New technology and changing customer expectations are forcing retailers to rethink their businesses from top to bottom.
E-commerce and mobile technology have drastically altered retail customers’ expectations on service and convenience. In January, Amazon opened its new concept store, Amazon Go. Customers simply grab items off of the shelves and walk out of the 1,800-sf store. Checkout and payment are handled automatically via the Amazon app on their smartphones. No lines. No cash registers. It’s the ultimate in brick-and-mortar shopping convenience.
“Change is the new norm,” says Justin Hill, AIA, LEED AP, Principal with MG2. “Retailers are looking for a silver bullet, knowing that there isn’t one, but that the search is important.”
The collapse of big chains like Toys”R”Us and tough going for stalwarts like Sears and JC Penney is often explained away as competition from Internet retailers. That’s an oversimplification, says Elaine Kleinschmidt, EVP of Strategy and Experience Design with WD Partners. “A lot of the problems stem from debt and bad real estate deals,” she says, noting that digital sales account for just 9-10% of overall retail sales. That leaves the lion’s share for physical locations.
Still, a major shakeout is to be expected. “We’re overpopulated in retail square footage,” Kleinschmidt says. “The U.S. has quadruple the amount of retail space as other developed countries.” The number of malls nationwide has declined from about 1,100 to 825, 275 of which are in jeopardy, she notes.
Look for closed department stores to be repurposed into healthcare centers, fitness clubs, and even charter schools. E-tailers such as Wayfair, which is planning to open its first brick-and-mortar location in Boston this year, are testing the physical store option.
Retail brands must understand the changing behaviors of consumers as they adopt new technology and new physical store strategies. “Insights have to fuel the design process,” says Kleinschmidt. Among the avenues for improving the customer experience are better in-store and online technology, remodeling interior of stores, and opening smaller-format stores that cost less to own and operate.
“Retailers have so many options to invest in,” says Stephen Jay, Managing Director at Big Red Rooster, a JLL company. “Where to start?”
Clients shouldn’t let the latest technology or design trend lead them to overlook quality of service, Jay says. “The last moments of a shopping experience are…
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