Retail Insights

The Store: Palaces of Consumption or Temples of Doom?

RR Apple store design brand experienceFor almost 20 years the death knell has been rung for brick-and-mortar retailers with such regularity that, by now, one might expect stores would be a thing of the past. Of course, many of the loudest voices of doom have come from the growing and dynamic world of e-commerce. The difficulties of troubled retailers like Best Buy, Sears, JC Penney, recently high-flying Abercrombie & Fitch, and now, RadioShack, are all cited as evidence of the long predicted “retail death spiral.” So are stores really temples of doom?

Retail Resilience

The impressive growth of many other retailers such as H&M, Zara, Ikea, and, of course, Apple, seems to tell a different story. And there is the trend of formerly pure-play e-commerce retailers like Warby Parker, Bonobos, Indochino, Boohoo.com, and BaubleBar, which are all now experimenting with brick-and-mortar retail. Google, inspired by Apple’s $10 billion, 400 store success, is also said to be close to launching a retail concept. This type of interactive store would, of course, allow customers to engage with Google devices, like Google Glass, smartwatches, phones and tablets. But perhaps more importantly, the store would also allow Goggle to forge the vital link between hardware and software, creating an appealing integrated ecosystem – a key element of Apple’s success – which was realized at retail. And the most striking example of the vitality of the physical retail channel is the elephant in the room: e-commerce behemoth Amazon is bound to open brick-and-mortar stores sooner than we think.

Survival in a Tech World

The battle between online and offline retail is ongoing. For example, everyone talks about e-commerce driving retailers out of business by stealing market share. While e-commerce continues to grow year-on-year at double-digit rates, it still only represents around 6% of the $4.5 trillion US annual retail sales. The rate of growth of e-commerce has also slowed from around 30% a decade ago to a projected rate of 16% in 2014, and predicted to be less than 10% by 2018. Moreover, it is worth noting that half of e-commerce sales are through merchants who are traditionally brick-and-mortar retailers. So is the retail channel really fatally flawed and doomed to extinction?

I think not. What merchants realized in the 19th century with the creation of their palaces of consumption remains true today. Retail is the most vital channel because only the physical store can bring a brand to life as a holistic, profoundly compelling customer experience. At the same time, retailers such as H&M, Zara, Ikea, and Apple are also expanding their e-commerce platforms supporting the view that omnichannel retailing is the strategy most likely to succeed. It is the physical store, however, that will not only survive, but will increasingly become the center of the omnichannel universe. Why? Because the store can be a magical emporium that offers space and place to help us choose among infinite possibilities.

RR Gucci store design brand experienceParadox of Choice

One of the most salient features of the Digital Age is the exponential expansion of information. It’s not just that there seems to be more data because we have such easy access to it via the Internet – there really is more. This is due to the nearly ubiquitous information-sensing devices that measure multiple dimensions of almost all recordable phenomena – from the weather to each keystroke we make while shopping online. Big Data has emerged as a science to try to make sense of this avalanche of information. The sheer quantity of information, combined with the broad array of available goods and services, leaves consumers with an abundance of choice – but the abundance is bewildering. So how do we choose?

Prominent social psychologists Barry Schwartz and Sheena Iyengar have both written that an abundance of choice can in fact paralyze decision-making. In Sheena’s now famous experiment, consumers who were presented with only six choices of jam bought ten times more than when they were presented with 24 types of jam. Commenting to The New York Times, Sheena said “a refrain has emerged: More is less. That is, more choice leads to less satisfaction or fulfillment or happiness.” So if less is more when it comes to choice, how do we filter the options in a manageable and actionable way? The answer surrounds us: brands.

Brand Choice

Consumer brands are microcosms of exclusion as much as they are inclusion. So to the extent that a brand stands for something, say, innocence or ruggedness – it must also exclude its opposite, in this case, urbane sophistication and delicate refinement. The natural selection of inclusion and exclusion is the first step in narrowing the customer’s choice.

Many of the best brands, however, present a much richer world. They are inspired by a creative vision and animated by ideas or intangibles that imbue them with meaning. The Ralph Lauren brand comes immediately to mind. The “World of Ralph Lauren” is an apt description because it evokes attitudes, values and a certain sensibility – all of which are intangible. Whole Foods Market creates an environmentally friendly, socially conscious, healthy world that you can participate in. These two brands each offer a vision and present a product assortment consistent with that vision. Therefore, the customer chooses the brand, and the brand chooses for them, offering pleasing possibilities conforming to a visionary “world view.”

Exalting merchandise from mere objects to meaningful necessities in a visionary brand world ultimately reduces the customer’s effort and risk of buying. It can also enhance the psychological enjoyment of owning the products due to the symbolic attributes that are associated with the brand. Think of the implied social justice people feel while wearing a pair of TOMS shoes. Or, on the other end of the spectrum, the sense of power and confidence women feel while wearing a pair of red-soled Christian Louboutins. This is not to say that the quality and suitability of products are not important factors in brand choice – they are. But research reveals that the intangibles can represent more than 50% of the brand’s market value, impacting a financial performance dynamic at the core of the business. Since intangibles are so important in influencing consumer choice, they must be revealed physically, expressed and given form.

Brand Experience

And this brings us back to brick-and-mortar retail being at the center of the omnichannel universe. In a digital age, the store experience is largely analog: it is omnisense and multidimensional. The store is the only channel where all the brand manifestations – product, service, merchandising, and marketing – can simultaneously come to life in a multisensory environment, expressing a coherent brand vision. Only the store can deliver this profoundly compelling holistic customer experience.

Let’s go back to iconic Apple. The intuitive seamless and harmonious experience of using Apple products is brought to life in Apple stores. The stores are a subtle and complex integrated operation combining an engaging, knowledgeable staff and the clarity of the store layout. The architecture and design are critical components of Apple’s feel-good success. There is a high level of ambient illumination; ample use of transparent glass; a very limited palette of materials of wood, stone, stainless steel and glass, all designed with clean, elegant detailing. Most importantly, there is an obsessive elimination of anything resembling clutter.

Contrast this to a Gucci store. The staff is discreet and speaks softly. The store design quickly transports you to an opulent, glamorous, seductive world through the use of low-level illumination, highly polished finishes, smoked bronze glass, rich plush upholstery – all enhanced with pulsating music and strategic scent marketing with the occasional whiff of Gucci fragrance.

In both cases, the store architecture and design creates a multidimensional, multisensory expression of the brand. This sophisticated use of stage setting helps the customer decide what to buy and have confidence in that decision.

Brand Triumph

In a world of almost infinite choice, there is no doubt that the other channels of an omnichannel strategy have important roles to play. But they are largely supporting roles. In omnichannel, each channel is, of course, just a delivery mode for branded content and the success of the strategy will depend on suitable product positioned within a relevant and coherent brand.

In retail it is often said that the product is the hero and the store is the temple. But it is worth remembering that the brand is a god.

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