Inspirational Business Model for Omni Channel Retail

The need for constant innovation in retail is a call to action. I’d love to motivate retailers to execute their innovative spirit with simple acts of creativity.

One option is to develop your customers’ new favourite place, spaces where the community meets to share common passions in a relaxed atmosphere while experiencing brands and their product offerings.

This article is primarily for those looking for longevity and a profitable, ideally full margin, retail business. The solution I’d like to propose is to develop locations into favourite places: gathering points where the community comes together to share their passions in a relaxed, sometimes artistic atmosphere while experiencing related brands and their product offerings.

Apparel brand Deus ex Machina serves as a great example of this idea and I can’t admire the creation and execution of this brand enough. Now in their 11th year, Deus is well in process to expand globally as a brand with a double-digit annual growth. Today, the brand operates 13 locations worldwide. Sure, it’s been a right time, right place kind of affair. But that’s precisely why it is essential to grasp the larger idea and translate it to fit other brands too.

People prefer to research product categories online, but they often still desire some sort of physical interaction with a product before deciding whether or not to buy it. And the higher the price of a product, the more a consumer is likely to want to touch and feel it first.

I would love to encourage you to start a relatively new, successful economic model based on emotional connections – both real and digital. A retail space is a great platform to curate an immersive, emotional experience. Think of it as a theatre, where the retailer has the opportunity to surprise and wow a potential customer, especially an affluent one in spending mood. The task then becomes turning a store into a destination, to create a desirable community, to offer a not-to-be-missed firework of events every week and to lift the customer visit rate to new heights.

Consumers no longer enter a store simply to purchase a product. Shopping for needs is simply not enough of a reason to visit a store these days, at least not for standard, repeat or replenishment purchases.

Let’s instead imagine a customer who does not yet know that within the next hour they’re going to spend money and be happy with the purchase. The question how to achieve what used to be the essence of shopping for pleasure (vs. shopping for a reason) is answered by some niche brands I have been lucky to discover and follow over the past decade.

omni channel retail deus

(Source: deuscustoms.com)

What Makes A Favourite Place Special?

Deus Ex Machina is not primarily a shop or even a brand. It’s primarily a lifestyle. The creation of a hub for like-minded people is key. That means a favourite place needs a café, a restaurant or a bar to host the core group of your future customers. The proof of concept is visible in the fact that, in the beginning, food and beverages generate more revenue than the shop as such. Product does not create footfall whereas a place to be does. A hotel will also do the trick, a few examples are included further down.

Next up is authenticity – which may be created by the means of touch and feel scenarios. Build motorcycles, bicycles, surfboards, skateboards or snowboards in your hub. Or furniture. Create art if you’re so inclined. Or celebrate sports, like German retailer L+T in Osnabrück.

Increase Frequency of Visit and Conversion Rate

Involve your customer in the action! Create events they’ve never seen before in- and outside of your hub. If the event is attractive, customers will be eager to be part of it. And if they need gear or want the look that your brand and your ambassadors represent, you should be their go-to retailer.

Sounds simple enough but, believe me, it’s not. It’s a 24/7 job, as anyone in the leisure industry can confirm. The trick is that it all has to look easy, organic and without foregrounding the commercial aspect – in one word: authentic.

As a side note, this business model is based on different profit centers. We still tend to focus on a set of well-trodden retail KPIs. Don’t quite forget about those, but do make sure to create a P&L that allows you to curate a product portfolio relevant to your specific customer target group. That includes steering clear from commercial temptations such as quick turning stock rates or complimentary product lines outside of your core competence.

We have to bury the old perception of a retail business to get ready for the next chapter! Your bottom line will be generated by food and beverage, the store, profitable event management, renting the space out to specialists, artisans or artists. All of which lies outside your core competence but contributes to making your new hub as lovely as possible.

To borrow a great description from my friend Gavin: today we live in a collaboration generation. The young generation is used to collaborations and desirability based on the rarity of a product anyway. Why not transfer collaboration from product and brand marketing into the retail space? In doing so, the retailer gets to take on a new role as an orchestrator. Isn’t that the dream for many of us in the retail business?

Other Success Stories

  • Starbucks is charging the brand with an event-character coffee roasting experience.
omni channel retail starbucks

(Source: www.starbucksreserve.com)

  • There are rumours about LVMH looking for hotels to host their luxury clientele and include stores in the hotels just like Soho House x The Store.
  • Eataly sells deli at premium prices because of their wide range of F&B experiences.
  • Armani Caffès are widely known and I would not be surprised if these are welcomed profit centres in some locations. (Something has to pay for the rent in prime locations after all!)
  • Cycling brands Rapha and Café du Cycliste have long discovered blended café, store, event and meeting locations for themselves:
omni channel retail Rapha

Rapha Club House & Cycling Club (Source: www.rapha.cc)

omni channel retail Cycliste

Café du Cycliste (Source: www.cafeducycliste.com)

Make Good Use Of Omni Channel Retail

The direct to consumer factor plays into the concept too when locally made or personalised products are sold in your hub. In essence, you create the market place for the people you want to sell to. You will become a retailer that uses the physical store not to sell products but to sell omni channel experiences that involve products.

And for those who need to stick to opening hours, let’s imagine the following scenario:

Jim, his girlfriend and some mates are enjoying a good time at the restaurant. While the store is already, his eyes detect a great jacket near their table. He decides to touch and try on the jacket. It fits and his girlfriend loves the look. A nearby touchscreen invites him to order the object of desire in his size right away, to be delivered to his home address the next morning.

Omni channel retail at its best! Return rate next to zero. A nice profit for the shop after official opening hours. And your new customer is sure to look his best for your store’s upcoming event! Jim may even post a photo on social media, and if you’re lucky he’ll mention the story behind his latest haul. That’s how you turn him into a loyal customer and eventually an ambassador.

Omni channel retail Bike Shed

(Source: thebikeshed.cc)

An added positive effect will be that your staff has more fun working in such a relaxed environment, which hopefully also leads to a better conversion rate and more sales!


About the Author:
With 25+ years in the sports & fashion industry, Christian is an international expert in wholesale and retail and in the implementation of exciting brands for premium consumers. Having seen many game changes in his career, he suspects there lies a chance in every crisis. If you’re interested in a more detailed discussion of omni channel retail or how to create your customers’ new favourite place, please feel free to reach out via email or connect on LinkedIn.

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