It’s no secret that the retail industry is changing. Over 4,000 legacy retail stores locations – including Payless ShoeSource – are expected to shut their doors this year alone, and Sears is on the endangered list. Simply put, customers’ tastes and needs are changing. In 2006, customers under 25 did more than 76 percent of their spending with “traditional retailers”. That number dropped to around 61 percent in 2016.
Today, when you can go online, place an order, and Amazon can simply deliver it to your doorstep that day, at least in some cases, consumers are prioritizing experiences. They need something more than a brick and mortar location or a specific product or service to attract them to a store. Customers are also beginning to expect more out of their retail experiences. On average, 86% of customers will pay more for better customer experiences and 73% of customers indicate that customer experience is an important factor in purchasing decisions.
Even here in Chicago, home of the iconic “Magnificent Mile,” the stretch of Michigan Avenue lined with high-end retail and dining, a lot of prominent companies are changing the look, feel, and function of their brick and mortar locations to meet new demands from customers.
Chicago is a city with a rich history in retail, and innovation in the retail space has always been a part of the city. Sears launched its massive stores and products lines, and let customers order a huge variety of products—including houses—out of their iconic catalogue. Montgomery Ward began its dry goods and mail order business in the city. Now, we’re spring-boarding into a new era of retail innovation. Both companies, with roots in the mail order space, have transitioned into the online space.
With more people shopping online, it now takes more to actually get customers offline and into physical store. PSFK, a leading retail and business intelligence platform that helps brands and retailers and their partners optimize and innovate the customer journey, found that over half of the 400 retail executives surveyed for its “Future of Retail 2018” report plan to allocate a significant portion of their budgets to “in-store experiences” by 2020. With that in mind, Sears is testing smaller format stores called “Sears Home and Life” – a fraction of the size of its traditional stores – that will carry products for the home, including appliances.
“The brick and mortar portion of our business has significantly changed,” said Troy Opgenorth, Manager, New Store Development at Kohler Co., the well-known manufacturer of sinks, faucets, and toilets. “Today you also need to have a successful online presence to be successful.”
Recognizing this, Kohler transformed many of its physical locations into showrooms, in which customers can touch and feel the faucets and appliances to help them decide which particular model they want for their homes.
“As much as consumers are quick to purchase online nowadays, people still want to make the big purchases based on seeing and touch,” said Brian Goehle, Kohler’s Manager of Architecture and Interior Design. “The big focus of our stores is presenting products that satisfy our brand and meet customer expectations.”
As much as consumers are quick to purchase online nowadays, people still want to make the big purchases based on seeing and touch.
Goehle and Opgenorth acknowledge that any given sale is potentially split between Kohler’s physical and online stores.
“Making decisions in the plumbing business has required a high-touch and multiple-visit selection process,” said Goehle. “The stores provide that opportunity.”
Comcast’s Xfinity Stores are also interactive and hands-on.
“Our stores are more like technology innovation centers. Customers can come in and engage with us in meaningful, powerful ways, and really get to try our products firsthand,” said Chris Smith, Comcast’s Greater Chicago Region Vice President of Sales and Marketing. “With our retail space, we’re taking our products and demonstrating them in ways that customers would use on a daily basis.”
The open-plan stores include space for customers to get hands-on experience with phones, bar tops where employees can engage with customers, and a “living room” set up complete with couches and televisions equipped with the company’s Xfinity TV X1 Entertainment Operating System.
“The more we can remove barriers in the design and get closer to the customer, we think the more meaningful and thoughtful we become with the customer,” Smith said.
This open store design wouldn’t work without thoughtful and engaged customer service. Mobile point-of-sale options allow employees to assist customers in personal ways, as opposed to being trapped behind a counter.
“Our retail spaces have really evolved and are focused squarely on the customer experience,” Smith said.
The focus on customer experience is spreading. It’s not just limited to traditional retail, many restaurants are also making their spaces more “experiential” places that draw customers in.
The more we can remove barriers in the design and get closer to the customer, we think the more meaningful and thoughtful we become with the customer.
“When I build my retail spaces, I build them with human connection first and foremost,” said Matt Matros, the Founder and CEO of Protein Bar and the Founder of Limitless Coffee, two successful Chicago restaurants. “I design restaurants to be a place where people can get a break from their world.”
Matros says experiential retail is all about “attracting more customers,” and he’s angling to attract “people who want to share.” This includes making the food itself all the more visually appealing.
“People are taking more photos of their food before they consume it,” he said, laughing. “That’s not something that we ever had to consider before.”
While the retail space is changing with each new day, these methods could help traditional brick and mortar business draw more customers in with experiences. While we see bleak headlines about “the retail apocalypse,” the industry is far from dead.
“Retail is not dying, it’s evolving and changing,” said Smith. “Companies that adapt will be successful.”
“Our Xfinity Stores get consistently high scores from our customers and have been very successful for Comcast from a business perspective,” Smith added.
This article was brought to you in partnership with Comcast.