What’s a Store For?

The first e-commerce transaction—a music CD, pizza, or weed, depending on who you ask—took place around thirty years ago. That means that first truly native ecommerce generation is now in charge of their own foot traffic and armed with at least one device that spares them the trouble of leaving the house. This, paired with the broader shift in consumer behavior across all generations, means brick and mortars need to find new ways to compete with digital to inspire visits and sales. Stores are evolving and, along the way, challenging the very notion of what a store is for.
Up against digital
A big part of brick and mortar’s evolution is digital integration. Today, retailers are working to enhance and personalize customer experience by connecting to consumers in-store through their mobile devices—building apps, targeting ads, and using beacons. You can find many examples of digital integration today, though online retailer Rebecca Minkoff’s flagship store in New York offers one of the more comprehensive ones; its interactive wall and dressing rooms have been credited with tripling expected clothing sales. Timberland also just launched its first connected store while Nordstrom’s commitment to digital integration has been credited with 50% growth in revenue over 5 years. (They just hired a former Amazon exec to serve as CTO.) Target, too, is getting into the mix, launching an LA25 initiative where it’s testing 50 of its top enhancements in 25 Los Angeles stores.
The IRL advantage
But digital integration is not the only strategy; retailers can also draw on the in-real-life [IRL] advantages of the physical space. Immediacy comes in here, with more retailers enabling online ordering and pick up in store or curbside. It’s competitive because fewer exclusively online retailers can offer this instant gratification, but is not necessarily a long-term strategy given that online fulfillment will continue to evolve and speed up.
More effective is the opportunity to build community. Oftentimes, this comes in the form of caffeine; Barnes and Noble was an early innovator here, adding a Starbucks to a New Jersey store back in 1993. Since then, many retailers have adopted or tested in-store cafes, including Urban Outfitters, Target, Restoration Hardware, and Kohl’s. Along the same lines, Target, Whole Foods, and Nordstrom, among others, are offering cocktails in some stores. When trying to attract customers and increase dwell time, there’s an advantage in offering something that can’t be instantly downloaded, like coffee, booze, and yes, maybe even tattoos. (See Whole Foods.)
Meanwhile, another concept that keeps popping up is—ahem—the pop up shop. The pop up shop’s currency is urgency; if customers don’t come now they risk missing out forever. Bloomingdales is hosting a pop up inspired by the musical Hamilton while Macy’s is bringing in pop ups as part of the reinvention of its Brooklyn store. The pop up also presents a low-risk testing ground for online retailers, one compelling example being Warby Parker’s touring store that was housed in a school bus.
But…is it a store?
As brick and mortar adapts, becoming deeper integrated with digital, acting a fulfillment center and expanding to offer drinks and other services, the classic definition of “store” begins to fragment. Already, the “store” has lost its longstanding position as the finale of the customer purchase funnel; in no small part because that purchase funnel itself is an antiquated concept. Savvy retailers and brands in general now think of the consumer experience as an ongoing loop, with consumers moving from digital to physical and back until, eventually, there may be no clear delineation between the two. This emphasis on the overall experience changes the expectations of stores. It also opens opportunities for more types of brands to invest in physical locations.
For example, last year, there was an more than an hour wait at the Museum of Feelings in downtown New York City. The museum invited visitors to walk through a sensory presentation of each feeling: Optimism, Joy, Invigorated, Exhilarated and Calm, while its exterior changed color to reflect the social mood of New York. You might argue that this wasn’t actually a store, but then it wasn’t actually a museum either; The Museum of Feelings was a branded retail experience for Glade, generating buzz for an otherwise not-so-buzzed-about brand.
More recently, Samsung launched Samsung 837, a “first-its-kind cultural destination, digital playground and marketing center of excellence.” Samsung 837 serves as a showcase for innovation, offering what may be the first virtual reality experience for many visitors and providing Instagram-friendly experiences like the walk-through Social Media Gallery. But what’s unique about Samsung’s space is that there is nothing sold there. It’s an experience—an opportunity for Samsung to tell its story and give visitors a way to get excited about the brand they’ll buy in the future.
In cases like these, brick and mortars serve as a marketing vehicle—an opportunity for brands to curate their own presence for customers, just as social provided the format to operate as a media company. It’s a trend that makes Amazon’s decision to open its own brick and mortars seem strategic. But is the return there?
It always comes back to data
The ability to more accurately track consumer activity gives brick and mortars a host of insights. Not only can the more connected store know what was purchased, they can also see what products compelled the most research, price comparisons, or inspired trips to the fitting room. They can engage with in-store customers via social media as well as encourage and measure posts from their store and, increasingly, tap into emotional analytics. Further, more sophisticated attribution measurement is making it possible to determine what investments drove traffic to the store, even without purchase.
Though it would be inaccurate to suggest that traffic and sales aren’t still the key performance indicators for most stores, this broader set of data, if put to use, can help a retailer optimize beyond the limits of its four walls—especially critical at a time when stores are closing so rapidly that CNN wrote “Store Closings are the Hottest Trend in Retail.”
Where to go from here
Digital has an odd way of creating challenges and then presenting solutions for those challenges it creates. It offers a range of ways of to add genuine value, from brand awareness to interaction, coupled with pop-up flexibility. If retailers are savvier about embracing this value, they’ll stand a better chance of attracting customers. If not, they’re not only missing out on opportunities in the near term, they’re limiting their future prospects for growth—after all, isn’t it a waste to see a store as a fulfilment outlet?

Evernote wants to sell you… socks?

A few years ago, Evernote started to test the waters for physical products that lined up with its note repository positioning, and worked with partners on items like the Evernote Smart Notebook by Moleskine. But now they’ve snapped.

Evernote has launched the Evernote Market where its selling items like the Moleskine, a scanner that’s integrated with Evernote (the Scansnap Evernote Edition Scanner), and what looks like a much better stylus for iOS devices (the Jot Script Evernote Edition). But socks, backpacks, and iPad sleeves? Wallets?

Screen Shot 2013-09-27 at 12.38.10

There may in fact be enough software, hardware, wearables, and peripherals to justify a store, but I think Evernote should keep away from socks.

Apple’s self-checkout system reportedly doing well

Apple’s experiment with self-checkout in its retail stores is apparently doing well, according to sources. The system, which allows shoppers to buy relatively items using the official Apple Store app on their iPhones, could pave the way to higher profits and lower operating costs for Apple.

Will Facebook Ever Be an E-Commerce Powerhouse?

A big factor in the $75-billion theoretical market value Facebook has amassed is the idea that the social network will become a major e-commerce player. But a new report from Forrester Research argues that Facebook may never actually achieve that goal for a number of reasons.

Lingering iPad Question: Who Gets to Sell It?

Woo hoo! Now we know when we get to buy the iPad. However, we haven’t been told where we get to buy it. Of course the Apple (s aapl) Stores (both online and off) will carry it, but the end of the press release has a cryptic statement that the iPad will be sold at select (emphasis added) Apple Authorized Resellers.

That probably means not every place that can sell Apple products will be allowed to sell iPads. This is a curious position for Apple and its distribution strategy. Which model does it choose?
Let’s take the iPhone. It’s very limited in distribution. Apple and AT&T (s att) controlled sales at the beginning and then eventually allowed places such as Wal-Mart and BestBuy to carry it. Apple COO Tim Cook confirmed BestBuy would sell the iPad but didn’t say who else would have that capability. Logically, anywhere you can buy an iPhone you should be able to buy an iPad, right?
What about any place you can buy an iMac? Only time will tell, but here is what I think will happen. Cue the special effects. Read More about Lingering iPad Question: Who Gets to Sell It?

Retail Rumors: Apple to Build New Prototype Store

Dream bigger,” Steve Jobs told a Disney executive as they discussed plans to reinvent the media company’s retail outlets. He insisted Disney develop a prototype store, much as Apple did before it launched its first brick-and-mortar outlet at Tysons Corner, Virgina, in May 2001. As the majority shareholder it’s in his best interest, of course, for Disney to be successful, but you have to imagine he’d offer the same advice to anyone.

Well, it has been almost nine years since Apple got into the retail store game and with Microsoft (s msft) blatantly copying Apple with their recent move into retail, it’s time for a change. As last week drew to a close, clues emerged suggesting Apple is looking to reinvent its retail store design, and once again it’s developing a prototype. This time, however, it’s not tucked away in an aircraft hangar at Area 51, but can be found at 340 University Ave, Palo Alto.

On Friday SiliconValley.com reported:

[Apple] will build an Apple Store that project developers referred to in planning documents as “a new prototype for the company.” The facade will be entirely transparent at ground level, vast skylights will flood the store with natural light, and trees will grow inside, fed by the sunlight from above.

It sounds so beautiful. Quite unlike the building that currently stands at 340 University Avenue;

Not much to look at now, but, give it time... Image from Google Maps

According to the report the architectural review board voted unanimously to approve the plans which, although referred to as a “renovation,” include completely demolishing the facade and roof of the building. It seems the structure has been altered so many times in recent years it doesn’t qualify for historic protection.

The plans credit architectural firm Bohlin Cywinski Jackson — the same firm behind Apple’s iconic Fifth Avenue store in New York, whose entrance resembles a giant transparent-cube. SiliconValley.com’s Will Oremus says several sources have told him Apple is behind the project, while Alexander Lew, chair of the arhitectural review board, said:

Apple is pretty secretive… But at the same time, when you look at it, the design is pretty unique. …I think a lot of people have kind of guessed.

The whole design is inside-outside, with everything completely exposed. With the huge skylight, there’s going to be lots of daylight and it will feel more like an atrium inside. … We’re excited about the project.

Naturally, Apple declined to comment on the plans. Shocker, eh? Thankfully, the proposal includes some tantalising descriptive prose detailing the vision for the new store, the beginning of which should sound familiar to anyone who has ever visited an Apple store.

The proposed store is a new prototype for the applicant. Fully half the function of the store serves to provide education and service to business as well as customer patrons in addition to product sales. The store is a commons for the applicant’s community to gather.

[The all-glass store front] dissolves the boundary that traditional store facades create. By not breaking the horizontal ground plane of the sidewalk with opaque wall or landscape element, for example, the street is made part of the store’s interior; the pedestrian is in the store before entering it.

Of course, we don’t know absolutely for sure if Apple is responsible; I suppose this could be Microsoft’s doing. And while we’re at it, Apple’s much-rumoured-tablet might run Windows 7 and feature a hardware keyboard and built-in fax machine.

I’m trying to imagine what makes this “prototype” so special and new. Aside from the interesting aesthetics (Apple does like its glass-walled cathedrals) what will make this store different?

The NYC Upper West Side store has been likened to a Cathedral. Image by Apple, Inc

Are we talking the tried-and-trusted Scandinavian furniture we see today in all other Apple stores, or will we be treated to a complete overhaul? Touch-enabled surfaces everywhere? More room dedicated to iPods and iPhones? A new Tablet Bar?

I’m holding out for a luxurious coffee bar in every Apple Store 2.0. If it did that, I could practically live in my local Apple Store. What would you change in yours? Share your ideas, and coffee-cravings, in the comments below.

Disney Stores Get the Apple Magic

disney_logo

The New York Times reported yesterday that entertainment super giant Disney (s dis) is planning to reboot its entire chain of global retail stores as part of a major new strategy and vision inspired and guided by Apple CEO Steve Jobs (s aapl).

In the current economic climate, most retailers are looking for ways to cut down on spending and holding-back on investment and growth initiatives. But according to the New York Times’ Brooks Barnes, Disney is taking a leaf out of Apple’s book and using the economy’s downtime to reinvent its own retail stores.

Disney is… getting more aggressive and putting into motion an expensive and ambitious floor-to-ceiling reboot of its 340 stores in the United States and Europe — as well as opening new ones.

This mirrors Apple’s own aggressive efforts in the last 18 months to refurbish existing stores and open whole new outlets. It’s a strategy that’s paying off. In August, Bloomberg reported that Apple’s retail stores were performing consistently well, despite the economic downturn.

Apple… increased revenue at its stores by 2.5 percent in the first six months of the year to $3 billion as the rest of the retail industry suffered. During the same period, sales at all U.S. retailers fell 9.2 percent compared with the first half of 2008, according to the U.S. Commerce Department.

So the investment and growth strategy is working well for Apple, and clearly Disney is hoping that some of Steve’s retail magic might rub off on it. Read More about Disney Stores Get the Apple Magic

Microsoft Retail Store Locations Announced

windows_store

The locations of the first Microsoft (s msft) Retail Stores have been announced. Microsoft’s foray into brick-and-mortar retail will begin in Scottsdale, Ariz., and Viejo, Calif., CNET News‘ Ina Fried reported in an article yesterday.

Microsoft confirmed it has signed leases for both locations, where it expects to open its retail stores in the fall. Microsoft spokeswoman Kim Stocks said:

“Over a billion people use our products every day yet we don’t have a way to directly connect with them. We see the physical stores, as well as a consistent online experience, helping that.
“Our customers have told us three things — they want a more simplified buying option for PCs and devices, great technology, and competitive prices and knowledgeable staff.”

Umm, isn’t that four things, Kim?
I’m not surprised she seems confused. If she read the 124-page Retail Store Proposal I reported on this week, she’s probably still a little dazed. I know I was.
I have only two questions: Will the first store be introduced to us by Steve Ballmer, will Microsoft forge ahead with its blatantly Apple-inspired “Guru Bar,” and will you be standing in line hours before the grand opening?

Microsoft Retail Store Proposal Leaked: 124 Pages of Execu-Speak

Last week Gizmodo published a leaked proposal (32MB PDF) from marketing agency Lippincott detailing plans for Microsoft’s (s msft) upcoming brick-and-morter retail stores. It makes for mind-numbing reading, running at a mammoth 124 pages of (mostly) brain-freezing execu-speak.

I’m glad I don’t work in Marketing. It’s a troubled, stressful world where there’s no such thing as a “lie” and the customer is considered little more than an uninformed, paranoid bag of walking money. Marketing execs rabbit incessantly about “managing expectations” or “steering brand awareness” and other essentially meaningless buzz-phrases. Either it’s subtle genius, or howling bum-gravy. Read More about Microsoft Retail Store Proposal Leaked: 124 Pages of Execu-Speak