Are traditional stores being transformed beyond the four walls?
By Chris H. Petersen
Retailing is steeped in history of the “store”. Customers went to markets and stores as destinations to purchase things they needed. With the consumer transformation to omnichannel shopping, there are those that question the future of the physical store. Yet, in most categories, only 20% of sales occur online. So, while consumers are still shopping in stores, there are some major behavioral changes in how they shop. There is a new term being bandied about … the “unstore”? What does it mean? Is it merely a catch phrase, or a signal of what is coming in the future of retail? What are retailers doing about it?
Why this is important: Retailers’ deep legacy of defining the consumer’s experience is being turned upside down by omnichannel. The very nature of the “store” is being redefined by consumers. Survivors will be the ones most adaptable to change.
The concept of the “Unstore”
One of my go-to sources every week is Kevin Coupe at Morning News Beat. Kevin has an uncanny ability to spot trends impacting retail–both retailer trends in how they conduct business and consumer trends in terms of how they engage and purchase. If you are in the business of retail today, you need multiple sources to monitor trends. If you haven’t found the Morning News Beat yet, I would highly recommend it, and Kevin Coupe.
Kevin had Eye Opener story titled: “The Unstore“. He provides a number of examples of how retailers are moving beyond the traditional concept of a store as a box to sell things. Kevin cites the example how Sony Execs in Japan had one demand for its retail outlet located at the base of its new Manhattan headquarters called Sony Square NYC: “make it flexible.”
That means building an environment that can “accommodate anything from in-store concerts, movie premieres, new product launches, private events to branded takeovers and will be remodeled every four to six weeks.
Apple is so “unstore” they removed the word store from their name
In case you missed it, they are no longer called Apple Stores. The word store has been dropped. Apple stores are now merely labeled by location – Apple Union Square. It is safe bet that Apple doesn’t need the word Store in their name at this point. But, is this just a subtle name change, or something more?
Apple’s retail boss, Angela Ahrendts, recently was quoted as saying that she wants Apple Stores, wherever possible, to function as “town squares.”
“We don’t really need to open more stores, but we need to open incredible places that almost behave like a town square, like a gathering place. Right? So when all the events start to turn on, that’s what, you know, we want you to meet people at Apple. See what’s happening.”
There are sound reasons why Apple has been the most successful retailer in revenue per square foot. Angela seems really understand the power of engagement, and has taken the concept of customer experience to a whole new level. With Apple’s reported development of cars, these “town centers” can easily become the place where you go to experience an Apple transportation experience.
Retail Classes of Trade reflect a product and store centric heritage
Two decades ago, retailing was still divided into “classes of trade”. Classes of trade were primarily based upon: types of products, customer purchases, and how the retailers went to market to draw people to stores. Typical classes of trade include:
- Mass Merchants – Huge product assortments, mass appeal, mass marketing
- Grocery – Food and consumables, frequent shoppers, ads and weekly promos
- Convenience – Transportation pit stops, impulse, key local locations
- Telcos – Focus on cell phones, contracts to drive hardware, bundles and promos
- Specialty – Few categories but deep, focus on key segments, targeted ads
And, the list of types of retailer classifications could go on and on. There are three key aspects or assumptions about Classes of Trade (COT) worth noting:
- Classes of trade were based upon the store being a “destination” for purchase
- Store differentiation was highly product centric – based on the assortment offered
- Marketing was very product centric, or focused on appealing to core customer segments in ways to drive traffic to their stores
In the “Age of the Store”, the underlying principles of differentiation and marketing were/are defined by the store as destination location for both shopping and purchase.
Blurred Lines – Transformation of the very nature of “Store”
So, what happened to the retail classes of trade? Stores are not going away anytime soon. Examples of classes of trade are still there today. Go to any mall and you will find a host of specialty stores, especially apparel, shoes and home furnishings. But, if you go online you can find a host of specialty shoe sellers like Zappos. Amazon and others are rapidly ramping up “fast fashion” that only used to be available in stores.
What is changing everything is the consumer capacity to choose when where and how they purchase. Today’s omnichannel consumers are not bound by stores as a destination location. They can purchase anything from anywhere at any time. Even the world’s largest store operator, Walmart, is rapidly scrambling to develop omnichannel capabilities like click and collect, which makes the “store” both a selling and distribution point.
The “Unstore” = Metaphor for shift in focus to on experience
The very term “unstore” is by design a term designed to disrupt the notion of a store as a box designed to merchandize and sell things. The “un” becomes a focal point for how retailers are rethinking stores as multiuse spaces. In the words of Ahrendts at Apple, “We don’t really need to open more stores, but we need to open incredible places that almost behave like a town square, like a gathering place.
The term “unstore” is likely to fade away. But, the movement to transform traditional stores into flexible spaces is already happening and accelerating. With all the availability and competition online, stores can no longer be just places with products on shelves at a price. The future of retail is now based upon one huge disruptive trend:
The consumer is now the “store”. They decide when, where and how.
If retailers want consumers to go to actual physical store locations, they have to create compelling reasons. The best way to do that is to “undo” some of the rigid store designs of the product centric past. One size will not fit all. The key to the store of the future is the flexibility to create and orchestrate the experience, not rearranging shelves and product displays.
- Morning News Beat: Friday Morning Eye-Opener: The Unstore, Kevin Coupe; August 12, 2016
- Business Insider: Apple’s retail boss wants Apple stores to resemble ‘town squares’, Avery Hartmans; August 19, 2016
- Omnichannel Shopper: StockImages; Freedigitalphotos.net
- Woman Shopper: JK1991; Freedigitalphotos.net