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Insights

Retail As the Third Space

05 January, 2015 - Source: JWT

Digital commerce is forcing retailers to rethink the function of physical shops, which is increasingly focused around experiences, unique environments and customer service – giving shoppers new reasons to spend time in these spaces.

Physical shops will increasingly serve as a “third space” that’s only partly transactional. The hard sell is becoming less important than providing something more fun, helpful, satisfying or distinctive than e-commerce can offer.

From luxe labels to sellers of staples, retailers are striving to make store visits worthwhile:

  • Redesigning spaces to be more visually appealing or comfortable
  • Providing better amenities like free Wi-Fi or charging stations
  • Offering services or space to the local community (eg. free yoga, meeting spaces)
  • Making customer service more personalised or specialised
  • Creating stores that are simply attractions in themselves

It’s about giving people a reason to want to spend time there, soak up the atmosphere and feel the story of the brand.

TREND DRIVERS

The UK is one of the world’s most advanced e-commerce nations. We’re comfortable with researching and buying online and in some cases we no longer need physical goods at all (think Spotify, Kindle, Xbox). Retailers thus need to fight harder than ever to prise consumers off their gadgets and into store.

At the same time, we live in an experience-driven economy where people place more value on things they do than the things they buy. We’ve spent over £254bn on enrichment in 2013 (travel, eating out, leisure, cultural activities) – over a third more than on material goods (£185bn) – and this gap is predicted to widen in the years to come (Oxford Economics July 2014 forecast).

So we’re seeing brands in diverse categories looking to deliver more immersive, spectacular and memorable experiences to grab the attention of distracted consumers. Check out Punchdrunk (http://www.punchdrunk.com), the theatre company which produces 360 shows in which the audience can get impossibly close to the action, or Secret Cinema (http://www.secretcinema.org), which turns classic movies into full-costume audience participation.

Retail environments can become playgrounds for brands too: “While computer screens can bewitch the eye, a good shop has four more senses to ensorcel,” observes The Economist. It’s a truly 3D environment.

There’s more and more evidence that a multi-sensory experience works. Way back in 1982, Milman found that slow music increased spend in supermarkets by 39.2% – since then, Nike has found introducing scent into their stores increased intention to purchase by 80%. More recently, Diageo showed that changes to the multi-sensory environment increased enjoyment of whisky by up to 20%.

In the future we’re likely to see more hybrid spaces which offer more than just retail so shoppers can get more than one need satisfied under one roof. One example is the Tesco concept store in Watford which hosts cafes, an in-store salon offering beauty treatments, and a community space offering classes.



MANIFESTATIONS


Rapha: This British cycling brand launched in 2004. They don’t have stores, they have Cycling Clubs. They sell Rapha products of course but they have been conceived as a place that celebrates the culture of road cycling. Each club has a café serving coffee and food where cycling fans can socialise and talk bikes as well as catch up with racing events screened in store. They also host exhibitions and events and organise local rides.

Duke Street Emporium: Jigsaw opened this new flagship store in April in central London. CEO Peter Ruis billed it as “a meeting destination for shoppers” with no pressure to buy. Selling a curated selection of the brand’s products alongside beauty, coffee and snacks from Fernandez & Wells, it also serves alcohol. Ruis said the store is about culture too, and plans to invite artists to stage exhibitions and musicians to perform mini-concerts.

Under Armour Shanghai: The first store in China aims to reframe ideas of what it means to be an athlete. Shoppers are guided down a long tunnel of light to the Experience space which shows an exaggerated scale, 270-degree panoramic film. The film tells the story of the brand featuring the latest products. As the film ends, they are invited to the retail space which accounts for just 20% of floorspace.



WHAT NEXT?

As retail becomes more automated and windows of interaction with tangible products and live salespeople become smaller, the in-store experience is increasingly important. Retailers who offer superb service and experiences going beyond the typically transparent attempts at driving sales, give consumers more reasons to enter their spaces and spend time with their brands and products.

The most appealing spaces will creatively rethink what a shop is for and exploit what’s lacking online: a truly three-dimensional, tangible experience, where consumers interact with products and other people in ways they can’t do online.

Technology may still be a big part of the equation, however, with shoppers interacting with kiosks and video, using augmented reality to enhance the experience, or perhaps looking into virtual mirrors to help them choose merchandise.

For many retailers, the aim will no longer be just clocking as many transactions as possible. Instead, the physical shop is a crucial complement to the online offering, providing a unique way to experience the brand.

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