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What's in a name?
14 October 2012

What's in a name?

Call me nostalgic but I still like to buy the occasional printed magazine. Even though my favourite music magazine now comes on time to my iPad at less than the cost of a paper magazine subscription, I’m happy to buy my second favourite a month late at a newsagency.

Happy? Well not really. I recently visited one of my local ones and was greeted by a threadbare carpet, fading paint and a shelving system that had probably once housed copies of the special Coronation edition of the Australian Women’s Weekly. The place was shabby, disorganized and above all needed a good clean.

By coincidence I just read Seth Godin’s blog discussion on whether things are sold or bought. Some items such as bottled water or chewing gum, he argues, just get bought, whereas something like life insurance won’t get too far without being actively sold. I hope for the owner’s sake that everything inside that newsagency is being bought because it sure as hell isn’t being sold.

It’s an extreme example but retailers do seem to take it for granted that people just buy stuff. Why else do so many build a vanilla box with basic shelving and lighting, fill it with as much stock as possible, stand back and expect people to walk in and buy it?

It’s because it’s still called a “store.” That’s what it was called in the last century before there were alternatives. Stuff got “stored” on shelves in “stores” and that’s where people would buy from because they didn’t have iPads or smart phones or personal computers. Retailers started putting “stores” everywhere and needed things like distribution centres- which are of course just big “stores” that send stuff out to all the smaller “stores.” These smaller “stores” are now all clustered together in large expensive buildings (kind of a glorified Kennards) that people drive to and pay a premium for shopping there. In the tech fuelled twenty first century it didn’t take someone long to figure out that you could just open one big remote distribution centre that people didn’t have to go to at all and they could save time and money by shopping directly from the comfort of – well, anywhere they want. So where does that leave all the “stores?”

Clearly they are obsolete.

At least the ones that think of themselves as “stores.” I’m talking about the ones that are crammed with too much merchandise, poorly lit, cheaply fitted out and inevitably full of sale signs. The idea of paying shopping centre rents to “store” stuff and hope that people will come and buy it is very old fashioned. “Stores” need to move from being passive buying environments to active selling environments.

The new key to retail success is to stop thinking of your real estate as a “store.” We’re going to have to start calling it something else. But what’s the new word? Before you say “shop,” it’s not appropriate either. It implies the idea of shopping around, which is not what we want our customers to do. We’re looking for a deeper relationship than that.

Let’s look at some of the elements that go towards this new environment

  1. Exclusivity.
    There is a huge advantage in being a single brand, vertical offer. Apple sells not only hardware but also the software that is tailored to it and a huge amount of content via iTunes. The key to it is that no matter what you buy or how or where you buy it, Apple still makes money. You can even use what you buy at Apple to buy more Apple product. The same goes for Nespresso: you buy the appliance, which like Apple product is innovative and sexy, but this is only the start of the relationship. Only Nespresso capsules work with Nespresso machines. The relationship continues. Neither Apple nor Nespresso stores stack up product and expect you to come in and buy it. Both environments are set up as a resource for the customer. Product density is sparse but what’s there you can play with and use. Apple gives you free lessons in how to use their products. Nespresso gives you a free coffee. People are there to provide service- Apple staff are all knowledgeable enthusiasts and evangelists for the brand; the dapper and polite Nespresso staff treat you like you’ve just walked into a boutique hotel, and the environment looks just like that. Apple stores exhibit the same intense attention to detail that goes into the design of Apple products- even down to the fact that the stone on the floor comes from the same quarries in Italy that supply the street paving for the city of Florence. It’s seduction, not selling- pull, not push. Neither of these environments is a “store.”

  2. Service.
    Not everyone has the advantage of only selling one brand. In a multi brand environment service should inform the design of the environment. The environment must enable easy engagement between staff and customers but it must go deeper than that. It must enable customers to make the right choices. Take vacuum cleaners. The old fashioned way to sell vacuum cleaners is to fill a “store” with lots of boxes, and demonstrate the appliances to customers who wander in. This was the scenario when we designed a prototype for Godfrey’s at Fountaingate. In a worn out and cluttered environment you couldn’t see what was on offer. We had two insights: First of all people know what a vacuum cleaner does nowadays. Demonstration is not important. Secondly, 21st century vacuum cleaners are beautiful pieces of industrial design. By designing a simple, gallery like environment we enabled customers to see and appreciate the product and make choices based on emotional criteria as well as rational. Customers commented on the increased range- there was actually less stock in store- and the average purchase price increased, along with profit. When designing a retail environment we need to consider what the advantages are to the customer and how the whole environment serves them best. In a world with exponentially increasing choice, one of the best ways we can serve the customer is to help her make a decision. “Stores” simply don’t do this.

  3. Experience.
    Some environments sell literally hundreds of brands.  Supermarkets, for example. It’s very interesting to see how the price war between Woolworths and Coles is now escalating into one of customer experience as well. Supermarkets, once the definer of the word “store,” are now offering a much more sophisticated customer experience. Coles started by creating a fresh food area that was more like a European marketplace, offering services like fish filleting and adding touches of the unexpected like an in house Indian takeaway restaurant. Woolworths have upped the ante by increasing the theatrical qualities of their fresh food departments and offering increasingly sophisticated sampling in stores. Supermarkets, however, put all the love into the fresh food areas. Just a few aisles over into the canned goods and toilet paper aisles, you’re back in “store” land. The way supermarkets will evolve though, is that low engagement purchases will be increasingly made online, and people will continue to visit for the high engagement items like fresh food. Food shopping will become more experience and less “store.”

  4. Community.
    The boundaries of the retail environment are extending beyond the lease lines. Small specialty retailers are now starting to punch above their weight and become communities. Bike retail is a great example of this. Conventional bike “stores” are being fiercely challenged by a cheap and well-serviced online market. Smart operators are now switching to a service and community based model. Lance Armstrong has opened Mellow Johnny’s in downtown Austin, Texas. Bike commuters can rent lockers there, have a shower and park their bikes. They can have their bikes serviced while they are at work. There is a café that offers conventional coffee and muffins for casual riders and also caters to elite athletes on special training diets. There are organized rides for riders of all abilities. It’s more about servicing a lifestyle than selling stuff off shelves. You can tell from the design: it’s centred around the workshop and café rather than racks of product. It’s not so much a “store” as a resource.

As designers we can no longer think of ourselves as people who design “stores.” We need to think of retail environments that are resources for customers, places where they can learn, be entertained, or become part of a community. There’s a lot more to think about than “storage.”

So here’s the first challenge.

What do we now call the spaces we used to call “stores?”

I haven’t decided yet but I’d love to hear from you.

 

Gary McCartney is the owner of McCartney Design and a regular contributor to Inside Retailing. You can reach him at gary@mccartneydesign.com.au.

14 October 2012
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