Six Themes Expected from Store Innovation in 2019
Pop-ups are still wildly popular, and retailers are still investing a lot into testing new store concepts and even launching new – and sometimes enormous – flagship stores in a bid to remain relevant to consumers, and in some cases, to get ahead.
Between December 2018 and January 2019, several retailers (brands too) opened new concepts that stood out from the crowd in what they are trying to accomplish. However, as I started pulling these examples together and profiling each one, some common themes became readily apparent – and these are themes that have surfaced before in looking at store innovation.
The trends driving retailers to design stores around these themes will sound very familiar – because they were driving a lot of store innovation in 2018. In addition to focusing on the stores themselves, let’s kick off store innovation in 2019 by outlining what, specifically, to look for in new store designs, and why these are important to retail innovation.
First, a look at this month’s store innovation highlights:
- Carson’s, Evergreen Park, IL. Carson’s is a Bon-Ton brand that was part of the brand’s intellectual property sold off during its bankruptcy. CSC Generations bought the IP, and is in the process of relaunching many of the Bon-Ton brands, starting with Carson’s eCommerce and this physical store in Illinois. The selling space occupies about one-fourth what Carsons did four years ago, but while some of that is from the original owners shrinking the store format, CSC Generations took the radical step of converting an entire floor – about 60,000 square feet – into fulfillment space, leaving a remaining 60,000 square feet for customers.
- Eobuwie, Wroclaw, Poland. An online-only shoe brand in Poland, Eobuwie opened its first flagship store as a showroom without the show – the company provides tablets to let consumers browse shoe images, and then request shoes and sizes, which are delivered out of a warehouse behind the store.
- Eloquii, Soho, NY. Eloquii is a plus-sized women’s brand opening its first physical location. It’s being operated as a temporary location, seen as a test run for a more permanent physical location. The store features events and services like tailoring and style advice, but has a larger objective around enabling a deeper experience for customers.
- Farrow & Ball, Los Angeles, CA. A paint and wallpaper brand, Farrow & Ball has opened a flagship store in LA that is designed to increase consumers’ confidence about wall covering design choices, including a showroom that displays 3-dimensional objects painted in 132 different colors, so that consumers can see how light and shadow change a particular paint color of interest.
- Intersport / Tmall, Beijing, China. Intersport’s latest store concept, in partnership with Alibaba’s Tmall, revels in technology in the store, including VR-assisted shopping and interactive displays everywhere.
- Levi’s NYC, Times Square, NY. Levi’s flagship location in New York is one of its largest, with its entire collection under one roof, including exclusives to the New York area, as well as a substantial tailoring and customization area within the store.
- Naked & Famous, Soho, NY. A brand manufacturer from Canada, the company opened its first physical store in Soho. Like Levi’s, this location offers the brand’s entire collection – the only place to find it all – and delivers a store experience that is more showroom or Bonobos-like, with examples of product out, and store associates happy to pull the right style and color from the back for the customer to try on.
- Nike Dubai. Following closely on the heels of its NYC innovation store, Nike has recently launched a Dubai store that carries forward several of the same elements across both stores. There’s a design-your-own component, a try-before-you-buy basketball court, and community spaces for events and lectures, including a women’s-only lounge area.
- Titici, Milan, Italy. Titici is a bike manufacturer that has created a way for consumers to design their own bikes using 3D software. It’s more like customization than ground-up design, but the Milan store (and others – they are carrying the strategy forward to other stores) is built around enabling consumers with this experience.
There are six themes common across the innovative store concepts mentioned above, and I expect that we will return to these themes over and over again in 2019:
Deepen the relationship – The store’s primary role is not about selling stuff, though that is certainly an expected benefit. It’s about deepening the relationship with the consumer, even if – and maybe deliberately so – that means pushing those sales online, rather than trying to force them in the store. This is an enormous shift in the perspective of the store’s role. Some would argue too extreme – but here are leaders from three of the brands above saying exactly that:
- Eloquii. “When we launched [the Olivia sculpting jean] online, the customer was blah. When we put it in stores — customers requested a basic, more elevated denim — it became the number one selling denim in the store. It made us reexamine how we sell and message online.” – Mariah Chase, Eloquii CEO
- Naked & Famous Soho. “The strongest incentive, said founder Brandon Svarc, is how the physical space serves as a jumping off point to develop long-term relationships with consumers from around the world.”
- Carsons. “We don’t care about those metrics [referring to same store sales],” Mr. Yoshimura [CEO] said. “We care about the store being a billboard for our digital business. It’s a way for customers to experience our brand.”
In-store services – Part of the reason why the store role has shifted so much is because retailers increasingly look for a store to be more than just a selling floor. Of the retail concepts mentioned above, four have invested considerably in dedicated floor space within their concepts that don’t really directly make the store money:
- Levi’s NYC custom tailor shop – 500 square feet of space including 2 direct-to-garment printers. One could argue that this does actually make the store money – these are value-added services that are priced accordingly – but Levi’s didn’t have to perform that service out in the open as part of the store experience. The company chose to dedicate space that could’ve been used to house (and sell) more inventory.
- Eloquii – technical fitting services, personal stylists
- Nike Dubai’s basketball court, to test out Nike gear and women’s lounge area
- Titici’s bike customization
Ecommerce fulfillment / integration – Probably the most extreme version of this is Carson’s, a department store that gave over an entire level in the mall to fulfillment, whether click & collect or eCommerce fulfillment from store. But the reality is, if you don’t expect a store to be there to sell stuff, then it better use that space in some fashion to deliver value to customers and to the company. Fulfillment is not the most efficient use of space that is typically high-rent selling space, but even in the case of Carson’s, there is a bit of a glut of that high-rent space, and if you can negotiate the rate for fulfillment over sales, then it will only make this new store equation more profitable.
- Carson’s converted an entire department store floor into fulfillment.
- Eobuwie, a Polish shoe company, opened a store with no shoes – they’re visible on a screen, and picked and delivered by a warehouse behind the store.
- Naked & Famous also operates showroom style, with a “menu board” of style options and employees available to pull inventory to try on in fitting rooms.
Rich behavioral data – Every CEO quoted in all of the articles cited above noted the importance of collecting data about store shoppers, and using it to better understand the relationship between online and in-store.
- Nike – app and in-store traffic, as well as loyalty members’ local preferences. Nike has been using this increasingly across its store base, with Nike by Melrose as one of the first places to bring this relationship to life. NYC and Dubai continue expanding these connections.
- Eloquii – marrying local eCommerce preferences with in-store behavior. Eloquii CEO Mariah Chase expressed surprise at some of the linkages – and disconnects – the company detected from having access to both online and in-store behavior, even in the aggregated sense. Some products that weren’t selling well online were going gangbusters in stores, which suddenly turned a product problem into a product information problem.
- Intersport/Tmall – using VR and smart mirrors to capture consumer behaviors in stores, tied into Alibaba’s analysis on the backend.
Events / education – Again, retailers are making the decision to give over store selling space to the kind of activities that are not themselves direct drivers of revenue. For some retailers, like Eloquii, this is still an experiment. But it is rare to see a new store that does not have some component of experience for customers that centers on education or community.
- Eloquii’s Beauty & Brunch Sundays, featuring “self-care events”
- Nike Dubai’s Nike+ Training Club sessions, athlete talks, artist sessions, stylist workshops
- Farrow & Ball offers special wall treatments and magnetic tools that help consumers “see” their color choices in different finishes
Exclusives for the locale – Retailers are not neglecting the sales role of stores entirely. A strong theme from 2018 that should carry forward to 2019 is offering exclusives that can only be found in a specific location, or offering a store as the only one of its kind in terms of assortment. That’s easy to do when you’re talking about a flagship store in New York, for example. It remains to be seen if this will carry over to locations in smaller cities. But expect some sort of assortment “perk” to be a part of almost any store opening of note in 2019.
- Levi’s NYC features exclusive New York-centric products
- Nike Dubai offers NikePlus members exclusive experiences and in-store events, and a free concierge delivery service
- Naked & Famous, in opening their first independent brand store, has also created the only store to house the brand’s entire collection
- Farrow & Ball’s flagship Los Angeles location features 132 painted objects that represent every color and every finish of that color that the brand carries