The future of the physical store

In his first guest blog for Nicholas Alexander Executive Search, veteran retailer David Kohn considers what stores are now about in an age of e-commerce and multichannel retailing.

Back in the distant past, in my first job in retail, I encountered a marketing director who was extremely bright and rather arrogant but rescued himself by being very funny. I remember him telling me when I started that there were only three things that mattered in retail – “location, location, location… and me.” His joke aside, he was reflecting the truism of the day, that if you put a shop in the right place and managed to keep your shelves well-stocked you were already well on the way to success.

Obviously, things have changed somewhat since then. Physical stores are largely no longer about convenience, instead they’re about … what? There’s a vague concept of experience that gets trotted out, but what is it and what is the future of the store? Indeed, is there a future in the long term?

My view is that it will be challenging, but that there is. The key will be to understand what a physical experience provides that a digital experience doesn’t – or at least doesn’t do as well. The five S’s framework is a useful way of looking at this.

Service

There are studies suggesting that consumer trust in store associates has declined but I don’t really buy this. I certainly don’t see it as inevitable. One of the biggest issues facing people in the modern age is the paradox of choice; there are now tens of plausible suppliers and thousands of options available for almost every product. This creates anxiety around making a bad decision and buying the wrong thing. This fear of getting it wrong can be relieved online by tools like reviews and recommendations and by good content, but there’s really no substitute for a face-to-face conversation. So, any store retailer should be investing in their team’s skills and knowledge so they’re capable of helping customers to navigate through the decision process and be reassured that they’re buying the right thing for them.

To some extent this advantage is ‘threatened’ by virtual shopping which enables face-to-face interaction with an expert without the need for a store. Whilst virtual will grow, it will mainly mean that in-store service propositions have to evolve and improve to retain an advantage.

Sensory

The web can do many things but it can’t really trigger the senses other than sight and sound. That leaves touch, taste and smell, and one or more of these is likely to be relevant to any retail proposition. In furniture, for example, it’s hard to communicate how comfortable a sofa is or (even with samples) what the fabric really feels or looks like. In clothing and footwear, although big strides have been made, it’s still hard to guarantee whether an item will fit or look good on you, hence massive returns rates. In cosmetics or skincare, both admittedly huge areas for online, you do need to try stuff. So, in-store you must really bring out the sensory side of your products.

There’s also the sense of scale and atmosphere that a physical environment brings. There’s a reason why stores invest big money in branding, window displays, fixtures and fittings and lighting. It’s about creating a sense of what the brand is all about and setting the ‘brand frame’- the lens through which we hope customers will look more favourably at our product. We had this with the Heal’s flagship store on Tottenham Court Road; there’s a ‘wow’ factor just entering the store and taking in the architecture that makes everything in the store feel special. It’s very difficult to replicate this depth of feeling online, however good your design team is.

Storytelling

There’s no doubt that a strong brand story can be told virtually or indeed through ‘old’ media such as brochures. Indeed, there are thousands of brands that have built recognition and loyalty and created a sense of meaning to their customers without the need for a store. A physical location though can tell a brand story in a way that’s potentially more immersive and immediate.

On top of the sense of brand that immersive, multi-sensory store experiences can engender, there are also opportunities to create more engaging narratives at a category, range or product level. And it doesn’t require loads of technology. A great example in Heal’s is the display mounted by Vitra to make the Eames lounge chair even more aspirational (if that were possible). It cleverly pulls apart the components of the chair to demonstrate the build quality and the many options available, and supports this with well-chosen photography and text to exemplify the heritage. Thinking about how you can bring products to life by storytelling will not only help customers convert, it will also reinforce their view of the value of your brand.

Social

Human beings are social animals and connecting with others is a fundamental need. Although we’ve seen changes in recent years in the ways people interact with each other (more time spent in home, being tied to our smartphones, virtual meetings etc) and these have accelerated under Covid, our instinct for physical connection has been built up over 10,000s of years of evolution so is not going to just wither away. Shopping is an intrinsically social activity, either with friends or family or simply being in places where there are other people. It’s worth thinking about whether and how you can draw more people to your stores, even if it’s not to buy. Independent bookshops have always been good at this, introducing cafes, putting on events and offering their space to the local community.

Serendipity

Most of our convenience needs can now be met by online retailers. If you need something specific and need it quickly, using Amazon is probably a better idea than going to a store where availability may be poor. Hence, stores have evolved to be more about inspiration and selection. This suits the way our brains work. When we walk into a shop we’re constantly scanning. Our brains are conditioned to skip over whatever’s not relevant, but to latch on to whatever is. Things catch our eye – a colour, a fabric, a style, a display – in a way that doesn’t really happen in the more linear online world. The old skills of visual merchandising haven’t died out; if anything they’re more important than ever as we need to create curated ranges and enticing displays that attract customers’ attention.

A nice example of serendipity in store is book-selling. A few years back, with online discounting in a race to the bottom and the Kindle starting to take off, it looked like physical book-selling was dead. One of my old companies, Borders, went under and another, Waterstones, was struggling. I’m pleased to say that the doom-mongers (myself included) got it badly wrong. Walking into a bookstore now is a mini-voyage of discovery, coming across unexpected, curated selections, reading the hand-written recommendations and picking up what tickles your fancy. For what it’s worth it’s also a very sensory experience; there’s really nothing quite like picking up a real book and flicking through the pages.

The five S’s are why I think there’s a role for the physical store. It will require creativity and thought, but those stores that bring something for the customer that they can’t get online will be able to thrive into the future.

David Kohn is a retail veteran, now acting as an independent advisor