Retail is under pressure. External factors such as increasing competition, technology advancements, and pandemic restrictions are driving change online and offline. Consumer preferences are also changing quickly.
That doesn’t mean it’s time to abandon the physical retail store. According to the Fourth Edition of the Connected Shoppers Report, 82% of the $23 trillion worth of sales occurred in physical locations in 2020.
Retail stores in the future are likely to remain significant moments in the customer journey. They will aim to support customers’ needs for entertainment, product engagement, fulfillment, service, and support. However, we may see those needs fulfilled in new ways.
For example, augmented reality (AR) and virtual reality (VR) can drive purchasing and compress the customer journey into a single moment. Retail sales staff may become influencers who sell on the ‘Edge’. More retailers may open hyper-niche stores.
Finally, direct-to-consumer (DTC) brands may partner with traditional retailers to break out of the online bubble, or open their own in real life locations. We’ve seen this with Roak, Warby Parker, and other brands.
At the same time, marketers will need to know their customers better than ever before. This requires a data-first approach built on solid journey management and a single source of customer truth.
Here are three critical trends that can shape retail stores of the future:
AR/VR can help customers make better decisions
AR and VR can be used as tools to compress the customer journey into a series of concurrent experiences that occur in a single moment. This provides a new way for customers to ask questions and obtain more information than was previously possible. Risk is removed from the purchase, and the customer can make better decisions.
For example, a brand may deploy an advertisement via social channels that connects the consumer to an AR/VR-based product demonstration. Next, the consumer may choose to engage with a bot to ask questions. This completes the consideration phase of the buyer’s journey and leads to purchasing. All in a single moment.
IKEA is one company that’s investing in this style of AR-assisted selling. The new IKEA Studio app (currently in beta testing) encourages consumers to virtually furnish entire rooms with multiple IKEA products. By doing so, IKEA has made it easier for customers to reach their desired goal, the completed room. By leveraging an AR-assisted moment, IKEA helps to answer previously unanswerable questions, like “Will this rug, lamp, and pillow pull the room together”? Thus removing risk from buying and speeding up the buying cycle.
Retail stores may become influencer studios
Shopping will likely continue to be a form of entertainment for consumers.
Retailers may consider merging online and offline selling by turning their stores into influencer studios. Retail staff can become influencers who sell products on the ‘Edge’. The ‘Edge’ refers to non-traditional brand or retail spaces, such as social media channels.
We’re already seeing retail sales staff at high-end brands like Tiffany’s sell to their own social media followings through their personal social media accounts. We may even see the rise of powerful influencers who lead tours to different stores, and book retail studios like music venues.
It’s likely that the growth of e-commerce will also continue to turn retail stores into BOPIS (Buy Online Pickup In Store) fulfillment centres. We may also continue to see retailers dedicate more physical retail store floor space to service and support departments. Apple pioneered this concept with ‘Genius Bars’ at the forefront of many of the brand’s retail stores.
Retailers may open hyper-focused stores and DTC pop-ups
Brands may take personalisation to the next level with new hyper-focused retail stores. These can carry a single product line to create super-niche experiences. Adidas, for example, recently opened a Terrex flagship store in Shanghai that only stocks the brand’s Terrex product line.
Smaller DTC brands may partner with larger traditional retailers to scale beyond online sales. These partnerships can also benefit traditional retailers. For example, they can consider embracing DTC pop-ups to refresh their offerings each time the customer visits the store.
The success of these partnerships depends on how well brands and retailers know their customers. Deep insights into what audience segments want, need, and expect will be critical to selecting the right retail and DTC partnerships.
Physical retail stores will still be relevant
While technology will feature heavily in the future of retail, it will not replace the physical store. Customers may not purchase in-store, but real-world interactions with brands will still be highly valued. It’s the nature of these interactions that will likely change the role the retail store plays in the customer journey.