The store as a destination
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11,000 retail stores closed in the U.S. during the pandemic, a number some called the “nail in the coffin” of retail. The logic seemed to add up: stuck-at-home buyers grew even more accustomed to the conveniences of online shopping, transitioning away from in-person stores.
But that’s not exactly how things played out. 2021 and 2022 have proved retail is anything but dead. In fact, some brands are even discovering that physical retail still offers many advantages that online simply can’t.
Retail hasn’t died—it has evolved. Smart DTCs and brick-and-mortar stores reinvented themselves as true destination experiences.
This quote from a Vogue Business piece summed things up well:
“Companies see opportunity in consumer shifts that have taken root this year, including a greater willingness to experiment with virtual shopping, more intense brand loyalty, and an openness to new brand relationships that answer needs and desires that have emerged in the pandemic.”
Online shopping is convenient, true. But for retailers with physical spaces, there are some experiences a customer just can’t replicate at home.
Take Indigo, a bookstore in Toronto. Rather than simply creating a section for cookbooks, they decided to put out a table, set some places, and make everything from the recipes to the plates available for purchase. This robust visual context is critical for shoppers who need retail to be more than a physical representation of items they could otherwise find online.
The store-as-destination model works—if you know how to work it. Here’s how brands are meeting the challenges of a digital world with unforgettable in-person experiences.
Overcoming the problems with physical retail space
It begins with the inventory. People go to stores for the tactile, in-person experience. They want to try things on, feel materials, and see how a product looks in three dimensions.
But if lagging inventories offer no products to bring home, where’s the incentive to go to the store? There is some help from endless aisles, which allow customers to order items online while in-store. But as customers emerge from the pandemic shutdowns, many have found inventory a missing piece of the physical retail experience pie.
Census data shows the inventory/sales ratio was down between 2020 and 2021 and was even worse compared to pre-pandemic levels: a 1.43 inventory/sales ratio shrank to 1.26 in 2021.
Then there’s BOPIS: Buy Online, Pickup In-Store. This is great for people who order online. But what about the people who only came to the physical store? They don’t react too kindly to depleted shelves. BOPIS tends to exacerbate inventory problems and shift labor away from retail upkeep: 56% of respondents cite strained store capacity as a primary fear when switching to BOPIS.
Workforce stability is another problem in 2022. Retail would be easier if labor was cheap and plentiful. But right now…it’s not. COVID-exacerbated problems around the labor force mean retail spaces constantly have to hire new employees, leading to bottlenecks from turnover and training periods.
“Hiring and maintaining a stable workforce has always been an issue for the retail industry, but the impact of the pandemic has further exacerbated this problem. In 2020, the industry experienced a 57.3% average employee turnover rate.”
Finally, there’s the rise of the multichannel shopping experience. Even a pure retail experience is hard to separate from online shopping these days. 74% of in-store shoppers browse the web before heading out on foot. Inventory-conscious shoppers, comprising about 46% of purchases, confirm the store’s inventory before going out.
The result: people feel a trip outdoors isn’t complete without a few taps on their phone.
So what are retailers to do?
Give them a store experience they won’t forget.
How to fashion a destination retail experience
Graanmaarkt 13 in Belgium is a restaurant, sure. But it’s also a gallery. It’s a store. You can even rent the top-floor apartment for €1,300 a night. Founders Ilse Cornelissens and Tim Van Geloven hand-select every product in the space themselves, turning their shop into a veritable life-spa.
In short, there is no English word for what Graanmaarkt is. And that’s the point: by simple diversification alone, you can’t get the Graanmaarkt 13 experience online. Brands are doing well to remember this key principle: give customers what they can’t get online.
Here are some essential tips for executing a destination retail experience.
1. Find a retail space that accommodates your needs.
Personalized service is one way to create a destination store. Kylie Cosmetics started as an online-only brand. However, the company decided to introduce itself in-person with pop-up stores featuring limited-edition merchandise and exclusive first-looks at new campaigns.
Kylie Cosmetics also leveraged its relationships with retail space owners that could host those destinations. Westfield Century City, a 1.3 million square foot shopping mall, helped in particular; having a prior relationship with Jenner meant she was able to secure a space for two full weeks.
The tip here: Become familiar with the owners of the retail spaces you may rent. “Start to build relationships with an established retail store or a boutique to allow you to get into the space,” said Cody DeBacker of Kylie Cosmetics. For pop-up stores, “find a way to work with someone to help you just to come in on a short timeline.”
Research the local showrooms you can use for personalized experiences and give special consideration to store-as-destination goals such as:
- Appointment scheduling. The bespoke model of retail means giving every customer a personalized, one-to-one experience. But if you don’t have a space that aligns with your appointment scheduling times, you won’t get very far.
- Showrooms. Don’t just build a showroom; consider what your customers might enjoy. Remember the Indigo bookstore’s “kitchen” layout? It hit on several targets: It was in a place where the target demographic already shopped, there was ample space for social distancing (per the COVID-19 rules in Canada), and the space fit the home-friendly vibe anyone shopping for a cookbook might enjoy.
2. Create a community hub.
The experience of a place is all about its psychology. So is the way we choose brands. Studies show we use emotions when we choose the brands we love. For many, a sense of belonging is the most powerful pull of all.
When LA-based streetwear brand The Hundreds came back, it didn’t do so via social media. Instead, the brand brought back its popular “Family Style Food Festival.” Beyond the delicious food, the event included music, exclusive merchandise, and even a burger-eating competition. Fans of the brand could come together (outdoors) to shop, meet up, and have a good time—all thanks to The Hundreds for organizing it. Not only did this help boost brand awareness, but it reinforced their company as the community hub for shoppers and fans.
Now, a brand community is not something that pops up overnight. But if you can invest in the levels of interactions in your store, you’ll serve two purposes.
- First, any connection you have with a customer is a win. It will give customers a reason to form an emotional link to your brand.
- Second, you’ll draw new customers thanks to the communal experience they might not be getting from the brands who aren’t thinking about how a community might factor into the retail experience.
3. Cull together different elements.
Combine elements to create what people can’t get online. Some co-working spaces double as fitness centers; some restaurants double as furniture outlets. Or take a brand like Deus Ex Machina, whose retail stores double as a cafe experience.
Bringing these elements together also gives people more reasons to make your space a part of their routine. Maybe your retail space becomes their go-to coffee spot.
No matter how good your website is, it can’t do any of that.
“The retail/cafe model is a way to draw people into a store who may not come in otherwise—and that’s cheaper than paying for marketing.” -Sucharita Kodali, Forrester Research
4. Test, test, test.
Start with a test on a small scale. Use pop-up stores, for example, to gauge interest and see what connects with your customers.
You shouldn’t expect to get everything right the first day. You might offer a service that has absolutely no relevance in the minds of your customers. A toss-away idea might turn out to be the most popular thing you do.
Warby Parker ramped up its retail investments by starting slow. Its early pop-up stores, including six at Nordstrom’s, served as beta runs before larger investments in permanent retail spaces. They even worked out of the back of a bus that rode around the country and visited pop-up sites in 15 cities. This served as proof of concept while building brand loyalty momentum for the full stores.
The point: you don’t know until you try it IRL.
Brands who nail the in-store physical retail experience
Brands like Kylie Cosmetics overcome these challenges by making their in-person experience too compelling to resist.
Kylie Jenner’s makeup line started as a Shopify-only channel. But Jenner wanted a physical presence. Kylie Cosmetics worked with Shopify to build a pop-up shop “introducing” the celebrity’s makeup to shoppers.
Using Jenner’s connections with Westfield retailers, they created a two-week pop-up event at their stores. Customers would wait in line to meet newly-hired makeup experts, apparel consultants, and receive a completely customized experience superior to any online chatbot.
Said designer Michael Brewer, who worked on the project: “It's more about selling your brand, not the product—your website already does that.”
Warby Parker went through a similar transition process. The brand might sound timeless, but it’s only had its physical retail presence since 2013.
Like Kylie Cosmetics, Warby Parker tested the pop-up experience to give retail outlets a “beta-run.”
Back then, customer acquisition costs (CAC) were hailed as the “new rent.” In other words, paying for customer acquisition online became the new static expense online brands had to contend with, rather than rent.
But for Warby Parker, working towards retail was ideal for customers who wanted a more tactile experience.
Brands like Warby Parker now incorporate augmented reality to show customers what their glasses can look like on their real, live faces. Good luck finding that online.
Warby Parker is comfortable with an omnichannel experience, with customers splitting between online and physical retail. According to one co-founder, it’s just how modern customers process a new purchase, with about 75% of customers who transact in stores also having shopped online.
“They’re not just going to our website or our app to look up a store address or hours of operation, they’re actually shopping and choosing which frames they want to look at when they visit the store in person or when they go to the store for an eye exam.” -Neil Blumenthal, co-founder, Warby Parker
Finally, consider Backcountry, an outdoor retailer which opened a pop-up shop in Soho in 2019.
They weren’t content to just use the retail space to drive sales. They also organized active events for its demographic, including climbing clinics and group runs. They also discovered the value in partnering with other brands, like Black Diamond and Arc’teryx.
The result: Average order values from in-store purchases were 2X higher than AOV on the Backcountry site. Brand surveys also confirmed that customers were left with positive impressions of the brand, with 55% of customers planning to visit the website after seeing its pop-up presence.
Making your retail space the place to be
Omnichannel approaches may be the new model, but that still leaves plenty of room for the essential in-store retail experience.
Rule of thumb: don’t give customers something they can do at home.
Give them a hyper-specialized experience. Offer tailored services, unique layouts, and tactile previews of your product they can’t find in a YouTube video.
The pandemic hasn’t stopped people from enjoying live music, even with the proliferation of free streaming services. The reason? You can’t see your favorite artist through the screen—not like you can in real life.
Figure out what part of your brand can be the rock star draw, and you’ll create a similar destination for your company. But even if you can’t find that, you can make the experience unique by incorporating different elements, like the retail/cafe model.
In short, don’t just stock the shelves. Stand at the doors of your retail space and ask: how can this feel like an event?
Want to know more about how today’s top brands are leveraging their spaces as must-visit destinations? See our post on gamification to boost the customer experience.