The Rebirth of Physical Retail

The Rebirth of Physical Retail

An explorative guide on brands and retailers adaptation to the post-pandemic next normal.

Our definition of shopping is changing rapidly. Almost everything is available online. Fast, cheap and easy. We see more and more empty square meters in shopping areas where traditional retailers failed to compete with their digital counterparts. The shops that we grew up with are now being replaced by brandless outlets and temporary pop-ups. The coronavirus pandemic has speeded up this retail apocalypse and the change we expected to see happening over the next years, has hit over a period of a few months.
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But just like television hasn’t disappeared like many predicted 15 years ago we believe that if we use our creative problem solving skills, physical retail will evolve to be something we can fall in love with all over again. 
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In this article we explore different trends that we see rising around the world that inspire us to think differently about something we passionately enjoy. We believe the thrill of venturing out to let yourself be seduced by brands and products is just as alive as it was 50 years ago. The only thing that has fundamentally changed is the role the ‘shop’ plays in the customer journey. 
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Shopping holds more emotional value to us than direct consumption. We’ve spent hours in malls as teenagers, shopping with our parents for Christmas as kids and then taking our own kids out to buy that special toy they’ve been longing for. We hold many memories to shopping, simply because we attach and engage emotionally with not only objects but more so experiences. Shopping in stores holds a sentimental value to us, something that online shopping will always have a hard time competing with.

The pandemic fast-forwarded the mass adoption of e-commerce, forcing retail to think from new perspectives on how to use space 

Even before the pandemic, the retail industry was in a state of disruption as consumers were increasingly buying online. Overnight, demand patterns shifted. In China the overall penetration increased by 15-20 percent (McKinsey), and in U.S. e-commerce jumped 49% in April, compared to the baseline period in early March before lockdown restrictions went into effect (Adobe, 2020 Digital Economy Index). Retailers which only rely on customer footfall, are the ones most affected.
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In the future, people will no longer visit stores unless they really want to. Brands must, therefore, find new ways to repurpose retail to what their customers are looking for. 
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The fact that our need for a larger scale of choice is offered online, has made that we’ve adapted to more personalized experiences in physical space. As retail stores will no longer drive the same scale of conversion, they must find a new purpose to why they exist. Those brands that are able to evolve to fit these new paradigms will not only thrive but also come out as leaders.

Forward-thinking retail stores must redefine the role of their spaces and prepare for the post-pandemic as the next normal. If online penetration increases as expected, stores won’t serve the same meaning to their customer’s life as they did at the beginning of 2020.

The movement is reversed - as online is our framework, stores will act as supporters

Instead of serving as transactional venues, physical stores can add dimensions to a brand that online simply cannot. Omnichannel retail, where brands have both physical and digital presence, is predicted to be what we’ll see more of in the near future. It makes the customer experience seamless and creates opportunities to build long-term relationships.
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With e-commerce making it possible to buy anything at any time, at any location, physical stores should act as touchpoints weaved together with the online framework creating a customer experience where digital and physical live in symbioses. In-store experiments make it possible to marry physical and digital in a way that makes stores more powerful. In times when everyone is online, a brand’s physical presence will not only play a vital role in driving digital sales but also add meaningful value in customer’s lives. 

Physical stores as touchpoints

For online purchases, a frictionless customer experience is simply key. This however, doesn't mean that digital and physical experiences should be separated and act in isolation from one another. Instead we already see brands using stores as a complementary component to online, building a more integrated customer journey. Research done before the pandemic shows that opening of a new physical store increased traffic to the retailer's website (fashionunited). New technologic solutions also create ways for brands to interact with their customers in-store and help create more seamless journeys bridging online and offline experiences.

Made.com

The London-based furniture retailer Made.com is another ecommerce platform that’s been putting more attention into physical retail stores, and their concept is proving that ecommerce and physical space can work together in harmony. In their stores you can’t walk home with a cushion, not even a bag. Instead, the stores are showrooms with innovations providing features and processing orders. The space acts as an extension of the online platform, somewhere where customers can get familiar with the brand and Made.com can build a more personalised relationship with customers.
"Every customer experience starts online these days, often through mobile devices. In our case, it also ends online. Why would you have a supply, if you can tell a story and let the transaction flow from there?"
— Philip Chainieux, CEO, Made.com

Amazon Go

For the e-giant Amazon physical stores represent an investment to build longer-term profitability. Their brick-and-mortar shops are designed to create a seamless shopping experience across the company’s physical and digital channels.

A store should be seen as a channel - a space to deliver a message to your audience

If online purchasing continues to grow, there will be less desire to pick things off shelves when we can simply get it delivered to wherever we may be. The physical store should be designed with this change in mind, and we might come to rethink concepts customised by location, possibly with a stronger focus on serving the local community. Each store should have a clear reason to exist in order to best resonate with visiting shoppers. Stores should simply be seen as a channel where they can deliver messages to a chosen audience, together with a product offering that is tailored to that. Customer data makes this practical, knowing your audience makes it easier to understand what influences purchase decisions. This also creates opportunities to tailor personalised experiences and ensure product relevancy. 
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If brands look at physical stores as another medium where to communicate a narrative, this will mean that stores at different locations will serve different purposes in order to connect with their community. Brands that take the next steps and adapt to this change will thrive as they take ownership of the relationships with their customers.
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