These days, it feels like the winds of change are blowing harder than ever before across the retail landscape. Everywhere you turn, industry experts are predicting the end of retail as we know it, reinforcing the “embrace it or die” imperative of technology and embellishing the advancing features of the newest generation of demanding consumers. But as best we can tell, brick-and-mortar stores aren’t going anywhere. Technology is best viewed as an opportunity, not a threat. And those young, “demanding” consumers? They’re expected to be the largest consumer generation in history.
The International Council of Shopping Centers (ICSC) says that in 2025, 85 percent of U.S. retail sales will still occur in brick-and-mortar stores. The challenge we see clients tackling is how to maximize efficiency in store design and layout (that is, how to do more with less space) without compromising the customer experience.
“Many of our clients are scouting smaller retail spaces in urban areas and town centers, rather than larger spaces further out in the suburbs,” says Vice President of Sales and Marketing, Chuck Bray. “This helps them reach the top three high-potential customer segments: Hispanics, Millennials and Baby Boomers. They are looking to us to help them continue to develop and be more efficient with less space.”
Retailers whose product category purchases are migrating to digital channels, such as consumer electronics and toys, could see square-footage needs reduced by half. According to Trade and Industry Development magazine, the stores opened by major retail chains today are 25 percent smaller than their average existing store. Plus, with more than 40 percent of Best Buy products, and over 50 percent of Walmart products, sold online and picked up in store, many retailers are re-thinking the space they have.
Those retailers who can align the (sometimes competing) interests of their construction and design departments will have the most success. “Look at the Apple Store,” says Chuck. “They can sell a large volume of products in a relatively small space, because they designed their store for the customer experience. Customers are happy to hang out in the store and wait to be helped because of all the toys they can play with while they’re there.”
According to Retail Environments magazine, even a five percent increase in customer retention can nearly double profits, proving that customer experience, which drives loyalty, is key. A recent study by McKinsey & Co. found when customer experience is designed end-to-end, revenue growth rose 10-15 percent, and cost to serve customers dropped 15-20 percent.
The in-store experience is the most intimate, emotional interaction customers will have with a retail brand. Stores must utilize the opportunity to engage them via touchpoints like one-on-one interactive product demos, live learning and multi-sensory experiences, while also providing an environment where customers will want to linger. “Everybody wants their store to feel like Starbucks,” Chuck says. “A place where people will come, relax, socialize…and of course, buy. Comcast and Time Warner Cable stores are doing a terrific job at this, by featuring plenty of interactive technology displays on the floor to get folks engaged.”
The bottom line? There’s no need to sound the alarm. Shopping trends and patterns continue to evolve, but the retail store will never go away. “Seventeen years ago, 60 percent of Randal’s business was book and magazine fixtures,” Chuck says. “Today, we do none. The industry morphs and changes, and we evolve right along with our clients. We’re excited to help retailers tackle the challenges of today and the next 25 years.”← Back to all articles