Across all industries, the pandemic accelerated the adoption of digital trends already gaining momentum before the lockdowns, and the retail industry was certainly not spared. Retailers scrambled to shift operations online and provide digital services such as click-and-collect and curbside pick-up. More than one year later, vaccination roll outs are priming consumers to return to stores, malls, and shopping centres. Retailers are confident that shoppers will return to brick-and-mortar, however the new retail environment will look and feel different, requiring a combination of new safety and hygienic protocols, merchandising and operational strategies, and a progression of the retail experience, as well as a greater trend towards convergence of physical and digital to offer increased flexibility and convenience to customers.
Here are five industry trends helping shape the new retail environment.
Providing Avenues for Escapism and Reinvention
After being confined to their homes during the pandemic lockdowns and stay-at-home orders, consumers will experience a heightened need for escapism and self-reinvention – they will crave normal social activities like dining out and casually shopping with friends. A year of WFH, pyjama attire, and COVID haircuts combined with the growing trend of health and wellness also has many people eager to explore new opportunities for self-transformation. Linda Price, a Marketing Professor at the University of Oregon defines this need for self-evolution as the “fresh start mindset”. Retailers that offer creative and inspiring products and services directed at allowing consumers to reinvent themselves will come out on top (think makeover items, self-help, wellness, etc.).
Retailers can tap into this trend by using a combination of online and in-store storytelling experiences to generate buzz and drive engagement. Within the physical store, retailers should strive to create flex-spaces to accommodate unique in-store events to drive foot traffic. These could include exclusive product drops, pop-ins, or performances hosted through collaborations with local artists, for example.
To further amplify this trend, brands should rethink their visual merchandising experience, especially from the exterior. Social distancing and store capacity protocols will likely remain for some time after the pandemic. In warmer months, this means longer queues of shoppers waiting outside to enter stores, which presents an opportunity for retailers to utilize window displays to showcase the customer journey as they explore various areas of the store or to highlight specific products, promotions, or events.
Unlike stores, window displays are never closed. They are visible and present to passersby at all hours, and therefore, act as brand representatives. Whether they are used for actual displays or left open to show a view of the interior, they need to be sufficient in communicating a message without further help of sales staff. “While the usual intent is to direct traffic into the store, lockdown periods increased the need to inspire customers to shop the brand, and during these periods, that means shopping online. Going forward, window displays, much like the rest of marketing, will likely express an omnichannel experience, meaning e-commerce and in-person shopping is not competing; they are treated as a whole, and the messaging should also reflect this,” says Ani Nersessian, a Visual Merchandising Specialist and Founder of VM ID.
Online Stores in Offline Spaces
Several direct-to-consumer brands – especially in thriving categories like apparel and athleisure – which started online have recently launched and expanded their physical presence. Despite a record number of closures of brick-and-mortar stores throughout 2020 and a decline in foot traffic, brands like Bonobos, Glossier, Casper, and Warby Parker have found that now is the opportune time to take advantage of low rent rates and have announced new store openings this year. Real estate experts have predicted that digitally-native brands will open 850 brick-and-mortar stores within the next 5 years (Tinuiti, 2020). Many retailers are realizing that consumers still prefer physical stores where they benefit from in-person interaction and can touch and feel the products.
Other brands like Gap Inc. and Lululemon, which were forced to pivot to e-commerce during the pandemic, seem to be ready to shift back into the brick-and-mortar game in an effort to re-engage customers that prefer in-store shopping. “It’s all about maintaining relevancy in the digital economy. Despite many brands seeing a boost in their e-commerce business during the pandemic, retailers are taking advantage of desirable real estate availability and more favourable lease deals to open new shops, expand or relocate existing stores, and launch pop-ups,” says Linda Farha, Founder and Chief connector at pop-up go.
How can retailers leverage this trend? Creating an offline experience is an excellent way for digital brands to leverage the omnichannel technology and convenience of their e-commerce strategy in a physical setting. “Brands should focus on what makes sense for them – be strategic about where your customers are going to be most eager to spend their time,” says Farha.
AR-Powered Shopping Experiences
Augmented reality, artificial intelligence, and machine learning are here to stay. An essential part of many retailers’ e-commerce business, these technologies are helping to further the convergence of digital and physical. According to a Nielsen global survey conducted in 2019, consumers listed AR and VR as the top technologies they’re seeking to assist them in their daily lives, with 51% saying they would be willing to use AR tech to assess products.
These technologies allow brands to create more immersive and visually exciting shopping experiences. Among those who have introduced AR experiences to showcase their products to consumers are IKEA, Home Depot, Target, and Shopify. AR and VR are especially useful for helping customers select the best size and fit of clothing and shoes – something most shoppers find challenging when purchasing online and is a primary reason for returns.
Retailers can partner with tech companies like 3DLook and TrueFit to offer their customers 3D body scanning services to help improve clothing size selection and hopefully reduce returns. This trend is likely to become increasingly utilized as a way to help consumers reduce the risk of “try until you buy”.
Transforming Store Operations
Physical distancing protocols and a new preference for self-service are altering traditional store operations in order to meet evolving customer experience expectations. For retailers, providing safe in-store experiences will help alleviate consumer worry about returning to pre-pandemic out-of-home shopping activities. Besides cleaning and sanitizing procedures, retailers can implement no-contact payment methods and alter the physical layout of the store, optimizing the footprint to increase distance and enable self-service with frictionless furniture solutions.
Hettich Canada, one of the world’s largest manufacturers of furniture fittings, has responded to this trend with modern furniture solutions that gives users added value in terms of design, functionality, and practical convenience. Products like the TopLine XL sliding door system and the AvanTech YOU drawer platform are creatively combined with other furniture systems to create new functions that make it easier for the retail customer to see and access products. When modifying or reconfiguring their store layout, retailers should focus on utilizing multi-functional merchandising furniture, low shelving, and accessible racks to limit high-touch surfaces and give consumers more control over their environment, rather than the shopping experience being determined by the staff.
Hettich Canada is offering insights into the future of physical retail environments during its hybrid webinar series, Hettich XperienceDays, taking place April 29 at 1:30 PM EDT. The webinars are free to attend, however, registration is required. Learn more at hettichxperiencedays.com.
The new retail environment is also seeing the trend of everything on wheels – fixtures are designed to be easily moved, taken down, and reconfigured, making moving merchandise and products around much faster. Additionally, retailers will benefit from modular store fixtures that take up less space while enabling the customer to see and access everything more easily and removing walls and bulky furniture to improve sightlines and physical distancing.
Treating stores and pop-up spaces as showrooms has been critical leading up to the pandemic. Ani Nersessian believes that the need to do so has only increased, especially given that social distancing requires clear walkways. “Editing down to a well-curated presentation has been imperative,” she says. “Since many retailers have been forced into this type of presentation, and customers are conditioned to expect this more than before, customers will likely be even more sensitive to higher standards of presentation. Websites will be treated as e-catalogues, diminishing the need and tendency to use the sales floor as a stockroom rather than as a presentation space” continues Nersessian.
Redefining the Role of Physical Stores
Having a thoughtful digital strategy has been critical to staying afloat this past year, particularly for many small retailers. While digital transformation will continue to play a major role in many brands’ business plans, the physical store is far from dead. The pandemic has provided an opportunity for retailers to rethink and reassess the purpose of their physical footprint and how to take their customer experience to the next level. In an article published in the Harvard Business Review, leading authority on positioning great brands, Denise Lee Yohn, explains: “As a result of COVID-19, all retailers will have to make their in-store experiences even more extraordinary for those who can visit in person. They have to give people a reason to visit that is so compelling, it justifies their exposure to health risks and overcomes the inertia of the behaviours they adopted during the shutdown” (The Pandemic is Rewriting the Rules of Retail, July 6, 2020). Brands that offer exclusive, one-of-a-kind experiences, superior in-person customer service, and a personalized approach will fair better than those that do not.
Additionally, physical stores will be used to extend the innovation and digital services a brand offers online, integrating the two worlds to create completely new and immersive shopping experiences.
Beyond supporting a brand’s ecommerce business, retailers are using their brick-and-mortar stores to reinforce brand positioning by placing a greater emphasis on educating consumers rather than simply selling product. This approach has been a staple of pop-ups which, in the past, have primarily served as testing grounds for emerging brands as they dip their toes into the physical retail world. Post-pandemic, Linda Farha believes the pop-up concept will serve as “an important way for brands to reconnect with existing consumers and new prospects in a more controlled environment before making a bigger commitment”.
Stores will make their comeback, but in a different format, feel, and function. With a progressive approach to integrating both the digital and physical retail environments, modernizing their physical retail infrastructure to be more flexible and immersive, and offering unique storytelling experiences that allow shoppers to reinvent themselves, retailers will be empowered to keep pace in the multichannel world by leveraging the benefits of both ecommerce and bricks-and-mortar to drive success.