How the Internet is changing the Physical Retail Experience

An interesting shift is taking place in the world of the workplace: cheap mobile technology has allowed workers to work from many locations. Since real estate is still expensive, companies are realizing that if their workers are working on their own, there is little value in them being in the office. The next generation office will be one of collaboration, for there is still value in bringing people together in physical space that cannot be replicated online.   This is an important concept for the service industry too, especially where there is a physical interaction with customers. If an increasing variety of digital channels, from app to TV to web, are replacing elements of the customer experience that would previously have occurred in a physical space, the environment needs to evolve.   This may occur due to a competing service, such as Amazon versus a traditional book store. From early days, it was clear Amazon’s value proposition was purely online.

It was competing against book stores with bigger overheads in real estate and lower amounts of stock available. It gave customers an opportunity to be impulsive, to shop at a second’s notice, more conveniently, faster, and with quick feedback as to whether the book is in stock. It also managed to add services that did not exist in traditional stores, such as user reviews and customized preference lists.   In this scenario, failure of the “traditional store” to evolve will lead to extinction, as evidenced recently with Blockbuster.   The physical space may also, however, be a holistic part of the service. Online banking has replaced many functions that bank branches used to provide for the vast majority of customers. The bank is still the same bank, however, and although new “online only” banks are evolving with added service benefits and lower overheads, many customers still prefer bricks and mortar institutions when it comes to dealing with problems or major transactions.   What does this mean for the future of retail space?

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Stores need to offer experiences you can’t ���have in virtual space

Many stores – book stores and bank branches amongst them – still offer the same customer experience they always did in the pre-digital age. They look the same, they feel the same, they operate the same.   The first attempts to change this have been made, for example through co-locating coffee shops within stores. Although there can be no virtual equivalent of a coffee shop experience, this is not enough.   Just as with the workplace, where collaborative activities and spaces will increasingly replace individuals activities, which will shift increasingly to other locations and virtual spaces, stores need to create a new concept for what activities should take places within stores. This may not be a total transformation, but an additive one. For example, Runners World sell running shoes, but they also offer a chance to get on a treadmill and try them out. They film you run, and show you what kind of shoes you need. The shoes may cost a slight premium compared to online, but the customer knows they are getting more value for money by getting the right shoe.   Stores can also exploit the full range of senses in creating a more holistic experience. The Economist notes that an experiment by BAA at Glasgow Airport saw revenues increase 10% when a relaxing melange of birdsong and music was played in the background. Smells, taste, temperatures, and lighting cause us to feel differently – and isn’t that what an experience is all about?

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Starbucks creates a holistic experience, tackling all the senses, to makes its cafes a destination that is about more than drinking coffee.

This is not an exercise for a boardroom brainstorm. Getting this right requires a solid design process. It requires user ethnography – going out and understanding your customers in order to understand what those customers need, not what we think they need. It requires robust development of not only an ideal customer journey – the routemap through your service - and set of experiences – the components of that journey - but a business model to back it up.   Finally, it requires designing, prototyping, testing and iterating until you have something that works, where real customers are coming in, using it, staying longer and spending more.

Stores need to become destinations 2

It is said that architects design spaces, but people make them places. The art of placemaking – creating public spaces that attract people to them as destinations in themselves – is well understood in architecture when applied to masterplanning. It is beginning to be well applied to retail, too.

Apple’s Retail Stores are leading the way in placemaking, right now. People visit them as a destination to browse and enjoy, not only to buy. They offer great physical experiences, such as the chance to try out the full range of Apple products, workshops and the “Genius Bar” help desk. In doing so they create a buzzy, vibrant atmosphere that reinforces their brand.   This is not to say that every store needs to become an Apple Store. However, the principles apply, from the smallest shop to the very large. To create a destination requires a very different way of thinking about both the service, and the space. It may also mean your sales channel operates very differently.

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The future store may integrate digital and physical together in innovative ways to provide new types of services and experiences not accessible in the home.   Bruce Kasanoff recently said that the new Microsoft technology, Kinect, is “the starting gun in a race to transform customer experience across all industries”.   He reasons that technology that recognises voices and gestures to the degree that Kinect can will chance the way we interface with the virtual world very quickly. This could provide a variety of solutions for stores, from simply interacting in a more tactile way with a back catalogue of other products, to virtual in store walkthroughs of a house when in an estate agency. One Touchpoint in Many   The future retail experience is an exciting one. It offers the potential to transform customer experiences and offer more personalised services. Your digital channels are not replacing your physical ones, just augmenting them.   This is not an area for wanton experimentation, however. Proper development and prototyping are essential for developing up future solutions that links together your entire customer journey, across all the interactions with a customer. Physical spaces will be one element of the total set of customer touchpoints, but it will still be an important one.

Stores need to blur the boundaries between digital and physical

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Every digital experience has to happen somewhere, whether it is the home or elsewhere. Sometimes, they deliberately come together, using augmented reality to layer the digital world on top of the physical world. It is too simplistic to think of the web as the only route for a digital experience.

The Genius Bar combines interaction, service and sales in a way that reinforces the Apple brand

Tom Weaver is a Director of Flywheel. Get in touch with him at: tomweaver@flywheel.org.uk