The future of retail

Reinventing Retail - connecting with todays consumers. Also, Yes, i know the quality of the photos are bad, but my only functioning phone that day was a 6-year old Motorola. It will get better!

Many have predicted the death of the Brick and Mortar stores that we have today due to digitalization, I wanted to find out if this was true. This weekend I attended the annual 2019 Retail and luxury goods conference on Harvard Business School, and want to share with you some key take-aways.

The conclusion

The conclusion is a plane, and simple no. Actually, a majority of the experts expects these type of stores to pop up with higher density than before. Especially within the Luxury Goods market, but also in fast moving consumer goods. There is no doubt that the inventory, looks and experiences of the physical retail store will change, but they will in no way disappear.

i must also empathize that I am not a good photographer either, so heads pops up now and then, but there were at least plenty of interesting people in the panels

The function of the Brick and Mortar

The function will change for many. For luxury brands in the Karing-portfolio (The parent organization of brands like Gucci), there will be a massive expansion of physical stores in North America. Although many people talk about the digital landscape taking over more and more sales, it does not account for more than 6-8% of Karings sales, and it is not considered to be increasing to more than 15% of total revenue. Consumers still want the physical experience of touching and feeling something when you talk about an investment, and to know the story behind.

The low share of sales happening online does not mean that you should, or that Karing does, neglect the digital platforms, even if you are in the luxury segment. Karing believe that you must create a journey and story for the costumer that stretches from the moment a potential costumer starts doing research online, to the moment he or she exits the store.

The costumer starts the journey online, and usually have a understanding of what he or she wants when they enter a store. Then they must make sure to create an experience out of it. Instead of just being a place where you browse for clothes, hoping to find something, you come in with an understanding of what you want, and the staff is there to tell you a story, give you a outstanding experience, and become the Brand Ambassadors.

The future in Omnichannel

While there were a lot of focus on the digital in prior years, the focus have shifted again. There used to be the cost of physical locations of the Brick and Mortar stores, and the low cost of advertising and acquisition digitally that gave the online retailers a big advantage in the competitive landscape, but the tables have taken a small turn back. The popularity of digital advertising have created a high demand for ads, which again have pushed the prices up. This means that the cost of advertising and acquiring costumers has also risen. The benefits of being a online-only retailer is no longer a game-changer. In fact, it was clear that the online retailers had a more challenging competitive landscape, and expected more obstacles than those following a Omnichannel strategy.

The increased online cost has created a need for a more balanced combination of both digital and physical presence. The obvious example is Amazon, who is expanding more and more into the Brick and Mortar stores. There is a reason for this. Entering this market is a way to reach a bigger audience than those that do their shopping online. It is a way to expand the market of your business, but can also be used as a way of building a brand.

As formerly stated, stores in the future will, in many cases, be about story telling and creating an experience that represents the history, value and brand positioning you want to have in the consumers mind. You should create a store and experience where costumers would want to take a picture, and post on Instagram from. Through these physical stores you can improve brand knowledge, decrease brand uncertainty, increase the number of meeting points with your costumers, and make yourself a “top-of-mind” brand.

Just some fashion word?

I am going to be honest and say this is nothing new to many people, I found the same thing in my bachelor thesis where I focused on car-dealerships. They will not disappear, but will serve another function. While they in the past have been only sales channels, they will in the future take on a role as brand ambassadors to show the costumer what experience characterizes the company. People might do research online, and be prepared for purchase, but still want to have the experience of the physical store where they can buy. At least this seem to be the case for the high end products.

One of my professors in College told me about certain “fashion words” that had no value or meaning, and was just annoying in his mind. Omnichannel, he said, was the worst. While "Omnichannel might be a fashion word, the concept behind it is certainly more than just fashion. With the extensive knowledge on the area of retail gathered there, and being mentioned by so many is just a sign that mastering Omnichannel will be the shortcut to success. But then again, no one can predict the future.

I want to end this blog post with a “sad” fact: While clothes 20 years ago were made for 200 wears, today they are made for five.