the new consumer demands new retail concepts · Kega

Written by Admin | 18 05 2017

The new consumer demands new retail concepts

The new consumer demands new retail concepts
We already read it in the previous blog post: inside the mix of efficiency, experience and expertise, retailers are in search of new relevance with ‘on-demand consumers’, who are shifting their store expectations to be more and more in line with their digital experiences. Formula innovation is essential in order to survive. But what store concepts will determine the face of retail in the coming years? In this chapter we’ll be putting the spotlight on a number of the biggest trends, illustrated with fascinating cases.

Time Saving vs Time Spending and Money Saving vs Money Spending
In essence, it’s actually quite straightforward to find your relevance for physical retail footprints. It all comes down to the combination of time and money. Here’s the question you should be asking: can you, on the one hand, meet the need of your shoppers to save time (run-shopping) or, on the other, their need (but not the necessity) to spend time somewhere (fun-shopping)?
At the same time, there’s this question: do they visit you because they

want to keep money in their pockets or because they enjoy spending money?
It’s these basic questions your concept needs to be able to answer in order to find genuine relevance. If you find yourself suspended somewhere between the two, you need to change course drastically!

The great disruptors: “clicks to bricks”
As has been the case in recent years, the great retail disruptions will have to come from brands that once started out as online pure players. Brands and retailers like Rockar, Made.com, Pro Direct Soccer and Warby Parker already came up with innovative, disruptive store concepts, but it’s Amazon that is really proving to be a fundamental disruptor of global retail, both digital and physical.

Frictionless retail will be the new standard
The one term that is absolutely essential in this story and that will be the new standard of retail for years to come is frictionless retail. Frictionless retail is all about eliminating every action (of the consumer) that does not have a positive added value for the customer experience, with Amazon Go being the most illustrious example. It is the superlative of omnichannel retailing, in which all touchpoints are seamlessly connected to one another, creating an ultimately smooth shopping experience, without any dissatisfiers. More about this subject in our future blog posts about technology.

Blurring takes on the most diversified shapes
Blurring has come a long way since its beginnings of simply pouring a cup of coffee or glass of wine in a fashion store. Today, it’s made its way into all branches of retail. In the Netherlands we’ve seen great examples of a denim store that bakes its own bread (The Bakery), a lifestyle store

that doubles as a restaurant, coffee bar, hotel, winery and workshop (Daens in Utrecht), and even an office, espresso bar, hairdresser and furniture store in one (Bouncespace, Amsterdam). Retail spaces are increasingly becoming ‘3rd Places’.

The trends and concepts that will determine the face of retail
1. Hyper convenience vs Hyper experience
These two trends are each other’s direct opposites and display the extremities of retail like no other concept.

1a. Hyper convenience
Store formats that serve no purpose other than to complete transactions, returns and additional (omnichannel) services as quickly, effectively and smoothly as possible.
Take Argos on Tottenham Court Road in London: originally an electronics store, but now a hub that serves as the centre point in the omnichannel fulfilment process in which convenience and time saving are key.
We’ll also be seeing a lot more retail ‘spaces’ whose primary purpose as ‘storage hub’ is to ensure superfast delivery within the catchment area of the retailer, often in collaboration with local logistics companies, or with networks such as Uber, Postmates, Deliveroo and the like.
In a recent study it was revealed that 80% of shoppers want to have same-day delivery and 61% percent want to have their package delivered even sooner (within 1-3 hours). To make this happen, these ‘storage hubs’ are vital.

1b. Hyper experience
On the other side of the convenience concept spectrum is hyper experience: store formats where you often stand around wondering if

they’re selling anything at all and where the operation hardly seems important. Concepts that don’t take the transaction, but rather the experience to the next level.
From Samsung 837 (described by Samsung itself as a “cultural destination, digital playground and Marketing Centre of Excellence”, where you actually can’t buy a single Samsung product) and the high-tech, hyper-adaptive concept of Pro Direct Soccer in London, to the ultra-artistic retail expositions of Galeria Melissa and Gentle Monster, these are store formats that stimulate, inspire and seduce to the max.

2. Super Service & Expertise Stores
These store concepts elevate service and expertise to a higher platform. The distinguishing cornerstones of these concepts are extensive advice on the products and services, practical assistance, human hospitality and the option to experience the products under the guidance of experts in the field.
American company Pirch, located in NYC, is an excellent example. It’s a unique experience centre for kitchen, bathroom and other household goods where customers – who spend an average of 2 hours and 11 minutes in the store – are given all the space they need to test and experience every product. Chefs prepare delicious meals, customers can attend workshops and can even take a shower or bath if they want. In combination with comprehensive warranties, services and a lowest-price guarantee, basically anything goes at Pirch to create a unique customer experience.

3. Mega mass retailing: shopping ecosystems
Big, bigger, biggest. The world’s biggest retail giants such as Ali Baba and Amazon, but also Apple and Google (Home) will be expanding their reach further and further and will manage to navigate their tentacles into more and more offshoots of our shopping lives.

This creates completely frictionless shopping ecosystems that are able to look after all our shopping needs.
The biggest pioneer in this area has to be Amazon. With its Bookstores, Go concept, Prime services and subscriptions, Prime Air drone delivery, Dash button and Echo, this company – particularly in combination with its incredibly smart big data and AI applications – is the one to watch.

4. The power of the niche
Blossoming in the shadows of the gigantic retail behemoths is a countermovement: that of the niche retail. Unique small concepts that go for extreme specialisation or one-of-a-kind exclusivity.
Take a look at the secretive World of Niché in New York (according to insiders linked to the equally singular Kith NYC). This sneaker store can be visited by appointment only, offers just 3 models in extremely limited editions and customers never know beforehand what the sneakers look like or even what they cost. Taking pictures is strictly prohibited!
On the other side, “niche” can also mean an extreme specialisation: the focus on one single product (type), like Kaktus København: a super-trendy store that sells nothing else but cacti. Niche stores are meeting an ever-growing need for small-scale retail and unique discoveries.

5. Hyper local // Glocal
Following on from the niche focus, there’s the focus on an extremely small catchment area to create maximum local relevance, preferably in combination with the local hero concept. Global brands such as Aesop and Camper give every new store a completely different appearance focused on the local environment and preferably designed by local architects. The humbly sized city garden centres Wildernis (Amsterdam) and STEK (Rotterdam) tailor their product range specifically to the demographics and living conditions of the local community (apartments with balconies), while Korean convenience store GS25 has cleverly tweaked its 1+1 formula to cater for the local target market of single-person households. More on this in Paragraph 6: “On the shop floor”.

6. Subscription services
An interesting combination of convenience and surprise are the popular subscription services. Still mostly known from innovative food delivery boxes like HelloFresh or the make-up box Birchbox, we can see this form of retail really taking off as soon as other, more day-to-day products, also start being offered: from cat litter to razor blades and from coffee capsules to nappies.
Can the consumer save time and/or money? And is it a product group that doesn’t fall inside the cluster of retail concepts shoppers enjoy spending their time on? Then get used to the idea of a (monthly) box service being delivered in the very near future. Especially now with the launch of Amazon Subscribe & Save.

7. Market places
There’s no way around it: online market places (Amazon, Alibaba, eBay, Etsy) are here to stay. Bol.com once started out as an online electronics store and bookstore, but now sells an impressive 25% of its range through its own market place, and this share is expected to rise up to 50% in the coming years.
Contemporary market places will be gaining popularity offline too, for example through blurring concepts where several shops come together to work under one roof.

8. True to the craft
Makeries and craftsmanship are also making a comeback to the shopping streetscape. From complete (end) production and assembly to customisation and repair. Read Rene Spaanderman’s column and the Retail Bite about Nixon for more about this trend.

9. Pop-up
A concept that popped up during the economic crisis when empty, expensive retail floor space needed to be temporarily filled, the pop-up store is gradually reaching maturity. Whether it’s retailers wanting to briefly explore new territories, brands aiming to add strength to their name through short-term retail visibility or the launch or quick exposure of a new product, pop-up retail won’t be leaving our streets any time soon.

The bottom line
New retail times call for new retail concepts. In the coming years, the focus will be on “experiental retail”, unique experiences that make sure that we, the shoppers, want to spend time and money. There’s also the strong growth of time & money saving concepts, which aim at making our lives easier and cheaper. The third concept is the increasing dominance of shopping ecosystems, like Amazon. Stuck somewhere in between? That’s not where you want to be. Build your concept around a well-thought-out mix of efficiency, expertise and experience and you’ve laid the foundations for a powerful retail formula.

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