How retailers can make the most of their physical stores

We’ve all seen it, department stores in refurbishment mode, with entire floors boarded up, sectioned off and hidden from view, while it undergoes a never-ending re-lift or re-format to help it boost sales. Often these refurbishments take many months or even years to complete, without the guarantee that once its new design is unveiled that said departments will see an uplift in sales. Imagine rolling this out across multiple stores, or hundreds or thousands if you’re a fast fashion chain or luxury conglomerate.

In the digital era, customers need a reason to visit brick and mortar. That reason is experiential. No longer do stores function solely for transactional purposes, just as shoppers no longer shop only with an intent to purchase. Shopping in physical stores has to provide an experience that can’t be had with a mouse click or pressing the pay button on our screens. Stores are brand building opportunities that should appeal to a customer’s sense of discovery, in addition to touching a product, examining the cut if it is fashion, smelling a scent and trying something on.

According to strategic advisers McKinsey, the sensory experience is the store format of the future, allowing retailers to offer distinctive and compelling experiences, giving a reason for shoppers to come through their doors. McKinsey this month released an insight report called "The ever-changing store: Taking an agile, customer-centric approach to format redesign,” which highlights why retailers should embrace speedier and less expensive format redesign that quickly yields returns on investment.

McKinsey recommends an approach that marries the creativity and empathy of design thinking with the discipline and speed of agile methodologies. This entails making high-impact changes rather than department-wide or storewide remodels. Indeed, retailers must adopt a mind-set of “never being done.”

This is why concept boutiques like Dover Street Market and department stores such as Selfridges have mastered the art of retailing, selling valuable experiences as much as products.

One of the key concepts of McKinsey’s insights is for retailers to define their vision. What is the primary function of the store? Where does it sit in its omnichannel portfolio? Is it a showroom to introduce new products, but with little inventory? Is it to offer a service that can’t be executed online? Is it a changing curated product assortment?

Mapping the customer journey

Retailers would do well to listen to their customers to see if their needs are being met. Why are they visiting their stores, what are their purchasing and browsing habits? How do they behave in-store? Are they shopping for items, goal-oriented, or do they interact with the store environment and are open to discovery? What are their pain points and obstacles they face to meeting their retail needs?

According to McKinsey, retailers would use a variety of methods—such as structured interviews, ethnographic techniques, and analysis of internal data (e.g. customer complaints, customer-satisfaction surveys, and point-of-sale data)—to understand the customer journey, in order to uncover a consumer’s unspoken desires, motivations, and concerns.

Of course some customer journeys are to meet a simple retail need, like visiting a store because you need a pair socks. But it is precisely those companies who go beyond the bounds of old-fashioned retailing that may have you go home with a newly acquired wardrobe.

Photo credit: Martin Addison / Selfridges / CC BY-SA 2.0