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| Farfetch's 'Store of the Future.' Courtesy of Interfashion Planning |
By Victoria Kim
The world best-known department store Macy's is closing eight stores this year as part of plans that were announced in August 2016.
Two years ago, Macy's said it would close 100 stores. Officials said the aim was to concentrate on balancing the present stores with its strong digital presence. Needless to say, it is no wonder the traditional retail industry ― physical stores ― has been struggling recently.
Many mono brands, malls and even select apparel shops have decided to shutter some of their bricks-and-mortar stores.
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| The Tsutaya Bookstore in Daikanyama. Courtesy of Interfashion Planning |
However, according to the U.S. Census Bureau, in 2018, 89 percent of retail sales were through stores and 5.65 percent were from e-commerce, with 1.85 percent by mobile and the remaining belonging to the catalog/others category. This implies that even though there are new types of retail formats, such as social commerce or live-streaming media businesses, typical store-based retail is dominant.
Therefore, it is not simply a matter of competition between online and offline distribution but a story of the distinctive value of the channels. In other words, the essence of retail management is "how" the retailer presents the differentiated product-related service and price range to the end customer.
Indeed, retailers encounter diverse technologies with personalized, data-driven services and experiences across the platforms beyond the merchandise. I would like to recommend models of store spaces that will thrive in the new retail landscape.
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| The Tsutaya Bookstore in Ginza. Courtesy of Interfashion Planning |
1. Showrooms more than a physical store
Commonly, a physical store is regarded as a stock display area, so the fixtures and store interior and exterior elements are tools of product decoration. The showroom concept is utterly different. "Our concept is not to sell books themselves, but to offer lifestyle navigation to read the books comfortably so it feels like being inside a library. After we conceived this founding concept within the store, the books sold so well," Muneaki Masuda, Tsutaya Bookstore's founder, said.
The work of Tsutaya Bookstore's employees is not limited to organizing books or helping customers find the books they looking for. They are called "concierges," based on their decades of field experience. For example, the "Travel" books category concierge has expertise based on a travel-related work career. Therefore, books displayed in the section not only include best-sellers but those that reflect the concierge's own taste and insight.
If a customer is thinking about visiting Belgium, the concierge can help with travel tips, advice on accommodation and book recommendations. This is a truly personalized evolution at the heart of the experience of authentic expertise.
"Showroom" originally defined a large space to display products for sale between the buyer and the brand agent. If we consider the store as the showroom to create intimacy and exploration for customers, it will become an entirely different business.
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| Farfetch's "Store of the Future." Courtesy of Interfashion Planning |
2. In-store Technology
Let's suppose a reversed situation: If you are born online and want to build up a bricks-and-mortar store, you would need very good rational reasons. It is not about the inventory storage concept for those who initially started in the e-commerce field. The contemporary is about data, or what artificial intelligence and machine learning, allied with big data algorithms, can achieve.
Farfetch U.K. Limited (www.farfetch.com) launched an offline store with a strategy based on the "Store of the Future." Jose Neves, CEO of Farfetch, said: "It's absolutely imperative that we bring data intelligence into our bricks-and-mortar businesses and deliver to customers incredible, mind-blowing experiences that only data allows us to do."
For example, when you get to the store's entrance, your mobile application automatically turns on. If you pull out a hanger from a clothes rack, it connects with the IOT (internet of things), putting the item in an online shopping bag. You can also see the item details on the smart mirror next to the displays.
This does not mean we need to fill the whole store with smart devices. First, you need to gather useful data from existing consumers. The Farfetch offline store was able to set up the store-engaging technology innovations after it accumulated a certain amount of consumer data.
Consumers' shopping behavior and preferences are apparently leading the changes. Millennials and Generation Z are digital natives. They want to have more personalized experiences and expand their access to a variety of products. Based on the omni-channel investment, more digital and technological methods combined in-store will be ways to survive.
Victoria Kim is the adjunct professor in the Department of Fashion Business Management at the Fashion Institute of Technology (F.I.T), SUNY Korea. She has over 10 years' experience in fashion consultancy and how fashion brands intersect with global retail trends and innovation. Her research interests are fashion retail trends and global business management based on contemporary consumer lifestyle change.
