Experts see innovation and pop-up stores

LONDON – The future of brick-and-mortar stores has been questioned by the coronavirus pandemic, but experts believe the key to survival will be reinvention.

Retailers have been trying to attract customers by creating in-store experiences for some time, but they now need to get creative as shopping habits change and customers become more demanding.

Online shopping has exploded since the start of the pandemic. In the UK alone, internet sales rose from less than 20% to more than 32% in just three months at the start of the first Covid-induced lockdown. And experts expect the convenience of buying online means consumers will continue this habit even after the pandemic.

According to accounting firm PwC, nearly 50 stores will be closed every day in the UK by 2020.

Both trends show how important it is for retailers to get their physical presence right.

Kristina Rogers, global consumer leader at Ernest Young, told CNBC in March that there is a “real redefinition” in the way retailers use their physical spaces.

“It’s not just an exchange of goods anymore,” she said, adding that retailers need to understand who their customers are and what they want.

She highlighted how Target, one of the largest retailers in the US, has chosen to have greater space in its stores for Apple products. This allows customers interested in Apple devices to view them effectively while shopping for other things in Target. It’s also useful for current Apple users who can merge two trips into one.

“They are in the process of recreating a ‘mini-mall’ in their store,” she said.

But not every retailer has such a large area to work with. In fact, some experts believe that successful stores of the future may continue to offer new stores regardless of size.

“There will undoubtedly be fewer brick-and-mortar stores as we progress,” Matt Clark, general manager at consulting firm AlixPartners, told CNBC’s Street Signs Europe in March. “But the stores that remain will have to provide an even better experience and an additional range of services, as well as just the ability to purchase products.”

One way retailers can differentiate themselves is by focusing more on pop-up stores. These are spaces that are temporarily open to show off a particular line or product, and have been gaining popularity in recent years.

“One of the most important opportunities for pop-up stores is to create new opportunities for discovery. It’s not about a consumer going to a Ralph Lauren store that is the same today as it was 10 years ago or 20 years ago,” said Alex Cohen. a commercial real estate expert at Compass told CNBC.

Some big brands have already looked to popups as a way to attract more customers. Stella McCartney, the British fashion designer, shows several local businesses in her flagship store on Old Bond Street, London, to celebrate the lifting of restrictions on retailers in the UK. Guess is about to open its first pop-up store in Germany. for Activewear.

Pop-up spaces allow retailers to create something “very fresh” while saving costs, Cohen said.

“The brands have the ability to spend a lot less, not have to commit to a long-term contract, spend less with modular installations and do it very quickly,” he added.

Moreover, these types of stores reinforce the idea of ​​exclusivity – a feeling that is increasingly popular for many customers.

“The whole idea of ​​exclusivity is really important. The fact that a popup expires … creates a kind of excitement in the consumer.” Wow, if I don’t check out this pop-up retail offering … in the next 3 months it will go away, I will never be able to see it again, ” he said. This adds the kind of excitement that is lacking in many traditional stores.

So it’s not just about the feeling of having an exclusive product, but also about an exclusive experience. And this means that there are other ways for retailers to capitalize on this exclusivity trend.

“In terms of exclusivity, many of the retailers now, whether by appointment or actually when you arrive at a store, require you to be connected to a salesperson. You can’t browse and that – for better or worse – creates a sense of exclusivity , ”added Cohen.

Brands also recognize the increasing importance of sustainability, both from a business perspective and because of growing customer awareness.

And it is not only reflected in more “ethical” product lines, but also in what services are available in physical stores.

For example, in its flagship space in Stockholm, H&M offers services to repair old clothes and rents out some of its outfits for special occasions.

“The sustainability movement really highlights one of the core dichotomies facing the fashion industry in particular, but also the wider retail industry,” said Clark of AlixPartners.

“The value versus values ​​debate: the need to be really, really clear about your sustainability credentials, ethical sourcing, etc., but at the same time provide great value for money that means not only cheap but also value for money for consumers . “