The Store of the Future Creates Omni-Encounters

A look at why retailers should relax the boundaries among "channels" in their Omni-channel retail strategies

The Store of the Future Creates Omni-Encounters

By John Bajorek

The millennial mindset calls for many varied digital encounters, Jill Lepore recently wrote after visiting the Whole Foods spinoff, 365 Everyday. The concept opened in the Los Angeles neighborhood of Silver Lake, the first of 19 new stores planned by the national chain. In describing the “varied digital encounters” she observed walking the aisles of the new concept:

“In the wine-and-spirits section, you can scan a bottle’s bar code and learn, by way of a user-generated-comments community, that the small-batch organic gin from Santa Cruz you chose solved someone’s ‘gin-mergency’ and gave someone else hints of ‘citrus, lavender, and spice.’ Another screen, in the seating area, lets you order and pay for a pizza, to be delivered to you at your table.”

In other words, 365 Everyday, the latest store of the future concept aimed at the budget-conscious Millennial demo, quite effectively blends the virtual and the physical worlds into a singular experience. These “digital encounters” don’t take place entirely in the realm of the virtual, yet aren’t entirely in the realm of the physical, either. Instead, they seamlessly integrate both worlds, effectively borrowing what’s best in online shopping and most loved about the traditional store into one singular and unified experience.

This Whole Foods concept is but one of many innovative store of the future concepts that point to a new and welcome future for commerce and culture. Most importantly, it reflects the unique ways stores can now create “digital encounters” with shoppers. This shift represents a new era of possibility for in-store marketing. For starters, the once highly perceptible divisions among the many separate channels of retail commerce—catalog, online, social media, traditional store, etc., — are being erased.

This is a good change—one overdue, in fact. The false “channel” divides have long been a hindrance to innovation. For example, even though we’ve found consistently in our ongoing research into unmet shopper desires, young people consider online peer reviews one of the best things about shopping virtually. Yet, it has taken retailers years to bring this effective tactic to the store experience. This delay can be blamed, in part, on a false division between online and in-store. The idea of separate retail channels also explains why (despite consistent consumer research showing shoppers rank the time waste of checkout as one of the most despised and frustrating aspects of traditional shopping) traditional checkout remains the status quo throughout most of the industry. After all, what else can explain why it has taken retailers so long to bring “instant checkout” to something as simple as ordering a slice of pizza inside the store?

Of course, there are all kinds of arguments and excuses one might make about institutional silos, etc.; but these delays in innovation can also be blamed on an outdated mindset. Creating meaningful and engaging digital encounters inside the store isn’t the same as having a great e-commerce strategy. In-store “digital encounters” require fresh thinking, a willingness to adapt to the demands of an “Omni-channel” world and the dismantling of the stubborn and staid “channel mindset.” The store is no longer one “channel” in a multi-channel or Omni-channel world, but the most important channel. After all, the store is and will always be the only place where all the other channels come together at once.

Perhaps, to move forward, what we need is new language—a new way of defining the store. Let’s call it the Omni-Experience Store, the place where everything anyone has ever talked about as possible within the store of the future—drone ports, real-time customer reviews, indoor cafes, playgrounds, “maker” studios, showroom merchandising, etc.—can finally happen, and all at once, too!

This kind of “mind-shift” brings a new sense of urgency and possibility to retail strategy and planning. It allows retailers to create digital encounters as a natural part of the physical shopping experience, not as a disruption to it.

The Omni-Experience Store:

Is where commerce and consumers can finally slow down

Ironically, the Omni-Experience Store makes it easier to bring innovations to the store…fast, but often the goal of this obsession with being first to market isn’t to speed the shopping experience up, but to slow it down. The reason for digital encounters is the opposite of speed: It’s about getting people to take time inside the store to experience the brand at its best. The store is the place where the deluge of information an online shopping experience entails comes to a stop. It’s the place where a consumer can slow down—where a brand can finally build loyalty and affinity and parse out individual shopper preferences.

Requires new forms of measurement

In the old “Omni-channel” world, each division, say store and e-commerce, were measured separately. That kind of measurement divide simply doesn’t work anymore. The e-commerce channel should drive the store channel and the store channel should drive the e-commerce channel. Even better, they should be blended together and be measured as one single unit. Additionally, the success of a store should no longer be measured by sales-per-square foot alone. It’s time to measure dwell times, too. The goal, after all, for any retail space is to get the shopper there, and then ideally “hanging out” with a brand as a part of their everyday lifestyle and identity. It’s more about footfall than foot traffic; it’s about getting people into the store and not necessarily getting them to buy something now. The goal is to create affinity for the brand—affinity that might end up as purchase intent while surfing the brand’s Instagram site later.

Has little or no classic inventory

Yes, the tactile function of the store remains critical, but it’s no longer about overstuffed shelves with every SKU imaginable. Edited assortments. Curated style. Moment of truth experiences. This is what consumers want inside the store of the future.

It’s a zone for experiences instead. It’s where you can scan what you want, either from a showroom, or an online screen, and then swing around a drive-thru on your way home, maybe even hours later, after enjoying a coffee with a friend inside a store café. It’s no longer about targeting consumers in specific modes, day parts or even inventory mixes based on geography. Yes, the tactile function of the store remains critical, but it’s no longer about overstuffed shelves with every SKU imaginable. Edited assortments. Curated style. Moment of truth experiences. This is what consumers want inside the store of the future.

Allows for Failure

With such a dizzying array of innovations, what deserves capital investment now? It’s not only a hard question to ask, it’s a hard question to answer. Despite a glut of futurists and gurus predicting the future, no one really knows what will catch on. Consumers and consumer tastes constantly change. The only sure bet is many innovations will fail and some expected to be total duds will surprise us all and become the next big thing. To prepare for and be ready to build the store of the future now requires retailers to integrate a certain level of facility flexibility into store design. Retailers should strive to construct fluid store spaces as much as possible. Will maker studios catch on? Will drone ports work? Maybe, maybe not. Amazon, after all, is still testing drone delivery. A regulatory crackdown remains possible and consumer surveys suggest most consumers aren’t ready for such a Jetsons-level evolution in the delivery of goods. But it’s probably not a bad idea to add a few hundred square feet of space in your back parking lot to adjust and build-out later.

Is Mixed-Use within Mixed Use

In the groovy, hipster neighborhood of Shoreditch, found in the East End of London, there’s an innovative retail store where the varied experiences not only transcend channel—they transcend the uninspired boundaries of traditional retail categories. The small space is known by many names; a reflection of the many mixed uses going on within the single retail space. It’s known as Neville & Cheeky but it’s also known as Barber & Parlour and Electric Cinema. This expansive yet small store offers a mix of services, products and entertainment. It’s a barber shop, a bookstore, a coffee shop, a juice shop, a brunch place, a specialty apparel retailer—oh and a 45-seat movie theatre (they were playing Clockwork Orange when I visited). That’s the kind of variety one might expect would require many thousand square feet of space to pull off, but it was all rolled up into a singular storefront. That’s one way to do mixed-used within a mixed-used space. There is more than a branding advantage to such a strategy. Instead of trying to make a profit from one single day part, one social-economic or gender demo or by fulfilling one specific want a consumer has, the store serves many wants and needs simultaneously.

John Bajorek
John Bajorek
Executive Vice President, Strategic Growth & Innovation
WD Partners
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