FOOD FOR THOUGHT
MUJI Plaza in Singapore
For the last few years, there has been constant chatter about the imminent decline of brick and mortar retail, caused primarily by the rise of e-commerce. In fact, there is no question that department stores and malls are seeing rapidly declining sales—and traffic—as consumers virtually flock to online stores. Thanks to the various startups that have developed convenient online platforms to help us get everything done with only a few clicks—whether it’s ordering groceries on Instacart, satisfying a food craving on UberEATS, or utilizing 2-day shipping on Amazon to buy a picnic blanket for an upcoming beach day—we are able to painlessly make most purchases on our preferred devices.
However, the not so surprising truth is that most consumers actually still prefer to shop in physical stores. Humans are inherently social creatures, and like to interact and engage with others—in person. We also enjoy using our five senses. When it comes to products, we like to touch, smell, feel, see, and hear. Even though countless Silicon Valley engineers are working day and night to advance AR and VR technology, we are nowhere near a point at which such experiences can replace actual reality. (And that may never truly happen.)
But are all stores and categories of products created equally? The answer is an unequivocal no, which is why we see the widening gap in foot traffic between retail with antiquated, stale concepts and newer ones that incorporate elements that resonate with today’s consumers. Over the years, consumers have developed into more sophisticated shoppers who are savvy about retail, brands, and the companies that are trying to reach them. They are able to quickly and comprehensively conduct information searches online, and educate themselves about the hottest new brands, as well as about an organic ice cream shop that opened up halfway across the world. Armed with information about brands and stores that excite them, consumers can easily choose to avoid the rest.
Simply put, retail businesses that are winning consumers’ hearts are the ones that understand that in the world we live in today, the consumer herself is the most important channel. Omni-channel is the buzz word du jour, but in reality, all retailers increasingly need a direct link to the consumer, regardless of where she is shopping. The reason is that one-click online shopping has commoditized a lot of the consumption process and thus people have become channel-agnostic. As such, when consumers choose to make the trek to a store today, they do so because they are looking for an enjoyable, elevating experience. They expect to walk into a store that looks, feels, and smells pleasant and exciting. They expect to be able to browse an elegantly curated selection of items that pique their interest, and receive thoughtful recommendations and advice from employees should they want it. In other words, they are looking for an experience that is holistic, engaging, and entices them to get off the couch.
Therefore, savvy retail businesses—regardless of whether they are apparel stores or home improvement centers—know that the experience they provide must be differentiated, relevant, and authentic. Bluemercury, a beauty retail chain recently acquired by Macy’s, is an example of a retail company that is successfully growing its store base amid a pronounced decline in retail foot traffic. The company prides itself on having highly trained employees who are extremely knowledgeable about beauty and skincare, and are genuinely interested in helping their customers. They are trained to provide detailed expert advice and to never push products. They understand that selling their products is only part of the reason to have physical stores. With all the e-commerce options available today, it is clear that when consumers step foot in a Bluemercury store, it is because they proactively want to.
Similarly, shopping complexes that are vibrant and buzzing with activity are the ones that employ dynamic elements, and adeptly utilize brand pop-up shops, live entertainment, upscale eateries, and wine tasting events to attract patrons. Eateries where customers can eat and shop are becoming increasingly popular. More than ever, the ability to seamlessly execute carefully thought out, experiential retail concepts is becoming a critical success factor. Physical retail businesses that resonate with consumers and add value to their lives are certainly not dying—they are actually thriving because they understand that consumers’ consumption preferences and behaviors have irreversibly changed. Differentiated retail is here to stay.
1. Tell the brand story
Asian consumers love to learn about brands. Years of studying and collecting empirical evidence on cross-cultural differences in consumer behavior have taught me that this consumer behavior is significantly more robust among Asians than among Westerners. This consumer desire manifests itself in a research process that includes searching for details about product specifications and manufacturing processes as well as about the brand’s history and heritage. Asian consumers are delighted to learn about the founder’s upbringing, how the brand came about, and what the logo stands for. They want to know why the brand is unique. Asian consumers view gaining brand knowledge as an asset that they can then share with others.
2. Mind the physical-digital retail gap
When compared to other mature markets, businesses in Asian countries, including Japan, are lagging behind in developing e-commerce sites for their brand. Though consumers still generally prefer shopping in brick and mortar stores, brands need to ensure that there is seamlessness and cohesiveness between their physical and digital stores. The biggest challenge for e-commerce in Asia is to ensure a high level of service. In effect, it is critical for Asian mobile messaging platforms such as WeChat and Line to develop user-friendly functionalities that enable consumers to click and purchase products with ease.
3. Really serve the customer
Given that Asian cultures are generally more collectivistic and hierarchical when compared to Western cultures, Asian consumers expect employees to be highly attentive and to anticipate and fulfill their needs even without overt communication. Under no circumstances can service feel transactional; instead, it needs to feel personal and customized to individual consumers. Consumers expect a flawless service experience, a reality that makes it essential to train and educate store employees to greet consumers properly, keep the right distance, and to walk each consumer to the door.
4. Obsess over the details
The high-end Japanese department store, Isetan, is famous for the intensive training in gift wrapping its employees are required to undergo. Every step, from folding and creasing the paper, to tying the ribbon on the gift, has to be perfect. If there is even a single blemish on the wrapping paper, the employee starts over. The customer’s time is precious, so gift wrapping must be done perfectly and efficiently. In addition, glass display cases must be impeccably polished at all times. Not a single speck of dust should be seen anywhere in the store. The bathrooms must be elegantly decorated and pristine. This level of attention to detail and quality control is especially important in the luxury context.
5. Respect the seasons
Asian cultures have a very intimate, deep-rooted relationship with nature. As a result, seasonality has a very strong influence on the market. Asian consumers love seasonal products and other limited edition products. Major luxury houses understand this very well, and regularly launch limited edition designs in different locations, and host season-inspired events that incorporate nature. For example, Moët-Chandon sponsors cherry-blossom inspired events in the spring in Japan, while other luxury houses launch Chinese zodiac-inspired collections during the Lunar New Year. To be successful in Asian markets, luxury brands need to gain a deep understanding of the consumers’ relationship with nature and its seasons.
Ikea gets the Millennial mindset. The company is expressing its witty, creative, and eco-friendly side by providing customers with instructions on how they can cut the Frakta bag into a bib, a pet's raincoat, an apron... and much more. Not to mention their playful response to Balenciaga's blue tote that looks remarkably similar to the Frakta bag...
Is this the future of luxury in the digital space? How will it simulate the quality of service customers can get in-store? Are they targeting a different demographic from their typical LVMH consumers?
LVMH prepares for launch of multi-brand virtual department store
The idea of a truly convenient store - but will it actually work?
Amazon To Open Convenience Store With No Lines
Actually, this reminds me of what Uniqlo's sister store, GU experimented with in Japan in 2014 - "GU Fitting":
Gu Store to Let Customers Leave with Unpaid Merchandise
I can see these ideas becoming more of a reality even in less "honor code-based" societies with the type of technology Amazon is incorporating.
This is what the future of shopping looks like!
Google takes you on a VR tour of New York’s amazing holiday window displays
Interesting article on millennials and luxury.
Affluent millennials interested in purchasing luxury goods drops 15pc: report
“Millionaires in Asia are young and many of them in our study are in the millennials age group,” said Amrita Banta, managing director at Agility Research & Strategy. “Travel is the new luxury in Asia amongst this profile of consumers and we see that the appetite for travel has increased this year from the last year but the appetite to buy luxury goods has definitely decreased in our sample.”
The study interviewed 922 affluent millennials from China, India, Singapore, Hong Kong, Malaysia, South Korea and Taiwan.