You’ve probably heard “retail apocalypse”. Brick-and-mortar retail is in trouble, even those retail giants are closing hundreds of stores every year. It cannot be denied that the digital revolution has changed the retail industry sharply and this change will still going on. As Michael Forhez who is Oracle senior director of retail and consumer goods said, “I can either shop on my own couch or I can shop at the retailer’s shelf—and I’m going to need a powerful reason to get off my couch”. That is the biggest challenge ahead of the entire retail industry (Currey, 2019).
So, how to survive in the e-commerce era? How should the future of flagship stores look like? Nike and Ministry of Supply could probably give some inspirations.
Nike House of Innovation
Nike House of Innovation sits in Soho shopping corridor of New York City, is a six-floor flagship store includes:
- a mini basketball court;
- a treadmill in front of screens simulating different outdoor runs;
- a small, enclosed soccer area;
- a customization shoe bar where shoppers can personalize a pair of Nike Air Force 1s;
- dedicated coaches on staff who can put customers through drills to test out sneakers (Bain, 2017).
The first floor is an area where you can customize your own shoes by choosing a sneaker style and/or changing your shoes’ laces. With an appointment, a more comprehensive personalization of the shoes is available. Furthermore, to match the customized shoes, the first floor also equipped with well-trained designers that can help you design the customized clothing if you request.
The mini basketball court and the soccer area are covered with cameras that enable to capture motion from 360 degrees. Moreover, in order to recommend the most suitable running shoes, cameras are installed next to the treadmill to record and analyze the customer’s gait during running. It also allows customers to access the footage and share on their social media by logging into their online Nike account.
The Nike app is the link between offline and online shopping. For fully enjoying the benefit of in-store services, you need to download the Nike app first to your phone. Through the app,
- you are able to ask the store staff to add more items to the fitting room online and you will receive a notification once items are ready.
- you are able to purchase the items online without waiting in the line at the counter. Kiosks also sit on each floor where you can drop off hangers and pick up a bag.
- if you are a member of Nike’s loyalty program NikePlus, you are able to reserve and pick up items from the in-store locker by your phone. Moreover, the store allows you to customize your shoes and clothing online and pick up items from the in-store locker (Bain, 2016).
Ministry of Supply
Some companies are seeking for other ways to attract customers visit their flagship store. For instance, Ministry of Supply, it installed a 3D knitting machine at its flagship store in Boston City. While some companies have used it in factories, it is the first time that the 3D knitting machine installed in a flagship store. On the iPads, you can see how products could be personalized. So far, customers enable to customize the shape, the colour and decorations of a sweater. Then, the 3D machine will start to make it. After a 90-minute wait, a customized sweater will be ready for you (Ministry of Supply, n.d.).
The Omnichannel business model and the role of new flagship stores
According to four business models as above, in order to achieve the sustained profitability in the digital era, it is a trend for business leaders of the retail industry to shift their traditional brick-and-mortar business model to the omnichannel business model (Weill & Woerner, 2015). Omnichannel businesses provide customers access to their products across multiple channels, including physical channels, like shopping in a brick-and-mortar store, and digital channels, like shopping online from either a laptop or mobile devices.
The core of omnichannel businesses is achieving a seamless shopping experience, which requires the company to possess the complete knowledge of customers under the value chain business design. Therefore, there is a strong claim to “owning” the customer relationship, where is also the challenge comes from. For omnichannel businesses, challenges are from two aspects. On the one hand, the challenge is how to attract more target or potential customers. On the other hand, the challenge is to seek more and more knowledge of the existing end customers and their goals to reduce the likelihood of customer churn.
For omnichannel businesses, personalization and customization are the keys. Nike house of innovation, a 6 floors brick-and-mortar store in Fifth Avenue is a costly investment with a high risk of failure since the e-commerce sales are growing so rapidly. But the most forward-looking companies, like Nike, they realise that physical stores are still essential for their brands, once physical stores can provide more personalized and customized services that e-commerce cannot or not yet.
These new high-tech and high-concept flagship stores, unlike the traditional physical stores, they emphasize more on enhancing one-to-one connections with customers and customizing products by using up-to-date technologies. Retailers and customers no longer just a simple sale and purchase relationship, these new flagship stores turn the retail into an experience that provides an attractive reason for customers to visit their stores. In other words, they as a supplement to enrich the customer experience of shopping and as a bridge to blur the boundaries between online and offline shopping. Are you willing to leave your couch and gain a wonderful customer experience in a new high-tech and high-concept flagship store?
Bain, M. (2017). A fantastical new world of high-tech, high-concept stores is here. [online] Available at: https://qz.com/956745/retail-experiments-from-farfetch-nike-and-amazon-offer-visions-of-the-store-of-the-future/[Accessed 23 February 2019].
Bain, M. (2016).Nike’s new store in New York is like Legoland for people who love sports. [online] Availableat: https://qz.com/836671/nikes-new-store-in-new-york-has-a-basketball-court-where-you-can-test-drive-their-shoes/[Accessed 23 February 2019].
Currey, L. (2019). Advanced Technology Key to These Retailers’ Success, Survival. [online] Available at: https://www.forbes.com/sites/oracle/2019/02/22/advanced-technology-key-to-these-retailers-success-survival/#315f2d506ec1[Accessed 23 February 2019].
Minister of Supply (n.d.) Introducing Our 3D Print-Knit Shop. . [online] Available at: https://ministryofsupply.com/blogs/tested/introducing-our-3d-print-knit-shop[Accessed 23 February 2019].
Weill, P., & Woerner, S. L. (2015). Thriving in an increasingly digital ecosystem. MIT Sloan Management Review, 56(4), 27.