In the second of a two-part examination of the future role of shops, Mark Faithfull looks at how some of the innovators in both the retail and food and drink sectors are experimenting with form and function as they strive for relevance and purpose in a confusing world.
Ten years ago Asos founder Nick Robertson sat on stage at World Retail Congress in London and questioned the role of physical stores for the next generation of shoppers.
Asking why “anyone would go and shop in a box”, Robertson insisted: “Our 20-year-old customer has been brought up in a digital world. If you ask how much of their clothes they buy online, it’s 30, 40, 50%. The 10-year-olds of today will see the box experience as strained.”
Arguably, retailers have been straining to answer that provocation ever since. Lots of meaningless buzzwords have been thrown at the quest: experiential, immersive, convenience, engaging, glocal, narrative, back story, seamless, educational, edutainment, retailtainment… You have undoubtedly heard it all before, because buzzwords have bloomed and flourished in the wastelands of store closures.
Robertson’s digital-savvy shoppers of 2012 have been followed by fully native Gen Z consumers, yet over three-quarters of retail sales are still completed in stores, the vast majority of food shopping continues to be conducted in supermarkets – despite the huge window of opportunity afforded online during the pandemic – and some of the world’s slickest global brands, from Apple to Nike, Lululemon to Ikea, continue to advocate physical retail.
“One of the things that’s changed is that for people to jump on the train or in their car, or walk to their high street, it’s got to be worth it because we can order so much online now,” says James Ramsden, executive creative director at design and branding agency Coley Porter Bell.
“Amazon Prime has set our expectations and retailers have clearly been affected by that perspective. Picking up bits and bobs and doing ancillary shopping doesn’t really feel like the thing that people do any longer.”
He believes that shops must be spaces that feel more immersive and engage the senses, pointing out that “digital expressions” have now deepened. “I can go online and learn so much about so many things. If you can achieve that sort of immersion on the couch, going to a store has to be made worthwhile,” he adds.
“Picking up bits and bobs and doing ancillary shopping doesn’t really feel like the thing that people do any longer”
James Ramsden, Coley Porter Bell
“Covid only accelerated this need for human interactions and people are just craving personal experiences again,” says Yasmin Borain, chief experience officer at Tribal Worldwide.
“But it’s different types of personal experiences than before. People spent a lot of their time really reflecting on their life needs. They were just consuming, consuming, consuming before, so they really stepped back and thought about what is important.”
That means they require something different from their shopping experience, she says: “Now they’ve gone back into the shops, they need to experience it, they need to sense it, they need to smell it, they need to feel the textures.
“For a long time we have been talking about stores as destinations, but I think consumers weren’t necessarily behaving that way. We just really wanted to push the brand that way. And what Covid allowed us to do is get to where people actually want destinations.”
In-store investment ethos
David Dalziel, creative director at retail design agency Dalziel + Pow, adds that the initial caution of returning to stores has largely evaporated, noting that those offers that can differentiate are performing best.
“The level of interest in serviced retail, around beauty and tech for example, feels strong, proving that if you can offer something the web doesn’t you can attract a customer who is looking for more from a store,” says Dalziel.
“We are seeing brands briefing quite targeted initiatives to re-engage customers or looking forward to more engaging future spaces.”
Dalziel maintains that brands should aim to “inspire and delight”, and to provide a “bit of joy” in consumers’ retail experiences, and he advocates investment: “Having consulted through a number of recessions now in our 40 years, we are aware those who are confident and invest in the future at this point can exploit the situation and come out of the other end stronger and more relevant. Historically we’ve seen River Island, Next and Primark all flourish in tough times.”
Some retailers are currently running the invest-during-distress playbook, including Ikea property arm Inkga Centres, which has been one of the most enthusiastic developers of physical environments.
In June it launched a collaboration with H&M at Livat Hammersmith called Atelier100, a showcase for maker brands located within 100km of London and combining investment, mentoring and the opportunity for creatives to sell their products in what the partners describe as a “sustainable and hyper-local approach to retail”.
Marcus Engman, chief creative officer at Ingka Group, says he hopes it will be a “new way of building a brand” and that the partners took the approach of “getting the idea out there” to learn how it might work, deliberately choosing a mall to experiment.
“It has been a challenge to ourselves” adds Camilla Henriksson, global brand manager at H&M. “I am curious about local relevance, about harnessing a hyper-local community.”
Community is something for which bicycle brand Rapha is renowned since breaking the mould with its first Clubhouse in Soho, London, back in 2012, at a time when there were just a handful of cycle shop cafes in the UK.
A major refurbishment in late 2021 has almost doubled the size to include a wider product range, personal shopping, upgraded fitting rooms and a large ‘experiential space’ to celebrate cycling, with an enlarged cafe area, and a packed events and rides calendar.
Rapha says it has more than doubled sales in the London Clubhouse since 2019.
“Build, and they will come”
Simon Mottram, Rapha founder
“Rapha Clubhouses exist to help our customers to find the products they want, but more importantly to help them get closer to the cycling community and closer to the sport itself,” says Simon Mottram, Rapha founder and chief executive.
“We set out to create a club feeling and we’ve grown to 20,000 members worldwide and 4,000 in London alone. We are by far the biggest bike club in the world. Build, and they will come.”
New formats for new priorities
“People are using the store now as a brand confirmation point, around service, around trust, around the look and feel of a brand,” says Stefan Hull, director of Amido. “Retailers need to think about what that brand engagement looks like, which then plays to the nature of the store space.”
He also believes that retailers need to try and capture as many views and ideas from their customers as they can, by asking for genuinely useful and customer-centric feedback.
“We have no data for this post-pandemic world. We are trying to work things out as we go,” says Hull. “Anything you can do to capture insight from people in stores is vital. Ask them, ‘Why are you here?’ I still think a lot of stores are trying to work out what sort of relationship they want with their consumers and I worry that many will invest without necessarily understanding how they want people to feel from that in-store experience.”
Others are responding quickly to changing behaviours and technology. This May, McDonald’s announced a four-year investment of more than £250m on a ‘Convenience of the Future’ programme, which will see McDonald’s UK and Ireland shake up the way its restaurants operate. Throughout 2022, McDonald’s will introduce 200 new concept restaurants – with 800 conversions planned over the next four years – with the first in Bow, Peckham and Kirkby.
“Anything you can do to capture insight from people in stores is vital. Ask them, ‘Why are you here?’”
Stefan Hull, Amido
The roll-out includes a front-counter redesign to create specific areas for different sales channels, a dedicated courier waiting area and entrance, a new kitchen design, improved car park layout to create a separate courier parking, and improved circulation for drive-thru and click-and-collect customers.
Frictionless retail
Innovation around payment has been led by Amazon. Until this year, Amazon’s Fresh and Go stores used Dash Cart as a high-tech alternative to checkouts, but that is shifting towards ‘Just Walk Out’ – consumers shop and leave, with their account automatically billed via an app.
The approach typifies Amazon’s boldness, says Nigel Verdon, co-founder and chief executive of Railsr (formerly Railsbank), exemplifying Amazon’s “look-back process”, whereby it sets out the proposition and then considers whether the idea is “big enough”.
Verdon says Amazon considered contactless and cashier-free stores, but determined that those were incremental efficiencies and instead chose to ditch checkouts completely, using data and AI to “take retail to another level”.
Tesco, Sainsbury’s and Aldi are all piloting shop-and-go stores, though Ramsden warns that customers getting used to such approaches will take time and cites the importance of rituals, even elements people don’t enjoy, such as queueing and paying.
“Rituals are massive in retail, particularly in areas like beauty. That’s a really interesting way to deepen the experience,” he says. “But even the ritual of writing names on cups at Starbucks and other simple signature moves are really effective.”
“Frictionless shopping is a progressing exploration for many brands that will eventually become the norm, it will simply take time to implement,” adds Dalziel.
“Frictionless shopping is a progressing exploration for many brands that will eventually become the norm”
David Dalziel, Dalziel + Pow
“It’s not cheap, but will get cheaper. For most of our clients that ultimate goal of seamless self-service is influencing small changes in today’s plans. A hybrid of serviced and self-serve pay points, the location of services next to fitting rooms, a prescribed customer journey, all important steps in the creation of that frictionless future.”
And Tribal’s Borain stresses the importance for retailers to make shopping as frictionless and easy as online. She believes in-store payments must be easy and fast, but adds: “It’s really easy to just go straight to functional needs and not consider the emotional ones. But the ones that connect with customers emotionally across all the touchpoints and channels are the ones that will bring the most value and growth.”
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