Retail Formats Remixed 2.0

BY Realty+

As pandemic safety concerns ease up, consumers are looking forward to browsing the aisles at their favourite shops again. At the same time, their habits and needs have fundamentally changed. New retail store concepts will be key to drawing consumers back to brick-and-mortar.

While a majority of customers are once again comfortable going to shopping malls, Yet a considerable percentage of these consumers are spending more online than they were pre-pandemic, underscoring the importance of creating unique store experiences. Retail real estate owners can future-proof their malls by diversifying their tenant mix with innovative retail, dining, and entertainment concepts. Following are a few examples of new formats to consider.

Brick-and-Mortar Spaces for E-Commerce Businesses: Many e-commerce businesses are finding that physical stores hold the key to faster brand growth. Omni-Channel is here to stay for many formerly digitally-native brands.

Allbirds, the eco-friendly shoe brand that began its life online, opened 13 new stores in 2021, helping its physical store sales skyrocket by 112%. In fact, in-store sales were the biggest driver of growth in Q4 2021. The online eyeglass shop Warby Parker is on a similar expansion spree. The brand plans to open 40 new stores this year, which would bring its total to 201 locations.

In India, Lenskart, and Firstcry started as online players and have expanded their offline presence largely thanks to a tech-first approach. Similarly the online beauty retailer Purplle is all set to launch ten stores- by the fourth quarter of this year. Another example is of another beauty online retailer Nykaa is all set to open physical stores.

Next-Level Experiences; Retailers know they need to offer unique experiences to draw consumers out of their homes and into stores. The trend toward experiential retail-led Dick’s Sporting Goods to launch new concepts where customers can test out products. At Dick’s House of Sport, shoppers can scale a rock-climbing wall, use a batting cage and putting green, and even head to an outdoor field to try out equipment. In the home furnishings category, IKEA is testing its Home Experience of Tomorrow in Shanghai. The new concept includes a theatre-like communal space where shoppers can socialize or relax. In India, OnePlus, one of the fastest-growing premium smartphone manufacturers, has announced the opening of its largest Experience Store in the world in India. The store has come up in Bengaluru, India’s Silicon Valley. The store, named “OnePlus Boulevard”, spans over 39,000 sq. ft. and will serve as a landmark venue for its Indian community to gain a global premium user experience and connect with the brand in a more intimate way

Store-Within-a-Store: A host of retailers are exploring the benefits of co-branding. They’re teaming up with complementary brands via licensing agreements to create store-within-a-store concepts. My retail journey began with Bed, Bath @Beyond America’s premier category killer store which was only a two store entity when I joined them and by promoting store within a store concept they were able to not only add depth to their merchandise mix but also increased there sku’s many hundred times over.

From a 10,000 sq. ft. store their size grew by leaps and bounds. Today they are rated 381 in fortune 500 list and have over 37,000 employees on their roll. In their latest initiative they have added the direct-to-consumer mattress brand Casper to their present Bed Bath & Beyond locations. Another store I had the good fortune of working with Macy’s recently got Toys R Us making a comeback with new toy shops inside more than 400 Macy’s stores.

But the best example of two niche category stores joining hands globally that I personally experienced was when in the late 90’s working as a BD head for America’s epitome of luxury home furnishings retailer ABC Carpet & Home in New York City the management decided to join hands with another giant of retail “Harrods” in London. We set up a 20,000 sq. ft. ABC Carpet & Home at Harrods. In India the partnership of MAC with India’s best known department store Shoppers stop is a classic example of a shop in shop.

Next Generation Drive-Thru: It’s not only store interiors that are getting facelifts. Shopping centre exteriors are also seeing changes as quick service and fast-casual restaurants reimagine the drive-thru experience. The pandemic accelerated customer adoption of mobile and online ordering for carryout orders.

As per a recent survey BY “National Association of Restaurents”more than half (54%) of adults today say purchasing takeout or delivery food is essential to the way they live. In response, food companies are striving to make the carryout experience more seamless than ever.

When Taco Bell Defy opens in the summer of 2022, customers will be able to zip through one of four delivery lanes to pick up mobile orders. Food is delivered to each customer through a lift system from the elevated kitchen, which sits above the drive-thru lanes.

Burger King also announced futuristic designs during the pandemic. Locations now offer more options for customers to conveniently get their orders with a drive-thru, drive-in, and curb side pickup. Restaurants are complementing their new designs with digital enhancements like interactive technology that ease the order and pickup experience, all to reduce, if not eliminate “friction” in food ordering and deliver.

Here in India we are still catching up on the drive through wagon although the first McDonald’s drive though happened in Pune way back in 2002. The Indian malls were not designed to have drive thru’s hence now that all the QSR players are insisting on drive thru’s the developers and leasing professionals are finding it hard to keep a check on circulation at entry and exit points.

Phygital Shops: Ninety-six percent of customers today demand a seamless experience across channels, according luckily, they are increasingly likely to find that seamless, frictionless experience as more retailers blend the physical and digital experiences with new “phygital” retail concepts.

Amazon is on the front lines of this trend with their Just Walk Out technology in Amazon Go stores. Customers simply grab the items they want and walk out. There’s no stopping at a check-out counter; purchases are automatically billed to the customer’s Amazon account. The e-commerce giant is expanding the adoption of this technology at Whole Foods stores and through a partnership with Starbucks.

Phygital experiences go beyond payment technology. For example, luxury brands such as Chanel and Gucci are enhancing their stores with augmented realty mirrors and interactive digital displays. And at the Adidas flagship store in Dubai, shoppers can find RFID smart fitting rooms and premium services like MakerLab, which allows customers to personalize products.

Experimental concepts: For many, but not all, the has been done in pursuit of experimental retail the lofty concept that stores can do more than just sell products. That they piloting of new formats can offer shoppers community and entertainment through the likes of services, classes and local events. For others, new formats are just a way of reaching a different market.

Bloomie’s: With department stores still under pressure, Bloomingdale’s is hoping to reinvent itself with a 22,000-square-foot format dubbed “Bloomie’s.” The smaller format is located in Fairfax, Virginia’s Mosaic District, notably outside of the mall, and builds off of a similar strategy pursued by parent company Macy’s.

Not only has Macy’s announced its own plans to move outside of the confines of the mall, but the legacy department store has also tested its own smaller concept Market by Macy’s. Similarly Bloomie’s, which opened recently features men’s and women’s apparel, accessories, shoes and beauty, as well as centralized services like a returns drop box and curb side pickup. The concept is meant to offer “everything [customers] love about Bloomingdale’s in a highly edited, convenient, and unexpected way,”

Made To Order: Nordstrom shoppers interested in the brand’s apparel work with Indochino salespeople to choose fabrics and customization options for their clothing, including lapels, buttons, pockets, lining and monogramming. Apparel is then made to measure and sent directly to customers within two to three weeks. Nordstrom also offers complimentary alterations for all Indochino customers.

“We have long admired Indochino as a leader in made to measure suiting and apparel and we are excited to bring the Nordstrom customer a new bespoke experience in our stores,” Shea Jensen, executive vice president and general merchandise manager of women’s and men’s ready to wear at Nordstrom, said in a statement on the launch.

Tags : Retail Formats Dr. Dheeraj Dogra MRICS Head Leasing Commercial Assets M3M India e-commerce business physical stores