- Even as e-commerce grows at a steady of pace, more than 85 percent of total retail sales happen in stores.
- Alton Lane and Reformation are two brands that have redefined the retail store experience, making it more relevant and appealing to customers.
- Retail leaders must follow their lead and get creative with their physical spaces to avoid the fate of now-defunct retail giants(opens in new tab).
Fact: Most consumers still shop in stores, even in the digital commerce age.
Sure, e-commerce(opens in new tab) continues to account for a greater portion of retail sales every year, contributing to the downfall of brick-and-mortar-centric retailers that haven’t figured out how to traverse the shifting landscape. But it’s not the bloodbath you’d imagine. Online sales have accounted for(opens in new tab) only about 13-14 percent of total retail sales in 2018 so far. (In recent years, that number has grown by about 15 percent annually.) If the uptick continues at this pace, physical retail stores are not on the brink of extinction, maybe just a little re-invention.
Forward-thinking companies are reimagining physical spaces to ensure they remain relevant not only in the near future, but in the next decade and beyond. Today’s top retailers find a way to connect the in-store and online experiences--look no further than formerly online-only shops like Bonobos and Warby Parker, which have opened storefronts.
Many of these new-age stores center on “experiential retail,” i.e. an enjoyable in-store experience that extends beyond purely shopping and gives consumers a reason to bypass the convenience of online shopping(opens in new tab). These companies do things differently, breaking from the standard retail model of “a large number of big stores with mountains of inventory.”
A model “suited” for the future
High-end custom menswear brand Alton Lane(opens in new tab) is an excellent example of an experiential retailer. On the company’s website, customers can schedule a one-on-one appointment in one of the brand’s 13 U.S. showrooms(opens in new tab). During an appointment, an associate helps the customer pick out a fabric and customize garments including shirts, suits or trousers. For a suit, the long list of customizations includes the lapel size and number of pockets and vents. The associate measures the customer by hand before leading them into a 3D body scanner that takes 300 measurements in 30 seconds.
The Alton Lane "showroom experience" includes dressing rooms with 3D body scanners.
The result is a piece of clothing tailored to the customer’s precise measurements, created by an expert they know and come to trust.
“I definitely think [our customers] are looking for a different experience, a more elevated experience, but also a more personal and educational experience,” Alton Lane Director of Retail Jodi Donaldson said. “We have really amazing people working for us that get very connected and build relationships with our customers.”
The showroom is equally personalized: It has a bar (whiskey included!), TVs and inviting leather chairs for customers to enjoy. Alton Lane’s leadership makes an effort to categorize the appointment as an experience rather than another trip to a retail store.
“The experience that the two co-founders had [shopping for bespoke clothing] in the past, it was a little stuffy, it was a little dry, it was a little old-school,” Donaldson said. “When they looked at this as a needed experience in a man’s life, they thought to themselves, ‘OK, what do I actually enjoy doing? How can I include that in this experience?’”
Alton Lane customers have the option to enter their measurements and place an order online, but that’s uncommon. Most come to a showroom first, where their measurements are saved so they can easily make future purchases online.
And some customers rarely order online or by phone, relying only on the showrooms.
“I think a lot of them want to come in because they want to visit with the people who work here and have them guide them through what’s new and exciting,” Donaldson said.
“Reforming” the in-store experience
Women’s apparel retailer Reformation(opens in new tab) has also revolutionized the in-store experience. Reformation stores have a clean, minimalist look with white walls and clothing racks that hold only one or two sizes of each item. A shopper peruses the inventory then turns to a large touchscreen on the wall and selects the items she wants to try on, in her desired size and color. The touchscreen process feels very much like shopping for clothes online, except the clothes appear in a dressing room instead of on a doorstep.
Reformation's in-store touchscreens make the experience feel like online shopping.
A showroom employee directs customers to the dressing room, where the items await in a double-sided wardrobe. (Associates access the wardrobe from its back side.) If the shopper wants a different size or another piece of clothing, she pushes a few buttons on a touchscreen in the dressing room and closes the wardrobe door. A minute or two later, a voice alerts the customer that the new clothes are inside.
The dressing room has three light settings so the customer can see what a dress would look like in a dimly-lit bar compared to an office with bright, fluorescent lights. There’s a shelf with an iPhone charging cable and a small speaker so the customer can jam out while trying on clothes.
Reformation is a far more calm and convenient shopping experience than grabbing a pile of clothes off a rack, trying them on, then getting redressed to grab other sizes.
The secret to avoiding retail downfall
Innovating brick-and-mortar stores is not limited to newer, smaller retailers. Nordstrom opened a new kind of store called Nordstrom Local(opens in new tab) in Los Angeles last year. There are now three of these stores in the LA area: Each is only 1,200-3,000 square feet and carries no inventory. Instead, Nordstrom Local is a place for customers to pick up their online orders, return products, meet with a personal stylist, get their clothes tailored and even get a manicure or haircut, depending on the store.
Macy’s is testing something similar, downsizing four of its locations(opens in new tab) into “neighborhood stores” with significantly less square footage and spaces dedicated to online order pickup. Meanwhile, it’s renovating other locations(opens in new tab) to include experiential elements like new dressing rooms and Starbucks shops. While the brand expects $1 billion in mobile sales this year(opens in new tab), leadership said its revamped brick-and-mortars are contributing to Macy’s recent sales growth.
Technology companies like Google are exploring the potential of retail stores, as well. Google reportedly plans to open its first retail store(opens in new tab) in a 14,000-square foot space in Chicago, where it could sell its growing lineup of hardware products including Chromebook computers, Pixel smartphones, Google Home speakers, Nest smart home devices and Daydream virtual reality headsets.
The bottom line
The future will likely include fewer retail stores overall, but there will always be demand for in-store shopping experiences, especially as retailers like Alton Lane and Reformation find new ways to engage with customers. Yet again, companies who adapt to the evolving desires of customers will stand above the competition.
“There are a lot of experiential brands that are growing,” Donaldson said. “Brands like Sears, Kmart: [Are they struggling] because retail is dying? Or is it because those companies didn’t evolve in terms of being experience-based retailers?”
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