Anyone who grew up in the nineties and visited New York remembers the magic of visiting FAO Schwarz. As a child, it didn’t matter if your parents told you “We aren’t buying anything” (the toys were too pricey anyway), there was something unmatchable about the experience. The legendary toy store moved away from churning out inventory and instead allowed for a space of wonder and play for children with a giant piano you could play with your feet and magic from one room to the next. Unfortunately in 2015, the iconic Manhattan store was closed by owner Toys ‘R’ Us and the brand was later sold off when it could not compete with the more accessible behemoths of the digital space. But what was it about FAO Schwarz that evokes such nostalgia to this day? It was the mastery of the intimate, branded experience - one that a pure e-commerce world is struggling to grasp.
For awhile, it seemed as if the pace of digital would continue to drive the retail focus within the fashion market. The millennial shoppers took over, the shopping malls died, and alas the digital age took over.The future of fashion predicted an increased reliance on smartphones and initiatives through “virtual reality” and “artificial intelligence”. But more and more we are seeing that it is a balance between digital and brick-and-mortar, and not a sole focus on digital that leads to success. In the case of FAO Schwarz, the strong e-commerce component was missing. But for many of these digital retailers, is the brick-and-mortar component missing?
As someone in the fashion industry who centered their career around e-commerce, my initial inclination was, “no, digital is king”. But it seems that despite declining in-store traffic and subsequent sales, customers are seeking the face-to-face transaction and retailers are looking for new and creative ways to meet that need. Indeed, e-commerce still accounts for only 8% of all retail sales in the United States. Even digitally native brands are seeking out ways to meet customers in a physical space, whether it is through permanent storefronts, pop-up shops, or showrooms.
Is it because of millennials that we see these shifts in the retail experience? Simply put, I don’t know. Attributing major trends to millennials in terms of consumer spending habits and cultural shifts seems a bit too convenient. What may be at play is a collective need for personalization, intimate experience, and community that the digital space hasn’t mastered yet. Take beauty cult darling Glossier, who after six years online, decided that a permanent showroom in SoHo was necessary not only for great Instagram posts but to attract and keep new customers.
Just like Glossier, the destination store experience has become of more interest to retailers. This brick-and-mortar initiative not only puts goods in front of the customer, but it creates an entire event out of the store visit centered around the lifestyle of the brand and not just the product they may be purchasing. This could include in-house coffee shops, restaurants, yoga classes, concerts, local artwork, and even rooftop bars to name a few. Take for instance the digital interactive basketball court in Nike’s SoHo location or Fendi’s rooftop restaurant above the Rome flagship. For retailers, this is a smart investment that capitalizes on changes in spending as more consumers are likely to spend money on experiences rather than tangible goods. If a customer purchases a sweater while meeting a friend for lunch in the store - even better.
Another advantage to adjusting the physical landscape in the digital world is through customer loyalty, especially in a social media driven world. If a retailer has the ability to create a genuine, meaningful experience in their store they have a higher chance of customer retention. Part of this defining experience is also having the store employees that embrace the concept. Employees that live the lifestyle and are “brand-fans” themselves can transform the visit into a positive visit, as if a friend is inviting you to into their home to try on clothes and have a cup of coffee. These experiences create defining memories that tangible goods sometimes cannot achieve. What’s more, the prevalence of social media means that the shopping trip, especially if positive, will be documented to a greater audience. With digital, this particular point of the interaction between retailer and customer may be lost. Would you post your online shopping trip on Instagram? Maybe, but it would be weird. But would you post your latte art from the indie cafe inside Urban Outfitters? Absolutely. #defcomingback.
Lately, the leader in the destination experience in terms of branding and lifestyle has come out of retail conglomerate URBN, parent company of Urban Outfitters, Free People, and the Anthropologie Group. Over the past few years one of their main initiatives as a company has been physical expansion, but not just in typical store fronts. In 2016, URBN added 8 restaurants to the company, many of which are housed within greater retail locations. This included the acquisition of Philadelphia staple Pizzeria Vetri, a move that signaled to investors the direction of the overall company. Other retail experiences include the home and garden decor brand Terrain and the storefronts that were developed with adjoining farm-to-table restaurants and the Williamsburg based Space Ninety 8 that was developed as a multi-level Urban Outfitters concept-store complete with rooftop bar and local merchandise.
Gone are the days in which shopping in person is a quick skim of a rack. Now stores must compensate for the growing digital space and create an experience that is unique and personal while still meeting the needs of the customer. While digital is still the main driver in an omni-channel space, the store experience must adapt quickly and with that are new opportunities for branding. As a retailer this means greater risks in terms of real estate investments as well as defining the customer lifestyle they stand behind. But for customers, this is an exciting time for retail ahead in which we can put down our mobile phones for once and have fun in the stores again.