State of Retail: Why We Must Embrace Hospitality

This post is part of a series in which LinkedIn Influencers analyze the state and future of their industry. Read all the posts here.

Next month, Sears will close its flagship Chicago store. It’s the latest sign of the struggling retailer’s slow decline and could indicate that 2014 will be the year of an industry-wide shakeout. Yet, I believe the state of retail is strong for those who embrace the core values of its past and future: Hospitality, time, and connection.

What’s Really Behind Retailer’s Current Struggles?

Sears isn’t the only American retail icon that is facing challenges. In the past two months, J.C. Penney, Macy’s, Staples and Radio Shack have all said they also will close stores and lay off employees. Add in Chapter 11 announcements from mall mainstays, Sbarro Pizza and Hot Dog on a Stick, and you might think we’re approaching retail’s end times.

The chart below from ChainLinks Retail Advisors dramatically illustrates the impact of recent closings on U.S. shopping centers, and the seismic changes roiling retail today. According to ChainLinks, “nearly 140 million square feet of shopping center space was built in the U.S. between 2002 and 2008. Since then, we have seen only 20 million square feet of new product delivered.”

Many believe explaining this chart is simple: as more consumers shop online, fewer are heading to the mall, lowering overall demand.

What’s causing so many retailers to fail is more basic. Too often, they don’t deliver the three core values that have defined retail for generations.

The Three Things Outstanding Retailers Deliver:

1. Hospitality. Ask yourself: What makes you shop in a physical store rather than simply make an online purchase? It’s the experience. The most successful retailers are embracing hospitality, and providing the small details that make guests feel welcomed, valued, and respected.

We all have our favorites. Here are a couple of mine:

• See’s Candies. Sparking clean, black and white shops recall Mary See’s original home kitchen. Loyalists love See’s because of the great, quick service they provide—and the fact that they are generous with their product. You’ll never leave without a handful of samples.

• The Container Store. CEO Kip Tindell practices what he preaches. His company pays 50 to 100 percent above industry average because he knows investing in his team translated into a great customer experience. Their service culture is forged through employee development and defined by an employee commitment to outstanding customer service.

• Starbucks. Starbucks creates an immersive, welcoming experience in a small space. Customers go there and surf the Web for a couple hours while nursing a latte. Starbucks doesn’t throw you out – they make you feel comfortable and invite you to stay.

Beyond the household names, there are thousands of smaller retailers that are thriving because of their unique experience. We all know that feeling of discovering a new boutique shop that make you just want to be there, shop, and ultimately return to in the future.

2. Time. Conventional wisdom says the most convenient way to make a purchase is at the click of smartphone button. However, physical retail can save time in ways that online and mobile cannot.

• Apple Store. Their knowledgeable floor associates provide a richer, more convenient, more efficient experience than going online and trying to figure it out for yourself.

• Nordstrom. The standard bearer for great customer service never stops searching for ways to improve customer loyalty. From personal shoppers to mobile point of sale, they continue to set the benchmark for exceeding expectations.

• Square. While not a retailer, Square is revolutionizing the way physical retailers and customers connect. In addition to reinventing the receipt, they are simplifying the purchase process down to just saying your name at checkout.

The greatest luxury for today’s customers is time, not money. Well-executed retail shows customers their time is valued – and that will win committed customers.

3. Connection. The best retailers embrace being merchants, recognizing that shopping is a social experience. They are creating heart share, not just market share, which in turn drives value.

• Toms. When CEO Blake Mycoskie opened up Tom’s flagship store in Venice, California a couple years ago, it was a smash success. In part, because Mycoskie had created something “closer to a community meeting place than just a retail location.” Their “One for One” movement enhances that feeling.

• Nike. Nike’s running stores are designed with the community in mind—from commissioning local art, to providing lockers for local runners, to hosting neighborhood run clubs.

• American Girl Place. Transports customers with engaging elements: a hair braiding bar, high tea with your doll, opportunities to attend events, dress like your doll and be a part of the American Girl community. It may sound absurd to some, but that is the cornerstone of their success.

Retailers should focus on giving their customers a sense of ownership, so that they aren’t “going to the store,” but “going to my store.” And, when customers feel at home, they stay longer and spend more.

What Do You Not See Coming?

Sears was once America’s largest retailer—until it wasn’t. I’ve often asked myself: how could Sears build the tallest building in the country and even from that lofty vantage point never see Wal-Mart coming?

In 2014, I think retailers should also ask themselves that question: what do you not see coming?

The answer may have less to do with watching out for the next new technology and more to do with returning to retail’s core values.

Are your customers demanding more when it comes to providing hospitality, valuing their time and creating connections?

Photo: See's Candies, Apple, Toms

Want more insight about this industry? Follow our Retail channel.

Enjoyed this post? Read what other Influencers had to say:

? Bill McComb on the State of Retail: Stores Become Showrooms
? Neil Blumenthal on the State of Retail: Jobs in Unexpected Places
? Ruslan Kogan on the State of Retail: Competitive Advantage through Efficiency, Not Pricing