Over the past few years, the rise of e-commerce and mass migration to digital channels by traditional retailers has been interpreted as marking the end of brick-and-mortar stores. In reality, as the forces of disruption continue to press forward, we can see that the digital is not replacing but rather adding a dimension to traditional retail by which existing elements acquire new meaning and functionality. There is still a place for traditional stores. In fact, as this report shows, the in-store experience is returning as an essential touchpoint with customers – one which augments its digital counterparts.
The store is no longer a beginning and end point, but rather a gateway to a brand’s entire ecosystem.
In a drastic change of narrative, the industry now considers traditional retail adopting digital channels and pure-play online brands opening brick-and-mortar stores as two movements that together drive a single retail revolution. The expectations of the modern connected consumer have fundamentally changed the game to the point where captivating customer loyalty requires brands to deliver a single, seamless and immersive experience across all channels.
The siloed approach of digital versus physical is no longer relevant, as it is only through functional integration that either one can be effective
As a global platform connecting young and established brands to commercial real-estate providers, we have witnessed firsthand how the retail landscape has shifted and how pop-up stores have become increasingly valued as a tool for the industry to navigate the unknown: experimenting with products, locations, tenant-mixes and commercial agreements.
As a result, the pop-up is now considered to play a central role in leading the retail revolution offering different benefits to brands and real estate providers working towards the same vision.
In our commitment to connecting the community to share the future of retail, this report reflects on key trends and technologies impacting the industry, shines a spotlight on how some brands play into these trends and pinpoints how pop-up stores function as a strategic tool for both brands and landlords to capitalize on these developments.
Mohamed Haouache - CEO at Storefront
The future looks bright…
27.73 trillion USD projected global retail sales in 2020, up from 24.86 USD in 2018. *
Global consumers are very confident about the coming years’ economy. Asian territories tend to be the most optimistic. *
Experience is a vital ingredient…
43% of consumers are likely to spend more with a retailer who offers a meaningful in-store experience. *
46% identify environment as a key element of a meaningful shopping experience. *
66% are more inclined to shop at places that house cafes, bars or restaurants. *
In the past three years the global number of weekly brick-and-mortar shoppers has risen from 40% in 2015 to 44% in 2018.
There is no retail apocalypse, but a blending of worlds…
40% of US male millennials would 'ideally buy everything online, compared to 33% of females. *
62% of permanent clicks-to-bricks stores have opened in the same city where they opened their first pop-up shop. *
90% of worldwide retail sales are still done in physical stores. *
74% of clicks-to-bricks retailers are apparel and accessory brands. *
Consumers want to know what their peers think: social media is the #1 choice to get inspiration for purchases online. *
By 2020, the demand for an omnichannel customer experience will be amplified by the need for near perfect execution. *
Artificial Intelligence (AI)
Brands are further exploring AI-powered retail applications that can identify patterns and actionable information about customer behavior and inventory optimization. Equipped with AI capabilities, businesses can improve the customer experience by timing promotional discounts right, offering exactly what customers need at the right price, optimizing layout for items in the store and placing products frequently bought together next to each other. The same technology can be used to make more accurate inventory forecasts based on historic purchasing patterns and prevent stock from building up.
Internet of Things (IoT)
IoT is moving beyond hype and into real-world applications, with malls and retailers alike embedding their omnichannel strategy with seamless device integration. With IoT, customers visiting a mall can access the floor plan using a mobile app that offers the suggested walking route and notifies them of relevant sales on the way. Connected to inventory management systems, the same app will be able to tell the customer if the favored store has the item in stock or suggest an alternative store instead. Using beacons, mall operators can analyze foot traffic hotspots and optimize the layout of the retail mix and event spaces.
Augmented & Virtual Reality (AR & VR)
With AR and VR increasingly available, retailers are integrating technologies with the customer journey to create specialized and intensely immersive in-store experiences. Either using their own device or an interactive smart mirror, customers can preview wearing a product, changing size and color to experiment with convenience while receiving personalized recommendations and on-demand product information. VR offers an even more immersive experience, lending itself perfectly to bringing products to life in the environment they will be used. Wearing a headset, a customer can take a car for a scenic test drive, or wear hiking gear standing on top of a mountain.
Smart purchasing & inventory systems
Shoppers increasingly browse on one channel, buy through another and potentially visit a third channel. Smart purchasing systems track the customer journey and provide a seamless process that allows for multi-step, multi-channel purchasing, and accommodates various payment methods including cash, card, contactless and mobile. Leveraging key inventory partnerships, stores can tap into a larger network which relieves them from carrying their own inventory and allows for smaller store formats where staff is more focused on creating an exclusive experience for the shopper. In a distributed inventory system, items will no longer be ‘in stock’ but rather ‘in network’.
Data collection & analytics
Retailers are ramping up their data collection and analytics capabilities. Data tracking is the backbone for meaningful customization of products and personalization of services. Facial recognition allows brands to recognize opted-in customers when they walk into the store, and mobile syncing makes browsing and conversion behavior available to staff to help deliver a tailored service – further synchronizing in-store purchasing and browsing behavior with the customer’s digital profile aligned across all channels.
Natural language interfaces such as chatbots are playing an increasingly important part in removing friction from the checkout process and boosting online conversions. Customer service is a key element of the in-store experience and can be difficult to replicate in the digital world. Sophisticated chatbots help bridge the gap by providing a level of customer service that truly adds value and streamlining “click-and-collect” models by, for example, booking a ride share to the store after an online purchase.
What consumers prefer…
● Seamless omnichannel experience and convenient payment solutions
● Face-to-face interaction with genuine staff to optimize decision-making processes
● Cutting-edge technologies that give a sense of excitement
● Meaningful shopping experience augmented by social spaces
● Personalized service and customizable products
● Value-driven brands that provide transparency
● Sense of pioneering
How brands create value…
● Providing customers with a memorable in-store experience
● Creating integrated touchpoints along consumers’ everyday lives
● Community building
● Knowledgeable and experienced in-store staff
● Strategic data collection and analysis to enhance personalization
● Consistency in service, product-quality and storytelling
● Connecting to a social cause
● Targeted store distribution - meeting customers in their own neighborhood
How landlords and mall operators provide support…
● Driving foot-traffic through dedicated pop-up spaces
● Diversifying brand mix to broaden appeal of shopping centers
● Flexible lease arrangements
● Including event and lifestyle spaces to make for a multi-purpose shopping experience
● Investing in technological infrastructure to gain insight into visitor behavior and facilitate innovative brands
● Dedicating retail spaces in off-beat locations to satisfy niche consumerism and open up neighborhoods to new commercial activity