2018 was a difficult year for UK retail, online and offline. But despite the huge challenges rocking the industry, some retailers are thriving and opening more stores than ever. Mountain Warehouse, Oliver Bonas, Hotel Chocolat and Kurt Geiger are just some examples.
The issues facing retail are wide-ranging, but stores are part of the issue. Retailers are plagued by the wrong type of estate: too many stores, inappropriate formats or the wrong locations.
We are witnessing the polarisation of retail. The retailers doing best are often the most ‘functional’ (cheapest or most convenient) or those with the most differentiated offer. Ultimately, only one retailer in each category can be the cheapest – most retailers must compete on having a compelling, customer-focused offer and a clear brand philosophy. Brands need to stand for something meaningful in the eyes of the consumer.
Differentiation responds to a specific customer, brand and business. It can mean focussing on offering one core product and doing it very well (Casper, Ugg) or curating a compelling product mix and experience with a clear brand voice (Oliver Bonas, Selfridges). It may well mean building a seamless, branded ecosystem (Nike, Apple) encompassing product, in-store experience, apps and branded content.
Like fears about the Millennium Bug, rumours of the death of brick and mortar stores were hyperbole. Stores will continue to be an intrinsic part of retail in the future, although their purpose is fundamentally changing. Amazon and other online retailers are opening physical shops because they know stores are unrivalled for the tactile experiences and human connection they can offer. Younger customers still value physical retail despite never knowing a time before the internet: more than 98% of Generation Z say they prefer to make purchases in brick-and-mortar stores (IBM & NRF global study 2017).
Although stores still account for the majority of sales, we are still far from an online-offline equilibrium. Mediocre shops may die out, but relevant and imaginative stores and pop-ups will be part of the future. The store is becoming a form of media – and a powerful way for brands to differentiate.
The best concepts today offer something memorable that customers can’t find elsewhere. Here are some of our recent favourites.
The Dreamery by Casper
The online US mattress brand opened The Dreamery in response to surveys that showed customers wanted more places to sleep outside the home. Guests pay $25 for a 45-minute nap at the New York location. The fee covers operations, making it a form of experiential marketing rather than a selling space. Cleverly, it means that Casper is the last thing in customers’ minds as they drift off to sleep.