The Future of The Retail Store

By Doug Stephens

Retail is dead!

At least, that’s how Marc Andreessen sees it.  The entrepreneur and tech investor was recently quoted saying that all physical retail stores will die, succumbing eventually to the vast sea of online competition.  According to Andreessen, there will be one way to shop for everything and that way will be e-commerce.  It’s also fair to say, given that Andreessen co-founded Netscape and is invested in a number of online properties, that he might be just a little predisposed to this extreme position.  Nonetheless, his opinion caused some unrest in the retail community and should be taken seriously.

On the other hand…

I have been a vocal proponent of a somewhat different future; one that includes both virtual and physical stores.  You see, if I believed that humans shopped for no other reason than to acquire goods, I might be more aligned with Andreessen’s view but in fact, we don’t shop just to get stuff  –  any more than we go to restaurants purely for nutrition.  In fact, we often shop to fulfill other deeper needs as well – the need to disconnect, to socialize and to commune – and at times to simply be out in public. Why else would celebrities brave the hoards of paparazzi to shop for things they could undoubtedly have delivered to them on a silver platter?  The physical, human experience of shopping is in some ways of far greater value than the goods that come along for the ride.  So, while shopping is a means of acquiring the things we want and need, it’s also a meaningful social activity that appeals to our deepest, human tendency to gather in tribes.

That said, I’m convinced that between the futures that Andreessen and I describe, lies the truth.  But one thing is quite certain; that retail stores will be much different in the years to come than they are today.

But how different?

Regrettably, this is where the debate usually ends, with one side declaring brick and mortar retail dead and the other passionately defending its infinite existence.  Rarely do we hear either side attempt to describe the specific ways in which stores are likely to evolve from what we see today.  In other words, few seem willing to paint a picture the store of the near future.

So, I’ll take a shot at it, based not on what I foresee twenty years from now but rather based on what I see just around the corner and in front of me today.

And so…

These are some of the biggest changes I see to the concept of the retail “store”.

Less Take and More Make

Stores will increasingly become places that we visit, not simply to pick up mass produced articles but also to design and co-create special things with the personal assistance of experts.  Whether it’s customizing a suit, building a one-of-a-kind notebook computer or designing the perfect bicycle, stores will be the point of collaboration and customization.  These elements of customization will make for unique personal and physical experiences.

Less Product and More Production

With online players like Amazon prepared to ship just about anything we want in a matter of a day or two, our dependency on physical stores for mere distribution will continue to wane rapidly.  Smart brands will have no choice but to, focus increasing amounts of attention on making their store spaces experiential brand starting points, with high production value. Stages where magic happens.  Canadian sporting goods retailer Sport Check recently unveiled a concept store that might better be described as an adult amusement park for the sports enthusiast. Leveraging a variety of media and technology, the store has morphed into a wall-to-wall sporting experience.  The store remains the most visceral expression of the brand essence.

Less Conversion but More Converts

The purpose of retail will no longer be to solely convert every customer into a buyer of goods but rather transform them into disciples of the brand itself.  To begin a relationship – a dialogue that may play out in any number of buying channels; online, in-store, mobile or elsewhere.  It doesn’t matter where purchases take place. What matters is that the consumer falls in LOVE with the brand and shares that love with others.  The store maintains the potential to be that emotional center of gravity for the brand.

Less People but More Performance

The economics of online competition mean that brick and mortar discount merchants will have no alternative but to completely automate their store environments to remain cost-competitive – Walmart , for one, is already heading in this direction.   At high-end merchants, stock clerks, cashiers and inventory counters will be the similarly replaced with technology. Front line salespeople, however, will be higher performing professionals who are paid considerably more money than today, and will be expected to literally sweep customers off their feet! These rare individuals will be intense believers in the brand, super-users of its products and co-creators with their customers. The era of the minimum wage clerk is giving way to the simultaneous rise of the robot at the low end and the Brand Ambassador at the high end.

Less Interruption and More Exchange

The current practice among retailers of asking for personal information only to annoy and interrupt with meaningless offers will give way as consumers garner more tools to filter out these useless overtures.  Enlightened retailers, like Neiman Marcus,  will appeal to their customers for a more overt exchange of value promising distinctly better, more customized and enjoyable experiences in exchange for relevant personal information.  The transition is less about privacy and data and more about earned trust through performance.  And the fruits of these data inputs will be almost immediately tangible to customers through clearly personalized services and product offerings, as data latency quickly becomes a thing of the past.

Less Established and More Ephemeral

Consumers, particularly younger consumers are developing an insatiable appetite for what’s new and next.  Therefore, managing the same 100 stores in a mall for years on end simply won’t do anymore. Leases will shorten, new retail brands will evolve more quickly, old ones will die sooner and pop-up installations will rotate through the space. Change will be continual.  The mall manager’s role will become that of editor and curator as the mall becomes a revolving door for new brands and concepts, in a relentless effort to captivate consumers.

Less Average and (Much) More Remarkable

In a contracting market, there will be increasingly little room for sameness.  Ten retailers at the mall selling variations of the same clothing styles will soon become 5 retailers who absolutely kill it, with unique and remarkable collections.   Average, forgettable experiences simply won’t pay the rent anymore and will be kicked to the curb by outstanding stores who bring something new and fascinating to the market.

So, is retail dead?  Not a chance. If anything, it’s the very pervasiveness of online alternatives that is causing the best stores to rise out of the ashes of 30 years of mediocrity, ushering in what I, for one, believe will be the true Golden Age of the Store.

(Update) Coincidentally, a week after writing this post, Google announced that they would be opening physical retail outlets.