Focus: Analysis of Real-World Shops

20 March 2017

Focus: Analysis of Real-World Shops

Research suggests that the shopping habits of digital natives require a step change in the design of real-world shops

Words by Kay Hill

Not so long ago, brick-and-mortar shops were considered an endangered species, doomed to be wiped out by the meteoric rise of online shopping. But just as the paperless office has failed to appear despite 30 years of computerisation, so the rumours of the demise of the shopping centre seem to have been greatly exaggerated.

The British are early adopters when it comes to e-commerce. Portland Design recently undertook a European research study of Millennials and their shopping habits called Envisioning the Future of Shopping in a Digital World, which revealed that globally, UK residents are the biggest online shoppers of all. But according to Terna Jibo, the company’s head of strategic insights, this hasn’t diminished the need for actual shops. ‘Millennials and Gen Z still love brick-and-mortar stores,’ he says, ‘as they want to touch and feel and have an interaction with a product. The challenge is meeting the expectations of that group – they don’t differentiate between online and offline retail, and delivering that can be difficult.’ Or as it says in Portland’s report: ‘The digital consumer is used to an organised and visually perfect display – deriving out of Instagram and online shopping platforms such as Zalando. Retailers need to create an optically strong and inspiring physical space to satisfy the Millennial audience.’

HMKM was tasked with designing a super-flagship store in Melbourne for Australian fashion brand Sportsgirl, with the aim of creating a new iconic architectural statement that reflected the interplay between the physical and the digital worlds. The shopfront is dominated by a striking triangular display window, guiding the customer into the store past high-impact floor-to-ceiling digital screens that showcase ever-changing brand content designed to appeal to digital natives

Global real estate company CBRE has also been researching how the needs of the digital natives will affect retail. Its Millennials Myths & Realities study surveyed 13,000 Millennials across 12 countries and came up with the rather surprising statistic that 70 per cent of their shopping is still done in store, but usually after using smartphones to research products and check prices. The report explains: ‘Making purchases in a physical store is still the preferred means of shopping for the Millennial generation, and this position is unlikely to change dramatically in the near future. Why? Because Millennials, like previous generations, are social animals. They like to shop in person with friends, family, or others and they want the physical experience of seeing, touching, testing and trying out the goods.’

So, the retail industry may be safe for now, but it doesn’t mean that retail designers can rest on their laurels – the recent demise of BHS and Austin Reed and the struggles of M&S show that stores that don’t evolve will eventually go the way of the dinosaurs. Therefore, what are the key areas for change and development?

Seamless technology

Older generations differentiate between online and offline shopping, but for younger people there is just shopping. ‘Gen Z are “born seamless”, moving fluidly between the digital and physical worlds without making a conscious distinction between them,’ says a thought piece co-authored by Alasdair Lennox, executive creative director at Fitch, called Gen Z and the Future of Retail.

Sephora uses technology in store to educate customers about how to use its products, including screens where cosmetics can be virtually applied to a customer’s image. In general, Millennials are excited by new applications of technology and are comfortable with the blurring of the digital and the physical. The store concepts are designed in-house

In her report, Millennials and the Future of Retail, Lindie Kramers, brand director at Kinnersley Kent Design, notes: ‘The store of the future will have many fully integrated channels, each being a seamless extension of the other.

Shopping will be anywhere and everywhere – full integration will not be a convenience, just the norm.’ Kramers told FX that a perfect example of this was the Sephora Flash Store in Paris. Sephora is a brand that already uses extensive technology in store to help customers to virtually test the cosmetics, but the Paris store was just 1/16th the size of a regular Sephora shop.

Dyson’s new Oxford Street store gives customers a chance to get hands on with its vacuum cleaners and find out how they cope with different types of dirt

While a select range of goods can be taken away, shoppers use a tablet to select from 14,000 more products online, then pay for both their real and virtual baskets simultaneously, with the virtual purchases delivered the next day. ‘Smart stores will save on space with a seamless link between physical and online,’ says Kramers.

The ultimate expression of this is the development of stores with no stock at all – online American menswear brand Bonobos, for example, has opened a series of Guideshops where you can try on all the clothes, but your order is processed online and then delivered to your home.

Nike’s five-storey flagship store in New York features running zones, football areas and basketball courts so that customers can try before they buy

And Samsung’s 837 flagship store in New York offers all the products to test and play with, but if you want to purchase, you will need to do so online. From the retail designer’s point of view, this strategy means less space devoted to stock cupboards and delivery areas and more room for creative display and expression of brand values.

More than a shop

When the world of e-commerce is literally in your hand, why bother with going to the shops? The only reason would be if physical retail offered something that online couldn’t – such as a hands-on experience, a leisure activity, a sense of community or a chance to learn something new. For this reason, the fundamental design of retail needs to change to accommodate these additional uses.

Local links are strong in The North Face’s stores designed by Green Room. From the contours on the signage that reflect local geography to the locally sourced timber and chalk boards giving regional information, everything conveys a sense of place

Nike’s new five-storey shop in New York’s Soho, for example, boasts basketball courts, soccer trial zones and running areas where customers can test out products in real life. ‘It’s a convivial space, not just a transactional space,’ notes Terna Jibo. In a similar vein, Dyson’s new store in Oxford Street has a Dyson Demo area where customers can have their hair styled with the company’s new hair dryer, or test vacuum cleaners with more than 60 different types of dust.

Providing a space that can be used for entertainment or community events is one way that a lot of stores are trying to create a sense of engagement among Millennials. So, Apple in Regent Street boasts a ‘town square’ layout with a central space, the Forum, that hosts daily entertainment and a central hall lined with trees. Meanwhile, Samsung 837 is, according to general manager Zach Overton, ‘a fully immersive cultural centre, featuring programming that will tap into people’s passions such as art, music, entertainment, sports, wellness, food, technology and fashion, all powered and enriched by technology’.

While it might go against the grain to ‘waste’ shop space rather than filling it with products, these kinds of spaces are a good investment, according to The Innovation Group’s study on trends, The Future 100: ‘As experience culture becomes pervasive, retail stores are trying to make their physical stores more immersive, on the grounds that the longer a customer spends with the company, the more likely they are to buy something.’ Or as Kinnersley Kent puts it: ‘To attract Millennials, retail brands need to redefine the shopping experience, by introducing community, discovery, flexibility and partying to their shopping environments.’

Not only that, but by providing ample opportunities for social networking, stores also provide themselves with the kind of native advertising that Gen Z, in particular, feels is the only trustworthy kind. Paul West, strategy director at Dalziel & Pow, explains: ‘A lot of the retail projects we have done have been about building community in the store. The role of the retail space is increasingly about bringing people together and generating content in store that is then pushed back out into the digital world by the shoppers themselves, almost as if it was a living magazine.’

Global and local

While Millennials are citizens of the worldwide web, they like to have local roots – and they want to feel that shops are, in a meaningful way, serving their local communities. So, for example, while The North Face’s various outdoor stores might have much in the way of commonality, each one is designed specifically for its location. Design director Martin Crehan explains: ‘The locality of the store is very important to The North Face in two ways: firstly, it becomes a way of demonstrating to customers that the global brand has localised just for this area and is, therefore, more personal. As such, the store location has become a feature of the physical design of the store, with coordinates of the location artistically decorating the entrance, elements of the store such as the giant tree in the centre have local provenance, and the contours of the area feature as a piece of art.

‘Secondly, there is a desire to demonstrate the way in which the brand adds to the local community through more than just a physical presence. The ambition of the store is to become a focal point and meeting place for like-minded individuals, as demonstrated by the community chalkboard, a non-digital representation of the online community through which the store engages with and entertains its local customers.’ In a similar way, Nike’s Community Stores across the USA aim to be grounded in their physical locations – hiring at least 80 per cent staff locally, decorated with photography of local places and offering merchandise for local sports teams.

Creating brand loyalty

Older customers tend to be fairly brand loyal, Millennials less so, and Gen Z hardly at all. According to The Innovation Group’s studies: ‘Generation Z poses a unique challenge for retailers. As the generation to follow Millennials, they will play a huge role in shaping fashion and trends over the years to come. But these young digital natives are proving difficult for retailers. They are brand agnostic, innately aware of advertising, and demand authenticity at every turn.’

Primark is a brand that doesn’t advertise and doesn’t sell online – which makes it even more important to create a stunning in-store experience. In the company’s flagship store in Madrid, designed by Dalziel & Pow, the stunning atrium provides the retail magic, while the sweeping staircase adds a sense of drama and theatre

Of the Millennials, Lindie Kramers notes: ‘They are brand loyal, but only for brands that stand for something that they want to be associated with. Social approval from their peers in the form of “likes”” and comments” is a real currency to them, and the places they choose to shop at are a comment about their own values. Brands that can’t compete on functionality like price or convenience must stand for something meaningful even to get Millennials to walk through the door.’

So, how can retail design itself promote brand loyalty? ‘The perception of the physical store is moving away from a place purely to make a purchase,’ says CBRE’s report. ‘It’s becoming a brand ambassador, a place to engage with the products and have an experience.’ Kinnersley Kent’s research adds: ‘The customer trend towards valuing experiences above possessions is already impacting retail. Innovative brands are responding by creating environments that pull customers back in store by blending together a sense of theatre with memorable content.

In doing so, many are looking for inspiration from the leisure and hospitality sectors.’ At Fitch, Alasdair Lennox writes of stores catering to Gen Z: ‘Retail is on the brink of a revolution. Retailers and brand owners need to fundamentally reconsider their proposition if they are going to capture the hearts, minds, wallets and attention spans of this constantly connected, partially attentive generation. The role and design of stores themselves will also have to change – and that doesn’t just mean new fixtures and fittings, it means real, dramatic change. Stores will need to offer compelling, brand-led experiences that are more about aspirational browsing and less about a direct push for transactions.’

Always changing

Walking into the supermarket and finding that everything has been moved, or picking up your mobile in the morning and finding an unfamiliar update is the stuff of nightmares for Boomers and Generation X, but the digital natives are comfortable with change. ‘Gen Z expects constant innovation,’ says Fitch’s research. ‘Upgrades and updates are always welcomed as signs of progress. In fact, Gen Z actively dislikes products that aren’t constantly changing.’

As an example, Terna Jibo points to Story, a Manhattan retail concept that completely changes its design and merchandise every four to eight weeks. ‘Every month they change the store around so it’s more like a magazine or an art space,’ he explains. ‘There’s great engagement and attention to detail. Nothing in the store is fixed, so they can change the whole format; as we live in an accelerated culture, things need to be flexible and transformable.’

Customer focused

‘The concept of in-store service means something different to Millennials,’ says the CBRE report. ‘Generally, the standard “yes sir, yes madam, how may I assist you today?” assistance is of little interest to them. What they expect is whatever will allow them to complete their purchase in exactly the way they want – such as access to fitting rooms, no wait to pay, a straightforward returns process and in-store ordering. Their facility with digital technology means that they no longer rely on sales assistants to recommend goods and guide their purchases – often they will have researched a product online by checking pricing and peer reviews before going out to shop.’

What can sometimes be a problem for these generations is information overload, and Portland Design’s research believes that stores will increase sales by devoting space to ‘curated luxury’. ‘Shoppers can sometimes feel overwhelmed with the amount of choice available,’ says the report. ‘Stores curated by expert editors will prevail because of their ability to distil key trends, styles and brands into one space. The future of luxury will be defined by spending as little time as possible searching inventory (both online and offline) and to have the service of a perfectly selected offer just for you.’

Generation Z customers want to visit real-life stores, so successful online brand Missguided has launched its first physical store at Westfield. Designed by Dalziel & Pow, the store is geared towards enabling fashion-mad girls to be creative on social media, with constantly changing displays to maintain interest

In conclusion, experts believe that retailers have a tough task ahead. Lindie Kramers sums up what designers need to be working on: ‘The store of the future aimed at Millennials will have many fully integrated channels. It will be a gathering space, as much a leisure and community hub as a retail space, somewhere to hang out and to be sociable, a destination hub with personal interest and memorable content.’ And maybe a few tills, just in case…

Insights from the Research

Millennials:

Born between 1981 and 1994
They make up a quarter of the UK population and are predicted to hit the 17-million mark by 2019
A Peter Pan generation that has more disposable income than most, often because its members have been unable to buy property
Tend towards being fairly selfish and self-centred
They would rather spend money on experiences than on products
Personal online profiles are a significant part of their identities. Social approval from peers in the form of ‘likes’ and ‘comments is a real form of social currency’
They are constantly creating online content, especially in the form of selfies (which make up 75 per cent of the images on Snapchat)
Tend to be wowed by technology
They desire instant gratification and so use credit cards frequently

Generation Z:

Born from 1995 onwards
By 2020 they will make up 40 per cent of the world’s biggest markets
They are on smartphones for six to seven hours a day, leaving them hypervisual with a short attention span
Brought up in turbulent times of recession and terrorism, they tend to be more mature, more sensible and less likely to smoke, drink alcohol or take drugs
They use technology to hunt for bargains and discounts; where possible they avoid credit and are good savers and planners
They would rather pay less for access than more for ownership; they are happy to rent everything from their homes and their cars to their films and their music
They are driven by values such as honesty, home, family and care for the environment
They are brand-agnostic, cynical about advertising and celebrity endorsement, and tend to disbelieve anything that isn’t supported by their peers
Their world is constant, so they expect to be able to shop 24/7
They are happier with a beta product now than a perfect product with guarantees and warranties in a year or two; upgrades and updates are seen as signs of progress
They don’t look up or see signage when shopping; they navigate at eye level and focus on the product, and assume that a store with no music on must be closing up.