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2015: What’s in store

Crystal ballWhile e-commerce is gaining rapid momentum globally as the fastest growing sales channel, it is still the physical store environment that continues to drive the biggest proportion of sales.

With this in mind, how is the physical store environment reinventing and what will this look like in the next 12 months?

As this year’s World Retail Congress highlighted, best practice retailers are focused on driving return on investment through return on experience. As one delegate tweeted, this increasingly means that the store will become more about delivering the brand story, with digital being used as the key transactional space. Smaller store formats will continue to arrive as technology works to open up endless aisle capabilities across multiple devices.

With 2015 just around the corner, retailers will have more opportunities to connect and create greater forms of value for their customers via their physical store experiences. Here are three emerging themes that will shape and influence best practice in the year to come.

1. Store as community hub

More than just places where people can transact,  stores are reinventing into places of greater connection. Look for stores acting more like local hubs of local experience where shoppers can buy local, tap into services, or even participate in social and community events.

Story (US): “Shop Small” – a program generating a localisation focus on neighbourhoods and local businesses. Driving a sense of belonging and investment back into the community.

Shed (US): All about driving local loyalty and becoming a modern destination for all things local. Based in California, everything sold comes from within a 50 mile radius of the store. There has been a deliberate focus on using the store as a return to place making. As a result, the store functions as a place where people can not only buy, but also meet and even book their wedding receptions. By doing this, it functions as a true community hub and inspires fanatical loyalty with people travelling out of their way to buy and visit there.

Kent and Lime: Australian-based, the men’s curated commerce clothing retailer has developed ‘hang outs’– locally tailored events centred on food, fashion, and drinks, inviting customers with similar interests to meet and hang out together. Examples of events have included bikes and rum and whiskey and watches nights.

Store as place of creation and consumption 

With the middle quickly dissolving, retailers are finding ways to create new value for customers. Emerging retail concepts are challenging and reinventing the idea of traditional retail spaces – turning them into destinations that both sell and serve broader lifestyle interests of their customers.

Story in New York is one of the leading global examples of this type of thinking, however, there are others who are rewriting the rules too.

Makers Shoreditch, London: A space that describes itself as “half maker-space, half café” dedicated to ‘changing the face of manufacturing through an approachable, engaging and personalised service’. Makers Café was launched in August and leverages the sociability of coffee drinking with access to the new world of 3D printing. The store is a space where people can bring their ideas, brainstorm them, and turn them into physical concepts, all over a coffee. From amateur to professional, one-offs to mass production, Makers Café offers after hours workshops (such as how to create your own bespoke engagement ring) through to talks and parties, essentially offering a space for people who desire to create and consume in one location.

3. Store as innovation space

John Lewis and Localz (UK and Australia): Delivering seamless cross-channel integration between digital and physical worlds will remain a critical focus for retailers seeking to build and differentiate their shopping experience. Positioning the physical store as a place where digital ideas can be tested and learned from is a key focus for retailers such as John Lewis via its JLab initiative.

Launched earlier this year, JLab is a tech incubator designed to uncover retail innovations that provide the retailer with future strategic advantage. Next generation technology start ups were invited to pitch ideas that could better help or inspire customers whilst they shopped. Up for grabs was a £100,000 investment and the chance to trial the winning solution with John Lewis.

Australian start up Localz was recently announced as the first JLab winner. Specialising in micro-location technology, Localz will enable John Lewis to deliver enhanced services directly to customers via their smart phones. According to JLab, this means anything from an automatic offer that triggers a customer’s Click & Collect order as they enter the store, to helping customers navigate their way around the store based on their online wish list.

As technology continuously disrupts retailing, the physical store environment needs to work harder to reinvent itself as a place beyond transactions alone. Customers are increasingly looking for experiences that help connect them to their local community, provide them added value in new and inspiring ways, as well as seamlessly connecting them to digital solutions and services.

What’s in store in 2015 are bolder customer expectations and shopping behaviours, that stores of tomorrow will need to actively prepare for and respond to.

Are you ready for the year ahead?

Caroline Ghatt is planning director, brand and retail at Leo Burnett Sydney.

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