Innovation & Design

Hot Shops: Retail Revamps


Light years apart in brand image and market appeal, both shops are targeting "the to die for" position which retailers the world over are striving to reach, the point at which a store becomes "a destination," a place where people choose to linger, learn, and be stimulated or simply have fun.

The best shops have always aspired to be more than mere merchants, but intense competition on the high street has upped the stakes. This is particularly so for department stores and specialist retailers, such as booksellers, caught in a pincer action by the advance of online sales on one flank and supermarkets offering heavily discounted blockbusters on the other. As Gennaro Castaldo, head of press and public relations at music store HMV, sums it up: "It's certainly the case that consumers have many more [retail channel] choices today. You have to give people an added reason to come into your store, something that makes the act of visiting a shop as rewarding as acquiring the good itself."

The battle for the public's time and money doesn't end on the high street, however. To capitalize on the increasing prosperity of its customers, retailers must compete against the hugely expanded range of leisure pursuits on offer in the "experience economy." "If you look at the full competitive set," says Melanie Howard, co-founder of the Future Foundation, a consumer research group, "it's everything that people spend their money and free time on -- from foreign travel, to keep[ing] fit, learning a skill or visiting a National Trust property."

To catch the public's eye in a marketplace overflowing with choice, forward-looking store owners are giving people more exciting things to see and do in their shops, positioning shopping as a leisure "experience." Selfridges is a classic exponent of the art with its themed "Zeitgeist" promotions, celebrity appearances and displays featuring aspects of contemporary art, culture, and design -- from body image to Bollywood and Brazil. Other retailers dipping their toes in the same pond, says Terry Prue, a partner at consultancy HPI Research, include book chains such as Waterstone's and Borders, as well as music stores HMV and the Virgin Megastore.

Most visibly a success is the reinvention of clothing retailer Topshop from cheap and tacky teen brand to high street style-leader, helped along by a massive investment in the brand's Oxford Circus flagship, which today boasts style advisers, nail and beauty bars, plus a sparkling calendar of fashion and lifestyle events. But how much of the "experiential side" of shopping do consumers outside the flagship locations get to taste? More to the point, does "retail theater" come up with the goods in terms of profits?

Chains that buy into experiential marketing argue that high-profile flagships generate a buzz that travels with the brand, adding a touch of excitement to even the dowdiest provincial store, whilst pulling in trade from a national, sometimes international catchment area. Yet stray outside London, and one or two regional hubs in centers such as Manchester and Birmingham, and there's no denying that the range of "in-store experiences" on offer to customers falls away rapidly.

This inability to replicate the flagship experience is a constant source of tension in retail strategy, particularly for large established chains, such as HMV, which stages rock performances in its 50,000-square-foot Oxford Street store, while maintaining a national network of 200 satellite shops, often measuring no more than 4,000 to 5,000 square feet.

Says Castaldo: "There's only so much that you can do with a smaller store. There's no sense of theater." But, he adds, "What you aim to do through the flagship is to associate the brand with an aspirational lifestyle that supports the other stores and motivates customers from smaller towns, perhaps two or three times a year, to make a trip up to London to enjoy the full experience."

Demonstrating the impact of retail theater on the bottom line is tricky. Some brands such as Topshop, the undisputed star of retail tycoon Philip Green's Arcadia group, which recently reported a ten percent year-on-year increase in operating profits, have certainly benefited. Offering an involving experience, instead of just books, is also fuelling the rapid expansion across Britain of Borders, the US-based bookseller.

Based on the idea of being "a bookseller that is friendly and accessible to all," Borders has worked to create a buzz around its stores, not just in its London and Glasgow flagships, but also in the smaller cities and towns in which it trades. "We have a Starbucks Caf? in all our stores and give our local managers a lot of autonomy to pitch for community events," says Josephine Birt, brand manager for Borders UK. She adds, "Building the experiential side of the brand [through in-store activities such as mothers and toddlers groups, creative writing sessions and quizzes] is really important, because Borders is all about being approachable."

Adding a touch of sociability to a brand's persona won't stop the rot if a company is falling down in its core business, however. Abbey, the high-street financial services group, put Costa Coffee shops into its major branches some years ago and jollied up its logo and interior d?cor to project a new friendly image. Yet it failed singularly to match the profit performance of its sober-suited competitors Barclays, Lloyds TSB, NatWest and HSBC.

Similarly, says Tamar Kasriel, head of knowledge venturing at consultancy the Henley Centre, offering extra "experiences" will only benefit a business if the experience builds on the brand. "If a specialist provider such as the DIY firm B&Q offers tutorials in home repairs it's credible, because that's what the store is all about," she says. "If a supermarket did the same it might not be."

Kasriel's point -- that "experiential" marketing works best when it "acts as a showcase for something that is already there in the brand" -- is a good one. Exuberant in-store spectacles, such as the 2003 Body Craze festival celebrating the human body, have helped crystallize Selfridges' image as a store that "connects with the Zeitgeist." But the heavy lifting that made Selfridges a magnet for style-conscious shoppers took place a few years before, when its management invested massively in securing concessions with must-have brands and runway designers. What worked for Selfridges, in other words, was particular to its brand and not a recipe for other high-end stores to follow, which returns us to Liberty, Selfridges' veteran rival.

Like Selfridges a decade ago, Liberty -- which last Christmas reported a 14 percent like-for-like increase in trading, bucking the retail trend -- is a heritage store bent on restoring its fortunes after years of decline. Building a better store "experience" forms part of this recovery strategy. But it's a pretty safe bet that the experiences on offer to Liberty's customers -- characterized by the company's marketers as "less brand-focused" and "more confident in their style" than those of other stores -- won't include high-octane promotions or celebrity photo-calls.

Instead Liberty is focusing upon service and merchandising: ensuring that its shelves are filled with "opulent" products that are "original" and hard to come by, and that staff "are courteous and always knowledgeable." Creating a haven, in other words, to which its self-possessed customers keep returning to browse, spend their money -- or sit companionably and knit. It's not a style that would appeal to Selfridges' brand-hunters or Apple's iPod enthusiasts, but for the market that Liberty is targeting it's an "experience" that fits like a glove.


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