From sustainability-linked loans to the rise of micro-fulfilment centres and stores as stage sets, here are the trends from the past year that will help you navigate the future of retail design.
At the start of the year we wrote about how Prada had taken on a major sustainability-linked loan, ensuring that the brand had to either reduce its environmental impact or else face pecuniary consequences. Then in the autumn, competitors Burberry and Chanel moved in a similar direction. For all three, tying the way they raise capital to sustainability objectives will have a fundamental impact on the design and operation of their property portfolios. For instance, Burberry says that offices and retail account for around nine per cent of its greenhouse gas emissions. Investment in more energy-efficient stores, as well as more ecologically sound building practices and design decisions, can’t fail to have a tangible effect on how consumers experience the brand in-person. Prada’s commitments, which require that a set number of outlets meet gold or platinum LEED green building standards, will make this even more overt.
"67 per cent of the public believe that companies can ‘‘build back better’’ if they invest in longer-term, sustainable and fair solutions"
All three will also be considering the increased importance retail now plays in giving narrative to a brand’s sustainability story, something that has become more important to consumers during the pandemic. A global study by Accenture found that 67 per cent of the public believe that companies can ‘build back better’ if they invest in longer-term, sustainable and fair solutions. ‘As stores set to move forward with their post-COVID-19 strategies, it is important for retailers to prioritize long-term goals for the environment and the use of sustainable materials in their retail design as they lay out the micro-steps for recovery within their short-term strategies’, argues director of retail design agency Sheridan & Co Freddie Sheridan.
Marketers have long talked about the ‘halo effect’ of brick-and-mortar stores, arguing that their presence adds value elsewhere in the business, both in terms of brand engagement and sales. This has never been more sorely tested than in 2020, when the majority have had to shut their doors. In response, many leaned further into the idea of the shop floor becoming its own media channel. In Paris, Galeries Lafayette offered to connect you via video chat to advisors from leading brand concessions, or book you a tour with an in-house personal shopper. London’s Selfridges offered a similar service. Stand-alone stores also explored this new channel, with Dries Van Noten’s Paris boutique offering 50-minute video consultations.
"The experience of buying a luxury good is a huge part of its commodity value"
For top-tier brands, the challenge is making sure the production values of a livestream meet the same criteria as every other touchpoint. ‘The experience of buying a luxury good is a huge part of its commodity value,’ writes Luxury Society’s Alexander Wei. ‘[They] need to be showcased within a specific type of environment to maintain the brand’s image, driving up requirements (and associated costs) when it comes to the livestreaming host.’ That’s why Gucci’s venture into livestreaming has seen them invest in the creation of a faux-store-cum-film-set. The space, part of the Gucci 9 customer-service centre in Florence, comes complete with TV-style lighting. As these initiatives captures the attention – and spend – of numerous high-net-worth clients, retail designers will have to take note.
Rationalized retail experiences
If you caught our series on how COVID-19 could impact in-store interiors earlier in the year, you’ll be aware that we’re likely to see a rationalization of retail environments. At least for everyday items, that means a move away from circuitous, serendipity-focused spaces towards those that emphasize hyper-efficient shopper journeys. As Will Broome, CEO of retail technologist Ubamarket, put it: ‘. . .Despite the havoc that is being caused by the outbreak of the coronavirus, I believe that the crisis is bringing into focus a number of pre-existing problems with the way in which we shop, such as complicated and constantly changing store layouts and confusion about where products are.’ The public agreed. McKinsey’s July Periscope report found that being able to find products in-store quickly and easily had increased as a priority for customers across all monitored territories, being valued by 65 per cent of consumers in the US, 59 per cent in the UK, 52 per cent in Germany and 47 per cent in France.
"The crisis is bringing into focus a number of pre-existing problems with the way in which we shop"
Walmart stepped up with an example of how a store that puts these principles first might look. In short, much like transport architecture. ‘We were inspired by airport wayfinding systems as best-in-class examples of how to navigate large groups of people,’ says chief customer officer Janey Whiteside in a corporate blog. The redesign features overt signage in bold dimensional typefaces that spotlight sections, as well as simplified store guides at entrances that direct people straight to their target items. It might not sound like much on the surface, but it's a fairly radical move in an industry that has made an art of intentionally confusing customers in order to extend dwell time and maximize serendipitous purchasing.
One of the main strategic benefits of the pop-up has been its ability to test not only new concepts, but new markets. That’s been particularly important this year as significant portions of many brands’ customer bases relocate to ex-urban enclaves. It’s something we wrote about at the end of August, when a number of Manhattan’s core fashion retailers realized that they were going to have to pack up and move to Rhode Island if they were going to make anything of the summer season. Jimmy Choo was even driving directly to clients' summer houses to offer the ultimate private concierge service.
"As bastions of tradition rather than experimentation, the pop-up’s ‘‘move fast and break things’’ ethos didn’t quite meet the code"
Conversely, with their usual long-term tenants either pulling out or scaling back on expansion plans, retail zones that were previously hostile to the pop-up concept are now looking to it to revitalize their image. This has been true in some of the world’s most feted luxury shopping streets. As bastions of tradition rather than experimentation, the pop-up’s ‘move fast and break things’ ethos didn’t quite meet code. But with commercial real estate vacancies mounting, landlords are having to rethink that. On New York’s Madison Avenue, where vacancy rates hit 19 per cent earlier in the year, the Madison Avenue Business Improvement District has created a new system to streamline the process for arranging short-term license agreements. The hope is this will tempt reticent property owners to lower barriers to entry. It’s a similar situation in Milan’s Golden Triangle, where local analysts believe 2020 could prove to be a useful impetus to revitalize the retail mix in an area that has historically had little scope for surprise.
Fulfilment-first floor space
At a time of accelerating consumer demands, e-commerce has a logistics problem. Nearly half of shoppers are more likely to buy online if same-day delivery is an option according to Accenture, while 77 per cent of under-30s make it a key priority. The solution? Many believe it’s to move inventory much closer to the customer in the form of what are known as micro-fulfilment centres (MFCs). Rather than large ex-urban distribution centres, why not have many much smaller sites proximate to where shoppers actually live.
"Brands will need to deliver on quick-serve metrics as much as they do on customer service"
This has significant ramifications for store design. Tom Custer, vice president of strategic design firm FRCH Nelson, told Grocery Dive that he expected to see a growing number of retailers who don’t have sufficient back-of-house space reapportion their store footprints in favour of the stock room. Brands shouldn’t think of this shrinking of the sale floors as a linear process. Melissa Gonzalez, CEO of The Lionesque Group, sees the stores’s new role as fulfilment centres as providing increased impetus for modular retail design. ‘Brands will need to deliver on quick-serve metrics as much as they do on customer service,’ she wrote on Design Retail. ‘As order volumes vary, the allocation of square footage between the front-of-house and back-of-house will be required to seamlessly flex, morphing so that stores can accommodate and support the journey of a package as much as it does the journey of the customer.’
If you want to understand the scale of this shift, just look to the fact that Amazon has been in discussion with Simon Property Group – the largest mall owner in the US – about turning vacated Sears and J C Penney locations into distribution hubs.