Next-Gen Customer-Centric Stores of 2019
For More on Nordstrom's New Flagship
Every year, New York City hosts the opening of more new retail environments than any other city in the US, and this year is no exception. Join Nordstrom's director of Store Design, Murf Hall as he takes you on a tour of their new flagship store which debuted in October, and Retail Design Institute’s Ray Ehscheid, for a curated tour of 2019's new and exceptionally well designed retail stores during “Virtual Design Tour 2020: The year's best designed new stores of New York,” at the NRF Big Show 2020.
The phrase “customer-centric” is more than just another buzz word. Creating a culture around the customer and their needs has become a roadmap to success for retail stores in an age where online shopping provides shoppers an easier alternative to trekking outside. Stores still represent the majority of retail purchases, but what a store is and what it offers consumers has to evolve and change if they are to remain relevant.
An overwhelming 79% of shoppers indicate that personalized service is an important factor in determining at which store they choose to shop, according to BRP’s “2019 Special Report: Personalization.” Beyond offering personalized service and offers, simply making shopping more engaging is another major factor to brick-and-mortar differentiation. A successful store requires an experiential environment that draws shoppers in and keeps them coming back for more.
In 2019 RIS saw dozens of examples of new retail models, flagships, and concept stores that pushed the envelope of what retail can be for shoppers. Top retailers are infusing their physical locations with game-changing experiences and technology that set them apart from the crowd. Here we recall the exemplary next-gen consumer-centric stores of 2019.
Retail Tech Centered on the Shopper
In 2019 we saw plenty of retail tech roll out that was centered on the shopper. One of the most fascinating examples has been Nike, which recently announced its Nike Live concept has done so well that it’s expanding it. The athletic apparel company is launching two new stores in Long Beach, CA, and Shibuya Scramble in Tokyo, in addition to the West Los Angeles, CA, concept. The Nike by Melrose store is a blending of data science and personal service that set out to cater to local NikePlus members’ exact needs. The new stores aim to cater even more to their local communities, fueled by constant analysis of the online buying patterns, app usage and engagement of members in the local neighborhoods they reside.
“Nike Live is the result of a singular vision: to design the most locally-relevant experience out there leveraging digital with personal service,” says Cathy Sparks, VP/GM of global Nike direct stores & service.
Both locations will include the NikePlus Unlock Box, a digital vending machine stocked with product that members can redeem using their Nike App member pass. Data informed product assortments deliver fresh inventory every two weeks. In Tokyo, Nike by Shibuya Scramble will offer a new tech tool to members allowing them to chat directly with store employees via the LINE App. With the tap of a link consumers can connect quickly to the store team to ask a question or learn about what store exclusive product is in stock.
While Nike is forging a striking path to personalization, Puma’s first-ever North American flagship in New York City is weaving together futuristic experiences and customization, along with an innovative use of RFID. Shoppers can view products in alternate colors and styles through four iMirrors placed throughout the store. The mirrors allow RFID product to bring up alternative selections based on the item the consumer tries on. When users interact with the iMirror "Discovery Wall," they can browse through all Puma inventory that is close to them using RFID. While browsing, they can also request a certain style and size right from the next-gen mirror. The info is then sent to the sales associates who will bring the requested items right to them. In addition, the mirrors act as a selfie station and display information from PUMA's social media channels.
Other fun experiences in the store include a basketball zone with stadium seating and a large screen NBA2K gaming experience, professional-grade F1 racing simulators and an in-store soccer simulator. Puma has even partnered with renowned artists and designers to bring its exclusive PUMA x YOU customization studio to the store, allowing shoppers to personalize Puma footwear, apparel and accessories.
While apparel retailers have been quick to transform their stores into shopper playgrounds, the grocery industry has also been looking to renovate the traditional supermarket experience into one that aligns with modern consumer expectations. Ninety-one percent of grocers report omnichannel customer expectations have increased over the past five years with 43% saying they have increased greatly, according to RIS’ “Winning the Grocery Wars” report. One next-gen example of how they are experimenting with doing this: Canadian grocer Sobeys is rolling out AI-powered Smart Shopping Carts. The shopping cart is powered by deep learning and computer vision that identifies items as they are added to the basket. The carts provide shoppers with nearby deals, tailored recommendations, and recipes through an interactive screen.
"The best Canadian brands strive to be world-class by thinking ahead and placing their bets on unique innovations," says Mathieu Lacoursiere, VP, retail support at Sobeys Inc. "We're constantly looking for new ways to evolve the grocery shopping experience."
The New Healthy Retail
Centering the retail experience on the customer has caused retailers to reevaluate what customer health looks like. This year we saw CVS Health unveil its new health-focused concept stores dubbed HealthHUBs. The hubs have been redesigned with more space devoted to services and an expanded health clinic, with a lab for blood testing and health screenings. There are even wellness rooms for yoga and seminars, dietitians and respiratory specialists. The drugstore retailer is in the midst of plans to add 1,500 HealthHubs by the end of 2021 and is on track to have approximately 50 hub stores operational by the end of 2019.
“A key differentiator of our retail stores is our ability to meet members and consumers where they are to deliver local personalized care through our MinuteClinics and now our HealthHUBs making healthcare more accessible and affordable,” said president and CEO Larry Merlo. “And our approach is clearly resonating in the marketplace and is exemplified both by our continued share gains at retail and the early success of the HealthHUBs.”
Merlo said the HealthHUBs in Houston, which have been open for eight months, have continued to outperform their control group with higher script volume and Minuteclinic visits along with higher front store sales, traffic, and store margin.
In a similar vein, Walmart opened its first-ever standalone facility devoted to health and wellness in September, dubbed the "Walmart Health" center.
Located in Dallas, GA, adjacent to a remodeled Walmart Supercenter, the Walmart Health center delivers services including primary care, labs, X-ray and EKG, counseling, dental, optical, hearing, community health and health insurance education and enrollment, all in one facility. In an interesting spin on traditional healthcare, the clinic provides transparent pricing: customers will be notified on the estimated cost of their visit when they book their appointment.
Walmart care hosts and community health workers are onsite to help customers navigate their visit and understand the available resources. Working in partnership with wellness organizations, the Health center will also offer specialized community health resources, online education and in-center workshops.
“The customer is at the heart of everything we do, and that focus is reflected in the new Walmart Health center,” said Sean Slovenski, SVP and president of Walmart U.S. health and wellness.
While not the retailer one might think of for healthcare, lululemon is bringing healthy, customer-centric experiences to its new 20,000-square foot location in Chicago’s upscale Lincoln Park neighborhood. The flagship opened this summer, and includes three exercise studios, a meditation room, and a lounge/workspace, as well as the athletic apparel retailer’s first-ever restaurant, “Fuel,” which serves up a variety of healthy beverages, food and snacks, including grab-and-go items.
“This store captures who we are as a brand as it will embody the Sweatlife,” lululemon CEO Calvin McDonald said in advance of the store’s opening. “This distinct environment will provide us additional opportunities to explore and learn as we connect with our guests in a range of new and exciting ways.”
The Next-Gen Department Store
In just five years, the shopper landscape has dramatically shifted. Shoppers are using online (73%) and smartphones (61%) more, while visiting malls (54%) less, according to RIS’ “2019 Shopper Megatrends Study.” Traditional department stores have had a tough run adjusting to rapidly changing consumer habits.
Some have made an effort to evolve into next-gen shopping destinations. Although, whether their efforts will be in vein remains to be seen.
Nordstrom, for one, has been strategically pairing Rack and flagship stores with smaller Nordstrom Local stores in the same area, to increase access to both inventory and services. Nordstrom plans to open more Nordstrom Local service hubs in Los Angeles and New York moving forward. The inventory-free stores offer services such as online order pickup, alterations, styling and more, tailored to reflect the unique needs of local customers. In juxtaposition to this small format spinoff, Nordstrom opened a 320,000-square-foot women's store in Manhattan in October, a year and a half after opening the doors to a 47,000-square-foot Nordstrom Men's Store NYC across the street. Some of the larger flagship’s unique services include 24/7 online order pickup in-store, self-serve “express returns” kiosks, and same-day delivery to select ZIP codes. Additional services range from connected fitting rooms and cell phone charging to free WiFi and gift wrapping.
The store is also packed with customer-centric experiences. Its alterations service includes online appointment booking and one-hour hems. The new Stylist Lounge serves up a dedicated space to meet with experts and appointments can be booked online. The store’s immersive, interactive beauty floor features retail services such as Drybar, for blowouts, Heyday for facials, FaceGym for facial sculpting muscle-manipulation techniques, Anastasia Beverly Hills for brow shaping, Nordstrom Spa Body Services, and more.
The new flagship location received 85,000 visits in its opening weekend.
"New York City represents our largest online market and we expect to see a halo effect when we open a physical location," Erik Nordstrom, co-president, Nordstrom, Inc. said recently.
He also noted the company’s overarching goal is to gain market share while driving customer engagement and inventory efficiencies.
“There are two elements to this strategy. First, we're giving customers greater merchandise selection with faster delivery without increasing inventory levels. Second, we're engaging with customers by offering express services, such as order pickup, returns and alterations at additional locations.”
Neiman Marcus is another department store that also opened a show stopper of a store this year. The 188,000-square-foot Neiman Marcus in New York City’s Hudson Yards is jam-packed with retail technology and innovative customer experiences. It’s the retailer’s first Manhattan location, which comes at a time when many department store retailers are closing landmark locations, such as Macy’s downtown Seattle store.
“This store recognizes our brand’s history and heritage while adapting to how the next generation of luxury customers shop,” said Geoffroy van Raemdonck, CEO of Neiman Marcus Group. “Neiman Marcus Hudson Yards will be all about providing physical and digital experiences in a way not seen at other stores, creating a personal customer experience that is seamless and magical.”
The store offers mobile POS throughout to ensure speedy checkout and more than 60 Videri screens, broadcasting both promotional messages and real-time content. Eleven digital directories found at each of the store’s entrances and in the customer service area provide customers with a quick search of departments, vendor locations, in-store events, and promotions.
Additional customer-centric features include Rockbot audio services, which allow customers to access and modify the store’s music playlist like a digital jukebox. Shoppers can also record makeup tutorials and record sunglasses they try on, via Sunglass Memory Mirror stations and Memory Makeover mirrors. In the interactive dressing rooms, they can customize their lighting through five unique environment settings and check-out right from the fitting room. They can also communicate with an associate through interactive touchscreens.
Meanwhile, JCPenney is the latest to open an “experiential” retail lab store with a reimagined format and new name: Penney’s. The store is built around data and insights learned from more than a year of extensive customer research and is a “direct result of what today’s shoppers want from a retailer,” according to JCPenney.
The store offers “The Styling Rooms,” with innovative Style @ Your Service technology to help shoppers get new sizes or colors without leaving the fitting room. It’s also staffed with dedicated style experts, free of charge, who can help pull together looks.
In the home section, Penney’s partnered with Pinterest to help customers find inspiration through an in-store style explorer. After answering a few home décor preference questions, shoppers are presented with a curated Pinterest Board featuring JCPenney home products.
The store makes a move many retailers should consider; it caters to families. A kid’s destination within the store houses a clubhouse where children can see artwork come to life and participate in Kids Zone events. Additionally, 13% of the store has been dedicated to 11 lounges, including a parent lounge to give parents a place to recharge. And, in the vein of lululemon, the department store even offers a “Movement Studio” with instructor-led classes and a full assortment of activewear.
Retailers are trialing many tactics to center service and the shopping experience squarely on the consumer. While some may fail and some may win, the bottom line is, if you aren’t trying to innovate and perfect the customer-centric experience, you won’t have much of a chance to keep pace with retail’s rapidly evolving landscape.