On the 2nd of November, we took to Hammerson's headquarters to discuss why and how online retailers are setting up shops in the real-world.
From Amazon and Zappos in the US, to Made.com and Missguided in the UK, the past few years have seen an increasing number of online retailers from all sectors venturing into the world of physical retail. And it's not hard to see why — as well as providing the opportunity to capture shoppers' attention in the real world, the physical store has become a space to bring brands to life through tangible and memorable experiences.
On 2nd November, we partnered with members Hammerson to dig deeper into this opportunity — discussing the role that physical stores can play in digital-first brands, and the ecommerce learnings and experiences that can be be applied to real world retail. Together with our panellists, we explored the innovative approach that many of these retailers are taking when setting up on the high street, whether it's using online data to design location-specific stores, or smart features that join up customers' online and offline shopping experiences.
The event was hosted by YCN's Head of Insights Sheena Patel, who led a discussion with three panellists:
Meredith Smith, Strategy Director at The Future Laboratory, who shared her insights into the drivers of this trend, along with some smart examples from around the world.
Becky Jones, Head of Special Projects at Appear Here, who works with a range of digital-first brands to plan and launch pop-up retail spaces.
Savannah Sachs, UK Managing Director of online beauty subscription service Birchbox, which in recent years has opened stores on both sides of the Atlantic.
Here’s what we learnt.
Digital-first means data-first
Meredith was quick to point out that the success of ’clicks to bricks’ ventures are characterised by digital-first brands effectively using data and insight on customer activity. Although not a retailer, she cited the Citymapper Smartbus service as an example of a digital brand using data innovatively to identify and meet a specific real world need. The company has used an analysis tool to spot gaps in London's night transport networks, based on the demand seen through their app. They've also used open data released by Transport For London, to work out a new fixed route that safely delivers late night travellers to the city's night tube service.
Using tech to remove friction
Using technology should be about reducing what customers dislike about the physical shopping experience, and less about bolstering brand identity or keeping up with trends. For example, Meredith mentioned this can be seen with the Los Angeles-based sustainable fashion brand Reformation, which has developed strong relationships with its customers, and knows exactly what they want and what they’re buying. It's latest store stores is highly curated, in complete antithesis to the high-volume retail stores, with hard-to-track stock, that are so commonplace on the high street.
Using an iPad to complete sales instead of a till is good use of technology, but what really factors into the store’s doubling of input and output is the way that technology meets unspoken demands, such as not wanting to queue. Alongside clothing on hangers, shoppers can browse from large screens mounted on the walls and send items to the dressing room. Store assistants collect and delivery the items to the dressing room in a quick, and easily managed system that frees up time to have proper conversations with customers.
"Stay as long as you're relevant"
This is Becky's advice for digital businesses seeking to open popups; she often reminds clients that moving to a physical space isn’t only about establishing presence long-term. Whilst bigger brands can benefit from permanent spaces to drive and bolster regular online sales, temporary stores offer timely ways to keep surprising and engaging customers. “Millennials care about experiences”, she said, adding that constantly refreshing physical stores allows for more genuine engagement, and more coverage on social media. Physical retail is less about buying products, and more about creating unique experiences. This can be anything from meeting like-minded consumers, to having photo-friendly elements – such as a mirror with a witty slogan – that lend themselves to Instagramming.
Meeting the customer
While digital brands may have a wealth of data on how their customers shop online, physical spaces allow them to get to know their audiences in other ways. Birchbox has a very clear understanding of its target customer – she’s not the beauty junkie with expertise gained from following influencers on social media. Instead, Savannah says, she’s the “beauty majority” who’s just looking for useful recommendations, and clear, no-fuss ways to be a better version of herself.
With a strong brand and purpose developed online, Birchbox's stores and pop-ups are less about building trust and more about creating physical touchpoints. Part of the aim is to learn about customers and demographics in specific locations. The flagship approach has given Birchbox vital information about buying habits. For example, in one case a product line with limited sales online proved to be a best-seller in the brand's New York store.
Birchbox is in the process of launching a new London pop-up. The trial aspect of a pop-up highly suits the brand, which sends out ‘try and buy’ boxes of assorted beauty products. The BYOB (Build Your Own Box) resource allows for their audience to experience the well-designed and highly-tactile experience of what a subscription entails, as well as learning more about the brand and its service from store staff, who are known as Discovery Specialists.
Discussing a company's profit and loss statement, speakers agreed that there needs to be leeway and more long-term thinking to evaluations that incorporate omnichannel thinking. A company’s P&L should be looked at differently in order to effectively value the impact a brand is bringing in online, for example attributing online sales within a certain zip code to the store in that area. Meredith mentioned it’s important to measure success equally through sales and footfall, allowing a physical store to dynamically change purpose for the consumer.
For example a physical store can be a showroom and stockroom, acting as a hyperlocal touchpoint for online consumers who want a product on demand. She cited the American luxury department store chain Nordstrom, who with their Nordstrom Local initiative have stores which act as a one-stop hub to pick up products bought online, whilst also offering alterations, nail services, refreshments, and appointments with personal stylists. Digital-brands are setting the tone for what retail can accomplish;
The evolving role of staff
The panel agreed that the role of store staff will change completely with the development of new digital tools — and further down the line, AI. Freed up from inventory management, sales associates will have more time for meaningful conversations with customers, acting more as product experts and brand enthusiasts.
This is already the case at Birchbox, who prefer to train team members themselves rather than relying on agencies. At Birchbox, store associates are knwon as 'Discovery Specialists' to better reflect the more personalised and conversational approach they take.
Becky discussed how thinking flexibly is neccesary to creating the biggest impact. Fashion brands are also considering how money usually reserved for catwalk shows can be spent instead on initiatives like 24 hour pop-up stores that allow them to reach their audience and fans directly. An example of this was Kanye West's 'Pablo' pop-ups which opened in 21 cities, making huge, targeted profit. Expenditure can be reconfigured, with pop-up spaces often working out as more cost effective than traditional out-of-home advertising.
In other cases, Becky pointed out that temporary spaces can help smaller companies to secure investors, and add credibility to B2B dealings. The ability to test out ideas, and show investors the possibilities for a business, is an added benefit to gaining exposure in a specific location or market. Around 67% of ecommerce brands have or want to open a physical store, Becky said, and pop-ups not only offer a flexible model of doing so, it also generates content for online that can prove invaluable too.
90 York Way,
London, N1 9GE,
Start:2nd November, 2017 at 6:30pm
End:2nd November, 2017 at 8:30pm