Commercial

Building blocks

Amazon Go opened its 12th US store in May at Brookfield Place, New York City

To survive and ensure sustainability in a changing retail sector, mall owners and tenants should tune into modern shopper aspirations.

To survive and ensure sustainability in a changing retail sector, mall owners and tenants should tune into modern shopper aspirations.

The future of retail is not one-size-fits-all. That message was emphasised by speakers at the 2019 South African Council of Shopping Centres (SACSC) Congress in Cape Town.

Navigating a chameleon retail sector and being in touch with the younger, ever-changing consumer responsible for its transformation will make the difference between retail success and suicide.

The key messages were:

1. Behavioural Intelligence

South African company Fatti uses Wi-Fi to record, monitor and produce results from behavioural insights and real-time shopper intelligence at a range of local shopping malls. CEO Adrian Maguire says the local market is challenging and changing. In the relationship of dependency that exists between landlord, tenant and customer, the common denominator is aggregated data. According to Fatti, retail-smart malls use it to make informed choices that better serve customers and improve the user experience.

The challenge lies in making sure that aggregated data provides the right information, says Maquire. No two malls have the same customer behaviour.

Both landlord and tenant need to evaluate the customer behavioural journey in the mall by asking: Did I get the right type of customer to that hosted event? Did the event influence them to shop more? Aggregated data reflects how turnover and customer entrance profiling on a weekday differs from that on a Saturday. Understanding this as a landlord or a tenant means engaging a solo shopper on a weekday with strategic advertising to convert their behaviour to maximise spend when they return with family for a leisure visit on a Saturday.

Such data has practical applications for improving cleaning staff services or parking facilities. The fact that one floor operates differently to another and that specific tenants operate differently to others also has implications for trading hours. Tenants using this information to extend their hours can make a phenomenal difference to their bottom line.

The silver thread running through all this is datadriven decisions. “Landlords, tenants and marketing departments keep saying the retail market is tough, but many are still making the same decisions and not changing how they do things to meet an evolving consumer,” says Maguire.

2. Customer-Centric

Embracing digital transformation means a retailer meeting its customers where they are, with what they want. Customers expect to interact across all channels on their terms. McorpCX president Michael Hinshaw says businesses should look at decisions through their customers’ eyes, yet 11% of business calls are made without customer input.

Retail research shows:

  • 91% of clients are more likely to buy if a retailer recognises them.
  • 79% believe a retailer should show they understand them.
  • 70% say understanding their needs drives loyalty.
  • 80% are likely to purchase if they’re offered personalised experiences.

3. Integrated Shopping

For consumers, the physical store remains an important element of researching and buying. But more and more of them prefer to research online before visiting a store for the final purchase. Digital is now an avenue for growth: stores don’t need to make the sale but rather deliver an experience that supports the brand.

Doug Stephens

Retail futurist Doug Stephens

Retail futurist Doug Stephens says the concept of what a store is and how consumers shop there as well as its revenue model have to be reinvented. This applies across the board from online outlets to bricks-and-mortar stores.

Stephens says to make their offering stand out, malls should invest as follows:

  • Create stories, don’t sell a product. The experience should be less about commerce and more about a community that reflects their values.
  • Personalise. Rather than focus on mass production, retail and manufacturing should embrace the age of me, as typified by Nike’s hyper-personalisation that allows buyers to design their own shoes. At the brand’s flagship store in New York City, customers can scan barcodes on shoes with their phones to find out what’s available in their size and preferred colour.
  • Surprise. Great brands engineer great surprises. Experiences should be unusual. Selfridges London built a skateboard bowl in store, for example.
  • Repeatability. It has to be possible to execute these experiences time and again.
Nike’s flagship store in New York City

Nike’s flagship store in New York City takes a personalised approach to the shopping experience

In SA, e-commerce volumes increased by 15% in 2018. Online retailers such as Amazon are interested in the local market: the appeal lies in the population’s average age of 27 and its high cellphone ownership, which drives 80% of online sales.

Digital marketing has become expensive as it competes for attention. Physical stores won’t disappear (online retailers Amazon and Alibaba are both investing in physical stores), but their purpose will evolve as they become media channels.

4. Shopper Engagement

John Ryan, stores editor of Retail Week, a UK-based magazine, website and data service covering the retail industry, says engagement is about putting the expected into an unexpected retail context. “Louis Vuitton are probably the leaders of doing retail in an alternative way,” he says. “At its New York pop-up store, everything was painted bright green in July, from the exterior brick walls to a mailbox and a bicycle leaning outside.”

Louis Vuitton is considered one of leaders in innovative retail strategy

Louis Vuitton is considered one of leaders in innovative retail strategy

A bookstore may be an established commodity but Duoyun Books in Shanghai Tower offers 60,000 books in 2,229m2 of space over 52 floors. You can create new from old if you do it differently, says Ryan.

Referring to the modern trend of supermarkets transforming into upmarket food halls using technology, Ryan says this business has evolved over almost 60 years to become slicker, faster and easier. The principle has been “get in, get it and get out”. But modern shoppers want a reason to spend their money.

Technology has brought us staff-free stores. Wheelys launched a staff-free convenience prototype in Shanghai, where doors open via a smartphone app, and tech startup BingoBox partnered with the French supermarket group Auchan to follow suit.

In January 2018, Amazon Go opened its first cashless convenience store in Seattle where customers scan their Amazon smartphone app to purchase items. The 12th US Amazon Go opened this May in New York City, giving shoppers an additional cash option, with employees performing store checkouts on mobile devices.

5. Personal Experience

Lara Marrero is principal and strategy director at Gensler, the design firm responsible for the interiors of premier retail addresses including six international Starbucks Reserve Roastery stores as well as the Adidas New York City concept store and Saks Fifth Avenue’s flagship store. She says navigating and activation are crucial:

  • We’re moving into the age of belonging: consumers want to be part of something bigger. Connection and bringing people together in shared spaces matter.
  • Remember that consumers are people. Their best experience of any situation becomes a benchmark for the next one. They express on Instagram or Facebook how they feel about retail. They don’t even need words; emojis can do the trick.
  • Modern independence is a phone — our window to everything we do.
Lara Marrero

Lara Marrero of the design firm Gensler

In retail this means singleuse spaces are obsolete, says Marrero. Modern consumers do different things simultaneously, checking e-mail or ordering food online while working. And make sure you’re creating areas where people can get together and chat – a consumer’s in-between time is not wasted time.

Technology matters, but not in the way you might think. It is applied in service to the customer journey, to help people in sales spaces to connect better with their customers. This is the best path to customer conversion.

Marrero concludes that retail today is about work style meets lifestyle and toggling between the two. Urban environments need to be designed to support how people act.

“It is no longer, ‘If you build it, they will come’,” she says. “Now it is, ‘If you constantly create ways of keeping interest, they will come’.”

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