Without a doubt, the retail industry has been facing extreme pressure recently. It seems like we hear of store closings every other day, and 2017 is on track to feature the largest number of closings ever. Brands from nearly every category seem to be affected, with fashion hit hardest. Many point to the rise of e-commerce eating into retail, which could very well be the case. When digital options offer convenience, nearly infinite selection, and free shipping/returns what purpose do retail stores have now?
It’s a question that has blindsided retailers new and old. As businesses recovered post 2008 recession, rents have increased in recent years putting pressure on retail to perform financially. While the traditional yardstick of retail has been revenue per square foot, that suggests the only purpose of retail is to transact. That metric assumes everyone who walks in knows what they want and is prepared to buy, but we all know that’s never the case. How many times have you responded “just looking” when an eager sales person has approached you? For every customer that’s ready to buy, there are dozens, maybe even hundreds who are looking for something else besides product.
Consumers have too much choice today, and they really need to know why they should visit your store. They want to know what’s different, what’s special and whether it’s where they want to spend their hard earned dollar. What does this mean for retailers? Your retail front is a venue to articulate your brand’s values in person and recognize that your customers have varying needs. Brands that understand this have designed their retail spaces with different zones, satisfying the gamut of customer needs. They make everyone comfortable walking in, no matter the reason.
So who is doing this well? If you walk into an Apple Store, there is no sales pressure. In fact, the majority of the store is setup for customers to try things out, talk to experts at the Genius Bar, and even learn how to use their products in an auditorium-like setting. Their newest store in San Francisco even has outdoor space to simply hang out at. And how do Apple retail stores perform? An average specialty fashion retailer does around $400/sq ft. Compare that with Apple whose stores do over $6000/sq ft annually. Most recently, they launched “Apple Today” a daily events program that invites creative professionals to speak at Apple Stores and help customers get the most from the Apple ecosystem.
Another brand that gets it is cycling specialist, Rapha which makes and sell high end cycling gear. They have completely rethought what it means to have a retail presence, artfully blending key elements of cycling culture together with retail and community unlike any other For starters, they call their stores “clubhouses,” suggesting their customers are part of a community of passionate cyclists. Each clubhouse is located in a part of town that is friendly for cycling. They all feature cafes, an integral part of many cyclists’ rides — and for curious shoppers looking to see what the brand is all about. To keep people coming back, they host free weekly guided rides beginning and ending at the clubhouses and screen cycling races for fans. Having visited a half dozen of their clubhouses, I estimate that over half of their space is dedicated to free or low-cost activities. A customer new to the brand may not buy a jersey the first time they visit, but after a few visits for coffee or rides or events, they very well might. The value Rapha offers through its retail presences is far more than just a quick way to buy its products.
Club Monaco recognizes that to become a lifestyle brand, you really need to deliver on that promise. Realizing their customers are sophisticated, they sought out ways to complement their products with other lifestyle brands. Their Fifth Avenue store in New York exemplifies an understanding of their customers with an openness to collaborate with others, offering up valuable real estate to coffee purveyor Toby’s Estate and Strand bookstore within their store. These brands help bring in foot traffic on a more regular basis, but also complement Club Monaco’s main offerings. Within the store itself, the women’s upper level has an airy feel, while the men’s lower level has a distinctly different feel, like a library or den.
The Fifth Avenue Club Monaco store features two entrances: one that leads directly to its retail offerings, the other that leads to a coffee shop, book store and then to its retail offerings. The latter is a “soft” entrance that brings in customers who may not intend to shop, but end up doing so because they’re already there.
Customers are welcome to hang out a this mini version of the Strand Books.
The lower level of Club Monaco is catered towards its male audience in every way.
If you are a retailer, it’s time to rethink how to best utilize your footprint. Consider the mindset of your customers and develop parts of your store to reflect those needs. Think of ways to bring customers together around common interests, or even better, activities. The wider the range of activities that align with customers’ aspirations and lifestyles, the better positioned you will be to convert foot traffic into paying customers.