Amazon closes down all physical book stores, pop-ups and 4-star stores in the UK and US. Do you want to learn how to avoid their mistakes?

Despite the initial media hype and large investments in technology, the stores failed to deliver the expected returns. And while that does come as a surprise, we questioned whether packing stores with digital gimmicks will make up for missing the essentials of retailing right after their opening.

As of 2022, Amazon’s retail venture provides a strong learning case: Money and latest tech can’t buy you a thriving retail concept if you ignore the basics of store development.

Why Store Concepts Are under Review

Amazon’s retail entry energised retailers and brands to approve store investments and brought many new digital interfaces to brick & mortar. Services like ‘click & collect’ have existed since the early 2010s, but seamless cross-channel journeys were still few and far between in 2017. With Covid-19, these innovations have become store naturals. Some are already in need of a rework, while the next generation of services is waiting for roll-out.

From our London cross channel readiness assessment (Graphic: Brand Pilots)

Brands come out of the pandemic heavily investing in new retail flagship concepts, now rolling out their flagship experience to smaller concept stores. That increases the pressure for all other brands to not fall behind on innovation.

If you follow the leading retail tech events like Eurocis in Düsseldorf or NRF in New York, you experience a new wave of tech influences every couple of years. Evolving technologies, advancing brand competition and ever-growing consumer expectations drive dynamics behind new store concepts. Staying behind in technology can lose you generation internet.

You have to be very brave to keep the tech in the background, here Valentino’s new flagship store on Fifth Avenue New York (Photo: Brand Pilots)

Latest Trends in Store Concepts

Retail technologies like Tablets, QR codes, RFID Tags, augmented reality or magic mirrors, once considered innovative, steadily become store naturals once the pass the readiness assessment. The latest trend are NFTs and how to make use of them in stores. In five years, we will know whether they are here to stay.

While new store features take over, the old ones evolve into something else entirely. Take the concept of a fitting room, for example. Thanks to RFID and magic mirrors, that uncomfortable confined space we wanted to leave as quickly as possible has become a selfie hotspot and a place we want to share with others, at least virtually. In its most innovative version, you book your fitting room in advance with a ‘click & try on’ service. Too fancy for your brand? Just keep in mind that this service has already  conquered the mass market. Can you afford to skip this tech and wait for the next one?

The new changing rooms pay into an essential store design need: Instagram activation points allow you to gain followers far beyond the shoppers at your store. Max Fashion for example demonstrated how this can work out with Ombori’s digital interaction point:

Store visitors created up to 1,000 selfies per day, and 76% of users chose to connect with the store on WhatsApp. Providing 700 new contacts every day, that’s how digital toys pay back their investment.

Avoiding the Complexity Trap

While store tech conveys innovation and contributes to consumer convenience, it all too often drives up store cost without adding value to the core of retailing, selling merchandise. If you think of it, if tech is highly entertaining, it will inadvertently do a great job distracting consumers from buying the latest merchandise.

Complicated innovations impress the board and make their way to store. Meanwhile, what is the value of consumers spending more time browsing touchscreen menus than checking merchandise? The latest generation of flagship stores easily have more than 50 digital touchpoints, all competing for customer attention.

       Adidas’ Digital Flagship Inventory (Source: Digital Innovation)

NPS, digital signage, QR codes for app downloads, product lookups, RFID recognition, or magic mirrors – the list of tech gadgets for brand stores is long and tempting. I just wish from time to time we paused to ask whether delivering outstanding experiences doesn’t also provide an outstanding distraction from shopping.

Without doubt, the more tech you add, the less your consumer can see the product message. And with too many messages in store, you will need Amazon’s landing page AI to guide consumers to a buy.

Is it a store or a tech museum? Nike’s House of Innovation in Paris (Source: Viacomit)

Store tech is useful, as long as it serves to support the consumer’s journey to the cashier. And for anyone who believes that it’s the tech that triggers sales, I’d like to point to a rather large graveyard of ‘future stores’, where tech took control of the consumer experience. Ultimately, they succumbed to the complexity trap and, like Amazon’s stores, vanished years before their lease ended.

The Art of Successful Store Concept Development

Store concept development needs to balance the needs of branding and commerce. But that’s very much textbook theory if you have too many cooks trying to influence store concept design, especially of flagships:

• the CEO who wants to shine with shiny new stores,
• the creative energy of a digital agency,
• an innovative retail architect,
• the brand department pushing for strong storytelling,
• merchandise planning insisting on fitting in all assortment categories, and
• e-com pushing for online experiences in store.

The result is likely a jack-of-all-trades store that neither creates a lasting brand experience nor wins new customers. Some brands work with project management offices to keep the store creation and costs under control. But project management professionals focus on delivering the concept design in time and budget, they don’t address gaps in the consumer journey.

If your design overstates branding, technology or entertainment, you end up with a showroom to the detriment of store productivity. If it overstates store productivity, your store will be boring and neither win new brand customers nor friends in the boardroom. To understand that challenge, I highly recommend an article by my colleague Greg Klingaman about his journey managing the design and creation of the £185M Johnnie Walker Brand Lighthouse.

Not a brand store, but an brand experience (Photo: Emma Pollock, Diageo)

His central advice:  “It is hard to put into words the incredible complexity. Through shared vision and aligned purpose, we balanced the push/pull of achieving commercial returns.” In other words, with all the creative energy flying around, the very basics of successful retailing risk getting lost.

The Store Design Essentials

If your last project became too complex, how about beginning differently this time around?

Step 1: Sketch the concept

Start with the basics and add the fancy stuff later. Implement best practice customer journey thinking, clarify the stores objectives and what you want to achieve with customers. Define assortment areas, zoning, windows, services areas, and experience areas.

Step 2: Study benchmarks

You will be familiar with the leading concepts, but have you truly studied whether key features work or are you at risk of copying bad ideas? Create a shortlist of 3- 5 brands that stand out. Study their consumers in stores, observe their journey and interactions, and create a list of best practices for your concept.

Step 3: Take an in-house inventory

Repeat Step 2 in your own stores. Observe and experience what works and what doesn’t. Are the NPS terminals in the right place? Is the store full of interactive displays, but not even one in the window to attract high street footfall? No-brainers you might say. Well, check any high street near you and be surprised at how many gaps you see.

Step 4: Define the role of the store

At this stage you are likely clear on the future role of the store and its location. Is it a flagship, concept store, factory outlet, neighbourhood store or something else? This defines the space you allocate to product, service, and experience. Make sure everyone involved is aligned on what this concept wants to achieve.

Step 5: Define the assortment

The key role of a brand retail store is to provide an environment for selling merchandise. But your assortment may fall into many different categories. Which ones will you offer at your new store? Showing too little of any given category can leave the customer questioning your core competence. Define the space for each category well.

Step 6: Add your tech & service highlights

Once the store role, the assortment categories and their zoning is defined, it’s time for the fun part: adding in the tech and service zones. While they are absolutely essential, it’s important to add them as a last step rather than first. That’s what the failure of Amazon’s stores has demonstrated yet again. Give tech and services enough space to positively influence your brand image, but don’t allow them to drown out the merchandise.

Rework Your Store Development Process

If you feel that all this comes a little late for your current store project, keep in mind that the next generation of store concepts is already on the horizon. To be prepared when the next project comes along, it’s a good idea to rework your store concept development processes now. And in doing so, make sure that the consumer journey is at the heart of your next store project.

And finally, if the there is one best practice to adopt from Amazon, it’s to include an empty chair for the consumer in your project meetings to ensure your multifunctional teams never forget who they design for.

Good luck, and please reach out with any questions or comments you may have!

About the Author:

Guido is a brand retail business coach, supporting brands on their path to healthy growth. He is happy to support you in reworking your store development processes. But you make him even happier by getting in touch for advice long before your store development requires fixing.