GlobalShop, the retail design expo, had its three-day extravaganza in Las Vegas the middle of March. Like Euroshop, its continental counterpart, it is a gathering of brick-and-mortar assets: flooring and mannequin companies; fixture and signage manufacturers; point-of-purchase display companies … and more. There are receptions, cocktail parties and lunches, and lots of meetings to imbibe in adult beverages. VMSD and Design:Retail, the two trade magazines covering the industry, put aside their differences and celebrated the occasion enthusiastically. Still, however happy the gathering was, it is hard to avoid the dark clouds looming on the horizon.
Traditional Retailers Are Increasingly Marginalized
American retail is over-stored. The A malls may be doing well, but B and C malls are suffering. Most of the big-box chains either are, or will be shedding under-performing locations. OfficeMax and Office Depot, the number-two and -three players in the Office Product Superstore (OPSS) category, have merged; the combined chain will shrink. Staples, the OPSS leader, has announced a series of store closings as the commodity side of the business migrates to e-commerce. As supply-chain management improves, many big-box chains will look to shrink their footprints. They can either continue to sell the same number of SKUs, or offer a better-curated selection in a smaller store. And what will they do with the excess space?
Sears and JC Penney are question marks. At what point are Sears’ vendors going to stop worrying about when they get paid and escalate to start rejecting orders? Kmart’s urban locations may be doing well, but the parking lots in suburban locations are frighteningly empty. No one in retail wishes anything but the best for JC Penney, but even the best is going to mean closing marginal properties. Whether that happens in or out of bankruptcy court is the topic of back-room conversations at shopping mall companies and key suppliers.
Walmart sales are flat as their core customer has yet to recover from years of recession. Last weekend at my local Walmart, I reported a very dirty men’s room to the store manager; she shrugged her shoulders and said that since they don’t have a maintenance person working Sundays anymore, the cleanup would have to wait until Monday. Lower-middle-class wages are stagnating and this level of consumer spending power is distinctly lower than it was 10 years ago. These customers have new costs like mobile phone bills and Internet access that are necessities and non-negotiable. Connectivity has joined Maslow’s Hierarchy of Needs. Every hard earned dollar that is spent on a mobile phone bill is no longer available to the coffers of Walmart.
Target has faced multiple public relations disasters and its Canadian expansion is troubled. Some of it is just bad luck, some of it was bad judgment, but the net result is equally damaging. The photoshopping of young Target models’ thighs went viral fast. Same-store sales are down. Can the chain recover the “kwell” factor that kept customers interested? The problem is shared by an elder generation that gets lost in super big-boxes and a younger generation that is questioning the need for big- boxes in the first place. Where are these Target stores? Target City has finally stepped into underserved urban locations, but getting back to higher ground is going to take time. Credit card theft and identity problems are only going to get worse. Regaining customer trust will be delayed by changing enterprise technologies, which will be very costly, albeit very necessary.
Macy’s is no longer describing itself as a department store, but as a retailer willing to sell you stuff any way they can. It is increasingly data-driven, propelled by the ability to collect information more easily. Much of that effort to zero-in on the customer is laudable, but, strategically, it is about backing into the future rather than shaping it.
Who’s Designing the Store?
Where is the creativity and invention in 21st century retail, especially in North America? The industry has not changed much in 10 years despite roll-ups and consolidations. Trend forecasting and services that report on retail innovation have proliferated. Yet much of the retail point-of-purchase and fixture industry is sales driven. Sales relationships and compensation structures are commission-based. Investing in research is seen solely as an objective, quant-based give-me-proof-that-someone-looked-at-this-sign-or-display and then went to buy the product. Investment in marketing insights is not fueled by the need to better understand what people are doing or how they’re absorbing information. What’s missing is the ‘why’ stores should conceive/build/position in-store elements.
And that brings me back to GlobalShop.
The retail design industry has a dirty secret; a remarkable number of designer prize-winning locations close two years after they open. From the E-Trade Store on Madison Avenue to the Barbie Building in Shanghai, all have been shuttered. Yes, we can reward retail’s willingness to experiment and applaud stretching the envelope with cutting-edge design, but the proof of the pudding is in winning victories, not beauty contests.
Isn’t it interesting that architectural photography is always done when the spaces are empty? That’s because many of our brilliant award-winning designers are more interested in creating high-buzz, notice-me designs than in dealing with the more mundane realities of creating a functional space that works. They design stage sets, not human-scaled dynamic environments.
The retail design industry is desperately looking for a better intersection between art and science. With all the new big-data engines, the question is, how do we process that information and actually put it to practical space-and-place use. If global retail is going to prosper, it has to be answerable to a human needs-based higher truth. If you are Cartier, Hermes, or Ralph Lauren on Madison and 72nd Street you answer to a different set of design gods. Not so true with Sephora, Chico’s or 7-11.
Most stores and store fixtures have a minimum five-year lifespan. That’s also the measure of the depreciation schedule for retail investment. It isn’t how good something looks the day the store opens, but how well it lasts. Ultimately, great retail design needs to match the store’s operating plan. For most merchants, the true test isn’t how cool the customer thinks the interior design is on the first visit, but their willingness to come back again and again.
Honestly, great store design is highly complex, combining aesthetics and sensuality with utilitarian functions. It has to stay clean. It needs storage. It also needs to seduce the store manager and associates into loving the space, so they perform at high levels in a pleasing place.
Great store design is also a balancing act. Designing profitable traffic patterns and navigation routes combines science and art. Any location where the typical customer visits fewer than every two weeks needs to pay careful attention to controlling how the customer orients herself. Great store design intends for people to be deliciously lost, not just lost. There’s a formula to traffic patterns based on human behavior. Most stores work better with a counterclockwise circulation pattern. Why? We hold things in our left hand and interact with our right (sorry, southpaws). And there are many other subtle design tactics that inspire customers to purchase. Sense-marketing is powerful, particularly with strategic elements of light, sound, smell, touch and taste.
Effective store design is subtle and based on how people shop and buy, not simply on creating a divine temple to the brand. Think about how the place is to be used and then plan the physical space around those needs.
Give the design good bone structure first, and then make it pretty.