The blue pill or the red pill: The future of retail is a choice

While some view brick-and-mortar shops are a thing of the past in this increasingly digital world, Bruce Gourley, Hyper NZ Strategy Director and speaker at the Future of Retail Marketing Conference, believes that retail marketers should change this mindset and put the physical store at the centre of the brand experience.


Remember that scene from The Matrix. Well, it’s like that. We have a choice. We can take the blue pill and remain in contented ignorance. Or we can take the red pill and face some unsettling truths, see the world with new eyes and just possibly change the game.

Some predict the slow demise of the physical store. And that’s true if all you offer is fulfilment.

I, however, see it differently. I see physical stores as the centre of the brand experience. I see it as a format that has all the elements to produce deeply engaged users. But it will require rethinking everything.

Doug Stevens says it well: 99 percent of retail was built to succeed in the 20th century. This means they’re built to fail in the 21st century.

The old model saw paid media as footfall drivers and the store as a transactional platform. While the store remains the primary transactional space (85 percent of retail is still offline) what we’re seeing is the beginning of a shift in thinking about what to do with the store.

We can choose to continue to focus on operational efficiencies – but frankly this really only better positions the store as local distribution centres.

Or we can look at it this way: Where are the biggest audiences right now? In retail. Where are the longest brand engagement times? In retail. Where, in the customer journey, can real experiences best be had? In retail. We’re sitting on a goldmine.

So let’s talk about the rethinking part…

Right now the physical store is a fundamentally an Ops centre focused on optimising supply chain efficiency. Supply chain wags the dog and the environment, the store, is basically back-engineered for it.

Changing this mentality and setup is difficult. That’s actually a massive understatement. And being in New Zealand throws up some additional challenges. Scale is non-existent. The money that comes from that isn’t really here. Some of the things we’re seeing around the world simply wouldn’t work. And perhaps most importantly, there isn’t the same desperation for differentiation and innovation – because there isn’t the intense competition…for now!

Perhaps I should also mention that we’ve done a great job at training the consumers to think price is value and to prioritise it above all else – but this won’t be the case forever.

So, how can we make the store not only a better experience but central to the customer journey?

Stop operating in silos

Right now we’ve got a problem in that the marketing teams don’t really participate in the curatorship of the stores. There isn’t a seamless system that regulates how shopper marketing works and how best to elevate it into something beyond simple POS on shelf. 

We like to think in terms of airplanes and runways. 

Store Ops and marketing teams need to come together to understand what platforms exist for marketing instore and which need to be created. These are the runways.

Now for the airplanes. Once the runways have been created and understood we can unleash the creative juices of the agencies and internal marketing teams to produce instore stories, content and marketing that elevates the brand and introduces supplier brands into the environment in more engaging ways.

Retail Media Networks are the start of this journey but there’s still so much to do in producing runways that help create immersive, inspirational and entertaining experiences in store. 

Let’s get more marketers into the store design teams. 

And let’s get the store into the media matrix.

Signature Experiences

How come I can make a consumer smile via a piece of marketing but instore we literally have a phrase for what happens to them: Zombie shopping.

If I asked what you would do to keep a consumer in your store for two hours, what would you say? Or how about, what would your store have to offer to make leaving the house a worthwhile trip and not a grudge visit? 

Signature experiences are those experiences that are the memorable moments of a customer journey. They are proof points for the brand mission, purpose, promise, point of difference (whatever phrase the brand strategist of the day wants to use!) But there’s no better place to develop these signature experiences than in the physical store. You’ve got your consumers in a space, for a significant time, with all the advantages that experiences ‘behind glass’ can’t offer. 

You need to find ways to make these store experiences unique to your brand, find ways to make shoppers enjoy their visit, find ways to reward them for the time spent with you.

And the best people to do this? Marketing people. Creative people. Again, get them into the process of store design, category development, store communication and signage – everything.

Build for the future

 Managing, building and updating stores is not like managing other media. Not by a long shot. Retailers think in terms of years – not weeks and days. The scale of development means the commercial impact of decisions is huge and therefore retailers usually move cautiously. 

But here’s the thing. Because of this timeline we need to realise that we’re not building environments for shoppers of today. If we’re focusing on today then we’ve already missed the boat. We need to focus on the shopper of the future. 

The best way to approach this is to clarify the role of the store in the your shopper’s world – not now – but in five years’ time. From my perspective I think this a major missing piece of retail here in New Zealand. 

Locking it down isn’t easy and this is why we see retailers around the world constantly innovating and learning through format experimentation and test stores (virtual and real).

Within cooperative models it’s difficult to designate stores as test stores but there needs to be more testing, a sandbox to play in, for us to understand how we influence the large design plans of store networks.

I recently bumped into a design development approach called Zero-Based Design. There’s a lot more to it but the main outtake for me was the idea of not thinking about the destination in terms of the tools or challenges you have today but rather working backwards from a perfect scenario or as they call it a ‘sunny day’ scenario and understanding what it would take to get there.  

I would encourage all retailers to clarify what their sunny day looks like.

The Prize

As much as every brand is currently heavily focused on being customer-centric, the reason to choose to make the physical store a key touchpoint in the customer journey isn’t just to grow shoppers’ ‘brand love’. 

If we transition the store from a transactional platform we’re looking at making this medium one that drives acquisition and retention, let alone generating higher conversion. We’re also talking about making a medium more and more stakeholders like supplier brands want to be a part of and are willing to pay to play.

In short, we’re talking commercial advantages alongside brand perception and engagement.

Summary

To conclude, the current trajectory of the store experience is one that is still being dominated by the mindset of the store as a transactional platform.

We don’t want to just keep the physical format afloat – we believe it should take its place as the centre of the brand universe. But as mentioned – everything would have to change.

We’ve got the audiences there right now – but these numbers will dwindle if we don’t take advantage of them now. 

We’ve got to start changing the behaviour of shoppers now – from only focusing on price to expecting and getting true brand experiences – or else face a race to the bottom.

And we need to define what those experiences are for each brand – our signature experiences.

And we need to start now – otherwise we’ll lose today’s shoppers tomorrow.

Future of Retail Marketing Conference

If you’d like to hear more from Bruce, get your ticket to our Future of Retail Marketing Conference taking place at Auckland’s The Cloud on July 28.

You can read more about the conference, here.

About Bruce Gourley

Bruce Gourley is Head of Strategy at HYPER NZ.

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