Rethinking the Post-Pandemic “Store of the Future”
Attempts to create a “store of the future” are littered with failure due to gimmicky concepts that over-promised and under-delivered. Here are concepts that change the rules and work.
There is an understandable feeling today among retailers that because non-essential stores were empty during the COVID-19 pandemic this is a perfect opportunity to start fresh. We can’t just go back to the way things were, right? Even for “essential” stores, the thinking goes, this is a time to throw out the rule book.
However, it would be a mistake to use the gyrations of the pandemic to be a prime driver behind a retailer’s next “store of the future.” Even before the pandemic, tectonic shifts were occurring in ways consumers shop and, importantly, several leading retailers were already responding and making big changes to their stores.
Here’s a look at four new store concepts that have recently emerged in our pandemic-influenced marketplace. One thing these “stores of the future” have in common is they take an evolutionary approach to innovation, an approach that enhances but does not disrupt the ease and convenience of shopping. The new concepts remain consistent with the retailer's brand promise while simultaneously adding new capabilities that augment the shopping experience.
‘Store of the Future’ Today
Retailers with long memories know that most “stores of the future” fail. One recent example is the Microsoft Store, a competitor to the Apple Store, which is the most successful “store of the future” in retail history.
After Apple launched its revolutionary Apple Store in 2001, many retailers tried to imitate it with limited success. In 2009, Microsoft thought it was ready to take its shot and opened a virtual copy of the Apple Store and stocked it with Microsoft products.
Microsoft pumped money into the effort for years and the chain grew to include 83 stores, however the concept never caught on with shoppers. Last year, Microsoft pulled the plug and closed all of its retail locations. Apple Stores, on the other hand, now have more than 500 locations around the world and continue to set the industry standard for foot traffic and revenue per square foot.
Here are some key “store of the future” concepts that have been recently launched by leading retailers. Most build on shopper-centric innovations that emphasize the use of consumer data and omni-commerce capabilities:
- Like Apple before it, Amazon is setting the pace in retail today. It’s first Amazon Fresh Grocery Store is likely to be much imitated – like the Apple Store was – but never quite matched due to Amazon’s technological and financial prowess. The Amazon app is fully integrated into many store processes. Amazon Prime members can get free same-day delivery and two-hour in-store pickup. They can order ahead for pizza and items from the deli, meat and seafood counters, and then get notified to pick up the items at a dedicated service counter. The store also features the new Amazon Dash Cart, which allows customers to sign into the Amazon app, place items inside the cart, and exit the store through a dedicated Dash Cart lane, which automatically completes payment. The stores are also equipped with Amazon Echo devices in the aisles that shoppers can use to ask for help using voice commands. And, of course, shoppers can pick up or drop off purchases made on Amazon.com.
- Nike’s latest concept store is called Nike Rise and it joins two other Nike concept stores already launched – Nike’s House of Innovation (2018) and Nike Live (2019). All three new stores-of-the-future use data gathered from Nike’s massive loyalty membership program to tailor each store’s product mix to member preferences based on where they live. If one neighborhood is filled with soccer fans as opposed to basketball fans or joggers, then soccer products are heavily featured and quickly restocked. The new Rise stores feature Nike Fit technology that scans feet to ensure the best fit, a personalization bar that enables shoppers to personalize items with design elements inspired by the local culture, and a mobile app called Nike Experiences, which connects loyalty members to local sporting and training events
- Target continues to evolve its already successful store concept -- probably the best way to keep ahead of the store-of-the-future curve. Spending between $4 million and $10 million per store remodel, Target will create a new entryway that optimizes “ease,” which means it will double the number of drive-up parking spaces and expand pickup counters for online orders and self-checkout. Target also plans to expand its successful small-format stores in urban centers and college campuses, which feature a mix of neighborhood-specific merchandise.
- Walmart, which pioneered an automated in-store-fulfillment center concept in 2019 to rapidly fill online orders, just announced it will expand the concept throughout the chain. While associates pick orders from the fresh produce, meat and seafood counters, general merchandise items will be picked by automated bots in a dedicated part of the store, where they will be stored until ready for pickup. In addition, Walmart is adding fully automated exterior pickup points where shoppers pull their cars into a drive-through lane where they scan a code, grab their orders, and go.
Clearly, the pandemic-inspired boom in e-commerce sales will have an impact on future store designs, however the most successful will likely take a hybrid approach, one that transforms stores by deeply integrating omni-commerce capabilities while also remaining consistent with the retailer's brand promise to its customers.