This piece was first published on October 3, 2013.
The retail store isn’t dying. It’s just transforming, and most people are being left behind.
The debate over whether a company should adopt an omni-channel presence is already several years old. Now, the savviest businesses in the world are not only playing with how products are bought online, but they’re changing the physical retail experience into something totally different.
Experience, knowledge and assistance are now the critical elements of a store – not turnover. Old metrics like sales per square footage are going out the window.
It only takes one look at an Apple store or IKEA to know the retail store isn’t dying. Not at all – it remains as important as ever. It’s just changing.
In August at the Online Retailer Conference in Sydney, futurist and consultant Doug Stephens – who has worked with some of the largest companies in the world from Disney to Microsoft – detailed his vision about the future of the retail store. And it’s something any business owner will want to pay attention to.
“We don’t go to restaurants for nutrition, we go because we enjoy the atmosphere,” he says. “It shows why players like Google, Amazon and eBay are talking about opening up physical locations.
“Brands need to be physical,” he said.
The retail store is changing – and you need to know how. Here are 10 ways the physical location will be transforming over the next few years:
The philosophy of the store is changing
The dominant purpose of the retail store has been to move product. With bricks and mortar the sole way to move money, inventory is the biggest factor in moving stock out the door.
That rule no longer applies, which means the purpose of the store is changing to something completely different. It’s still an important channel, but it’s only one of many.
You only need to look around and see how this is changing in Australia. Myer and David Jones realise this, which is why they’re changing how their in-store experience feels, while at the same time pumping up their online commitments. In some cases, Myer has closed stores altogether.
The purpose of the store in the overall make-up of business is changing – which means companies should be less eager to expand as quickly as possible.
Old metrics are not as useful
This point rolls on from the last. With the philosophy of retail changing, the metrics used to determine ‘success’ change as well.
“For those who have bricks and mortar stores, you need to look at the strategic function differently.”
This means things like sales per square foot are less relevant, when the purpose of your store is not meant for inventory but for brand exposure. Again, you need to think of the physical store as just one part of the overall retail experience.
“Those metrics have become antiquated,” Stephens said.
“We’re seeing new metrics using mobile tech and analytics to get a sense of how those things work. Bounce rates, page views, and so on; these types of metrics are becoming integrated with the physical store.”
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