Digital Natives in the Offline World: What Retailers Can Learn

2016-11-14-1479156485-1415241-google.jpg

Dan Baczynski, Experience Designer (EMEA), FITCH

Google opened a new physical store in NY last week, in addition to the two previous spaces in London, bucking conventional wisdom concerning online-only retail and its role in business strategy. The YouTube Creators Store opened at the end of this summer, and skillfully demonstrates some of the most significant features of modern retail – features which even some of the longest-running high street stores have yet to embrace.

Google is just one of the formerly pure-play online retailers which are leading the resuscitation of physical stores with new, experimental formats. This role reversal should show the significance of physical spaces in creating strong experiences and should also offer a clear example for brick’n’mortar stalwarts as much as future entrants to the space.

PWC’s recent Total Retail report highlighted the continuing growth of online retail channels, particularly mobile, but the report also noted that physical stores still represented a ‘critical step’ in the purchase journey. It’s not hard to see why retailers of all kinds continue to draw on physical stores as part of their strategies; as FITCH explained in the recent Peak-End rule’ report, the in-store experience drives loyalty among customers, especially in the millennial demographic, by offering substantive experiences that can combine effectively with the convenience of online shopping.

So many retailers may wonder what the in-store experience should be all about, and rightly so. The truth is that for stores to stand out and succeed amongst their competitors they must add value in a unique way. But it’s not a guessing game; there are great stores out there which demonstrate exactly what makes physical retail such a strong channel for any sector.

Embracing the showroom … and webroom!

Digital channels have progressed at a rapid pace, but nothing has yet recreated the immediacy of trying and testing products in-store before you buy. This is the biggest reason that, even as online sales grow, physical stores remain crucial to the overall retail strategy.

Consider the launch of Google’s Pixel phone, the Google Daydream VR headset and the upcoming Google Home – these products are as yet untested by consumers and need to be seen and interacted with. When rival products are in the market, such as HTC’s Vive headset and Amazon’s Alexa system, physical interaction and play with Google’s devices is an important step towards purchase. The new Google Store NYC provides access for people to try those new devices that they discovered online, and maybe buy it straight away in store.

But a store full of product is not enough. The Bonobos Guideshop opened last year to address the webrooming phenomenon, in which customers browsed for products in-store however bought them online. Many retailers have found this behaviour frustrating, and few have solved it, but Bonobos built a store to cater to customer preferences instead of fighting them, by linking Bonobos’ physical stores to the brand’s original online channel.

When the customer enters a Guideshop they are taken care of by personal shoppers (Guides), who introduce them to clothes of different cuts, colours, fabrics. After the outfits are chosen, customers order online (while in the store) and they receive it at home, with free shipping both ways.

As Google takes advantage of webrooming, the Guideshop takes showrooming to the next level by creating a positive shopping experience for customers. One-on-one contact with the in-store advisors elevates the overall process of clothes shopping beyond the ordinary to a personal service, and the fact that you can leave hands-free will be a big bonus for busy shoppers.

A ‘store’ no more

Trying before buying is important for most brands, but there are some products and brands which just don’t need to use it anymore. Take Apple: most of their tech is widespread, so chances are customers have tried out an iPhone or Mac, or at least seen one in action.

But that doesn’t mean Apple stores are redundant. In fact, the business has expanded the scope of its retail space from simply selling products to creating community hubs, where people can speak with ‘Creative Pros‘ - assistants who teach, conduct product workshops and creative demonstrations involving design, music, photography and so on. These additions to the Apple spaces give a new layer of experience, providing real value to shoppers without explicit sales pressure. Apple has gone so far as to drop the ‘Store’ from its name, opening Apple San Francisco and Apple Regent Street this year.

With YouTube’s Creator Store, the same is true. Sure, there are products on sale, but none of them are YouTube’s per se. The Creator Store is a place for YouTube stars to sell their merchandise. The Creator Store allows fans to meet their favourite stars rather than simply leaving comments online. YouTube also provides studio space for Creators to access knowledge and high quality equipment to produce better videos.

But this process benefits YouTube, too: this physical store is an gateway for new audiences to get to know creators, who will then later go online and view their content, generating YouTube ad revenue on each view.

For other retailers, the arrival of ‘digital native’ brands in the physical retail should point the way forwards. By thinking beyond the restrictions of purely sales-focussed spaces the likes of YouTube, Bonobos and Apple have each developed their ‘stores’ to create a customer experience that goes beyond the transactional and is unmistakably of the brand. The experiences are valuable and unforgettable: the essence of physical retail which online channels are still a long way from replicating.