Retail Trends: Evolution of traditional retail.

Technology changed the way we do everything. In retail, the rise of e-commerce has sparked worry about the relevance of brick-and-mortar and prompted retailers to reimagine the way they use tech to promote their products and engage shoppers. 

A ‘new normal’ has emerged, challenging us to think outside the box in exploring new formats and creating displays and activations that chase up the figures for sales, customer engagement and brand awareness while cutting down on manufacturing cost and timeframes.  

In this article I look into the trends shaping this shopping evolution and how it impacts the way retailers experiment with product displays and in-store activations across both temporary and permanent store formats.

1. ONLINE/OFFLINE INTEGRATION: Physical stores VS Online stores

Deciding between ‘online’ and ‘offline’ methods of commerce isn’t a ‘one VS the other’ argument, but rather a challenge for retailers to drive omni-channel strategies to extract the best uses of each platform. Neither of the two can work perfectly on its own; physical stores and e-commerce are reliant on each other to utlise each to their full potential. Less than 50% of customers’ overall shopping time is about the actual purchase, according to Gensler’s Experience Index for Retail.

Online shopping, therefor, occupies a small place in the bigger picture of customer experience. Store design is a key driver for impactful shopping experience retailers can use it as a tool to tap into customers’ emotions, turning their physical spaces into experiential hubs while focusing transactions online.

Birchbox Pop Up

Beauty brand Kylie Cosmetics is an example of an online-born business that has been thinking outside of the internet box, expanding to traditional retail methods through pop-up events and store-in-stores. Founder and owner, reality star Kylie Jenner, has the internet and TV screens across the world to thank for her fame, so it’s a no-brainer that her brand emerged online.

But with customers looking for a more personal touch on shopping, the brand entered a partnership with Topshop in 2017 to display Jenner’s makeup and beauty products in store-in-store (SIS) stations to offer their customer base an in-store shopping experience – a preference that came to light when the brand conducted in-depth market research into shoppers’ online vs in-store behaviour.

The first of these pop-up stores lured hundreds of shoppers lining up outside Topshop in Midtown Manhattan to get first picks on the limited-edition products sold at the Kylie Cosmetics SIS. Right off the bat, there are two major benefits we see here: physical brand presence for the pop-up brand and increased customer traffic for the retailer hosting the pop-up. 

These kinds of temporary spaces bode particularly well with skincare and cosmetics brands, with market research showing close to ¾ of shoppers prefer buying cosmetic products in-store if they are first-time buyers. But it doesn’t stop with this group of retailers.

The trend extends to tech and telco with Indonesian bank giant CIMB Niaga rolling out their digital branch concept across Jakarta to merge the best of both worlds: the convenience of digital banking and the personalisation of in-branch assistance. Check out their first residentially located digital branch that just launched in collaboration with greater group.

2. THE HUMAN FACTOR: Beauty product displays

Amid the revolution brought about by online shopping, physical stores are still thriving. Why? The reason e-commerce will never fully replace brick-and-mortar is because it lacks the ‘human’ element and in-person interaction that cannot be achieved through technology.

Online brands experimenting with temporary store formats is a pattern we see everywhere, from skincare company Glossier’s traveling pop-up store to mattress retailer Casper partnering with Target to display their mattresses in-store.

rose quartz

Shoppers like the sensory aspects of physical formats where they can touch, test and experience products while assisted by in-store staff, knowing they can resort to online shopping methods to get bigger products delivered hassle-free or stock up on their favourite skincare and cosmetic products.

Sephora, praised for their innovative and immersive customer experiences like digital try-on features in-store, has been playing around with new concepts to drive interaction with their customers. In celebration of their 20th anniversary, the brand launched Sephoria House of Beauty, a two-day event packed with activities like master classes, exclusive product demos and meet-and-greets with guest stars.

This event capitalised on the air of exclusivity, creating a one-time event where attendees can socialise with major names in the industry. The design of this pop-up experience played a significant role in its success. Sephora rented The Majestic Downtown, a well-known set for movies and music videos, setting the dramatic tone for greeting guests by the grand staircase accentuated by low lighting and a carefully curated playlist. Food and drinks were passed around and two fully stocked bars waited in the basement – working with the scents and visual appeal of Sephora’s products to create a one-of-a-kind multi-sensory experience.

3. TECH INNOVATION: Retail Displays

With that being said about the importance of the personal touch, technology is making its way into every sphere of our lives and there’s nothing we can do to stop it. But instead of tech taking away from the personalisation of in-person interaction, it is a valuable tool in increasing the quality of day-to-day operations of stores and evaluating the success of new formats through social media metrics, store visit numbers and sales figures.

IoT (Internet of Things) – a system of interrelated computing devices able to transfer data over a network without needing the skills or services of a person – allow customers in a shopping centre to follow a suggested route to optimise their shopping experience with relevant sales and promotions along the way.

Mall operators can use this technology to determine traffic hotspots and analyse shoppers’ movements in-store, ultimately allowing individual retailers to strategize wayfinding tools like signage and product display placements that will increase sales based on the way customers are most likely to navigate the store

Samsung did a great job with The Frame, an in-store unit designed to creatively showcase their latest products by demonstrating how it can be used in home environments. Designed, manufactured and installed by X-Factor Displays, the completed unit is compact and flexible to ensure pain-free installation in a variety of spaces – a key factor for designing temp spaces.

Samsung has reported that these displays are a big hit with both customers and retailers, with increased engagement as shoppers are invited to interact with the displays to curate their shopping experience.

4. SMALL & TEMPORARY FORMATS: Temporary retail building

Temporary formats have become increasingly valuable as a tool for test driving new locations and products. Pop-ups, for one, hold immeasurable value by offering practical and financial benefits for brands.

Target plans to open 30 small format stores annually over the next couple of years to move into smaller spaces like campuses and urban centres where the typical size of their stores cannot be accommodated. To kick off this small format project, the retail giant is opening three such stores on college campuses across the US, designed for convenience and focused on the needs of college students with grab-and-go meals and stationary supplies.

Target is taking a very smart approach with this format expansion, cultivating loyalty and brand awareness among the younger demographic who will go on to become their biggest customer group in coming years.

According to a report by Storefront unpacking the rise of the pop-up format, the demand for an omnichannel customer experience will be higher than ever in 2020, driven by the need for near perfect execution and seamless transition across different platforms.

The report elaborates on how landlords and mall operators are providing support to brands exploring new formats through dedicated multi-purpose spaces for pop-up stores and lifestyle events, flexible lease arrangements, offering a diversifying brand mix and investing in tech infrastructure to gain more accurate insight into customer behaviour.

ANZ in collaboration with X-Factor Displays is working on a temporary format project to create a space for the bank to interact with their clients across a variety of potential scenarios.

The pilot kiosk was delivered in Queensland’s Riverlink shopping centre to fill the gap when the permanent branch underwent constructions and showed incredible metric success in terms of customer engagement. This kiosk is an excellent testimonial of how temp formats can up the game for retailers across all sectors.

TO SUMMARISE:

In 2020 and beyond we can expect to see temporary formats lead the charge in the retail evolution sparked by online shopping platforms. There is, without a doubt, still room for physical stores and traditional retail approaches, but retailers will continuously face the challenge of merging channels to create unique experiences that will make customers come back again and again.

Small and temporary store formats hold incredible value in creating brand awareness in new locations while saving time and money – shorter rental periods, reduced time frames for manufacture and build, more freedom to explore sustainable and durable design options, and the ability to recycle the same units across many different locations.

When it comes to creative displays and activations, technology holds the steer for creating product displays and way-finding tools that grab shoppers’ attention and can easily be adapted for different uses.

Be on the lookout for a complete project showcase about ANZ’s temporary kiosk to see how these strategies play out in the field!