The Future of Retail Space - The role of physical space in the digital-first retail future - Insider Trends
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The Future
of Retail Space
The role of physical space
in the digital-first retail future
In association with
2 The Future of Retail Space
Introduction
I
n an age of unprecedented
change and disruption, much has
been said about the future of
physical retail. Naysayers see this
as a battle between bricks-and-mortar
and online retail as though there can
only be one winner in the battle for
literally ‘thinking outside the box’. They
use innovative and creative strategies
to produce positive and memorable
interactions that drive transactions
across all channels.
This report showcases the latest,
most original and inventive use of retail
survival. In reality, we live in an omni- space that meets the demands of
channel environment, where both the today’s consumer: convenience, service
physical and digital are intertwined – and experience. It highlights the key
when retailers invest in brick-and- factors that you should consider in
mortar stores, their online order to make the most of your retail Insider Trends focuses on the future
presence thrives and vice versa. space. of retail. It helps clients such as Nike,
But there’s another important The case studies and views of Chanel, Galeries Lafayette, Unilever
dimension of retail success that’s a industry insiders that feature in this and Lego understand what is coming
direct result of retailers’ physical report not only demonstrate that the next in retail and how they can take
retail ventures: brand perception and future of physical retail is far from over, advantage of it.
awareness. Physical locations are places but also highlight the imaginative way Its Head of Trends, Cate Trotter,
where brands can make genuine in which the industry is embracing and has consistently been named one of
connections with consumers who adapting to the new digital era. Retail the world’s top influencers in retail.
are more engaged and informed than spaces are evolving at a rapid rate to
ever before. meet consumers’ changing needs and
Consumers still want and need desires and, alongside a complementary
physical stores, however, they have mix of other uses, it will remain a
become increasingly 'channel agnostic' fundamental element of successful
– they expect a consistent experience places in the future.
across every possible touchpoint. As a
result, retailers can no longer look at Join us as we make this journey into
their online and store operations in silo. ‘Retail 2.0’ together.
Brands and landlords alike are
embracing these challenges and are Cate Trotter Head of Trends
Insider Trends
In association with
Tokyu Plaza Omotesando Harajuku Tokyo
The role of physical space in the digital-first retail future 3
4 The Future of Retail Space
What we think about In 2021, over Ecommerce is now driving
when we think about retail 2.14bn people worldwide
90%of growth in
are expected to buy American FMCG sales.
goods and services online, Nielsen June 2017
up from 1.66bn global
digital buyers in 2016.
W
Statista 2017
hen you think about your retailing, what pops
into your mind first? Do you think about your
stores? Do you think about your website or
76% 67%
app? If you think your retail business only
revolves around one part, we'd like to invite you to
think differently.
As this guide will show, retail is fundamentally
changing. Retail can now be everywhere in the world of American shopping of global ecommerce brands
around us. Yes, it’s in our pockets, on our phones, journeys now begin online. that received funding of
but retail can now be much more intuitive than that.
Retailers can scan our bodies over the internet,
IRI, Consumer Connect Survey January 2018 over $6 million opened
we can tap a billboard with our phone to buy, we a physical store within
can scan any image or object to buy. Digital channels the last 36 months.
now offer immersive experiences, sophisticated Hero 2017
personalisation, enhanced recommendations and
discovery opportunities. Physical retail is here to
stay, but retail now goes much further than the four
walls of the store.
So, when
shopping can be
everywhere
To answer this question, we drew on
the latest research and thinking, as
well as interviewing some of the
world’s leading authorities on the
83%
of shoppers feel
78%
of shoppers globally
stores are important as they say an enjoyable in-store
in the world future of retail space.
allow people to see, touch atmosphere is a key factor
around us,
and feel a product. in their decision to choose
what is the role
of the store?
Mindshare 2017 in-store over ecommerce.
Mood Media 2019
The role of physical space in the digital-first retail future 5
6 The Future of Retail Space
The digital-first
ecosystem
What it is, and why leading
retailers are thinking this way.
D
oes ecosystem sound more solutions are offered to retailers. a completely personalised hair product
rainforest than retail to you? An Most importantly, digital model à la the US’s Function of Beauty.
ecosystem is just a network of interactions are radically changing. Likewise, the US-based online custom
interacting elements that They no longer need to be flat, silent, menswear company MTailor uses digital
together create something beyond any catalogue-style experiences. Through to offer perfectly tailored clothes to
one part. If you think about it, the store, geolocation, augmented reality and customers shopping at home. Using just
the website, the app, the chatbot... scannable images, chips and codes, their smartphone they can be measured,
“The high street isn’t they’re all components of the much new types of immersive shopping customise their clothing and have it
larger idea of retail. experiences can be created. And with sent to them. From an ecosystem
dead – it’s just
The very best brands think of their connected objects and trackable apps, perspective that data could be used to
different. Retail isn’t retail channels in this way, with each brands can understand and serve enhance a complementary in-store
dead – it just needs channel playing to their strengths and customers better than ever before. experience of click-and-collect, fabric
to be different. working together. Retail is now about so The great thing is that an choosing and repairs.
It needs to adapt much more than the store – it’s about ecosystem approach can naturally
to the changing seeing the store as one of many build relationships with customers.
world around it. different channels. These channels all Take L’Oreal’s smart hairbrush, for
I don’t think retail interconnect with and feed one another example. It connects to a partner app
as different touchpoints in the shopping to analyse your hair type and condition.
can be just looked journey. It then uses this information to
at as retail now, There’s no getting away from the recommend the best
it’s actually a fact that this ecosystem is digitally-led. products in its range for Digital-first interactions
combination Some of the world’s most forward- your specific needs. don’t have to rival the
of so many thinking retailers are now seeing 50% of Naturally, L’Oreal
different things.” their sales come through digital. This is can also harvest this physical space. Instead, they
only going to increase. information about users’ can redefine and reimagine
Tor Burrows Director of
It will increase as customers become hair to direct its product physical retail, opening up
Placemaking, Grosvenor, UK more confident buying online and as development. In the
more tried-and-tested ecommerce future it could even offer incredible new opportunities.
Niketown London
The role of physical space in the digital-first retail future 7
8 The Future of Retail Space
What does your brand’s
digital-first ecosystem
Nike House of Innovation New York
look like?
“The high street These new channels let brands engage
shouldn't be afraid customers in space whilst thinking An informal
beyond the store. Nike has shown the
of online. We really world how spaces such as a park,
workshop task.
need to push the restaurant or gig venue can become a
digital high street store. It has utilised geolocation and Now retailing is • Invite your team to come together over lunch,
forward to attract a augmented reality technology in its changing so pizza and/or beer. Provide them with flipchart
younger shopper apps to turn new product drops into fundamentally, we paper and fat markers.
profile, and that has real-life treasure hunts, and to launch often suggest the
to be a key element product at concerts. following process to • Dream up your digital-first ecosystem.
New technologies mean that our clients: - How would you sell and communicate with
of any strategy for
touchpoints such as billboards can now customers if money was no object?
any town centre become interactive and shoppable, - How would you get to know them better and
now.” helping customers discover new sell in more intuitive ways, through apps,
products and offer a level of connected objects, geolocation, connected
Dr. Steve Norris Head of convenience to rival the store. billboards and more?
Regeneration, Lambert Smith
Hampton
Solutions like Israeli tech-company - How can these touchpoints learn about
Syte’s AI-powered image recognition customers’ body shapes and preferences,
tech means that all of the images we tailor products to them and let them sample
see – in print, online and on social things virtually?
media – can now be shoppable. In the
future, this could extend to any visual • Sit back and look at what you’ve devised.
Syte AI-powered image recognition app
content anywhere with everything from Consider what your new ecosystem CAN’T do.
Image: courtesy Syte
adverts to films and TV shows becoming What customer needs and desires can’t be
easily shoppable fulfilled by these touchpoints?
As we all know, the store isn’t dying.
But brands would be wise to explore • Brainstorm and sketch out physical space to
what they can do with digital address these remaining customers needs and
interactions and experiences first. desires.
They can then use this to rethink what
physical retailing means. This may well • Reflect on how your thinking has changed
involve the store, but it may also during this exercise and what you might like
involve a myriad of other physical to do differently going forward.
touchpoints.
The role of physical space in the digital-first retail future 9
10 The Future of Retail Space
What’s the store’s role
in a digital-first important as all the other elements that
Image: courtesy Checkland Kindleysides
make up the experience."
ecosystem? When asked if the role of the store
has changed much, Raj Wilkinson,
Creative Director of JHP Design, noted:
“It hasn't really. Before, you had a space
“We all have that was well designed and created an
different tastes, environment that was engaging and
S
styles and body enticing and attractive to consumers.
types. You cannot o, as digital-first retail becomes That hasn't changed. It's just the means
more intuitive and compelling, by which you do it that has changed.”
make something to Paul West, Strategy Director at UK
how can physical stores and
fit the entire mass spaces support this ecosystem in experience agency Dalziel & Pow,
market. Consumers the most effective way? points out that as brands change,
are now more than The Boston Consulting Group found spaces need to, too: “How has the
ever looking for the that the brands that engage customers purpose of the brand changed? The role
experience. They emotionally are able to both charge of the store should be a reflection of that
want to feel special, customers more, and sell more. By shift in purpose. I think the store can be the
be doted on and engaging all five senses, and bringing most fundamental part of an ecosystem,
the brand to life through staff and but it can also be a complementary part
entertained or go to service, physical spaces will always be depending on the business model and the
a new unique place king of the emotional connection. purpose of the brand. There will be
and have fun.” Way back in 2001, Apple rewrote different ways of treating these channels
the rules of retailing by creating a new to play to their strengths.”
Jessica Sarkissian Principal Planner retail format that drew its inspiration Jeff Kindleysides, Co-founder of
The Planning Center, US UK-based design consultancy
from a library. It invited customers in to
spend time, experience and play. By Checkland Kindleysides agrees:
putting selling second, it created a “There’s no one approach – but one thing
space with one of the world’s highest is for sure it now must be about more
sales per square foot. than a straight forward transaction.”
As Steve Collis, Strategic Director Going to a store to stock up on
of UK-based retail design agency JHP essentials is now less of a necessity.
From top: Alexander McQueen London; 10 Corso
Design, says: "If someone asks what makes But shopping as a form of social Como New York; Starbucks Reserve New York
an Apple store an Apple store, it’s the fact interaction, of entertainment, as a way
that you can touch and play with every of discovering something new, is very
product and the fact that you can pay any much thriving. It’s one of the reasons
way without having any cash desks. That experience has become the go-to
Adidas Originals London is a business shift. Those two things are as buzzword for the retail industry.
The role of physical space in the digital-first retail future 11
12 The Future of Retail Space
“Those very functional transactional
journeys are the things that are reducing,
but people will absolutely keep going for
emotional reasons,” agrees Kathryn
Malloch, Head of Customer Experience
at UK property developer and operator
Hammerson.
Images: courtesy Gentle Monster
Chris Dewar-Dixon, Co-founder of
UK graphic and interior design agency Gentle Monster stores in
Studio Four IV, thought similar. various cities
Gucci SoHo New York “The experience of a store is absolutely
paramount. People are fighting for The brand understands
individuality and to really own the that Gentle Monster’s
experience across every single touchpoint physical spaces aren’t
“ The way the – from customer service to how you pay.” about fulfilling orders
consumer makes a Jeff Kindleysides goes further, – they’re about bringing
decision on where inviting us to think about the store its brand to life. The
to buy something differently: spaces create the desire
is they intuitively to purchase in the first place.
"It’s thinking about Gentle Monster is a This is very much something that
think about time, Ted Galperin, Senior Interior Designer
touch and money. what ‘fulfilment’ leader in using its stores
to create a brand of design and branding studio Partners
‘How quickly do I means – people
experience. The spaces & Spade in New York, is exploring when
need it? ‘Do I need go to the store to be from this South Korean it comes to the future of retail space.
to touch it and fulfilled in some way eyewear brand have more “I really enjoy pushing clients and
experience it?’ or another; it might in common with art brands to find the minimal number of
‘How much am I be to take something galleries than they do objects needed to define a 'store'. There
stores. really is an opportunity where retail is not
willing to spend?’ away with them, Although sales per just the act of buying, but a way of
I look at every or just to touch and square foot seem to be creating a memory,” he notes. “For me,
individual shopping try something on." the last thing on Gentle that’s the ideal place that retail is going. I
centre or retailer Monster’s mind, it is liken it to running a marathon and
and then I’ll try to continuing to open new someone handing me a water. It's part of
put myself in the stores – it started in your journey. It's not a destination. I think
shoes of their South Korea in 2011, retail can do the most good when it
target consumer opened stores focuses on adding value, rather than trying
throughout Asia, opened to be the whole purpose.”
and answer those New York and London
questions.” branches in 2016 and
2018, and there are
James Cook Americas Director of more to come.
Retail Research, JLL, US
The role of physical space in the digital-first retail future 13
14 The Future of Retail Space
“ Digital has been
a substantial
disruptor; however,
research shows
that 90% of retail
transactions touch
a store in some way.
For in-store,
experience is
Gucci SoHo New York
king and services
necessary, giving
Shoppable apartments are also a twist Muji’s locations in Shenzhen and Beijing consumers a
on the experience model. Rather than in China, work on the basis that living compelling reason
RH New York just placing clothes on a rail or plates with the products for a few nights will
on a stand, the shoppable apartment be inducement enough to buy. There’s
to visit and drawing
“ Retailers that are places them in situ in a covetable living no better way to experience a in shoppers who are
still doing well environment. The store behaves like a toothbrush, for example, than using it in ‘discovery’ mode.”
have proactively walk-in magazine. Rather than visiting and if you love it why shouldn’t you be
invested in their with a specific purpose in mind, able to buy it? Kyle Monk Head of Insight
New West End Company, UK
stores in the last customers visit for inspiration and end Experience sells because if we enjoy
up buying something they weren’t even ourselves, if we are entertained, if we
5-10 years to make
aware they wanted. are inspired, then we want to capture
them engaging, It’s made even more compelling by that feeling. We’re willing to buy into a
Adidas Originals London
interesting the fact that the environment looks like brand, or product, that makes us feel
experiences that the customer’s dream home. Logically, that way.
people will want to customers know that buying a set of
visit and spend time plates won’t turn their home into this
Image: courtesy Checkland Kindleysides
and money in.” gorgeous Instagrammable paradise, but
that won’t stop them buying.
Meanwhile the shoppable hotel,
Adam Bunn Associate Director
Urban Shape, UK such as Japanese homewares retailer
Bless Berlin Maison Sarah Lavoine Paris
The role of physical space in the digital-first retail future 15
16 The Future of Retail Space
Experiences don’t get much bigger than Do your spaces
Tommy Hilfiger’s Tommyland, which ran sell more by
in February 2017 in California, US. This putting experience
multi-day funfair, music festival and
catwalk show couldn’t feel less like a He reiterates the point that a store has before sales?
store if it tried and yet all of the catwalk to be fully connected to the brand and
designs were instantly shoppable via a its experience across all touchpoints: The retail industry is
smartphone. The event sold a at an interesting point
perception of the brand first and its "For us, experience isn't currently - everyone
Tommy Hilfiger Tommyland California
products off the back of that. something that is layered into is talking about
The pictures and video captured
existing stores; it's everything experience, yet few
Images: courtesy Tommy Hilfiger
during visits also form a social currency retailers are actually
that can be shared with others. The a brand does to connect doing it well. You can
focus is on spending time with the with a customer.” ask yourself the
brand, which creates the kind of following questions
relationship that keeps customers to see if your spaces
returning. truly offer a
However, Dalziel & Pow’s Paul West compelling, brand-
notes that a store experience isn’t just building experience:
about a big flagship production.
“Experience is often seen to be something • Would someone
that has to all-encompassing, super pay to come into
engaging, shareable, original, but it can your space?
also be something that's incredibly simple
and convenient as well." • Do customers take
photos in your
space?
• If your family had
the opportunity
to visit your space
or go to the cinema,
what would they
choose?
• Which features of
the space make
customers want to
come back again
and again?
The role of physical space in the digital-first retail future 17
18 The Future of Retail Space
Image: courtesy Checkland Kindleysides
Good things
in small packages
B ig experiences aren’t the only
way to make use of physical
space though. We don’t always
want this slower, wow offering
when we’re shopping. Sometimes we
want to just get the job done. In these
cases we may turn to physical retail as a
thousands of commuters and travellers
who pass through the station.
It’s worth noting that the UK’s
Network Rail reported a 2.3% increase
in train station retail sales over the
2018 festive period. The vast numbers
of people who pass through transport
Joseph Cheaney Coal Drops Yard, London
“ The smallest space
with the biggest
message can
faster option to online, which still has to hubs make them more consistent in become the
factor in delivery, for convenience or terms of footfall than the high street
because we need something that’s not and therefore a great opportunity for loudest voice.”
easily catered to online. the right retail offering.
Micro spaces are a fantastic way for American high-end department Jeff Kindleysides Co-founder
Checkland Kindleysides, UK
retailers to balance having a physical store retailer Nordstrom
presence with something sustainable is also experimenting
Image: courtesy Dalziel & Pow
long-term. Not every town or city needs with smaller spaces via
a large-scale, experience-heavy format. Nordstrom Local. Instead
By combining smaller spaces that focus of stocking inventory,
on services with these rich flagship these small-scale spaces
experiences retailers can create an are packed with services
offering that serves customers needs from on-site repairs and
on a day-by-day basis. alterations to click-and-
Some brands are already putting this collect to personal
into practice. John Lewis is well known stylists to manicures. It’s
for its large-format department stores, about creating a single
but the brand has also opened micro place for customers to
spaces in key locations like London’s come and have their
St Pancras train station. While the store needs met locally.
does stock some product lines, it acts
John Lewis London St Pancras as a useful click-and-collect point for Argos is a brand making great use of small spaces.
The role of physical space in the digital-first retail future 19
20 The Future of Retail Space
In Thailand, fashion retailer Pomelo Pin
is using small spaces for pick-up and
Brainstorm
discovery. A curated range of products
are held in-store which customers can
try on and then order digitally for
your micro-retail
collection or delivery. Customers can
also shop online and collect from
space
Pomelo Pin. The space acts as an easy
physical returns point as well.
Swedish furniture and homeware
giant IKEA is another brand that has
downsized its large-scale out-of-town
stores in order to reach city dwelling We believe that • Which locations might be best for your
audiences. Starting with London, the micro-stores are the micro-retail spaces? Consider areas that are
Planning Studio model lets customers future. You can start to currently not served by your stores, transport
design their perfect IKEA spaces and dream up your brand’s hubs and other places that your target
shop products for delivery to their home. micro-stores by customers spend time, such as football
The company is already planning to discussing the following stadiums, gyms, creches etc.
expand the model to New York this with your team:
year. IKEA is taking a localised approach • How might different spaces be tailored to
to each Studio to ensure the offering different local audiences?
fits in with local demand. It’s a smart
concept that sees IKEA breaking away • What kind of technologies would help you do
from selling £4 chopping boards bought more from a smaller space?
on impulse to engaging high-income
but time-poor customers on big ticket • What services might you offer or sell to
purchases. customers, in or from the space?
If IKEA can break away from an
approach to retail that has worked for it • How would your micro-spaces and larger,
for decades then you might be able to traditional spaces interact? What would be
do the same. the role of each?
As our lives get busier and our time
seems more squeezed, we’re looking for • Has your brand invested enough in digital
ever more convenience. Brands that fit and logistics to support a network of micro-
in with us, rather than expecting us to stores? If not, what are the most important
fit in with them, will have the edge. investments and changes to make?
IKEA Planning Studio London
The role of physical space in the digital-first retail future 2122 The Future of Retail Space
Data-driven
physical retail
Images: courtesy Nike
The better you know
your target customer,
and the customers
around you, the better
your physical stores can
cater to them. Brands’
insatiable thirst for data
is another reason why
they are investing in
A
digital-first ecosystems.
lthough data-driven retail Customers who interact
certainly isn’t new, its potential is and buy via digital
increasing all the time. When data provide more data,
equals insight, and insight possibly at lower prices
minimises risk, every retailer should be than paying an external
embracing data. Leading retailers are agency.
now using data, not just to decide where Nike’s investment in
to sell, but what to sell. This comes from ecommerce and apps
knowing what’s going on outside the have given it huge
store – who lives in a certain area, how amounts of data to mine
they move around, how much money for Nike by Melrose –
they have to spend, what they do its new, optimised store
socially and more. concept in Los Angeles.
It’s called that because
“The first step is to use data to truly understand the company considers Nike by Melrose
what's the best experience that you can build the space to have been Los Angeles
‘shaped’ by the local
for a specific location. In a sense, data is
NikePlus members. Nike used insights
actually defining the format and the type into their behaviour to not only choose
of physical spaces that brands are building,” where to locate the store, but also what
products and services to provide.
says Rafa Pulido, Senior VP of That product range changes
regularly based on localised buying data
Image: courtesy Checkland Kindleysides
Product & Growth at Spanish location
intelligence company Geoblink. – particularly that which comes via its
"That’s a big shift because it's not just app. Suddenly, it’s no surprise that Nike
expanding for the sake of expanding. It's is putting its app at the heart of a lot of
more about understanding the location its new store developments including
and the customer." the Houses of Innovation in Shanghai
AE Studio New York and New York.
The role of physical space in the digital-first retail future 2324 The Future of Retail Space
Image: courtesy Partners & Spade
In a similar approach, Chinese
ecommerce giant Alibaba's Home
Times furniture stores use information
about the best selling products within
five miles of the store to decide what
to stock. It’s a smart way of using
limited in-store space by ensuring that
the people who are most likely to go
into the store can find what they want.
The whole product range is available
to order in-store for fast delivery
should they need anything else. Data provides a real opportunity to
Meanwhile Amazon has used data look at each store on a case-by-case
from across its entire ecommerce basis and how it can be tweaked to
empire to determine the stock for its maximise value to customers.
series of Amazon 4-Star stores in the “It’s not only about the location, the
US. As the name suggests, the stores consumers, their behaviour and what's
only stock products that have been happening around the area. It's also
rated four stars or higher, are a top taking into account how big the store is,
seller or trending on Amazon’s website. what’s the set-up of the space, what are
The space aims to offer customers an the products, what are the marketing
opportunity to discover new products, campaigns etc,” notes Geoblink’s Rafa
while having the confidence that Pulido.
they’ll be of a certain level of quality. “By taking those business insights
It’s an interesting use of review data and the location insights and crossing
that may well be employed by others them, you are in a much better position
Amazon 4-Star New York in different models. to tell what the drivers of your success
Locating and stocking stores using are. Then you can make decisions on
data is particularly important for how to optimise that.”
retailers who will mix a network of
smaller stores with a few big flagships.
Warby Parker Century City, Los Angeles
Endless aisle technologies and mobile
Image: courtesy Partners & Spade
Another brand using data to help make
web mean that once someone is in a decisions when opening new stores.
store you can fulfil most of their needs,
even if the product physically isn’t
stocked. Getting them through the door
is the first piece of the puzzle and a
localised approach is a good way of
doing that.
Warby Parker Seattle
The role of physical space in the digital-first retail future 2526 The Future of Retail Space
But what if I have
a 20 year lease? The idea of placemaking is likely to
only become more important in the
future as Jeff Kindleysides of Checkland
Kindleysides notes: “Retail is the last
“ Before you can bastion of some form of community.
design something, There’s collectively a bigger thing to be
you need to think thought about there in terms of shops as
about its intended places in our lives.”
A
Pop-ups or in-store concessions can
purposes and how it s the world speeds up, it gets be a great way to inject new life into a
can be used if things harder and harder to find any space while also sharing some of the
change. We need to retailer to disagree with Tina risk. Getting the right new brand in can
create designs that Qiu’s statement (left). But be a big attractor. You can also benefit
adapt to a faster, knowing what to do is one thing. from seeing how customers respond to
Making a success of yesterday’s them which may then guide your
more agile and decisions is quite another. Some thinking on new products and services
efficient lifestyle.” traditional retailers have a large network in the future.
of stores and a series of multi-decade While UK department store chain
Tina Qiu Senior Associate Partner leases left to run. House of Fraser may not be flying high
PLP Architecture, UK If you’re one of these retailers, right now, the company did have some
knowledge is power. Before you do good ideas like working with Popertee
Louis Vuitton New York
anything, you need to be aware of what to select great pop-ups through AI and
you physically can and cannot do under location intelligence. In House of
Image: courtesy Checkland Kindleysides
the terms of your lease. That way, Fraser’s case it was perhaps too little,
you’re having practical discussions rather too late, but its loss could be your gain.
than blue sky conversations.
Think of your space not as a store
but as a place. What can you do to
make it somewhere people would like
to come and spend time? Could you
add in a food and beverage element?
Could you run classes where customers
can get hands-on and make things
themselves? It could be as simple as
putting a few nice seating areas around
the store where customers can stop
and relax.
American Eagle Las Vegas
The role of physical space in the digital-first retail future 2728 The Future of Retail Space
If you’re really struggling, you could also
consider whether parts of your store
could be used to better serve the
ecommerce side of your business.
Partners & Spade’s Ted Galperin
notes:
"A lot of our clients are looking at ‘dark stores’ –
mini non-customer facing distribution centres
that allow for an incredible amount of
inventory to be nearby so they can replenish
the store if they need to but are also able to
take on more interesting retail."
Other retailers have found
opportunity in giving over some of
their space to other methods of driving
footfall such as gyms and flexible
Last year US department store chain working spaces. A bar might suit your
Macy’s launched a pop-up marketplace customers or an in-store hairdresser or
concept called The Market @ Macy’s in fitness class.
a number of its locations. Brands are Could you offer some added value
given a pod of space on the retailer’s services like personal shopping,
ground floor in exchange for a fee, with jewellery cleaning, dry cleaning,
Macy’s staff running the spaces and product demonstrations? Aftercare
selling product. often provides a lot of opportunity.
Interestingly Macy’s also partnered For example trainer fans are so 10 Corso Como New York
with Facebook over the Christmas passionate about their purchases and
period to bring 100 digitally-native looking after them that a number of
brands to The Market. The featured companies have opened up spaces for
brands were all successful sellers via cleaning, refreshing and protecting their
Facebook and Instagram. Partnerships beloved shoes. But this could easily be
like this could be one way that you part of the shoe brands’ own in-store
could benefit from the masses of data offering. Consider the success of
generated online as well. Apple’s tech support Genius bar and
training model in giving existing
customers a reason to return.
The Market @ Macy's US Gucci SoHo New York
The role of physical space in the digital-first retail future 2930 The Future of Retail Space
What does
the shopping centre
of the future
look like?
T
o put it in its simplest terms,
the shopping centre of the future
is a space that people will visit.
“Why would someone come
here?” This is the question kicking off
strategy sessions for town centres,
shopping centres and landlords. People
There are a few ways of doing this:
Tech-driven
Westfield’s OneMarket concept is one
example of this. Having begun life within
Hammerson’s Kathryn Malloch also
believes that innovation doesn’t require
spend money in places they spend time in. Westfield, last year it was spun out as huge time and money investments.
“It’s almost a case of reverse its own business which aims to create a She advises an iterative test-and-learn
engineering it,” says Alfred Bartlett collaborative network around data and approach. “I think there's a lot of fear that
partner at UK property and planning tech. you can only take a finished product to
consultancy Rapleys. “It’s about asking As a result, OneMarket has your customer."
“what is the goal for this centre?”, “what developed a number of products "Actually they love to test new
type of customers do you want to attract?”, including engagement platform Hadley technology, they like to give you opinions
“what type of brands do you want to see and co-marketing platform Shopper and they like to be involved and I think
here?” and then building a case that Exchange. too many companies are scared about
informs the design, layout and mix of The traditional process involves that and not getting the benefit of that
operators in the scheme.” retailers spending large amounts of time test-and-learn approach.”
JHP Design’s Steve Collis agrees. and money trying and testing different
“We have a lot of friends in the tech, before finding out that different
architectural world who build shopping systems don’t play nicely in a live store
centres from scratch who have never really setting. By contrast, Westfield has done
understood what makes a customer go all of this hard work once, letting it offer
into a store and pick a product up. We clients options that actually work.
start with what people put in the bag.
Once you understand that it's easy to
design the store and the building to put
the stores in.”
Zeilgalerie Frankfurt
The role of physical space in the digital-first retail future 3132 The Future of Retail Space
More to discover
The soon-to-open new 720,000 sq ft It’s an approach that Sean Prigmore,
mall at the Hudson Yards development National Head of Retail at UK-based
in Manhattan is taking an interesting commercial property consultancy
approach to up-and-coming online Lambert Smith Hampton, sees
brands by dedicating a floor to them. opportunity in. “One of the trends we
The spaces are bigger and the leases may see going forward is if landlords are
are longer than the standard pop-up- going to let shops or shopping centres they
in-a-shopping-centre offering. Others almost have to give a turnkey option for
Fünf Höfe More efficient interactions are also looking to these ecommerce those start-up businesses.”
Munich companies to bring something new to Fourpost is a store-within-a-store
Alibaba Group’s first brick-and-mortar their spaces. concept at Minneapolis’ Mall of America
shopping centre, the five-storey More The 13,000 sq ft Neighborhood - the US’s largest mall at nearly 5 million
Mall in Hangzhou, China, is uniquely Goods in Texas is more of a sq ft and owned by MOAC Mall
built around the company’s business department store than a shopping Holdings LLC. Brands rent space within
ecosystem. The stores have unmanned centre, but its model could easily be the unit on a monthly basis with the mix
checkouts that use its Alipay payment scaled into a larger space. Created by of brands on offer carefully curated to
service and offer deliveries using entrepreneur Matt Alexander, the create a place to go and discover. Plus,
Alibaba’s logistics network. It’s the sort company uses its physical space to the space hosts regular events. The
of neat, one-stop-shop service that few host an ever-changing series of brands concept is also coming to the 5.3 million
companies can natively offer, but and experiences in order to drive visits. sq ft West Edmonton Mall in Canada
perhaps the shopping centres of the Each featured brand is able to this year.
future will leverage a similar centralised curate the experience of their pop-up, Whether it’s a shopping centre or a
system for certain tasks like payments. but Neighborhood Goods handles all town centre, having the right mix is
For any sort of shopping centre, the staffing, fit-out and tech. There’s essential. Sometimes brilliant insights
offering value-added services is also also a communal space for events and around that can come from retailers
vital. Done right, these can be a installations, plus a bar and restaurant. themselves, via things like contingent
win-win for both operator and customer Neighborhood Goods also has an lettings, as Rapley’s Alfred Bartlett
as UK planning consultancy Urban interesting app component that lets explains: “We ask a retailer ‘who do you
Shape’s Director Caroline Marginson you learn about the brands, message want to sit by?’ ‘Who acts as a generator
notes: “When you have a managed indoor staff, get products brought to you for your offer?’ We then use this to build
shopping centre you could use one of the and, of course, buy. the mix and offer lettings dependent on
vacant units for click-and-collect where securing other complementary brands."
customers can buy online, get it delivered
to that unit, try it on and either take it
home or return it." Zeilgalerie Frankfurt
The role of physical space in the digital-first retail future 3334 The Future of Retail Space
Laser-like focus
There’s also something to be said about
shopping centres that serve a niche.
The 450,000 sq ft open-air Bal Harbour
Shops in Miami is one of the most
successful shopping centres out there.
Still family-owned by the Whitman
family, Bal Harbour targets the luxury
end of the market and is one of the More experience and leisure
most productive shopping centres in
the world. entertainment offering. The Sport Society If experience, leisure and discovery lie
It not only has a 340,000 sq ft multi- will have three floors covering an area at the heart of physical space, it makes
million expansion underway, but also a equivalent to 12 football pitches and complete sense that they also lie at the
waiting list of brands who want to get host various sports events and activities heart of the shopping centre’s future.
inside it. Bal Harbour is successful within the space. The proposed Miami supermall from
because it’s focused on serving a Creating a place that caters to a Triple Five, American Dream Miami, is
certain type of customer. In this case it’s specific interest or way of life may be a taking its leisure offer to the extreme
the deep pocketed, but there are a way for shopping centres to secure with an amusement park, water park
myriad of other niches that could be their future. and indoor ski slope among the
catered to. entertainment offering. Early plans
The 286,000 sq ft Life Time Center allowed for 1.5 million sq ft for Posnania Poznań
in Boston, owned by The Bulfinch entertainment and 3.5 million sq ft for
Companies, Inc., has pivoted to become retail. However, those positions have
a successful health, wellness and now been reversed to give more room
fitness-focused centre. An upcoming to entertainment. These sorts of
new shopping centre in Dubai from Viva developments mean that we may
City is going to be dedicated solely to choose to spend a day at a shopping
sports, both in terms of the retail and centre over a theme park in the future.
It also shows that retail alone isn’t
always considered enough to get
people to make a trip to the shopping
centre any more. Gyms, co-working
spaces, offices, hotels, dining, residential
and health and beauty services are all
among the new shopping centre mix.
The Bowl at Selfridges London
Zeilgalerie Frankfurt
The role of physical space in the digital-first retail future 3536 The Future of Retail Space
What should
you do?
Image: courtesy Gentle Monster
be original, they have to be informative
and fulfilling, they have to be connected to
the ecosystem of the full brand offer,” Paul
says.
An exciting new future also opens
up, as immersive digital interactions
change the location for physical retail.
Shopping can exist inside AND outside
'P
the four walls of the store, spreading
hysical retail isn’t dead!’ cries just anywhere and everywhere into the
about every speaker at pretty world around us. Stores may be dotted
much every retail conference. around the world, but space is
And the whole room sighs with everywhere – in shops, pop-ups, the
relief. The statement may be true, but atrium of shopping centres, bus stops,
the reaction deeply concerns us. parks, transport hubs, forests, mountain
Physical retail ISN’T going away. ranges… With this, everything can
But physical retail is going to look become a shop, and shopping can be
radically different, very soon. We worry much more intuitively integrated into
that retailers take too much comfort in our lives.
the fact that physical retail isn’t going JHP Design’s Steve Collis puts it
away, and overlook the change they brilliantly:
need to undergo to survive and thrive.
The key may lie in ceasing to think
“Be prepared for everything to break down
about the STORE, and starting to focus a bit. Expect the definition of the difference
on SPACE instead. between the place that you go to buy and
The term ‘space’ encompasses two where you utilise what you have bought to
key changes – function and location.
Dalziel & Pow’s Paul West observes dissolve and all worlds to become one.
that the space will do a lot more than There's going to be a great breaking down
selling. “The space of the future will have of barriers because that's how we live
a range of jobs to do – from instant
fulfilment and convenience to full our lives."
experience, education and community.”
And, of course, these physical
spaces and experiences will connect
with the brand’s offerings in other
channels. “What will tie them all together
Gentle Monster Los Angeles is that they have to be smart, they have to
The role of physical space in the digital-first retail future 37
38 The Future of Retail Space
In conclusion
Having interviewed • Run the exercise on digital-first (page 9).
all our experts and What kind of physical store ecosystem
considered numerous emerges?
world-leading examples,
here are some questions • What kind of changes and investment do you
you could explore with need to make to support this ecosystem?
your team to stay ahead: What are the top priorities?
• What services and leisure experiences could
you offer from your spaces to break down the
As these barriers break down, it may boundaries between selling and experience?
get a little messy. The way forward may
not always be crystal clear. But we now • What can you do to make your physical
know where to start, and action always spaces rival other leisure experiences to keep
brings insight. customers coming back?
Any which way, our retail spaces, - It may help to imagine that your space wasn’t
and our retail experiences, are about to allowed to sell a single product. How would
become much more rewarding and you bring your brand to life and keep
exciting. customers coming back?
- How would you link the physical experience
Enjoy the mess and the adventure. with digital to encourage online buying?
• What can you do to ensure every part of your
space is as profitable as possible? Who might
you partner with?
• How can you start to embrace the retail
space that exists beyond the four walls of
your stores?
- What is the smallest, lowest-risk experiment
Citadium Paris
you could run?
The role of physical space in the digital-first retail future 39The European Conference & Exhibition combines the idea exchange of ICSC’s European Conference with our innovative exhibition for the Space, Place and the Future of Retail experience. Join us in Barcelona, Spain, to be inspired, share practical insights, capitalise on retail trends — and grow your business. Space, Place & the Future of Retail brings together leaders from the retail real estate, retail and technology industries: Everything and everyone you need to know in one great place and two indispensable days! April 10-11, 2019 | Barcelona, Spain Register here: www.icsc.org/2019EU
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