by: David Polinchock

This was at the heart of our discussion about the socialization of place and now there seems to be some numbers to support the theory. Here's what we think. As more & more people do their actual purchases online, what's to become of the physical real estate of retail?

We first wrote about this back in 2005 and then again in early '06 at Retail Design Diva -- Socialization of Real Estate and we think it's going to be even more important in the future. Here's what we said back then:

It made us ask the question, what is the value of real estate for retailers today? Does a record store really need to exist as it's been for the past 40+ years? Or banks, grocery stores, fashion retailers? If, thanks to the internet, people are much more comfortable getting their purchases sent to them, rather then getting them right away, do we need that much space dedicated to merchandise? So, if we can do away with the inventory portion of most retail spaces today, what else would you do with the space? How could you make it a much more social environment, rather then being a retail environment? After all, this is exactly why places like Starbuck's or the Apple stores have boomed -- they created a social space, rather then a retail space.

And these numbers seem to support the thought that people just aren't going to the stores like they used to. Now, the economy is also having real challenges today and people are not shopping as much as they were, say a year ago, but this was about traffic, not shopping and I think we'd be seeing some declines no matter what the economy was doing. Yes, there was also a decline in online shopping of 1%, but you can't compare shopping data with traffic date. With gas being up (although now we can get it for about $3.55 by our house, so it's dropped about $0.80 recently) and retail experiences tending to be so bad, it's creating a huge reason not to go to stores.

When you combine that with the consolidation that's hitting the retail industry and you're coming to a perfect storm of reasons not to go to the local mall.

So, if you're a retailer and you're not looking to significantly increase your retail experience, then understand that you're going to be losing more & more money on your real estate holdings. It's just not worth the hassle for people any more. Back in its time, if I went to a place like Spag's, I was cool with it being such a difficult retail experience for the bargains I got. Or look at the annual wrestling match more commonly known as the Filene’s Basement World Famous Bridal Event. But, if we're going to Macy's or Old Navy or Target or any one of a thousand of look-alike retail experiences, with many of the same items at very similar prices, you'd better start thinking about what that real estate is worth to you and how much you're going to need to spend to create a compelling, relevant and authentic retail experience.

We also wrote in early 2006:

Raise your hand if you’ve ever gone to a store, taken up a great deal of the sales persons time, only to go home and buy online because you could find it cheaper? Come on, you know you have. Everyone does it. And this helps to turn the retail space into a showroom, rather then a place to actually purchase. Worse, technologies like SCANBUY Shopper let you check the price on something by using your camera phone to take a picture of the bar code and then finding the best price. And that’s before we start talking about AI shopping bots!

So, you make the retail experience worse and worse and we use it less & less causing you to make it worse & worse, causing us to use it less & less....see where I'm going with this?

The truth is too many retail experiences are either neutral or they plain suck, so we find other ways to buy. Sam Ewen from Interference recently commented on a post about brand ambassadors and said "Would you spend $250,000 on a tv spot placement and then hire a high school film student to direct?" Yet we have no problem spending billions on the actual real estate while paying your employees as little as you can get away with. In a recent blog post entitled Shouldn't Every Employee be a Brand Ambassador?, I posed this quesiton -- "Do you hire to save money or to find the best people possible to represent your brand? The consumer will know the difference."

So, if your physical retail real estate has real value to you, then you need to treat it likes it that important. You need to:

  • Staff it like us being there is really important to you. Ever go to a house where you're not quite welcome? Well that's sometimes how we feel at your stores. And it doesn't make us want to come back!
  • Although it's not a retail experience directly, take a look at Coca-Cola 'rewards' may have cost longtime employees their jobs - Vallejo Times Herald. So frequently the employees are treated like they're not welcome either and that feeling ends up deposited at the consumers feet. They work for you damn it, treat them like a guest! They're your front line in the war to be successful, why do you spend so much time hobbling them? If you treat them well, I can guarantee you they'll treat me well. If they feel unwelcome, so will I.
  • Look for better ways to combine your offline & online retail. You need to E-tail Your Retail. If i can do it online, I should be able to do it in-store.
  • Ask yourself what your space would be if it wasn't about inventory management. What would make me, the consumer, come in?
  • Are you experimenting with social media, whatever that is? Well, bully for you! No really, that's good. But are you doing anything social in your space? After all, every day, thousands of people walk through your doors and you've probably never thought of the social media power of your own space. Walk over to the Apple store and see the results of retail as social media.

    There's a lot more to think about, but this is probably enough for one post. I'd love your feedback. What stores are doing a great job retaining guests despite this drop in traffic? I'll bet they'll be the ones still standing when the economy gets back on its feet!

    According to research by TNS Retail Forward, most shopping venues are losing audience at a steady pace, year-by-year [has shopping lost its charm?]. The TNS Retail Forward ShopperScape survey found that shares of monthly shoppers are declining the most at shopping centers, including both traditional malls and lifestyle centers. Regional mall traffic of monthly shoppers declined from 34 percent in 2006 to 30 percent in 2008; while lifestyle centers showed a decline in monthly shoppers from 24 percent in 2006 to 20 percent in 2008. According to the report, both formats need to do more to attract shoppers.

    Power centers held firm at 59 percent of monthly shoppers in 2006, and 60 percent [slight increase] in 2008 [no surprise, with price driving more purchases in this economy]. And factory outlets increased from 10 percent to 13 percent, while strip centers with grocery anchors decreased from 55 percent to 49 percent. Online sales lost 1 percentage point, falling from 43 percent to 42 percent, over the period. That’s not much of a difference, but it seems at odds with analysts who speculate that the downturn is driving [no pun intended] more shoppers online, seeking to save money on gasoline.

    Link: Retail Design Diva.

    Link: Retail Design Diva -- Socialization of Real Estate

    Link: Experience Manifesto: Socialization of Place.

    Link: Experience Manifesto: Brand Autopsy: Designing Retail Experiences – The Apple Way.

    Link: Experience Manifesto: Luring MP3ers Back to the Mall - January 01, 2006.

    Link: Experience Manifesto: The Socialization of Real Estate.

    Original Post: http://blog.brandexperiencelab.org/experience_manifesto/2008/08/retail-design-d.html

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