This article is for the Professionals
Sign up to Inside Retail Professional now for only $4 for your first three months.
That's an 85% discount plus you’ll get FREE access to all Masterclasses during Retail Week. 5 retail industry leaders like you’ve never seen them before.Already a professional? Log in
Phygital, omnichannel, hybrid, online-to-offline, etc
The easiest predictions to make are those based on current trends. If something is already happening, it is easy to predict the trend will continue or even increase in the short-term future. For physical stores, the obvious trends are an integration with other channels, and the increase in various in-store technologies. There are many buzzterms around these trends; phygital (which doesn’t quite roll off the tongue), multichannel, omnichannel, hybrid stores, and so on.
There is an interesting trend with buzzterms in retail. Once one becomes popular, we seem to quickly look for a new one and proclaim the old one ‘dead’, even if most of the industry hasn’t caught up. For example, multichannel gave way to omnichannel when many retailers were still trying to simply create an effective e-commerce presence. More recently, retail author and consultant Steve Dennis wrote that omnichannel is dead, and the future is ‘harmonised’. Yet many retailers are still struggling to accurately show consumers how many of each product they have on their shelves, or even offer effective click-and-collect.
Regardless of what we call it, the fact remains that physical stores will still need to be more integrated with other channels, and with emerging technologies, across 2022. For example, we have recently seen retailers here and abroad experimenting with scan-and-go stores more seriously, so we’ll probably see more. Through my research, we’ve seen an increase in augmented and virtual reality in stores using smart mirrors and interactive walls. Again, we will almost certainly see more of those technologies in stores next year. These aren’t wild predictions, but important trends nonetheless.
My big question here is about balance. While stores need to work with (or ‘harmonise’) other channels and technologies, we also know some consumers prefer traditional shopping experiences. Even those who enjoy technology can prefer a simpler approach when they are trying to get in and out quickly. So, will we reach a tipping point in 2022 where some stores have too much technology or too much ‘harmonisation’? Could we see some stores differentiate by their lack of technology? Or will tech in stores just keep ramping up, leading to even newer buzzterms making even the emerging ones ‘dead’?
Another easy trend to predict is the continued focus on experiential stores and the experience economy. Partly due to the rise of e-commerce – and mobile commerce and social commerce – we’ve seen stores increasingly putting less focus on transactions and more on experiences. This is where what we define as a ‘store’ becomes murky. For example, is the Legoland Discovery Centre which charges for the experience they provide a store (beyond the attached mini-store)? Even more traditional stores are using experiences as a centrepiece of how they promote their products.
For example, I spoke about this trend with Danny Lattouf from the General Store for my Shopology show recently. Danny was one of the masterminds behind Rebel Sport’s award-winning new store concept. In that chat, Danny explained how in-store experiences are about encouraging and facilitating meaningful product trials, and that consumers ‘pay’ for them by choosing to spend their time in the store. He’s right on the money, and quite literally so, given the success of brands the General Store have helped roll out these experiential retail concepts.
However, like with tech and channel integration in-store, the question of balance is also relevant to experiential retail. In-store experiences can be highly engaging and valuable, but often are not a convenient way to shop. For instance, a fully experiential store with no products in-stock means consumers can’t just walk in and get what they need.
So, as we see more experiential stores in 2022, it will be interesting to see how that is balanced with still providing convenience to consumers just trying to make a purchase.
From CBDs to suburbs
A potentially more intriguing trend to consider in 2022 is in the balance of retail locations between CBDs and suburbs. Even back in 2020 a group of researchers including Paul Maginn, Gary Mortimer, and Louise Grimmer, were writing about the ‘death of the CBD’ and how the suburbs were the future of retail. In those articles, they referenced the sharp drop in foot traffic to CBDs, and the growing desire to continue hybrid working even post-pandemic. Since then, we’ve seen even harsher lockdowns and even stronger preferences for working from home – at least a few days a week.
This raises a big question about how CBDs will adapt in 2022 and beyond. Even a few days of city-workers staying home has a big impact on lunch-time shopping trips, coffee meetings, post-work drinks and so on. Even as international borders open, I can’t see tourist numbers immediately bouncing back, or perhaps ever being able to make up the difference from reduced worker traffic.
So, how will CBD precincts look to attract retail visitors? Will brands in those areas double down on flagship experiences as a lure for either workers to choose CBD over home, or visitors to make a deliberate trip in? Combine this lower traffic with high rental costs, and we will likely see more vacancies – so what will happen with those spaces? Do landlords go searching for international brands to fill the gaps (I hope not!)? Or could we see more hybrid spaces combining retail with community activities, arts, working and meeting spaces, and so on?
As a potentially even bigger impact, could we see a shift of focus to where consumers will increasingly be – the suburbs? Think about it, if more of us will be working from suburban or even regional areas – even for just part of the week – we should also see more traffic to those local retail and dining precincts. So instead of sticking with traditional CBD locations, could we see more investment in local centres and strips? I find that quite an exciting proposition, particularly for local areas that have seen major brands close stores in recent years. Rather than local stores being treated like an afterthought, could they become the first priority?
Into the metaverse
Speaking of store locations, the ‘physical’ component of stores is also interesting to consider in 2022. It feels like since Facebook tried to claim the word ‘Meta’, everyone is talking about the Metaverse, and many are already claiming to be experts. At the same time, the smartest people in the space seem to agree that the true Metaverse is still quite a while away. Instead, what we have now is a series of virtual worlds (or universes) that are as-yet largely isolated. The actual Metaverse will be here when those universes are seamlessly integrated.
Even if the real Metaverse isn’t here yet, and if Facebook (sorry – Meta) won’t own it, very interesting things are already happening regarding ‘stores’ within virtual worlds. For example, a group called Metaverse Group recently bought a virtual plot of ‘land’ within virtual universe Decentraland for the equivalent of $2.43million US dollars’ worth of cryptocurrency. This plot is within the ‘Fashion District’ of the world and will used to house digital stores to sell digital items and NFTs. Similarly, Nike recently created Nikeland within Roblox – a virtual world that started as a game but increasingly acts like a virtual world. Within Nikeland, consumers can visit a showroom of Nike products for their virtual avatar, and there are even links to the real world environment.
While we are still seeing this technology and consumer adoption of it evolve, there are fascinating implications for what we think of a ‘store’ in 2022 and beyond. Increasingly we will see brands experiment with digital environments, whether that be virtual malls and stores to buy products IRL (‘in real life’), or even focused entirely on digital products for our digital selves. So could we see more brands give up physical stores for virtual counterparts? This is a fascinating space with already substantial levels of investment occurring.
Conclusion: Stores – dead or alive?
The trends above clearly show stores are not ‘dead’. Next time you hear someone say they are, ask what they mean by ‘store’, and whether they are talking about physical, virtual, or both. Because while stores look a bit different now they are certainly not dead, they have just evolved – and you may have to look in the Metaverse to find some of them.