I doubt I have previously written so many words in such a short space of time. I guess I had a lot to share. I am by far no retail real estate expert. What I am, is a big advocate. This is what prompted me to write, my endorsement for its future. I am a big fan of walking around cities and exploring all what they have to offer. Part of this is exploring stores and concepts. Whether familiar companies releasing new products or up and coming brands showcasing new stuff. I share some thoughts on what the present and future of retail looks like. As you will see, I am bullish.
It is no secret. Retail has been in freefall. Does this mean the end? Absolutely not. I believe there is so much potential I struggle to see how retail won’t keep on playing a vital part. Many have suggested we replace high street shops with residential units and replace shopping centres with logistics centres. I see this as part of the solution, not the only solution. The past few years have been a rough ride for retail with online commerce taking over physical commerce, accelerated by Covid.
It is now time to experience the next shift. No longer focusing on how online replaces offline, rather where online meets offline. Yes, online will keep on eating up offline, but as the online world becomes more crowded, it is where the opportunity lies in the offline world. By this, I do not mean abandoning an online presence, but rather supplementing it with an offline presence.
Retail used to be a must. People did not have an alternative but to go to the store shopping for clothes, buying cars, or exploring new brands. Today, no need to leave the sofa. Click a few buttons and the shopping arrives in days if not hours or minutes. So if shopping is done so easily online why bother going to the stores at all? Because people still see value in it. They want to do more than just shop. They want a memorable experience, they want to touch the product, they want to try it. They want to explore new brands and they want to discover new concepts. In January 2020, I explored why digital brands require physical space.
In every risk lies opportunity. The risk is retail, entering the market is the opportunity. For the smart brands out there, will they be able to spot a gap in the market that the market has not yet spotted. How are they going to differentiate themselves, have a physical presence, and make it align with their overall business strategy.
This is where online meets offline and how retail in 2022 and beyond will look like. Let’s explore a few concepts.
Concept Stores
In early 2020, I was supporting two entrepreneurial friends in exploring their concept of a pop-up store. The brand was named Gallery Society. Here’s my article supporting their venture. Sadly, the pandemic hit and they pivoted the business. Gallery Society’s business model was:
Gallery Society is a London-based physical retail platform designed to discover, experience and engage with brands in real life. They bring multiple brands closer to customers, allowing shoppers to discover, try and learn about these brands first hand. For brands, this is an opportunity for them to test physical retail, test new products, acquire new customers, and collaborate with like-minded brands. Brands are provided with space where they can engage with their consumers in the physical world without the headache of traditional retail such as finding a space, merchandising and staffing.
Here is the store pre-launch:
Although Gallery Society is now a thing of the past, the concept lives on. A couple of brands taking on the challenge are Retail Prophet and B8TA. These businesses are great enablers for digitally native brands to promote their business to the physical world and acquire new customers.
The Apples of Our World
On the other side of the spectrum, we have the tech giants who take full advantage of retail exposure. Let’s look at Apple and Samsung. Whilst both benefit financially from their retail presence, there are other less obvious benefits. The Apple Store is more than just a store. It is like entering the future. People love hanging out and feeling part of the brand. They browse new products. They come for an appointment to fix their products. They come in to charge their phones. To top it all off all, members of staff are “geniuses” (as termed by Apple) and know everything about the brand and its products.
And now to Samsung. Even though not seen as a favourable brand to many, their stores are extremely innovative, showcasing all their latest gadgets. They do a great job demonstrating their smart tech and exposing consumers to how technologically advanced the brand is. You cannot truly experience this online, and you’re not likely to be browsing for a fridge unless you need one. When in-store (and even though consumers are not expected to buy a fridge on the spot), consumers learn two things. One, Samsung knows its stuff. Two, when they need a fridge they will consider Samsung. The stores also have fun events such as wine tasting, VR sets and virtual racing cars.
When entering either of these stores, consumers are not necessarily going to buy a product, but what they are certain of, is convinced that these brands know what they are doing and will be at the top of their minds.
VRs and the Metaverse
And then we have the futuristic stores where it’s all about the VR headsets. Currently, these are mainly gaming focused, but these will expand in the future. Let’s look at Facebook, recently rebranded as Meta. The name says it all. In reality, the Metaverse hasn’t been defined yet, but what we do know is that it is all about virtual worlds with Meta betting big. From Facebook’s introductory video of Meta, you get a good idea of what the firm is trying to achieve. I would not be surprised if the company started to acquire retail space. Will they be selling products? Possibly. More likely, they will be promoting the idea of using their VR headset Oculus and the opportunities it provides within the Metaverse. This will also introduce many new people to the metaverse, specifically the older generation helping them understand what the concept is about. Meta will be able to explain the Oculus to new and existing crowds, share new products and services and elaborate on future plans of the company. Considering Meta is now the parent company, this is a smart move distancing itself from Facebook, only used by our grandparents’ generation. The store will also be about convincing the younger generation that Meta is the place to be.
Where Adidas meets BAYC
Staying within the Metaverse, Adidas is also betting big. They recently purchased a digital piece of land in the virtual world Sandbox, and have collaborated with 3 digital artists (NFTs) including The Bored Ape Yacht Club (BAYC). It is still early days and it’s not quite sure how Adidas will benefit and operate in the Metaverse. From Adidas’ perspective, the upsides far outweigh the downsides and is a risk worth taking.
Now back to the physical world where we could see digital artworks cropping up around Adidas stores. From the artists’ perspective, this would be great news. Offline exposure to their online art. Very much like the digitally native brands at a concept store. It gives a chance for the offline world to promote the online world. What Web 3 promises, is that you can buy digital merchandise in-store with Adidas, say new digital sneakers and then be able to use it across all Web 3 applications. Essentially, you buy it in-store and when you get home you play with that avatar and its new digital sneakers anywhere in the Metaverse. It is still early days for this adoption, but this is what makes Web 3 so appealing. Jack Dorsey and Elon Musk have recently shared their doubts about Web 3, so let’s not get too excited.
Super Tesla
I can picture a Tesla superstore on Oxford Street. If the company can do anything to make it stand out even more, this would be it. In reality, it would make far more sense for the more traditional players playing catch up to implement this strategy. The stores would be similar to car showrooms but tailored to an urban crowd of the 21st century, which is all about the experience. The BMW HQ in Munich is a great example:
The company would have their best cars in store for people to explore and play around with. But that would not be the only attraction as the store would be made entertaining and interactive. Whether car racing games, events with F1 drivers, or workshops on how their electric and autonomous cars will be taking over our streets.
F&B
And finally, let’s consider food and beverage. Starbucks recently merged with Amazon, collaborating on a new store concept in New York City. As defined by Starbucks:
The new store integrates the digital and physical retail experience, bringing together the connection and comfort of a Starbucks café and convenience of Amazon Go’s Just Walk Out Shopping experience.
You order your coffee on your phone, walk in store, pick it up, and enjoy a takeaway or eat in. I can see this taking off further with bookstores (hopefully the independent stores as well). For instance, you have a collaboration between Starbucks and a bookstore, where coffee is served with a reading area in-store. You order your coffee online and pick a book up from the library. You find an area to read your new book alongside your coffee. When you’re ready to go, you walk out with your new book with no checkout. The only touchpoint is scanning a QR code upon entry to the store.
The Landlord
From a landlord’s perspective and as is often the case location is key. In the 21st century, tech as well. Providing seamless integration of online and offline commerce through best-in-class wi-fi, 5G connectivity and enabling brands to integrate their technologies. Data and analytics will also be key, providing footfall and consumer data such as heatmaps. Sure, there are many other factors for landlords to consider, but ultimately, if they own real estate in prime locations, most of the job is done. It is then up to the brands to live up to their customers’ expectations.
Final Thoughts
Many will try, many will fail. This is the harsh reality. Whilst I am bullish on the sector, the reality is that our attention spans are shorter than ever and shopping online has become easier than ever. If within sixty seconds we are not hooked by a store, chances are we will not enter again. What is required, is an environment that surprises and delights, introduces new experiences, makes use of all the latest technologies, and taps into the aspirations of existing and new customers. For brands to succeed, they will need to stand out and follow this approach.
As put nicely by Nellie Hayat at Density:
In a world becoming more and more "remote", people are craving connection, belonging, authenticity and community. So your best recipe: mixing fans, users, customers, employees and even shareholders in a curated environment, allowing them to bond over barista-made latte art, testing out the new product, getting some branded goodies at the store and why not recording an episode in the brand new podcast recording studio on the first floor. This is the recipe for success to increase your brand popularity, motivate your employees to deliver their best work, and create a loyal customer base.