Features, Retail Insights

McKinsey Launches a Flashy New Store

Late in September, McKinsey & Company, the famed consulting firm that every year hires left-brained Ivy League MBAs off campuses like a drug addiction, went from consultancy to full-fledged retailer. With much fanfare and national press, McKinsey debuted its Modern Retail Collective at Mall of America. The Collective brings together trending brands, new technologies and even new forms of payment. But in the end, the whole thing just leaves us feeling dazed, confused (and yet wanting more).

Everybody’s First Time

The experience of losing one’s innocence is a perfect analogy to describe the Modern Retail Collective. Here you have a first-time retailer, McKinsey. Sure, they have talked a lot about and consulted about retail in locker rooms with their colleagues, but McKinsey has never actually done it before. Then, when McKinsey tries to do it for the first time, it comes out looking like a great idea without enough there.

Now, before I go any further, it is important to disclose that Mall of America, one of McKinsey’s partners in the Modern Retail Collective, is also one of the sponsors of my retail lab Third Haus in Minneapolis. Regardless of the subject matter, I will always express my opinions, be candid, and to do it for the purpose of retail education, which, as you will see if you stick around to the end, is exactly what I intend to do.

Note: Critique is healthy. I tried multiple times to connect with McKinsey about this article via the contact information given to me during my visit to the Modern Retail Collective, but my requests for information and comment went unanswered in time for publication.

All Talk

While it tries to sell itself as a fully functioning store, the best way to sum up the Modern Retail Collective is that it is a collection of tech-driven ideas, sort of a showcase for emerging retail tech, but one that doesn’t work within the rhythm of consumers’ expectations and desires. It is not a cohesive experience. It reads more like a trade show expo than a concept store. Sure, it is cool to see brands like Third Love in a physical space, but the tech inside the Modern Retail Collective is so ubiquitous that it leaves one feeling, as my Generation Z intern put it during our visit, “completely underwhelmed.” Too much of anything diminishes its value and impact.

Overall, McKinsey tries to hang its hat on four key technologies from a consumer perspective:

  1. NFC-guided shopping
  2. Design your own jewelry
  3. Augmented Reality jewelry try-on
  4. Cryptocurrency

1. NFC-Guided Shopping

NFC (aka near-field communication) is essentially the technology that knows when our phones are close to something. It is what drives ApplePay. If you have ever used it at a grocery store, you simply tap your phone to pay for something at the point-of-sale terminal. In the Modern Retail Collective, McKinsey is using NFC or what they call “Tap Here” as a way to guide the shopping experience, serve up information and create a digital cart, if desired. Here’s a demo of the concept in action in the Third Love section of the Collective.

On the plus side, the technology does separate buying from shopping. It allows consumers to browse, add items to their carts and elect to either buy the products on site or have them shipped to their homes later. On the other hand though, the whole experience has a major drawback. As I was informed by the lone store sales associate, Tap Here only works with iPhoneX or higher and with Android devices. I had to borrow my partner’s phone for the demo, for example, as my older model iPhone didn’t work.

This massive interface design flaw notwithstanding, the more important point is that there are still better, physical ways to accomplish the same thing. If a consumer is at the point-of-purchase, a well-placed sign or even a quick “fit-finder” cheat sheet are far more effective tools than forcing an eager customer to dive into and get comfortable with technology that is less than intuitive. Just because something works visually on our screens and interfaces at home does not mean it should be ported over and used within our stores. Omnichannel retail or whatever you want to call it does not work that way.

While McKinsey’s Tap Here tech serves the intended purposes, it forces the consumer to work way too hard and also does not even work for everyone, the latter of which should have been enough to realize that the whole thing is probably a really bad idea.

The GH Lab experiment at Mall of America last year that used Smile Codes/QR Codes is far better way to accomplish the same thing, with less friction.

2. Design Your Own Jewelry

McKinsey also went to great lengths to try something new with design your own jewelry tech. Against a beautiful backdrop of Kendra Scott mannequins and necklaces, McKinsey created a station within the Modern Retail Collective where consumers can make their choice of various beautiful stones, place it in a container on an interactive screen and then design their own pieces of jewelry via a digital kiosk (video demo below).

The technology is effective in satisfying a creative need to customize a design. That being said, the options for the finished product are limited to the models in the system. It’s not really a design your own experience, it’s a choose your own design experience. It still is a demo kiosk at the end of the day, plain and simple. It is also a kiosk that doesn’t work within the flow of the total store. Why a consumer would want to do this alongside an NFC bra fit finder is cognitive overload.

How do I know? Because I also visited the traditional, full-sized Kendra Scott store on the first floor of Mall of America. There I learned, through a conversation with that store’s sales associate, that even though similar, less techy customization kiosks are available for consumers to use within the traditional store, consumers actually prefer to have a helpful sales associate walk them through the process.

Again, sometimes physical signs and actual people are better sales signals.

3. Augmented Reality Jewelry

I will let this video speak for itself. Watch it and answer this question honestly, “Does this make you more or less inclined to buy jewelry?

This technology may work for make-up, as tested by Sephora and the myriad other beauty brands. But for earrings? Short answer, it doesn’t help in the slightest. The images are not a good representation of real product, and again the consumer is already in a physical place, where the tactile ability to touch and feel products is one of the sole differentiating points against e-commerce. Why go against that?

4. Cryptocurrency

McKinsey, by way of a tiny sign on a wall (see below), allows customers to pay via cryptocurrency with Flexa, a company whose website has a total of three total pages.

Flexa Cryptocurrency Sign at Modern Retail Collective (Courtesy of Omni Talk)

After navigating through all the other pieces of new tech, consumers at the Modern Retail Collective can also download an app called SPEDN and use the app to pay for their purchases via Flexa and crypto.

The tiny sign on the wall was enough to inform me this idea was a canary in the coal mine. I didn’t even bother taking a video of the whole experience because it was just too big of a hassle to download another app I didn’t want and that I can’t likely use many other places, and I was still too vexed that the NFC didn’t work with my iPhone.

The above aside though, I am actually a big fan of frictionless payment systems for retail. It is just way too early, McKinsey, for the concept to appear live, and especially when marketed as a tiny-signed bolt-on.

It Can Only Get Better from Here

Full rant and diatribe over. Here’s why I said to stay to the end – I actually love the Modern Retail Collective.

Kudos to McKinsey for going where others haven’t dared and for doing something new. It should only get better from here. Reports are that McKinsey plans to change things up every three months. I am, therefore, excited to see how things will change over time. Will it stay a collection of disjointed, almost trophy case-like tech, reminiscent of a trade show floor? Or, will McKinsey try to do more with less and create a more holistic experience design with fewer brands or even one brand?

And what will the tech be? Will it be something foundational that flows frictionlessly through the entire experience or will it just be more of the alphabet soup of buzzwords that are AR, crypto, and the like?

My one word of final caution to McKinsey? Take your damn time! The more partners it involves and the more it changes up the tech, the more difficult McKinsey will find it to create a congruous experience and instead capitulate to the “tech for tech’s sake” mistake again and again. McKinsey should instead think of the Modern Retail Collective effort like a piece of software product that evolves iteratively over time rather than as something that is completely reborn new each time.

Things only get better with practice. So, for god’s sake, McKinsey, keep practicing. Nobody does it right the first time.

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