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Euromonitor International had the pleasure of attending the WWD Retail 20/20 Forum: London, The New Store Experience held at the Ham Yard Hotel on April 25, 2017. The event brought together executives across the retail and e-tail worlds to discuss the rapidly changing face of the physical store against the backdrop of a digital revolution. Recurring narratives of the day fixed on the seamless implementation of meaningful technology and unification of both traditional and digital features to create a “phygital” environment. Beyond this, the store must pivot around an axis of community and enrichment, much like Apple’s retail “town square” concept. Space productivity also emerged as a central theme of the summit, with various speakers viewing the role of each square foot of a physical store differently; however, ultimately all were in agreement on the importance of a brand having a clearly defined objective for its physical space.
Talk of the channel agnostic consumer gathered pace in the auditorium throughout the day, kicked off by Tom Chapman, the CEO of Matchesfashion.com, as he emphasised the importance of making digital physical and physical digital. The consensus was that omni-channel segmentation is no longer relevant because omni-channel retail is retail in 2017 and this demands a phygital environment. Unified in the term “frictionless commerce”, discussion ranged the culling of “dead stores”, i.e. those that do not have interactive images or moving POS, to the online equivalent. Apu Gupta, CEO of Curulate, took a deep dive into optimising digital commerce for discovery. In the age of actionable, not static images, every online touch point should be easily navigable and shoppable to mimic the discovery element that stores are so great at.
An e-commerce core means that for Matchesfashion.com, stores are not profit centres but marketing opportunities and brand beacons. Chris Sanderson, Co-Founder of The Future Laboratory echoed this sentiment quipping that retailers should be thinking in “wonder per square foot, not sales per square foot”.
Lush Cosmetics had a similar stance on the significance of the physical store and shared its retail strategy looking ahead, which is quite simply the right stores, at the right size, in the right location. The retailer’s 10,000 square feet Oxford Street Flagship wholly embodies this formula, with an entire event space dedicated to providing entertainment, including cinema and live music. Considering that bricks and mortar still accounts for 90% of Lush’s sales, however, it is only natural that profitability must continue to be a focus for now. This is a case of the bigger the store, the better the experience and thus, the higher the brand equity.
At the other end of the spectrum, Mon Purse, a luxury retailer of personalised accessories, talked of how bespoke concepts offer best-in-class retail productivity; the lesson being carried little and invest in value creation. Without the need for an extensive product showcase but the added value of bespoke products, Mon Purse outpaces many of its luxury counterparts when it comes to sales per square foot. Key takeaways are that retail property owners are actively looking for tenants that can drive up property sales per foot and on average department stores operate with lower productivity when compared to traditional retailers. This puts the likes of Neiman Marcus and Nordstrom at the back of the pack when it comes to retail productivity, and Tesla, Apple and Mon Purse at the front.
Getting smarter with data emerged as a thread that tied much of the dialogue throughout the forum together, and Tumi Travel’s Chief Digital Officer, Charlie Cole, simplified the difference between e-commerce and brick and mortar data. Ultimately the problem with the physical sphere is that these retailers are not thinking about programmatic “clienteling”. In fact, data is something that many retailers are still grappling with, even in the e-tail arena. E-commerce conversion rates are generally 1%-3%, maximum 6%, which as Cole points out, “means that 94% of the time what retailers are doing is not selling stuff”. The reality of this, as Cole observed, is that “if we don’t find a way to be symbiotic across retail, then Amazon will kill us all”.
To find out more about New Concepts in Fashion Retailing, download our report.