Retail’s Future: The Store as Entertainment

When was the last time you went to a store and felt happy just by being there? Remember the movie, “Breakfast at Tiffany’s”? In it, Holly Golightly lovingly looks into the Tiffany store window on Fifth Avenue and says “… nothing very bad could happen to you there …” In today’s digital world, how can stores create the feeling of engagement and excitement that Holly felt?

Audrey Hepburn
Source: Pixabay

When was the last time you went to a store and felt happy just by being there? Remember the movie, “Breakfast at Tiffany’s”? In it, Holly Golightly lovingly looks into the Tiffany store window on Fifth Avenue and says “… nothing very bad could happen to you there …” How wonderful to feel that about a store experience! Whether feeling special or entertained or valued, stores that make you feel that “nothing bad can happen” have a special place in the hearts of their customers.

In today’s digital world, how can stores create the feeling of engagement and excitement that Holly felt when looking at the Tiffany’s store window? Our surveys show that customers are still interested in shopping at stores, but the store experience they value today is very different than what they valued in the past. And their expectations of the future will be very different as well.

In the “Synchrony Financial Future of Retail Study,” when asked about the most exciting ideas for the future, 55 percent of consumers surveyed picked “an in-store experience that entertains me” as one of the top three most exciting ideas. And according to the “Synchrony 2016 Affluent Study,” about 70 percent of shoppers say they would rather spend money on experiences over spending on things. The message is clear — shoppers want to be entertained when shopping.

Below are some new shopping formats that we may see in the coming years as brands respond to this sentiment:

  • Experiences merged with shopping. Various categories are now being added to the retail experience. Examples include coffee shops, cafés, music experiences, bars or complimentary products or services inside the store. It’s a big reason why local “markets” are making a resurgence across America. Some call it “retail-tainment.” The retail experience can be a place to gather or a place to just relax and have fun.
  • Crafts and learning within the store. Retailers can let shoppers see how a product (like a leather belt) is made from scratch. While this experience is already being used, it may become more mainstream in the future.
  • Retailer apps that are interactive and combine the digital and store experience. For instance, a customer can pick out clothes and reserve a dressing room right from the retailer’s app. This is both a timesaver and a delighter.

Ryan Mathews, a Futurist at Black Monk Consulting says,

“So, the question then is, if you don’t need to go to a place to get stuff, what do you need to go to a place for? And that’s kind of what we call higher engagement things: the experience, advice, consultation, fun. It’s moved beyond transactions into real relationships.”

So, looking to the future, the bricks-and-mortar store may no longer be a place to just pick up a sweater or a pair of shoes. It may be a place to meet your friend for a drink, learn to mix a cocktail and pick up that cute scarf that goes perfectly with the pants you’re wearing. For the Holly Golightly of the future, that could be the next “Breakfast at Tiffany’s” experience.

Note: The views expressed in this blog are those of the blogger and not necessarily of Synchrony Financial.

What the Hell Is Happening to Retail?

Retail is having a moment right now. Since the calendar flipped to 2017, we’ve seen more bankruptcies than all of last year. What’s going on?

Retail is having a moment right now.

Since the calendar flipped to 2017, we’ve seen more bankruptcies than all of last year, including some consumer electronics chains like RadioShack (again), hhgregg and Sears. Just recently, hhgregg announced it was going a step further, closing all of its remaining stores and liquidating all products.

The doom-and-gloom news has, of course, extended well beyond the CE industry. Some major stores — JCPenney, Macy’s, Payless, Lululemon, Urban Outfitters and more — have all announced either store closures or seen their stocks tumble to new lows. Ralph Lauren even announced that it was closing its flagship Polo store on Fifth Avenue in New York.

Mind you, all of this is happening at a time when the economy is very much out of the recession phase, consumer spending and confidence are up and the economic outlook has been nothing short of rosy.

So What Gives?

So what the hell is going on? Is this the end of retail? Is the apocalypse upon us?

The answer to any of those questions, as you’d expect, isn’t so straightforward.

Yes, this is a very dark time for retail. A lot of things are up in the air. Brick-and-mortar stores are facing some incredibly difficult times. But that doesn’t mean the entire industry is about to go kaput.

The Atlantic recently published a deep dive into the current state of the retail industry, and its explanation couldn’t have been more accurate — it’s probably the closest thing to a complete answer we’ll be able to find. The analysis points to three main causes for the “Retail Meltdown of 2017”:

  • The rise of online shopping,
  • the existence of faaaaar too many malls,
  • and a major shift in how consumers are spending money.

All of those make perfect sense. No industry understands the impact of online shopping better than the consumer electronics space, which has seen billions of dollars in business go to Amazon. Since 2010, the e-commerce giant’s sales in North America have quadrupled from around $16 billion to more than $80 billion last year. And in 2016, Amazon’s growth alone accounted for more than half of all online sales growth.

There’s also the mobile wallet affect. Since 2010, The Atlantic pointed out, mobile shopping has grown from less than 2 percent of digital spending to 20 percent last year.

As for the declining footprint of malls, there are roughly 1,100 in existence today. That’s down from the peak of about 1,500 (all of which were built between 1956 and 2005). So nearly a third have closed in the last decade. Further, while all of those malls have closed, not a single new one has been built.

Whereas malls used to serve as the cornerstone of local communities, the era of expansion resulted in an oversaturation of malls. When you take into account the number of malls and outdoor shopping centers throughout the U.S. — which brings the total up to more than 7,500 — and break it down by “gross leasable area,” as one research firm did, the U.S. far outpaces the rest of the world.

shopping center study

Lastly, The Atlantic hit on consumer spending trends. Here, it notes that Americans have shifted from a materialistic mindset to one where we’d rather spend money on going out with friends for food and drinks. A fair point.

A Shifting Retail Paradigm

The message in all of this is really geared toward the larger national retail chains. The downturn in physical retail square footage goes to show that, in the era of omnichannel retail, there’s no need to expand your brick-and-mortar footprint in order to boost sales. Rather than needing more locations, companies need a stronger e-commerce strategy. Easier typed out by a blogger than implemented by a retailer.

But what about the smaller stores?

If anything, all of the mall closures are positive for the specialty guys out there. With less competition in those local markets, consumers who still prefer to shop in-person are more likely to turn to you.

But that doesn’t mean you can continue to operate as you always have. Just like we wrote about in our analysis of Staples’ new strategy to drive foot traffic, local shops need to continue to drive home in consumers’ minds why their stores matter. You have to find that personal touch, something that separates you from the national chain, and can entice consumers to come walk through your showroom. It doesn’t have to be a co-working space. Maybe it’s free delivery if they live within so many miles, or same-day installation for orders over a certain price threshold. Heck, maybe it’s even just outstanding personal service from your salesfloor team.

Retail isn’t going anywhere. There’s always going to be a need for a physical place where people can come in and experience a product. The only difference today is that consumers need a little more enticing to get out from behind their computers. The onus is on the retailer to prove its worth in its communities. If you can do that, the “Retail Meltdown of 2017” will mean absolutely nothing to you.