Bay Area Retail Asks: Are You Experiential?

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Shoppers want authentic experiences, not just goods.

THIS ARTICLE WAS PUBLISHED IN THE ‘Q’ – THE REGISTRY’S PRINT PUBLICATION – IN JANUARY 2013

By Maria Shao

From bustling downtowns to suburban malls, the brick-and-mortar store is poised for reinvention. Faced with increased competition from Web retailing, merchants are elevating the in-store experience into something more exciting, entertaining and educational to lure shoppers through the door. The store no longer exists just to move merchandise and ring up transactions. Increasingly, it also serves as showroom, museum, warehouse and fulfillment center.

“What online has done, and what the shopping trend is, really is the Apple store experience in every experience. It’s play with your gadget, play with your shoes, play with your car, play with your food. Shopping is becoming more and more of an experiential trip,” said Sean Slater (pictured), director of mixed-use and retail design at ELS Architecture and Urban Design, a Berkeley architecture firm.

[pullquote_right]“Shopping is becoming more and more of an experiential trip.” Sean Slater, ELS Architecture and Urban Design[/pullquote_right]Stores are employing high-impact, eye-catching design to evoke and promote product brands. There’s less emphasis on stuffing shelves and racks with every size, style and color imaginable and more emphasis on communicating information and stories about products and brands. Kiosks, touchscreens and other new technologies are being used to create interactive experiences. Take Japanese clothing retailer Uniqlo, which opened a 29,000-square-foot store near Union Square in October. The glossy store shocks the eye with its wide color palette, 90-plus rotating mannequins, 77 LCD screens and “Magic Mirror” dressing room for trying on virtual clothes—technology unveiled in October in San Francisco.

Today, many consumers can order an item online and pick it up, or return it, to the physical store. Amazon.com has “click-and-collect” lockers in 7-Eleven stores, where customers can pick up items purchased from the e-tailer. In an example of self-help, consumers can check Ikea’s Web site to see how many units of a particular chair are in stock at their nearest Ikea store. In 2011, Amazon.com released a price-check app to let shoppers with smartphones scan bar codes right in the store and compare with prices on Amazon.com.

121129_Registry_2013_Q1_582The role of the physical store has come under question as retailers strive for same-day delivery of goods. Amazon.com, for example, is pouring billions into building regional warehouses (including two in California) that could move it closer to broadly offering same-day delivery. Wal-Mart recently launched same-day delivery of certain toys and gifts in the Washington D.C. suburbs, Philadelphia, Minneapolis, San Francisco and San Jose, and eBay has announced similar plans. The items will be picked, packed and shipped from Wal-Mart stores, in effect turning them into a sort of warehouse operation. So, if consumers can electronically order, and receive, their merchandise right away, what will be the point of a store in the future?

For now, though, merchants are striving to increase the productivity of retail space, fueling a new focus on urban stores. Shops in city centers or other high-traffic areas tend to be smaller and have higher sales per square foot, helping to offset higher labor and leasing costs. Increasingly, city stores may be used to stock and sell the most profitable, hottest items, while less popular and less profitable merchandise is handled through online and catalog fulfillment. After all, the cost of warehouse space in a sparsely populated area is much lower than the cost of urban retail space. “What you have is a smaller store. You have a more edited assortment, more wanted items,” said Howard Davidowitz, a retail consultant and investment banker.

Photos of Sean Slater at Uniqlo in San Francisco by Chad Ziemendorf

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