Today there are about 1100 enclosed malls still in operation in the U.S.
In the next five years, a quarter of these are expected to close. In 2017, more than 15 U.S. retailers filed for bankruptcy.
Most of these closures were by national chain stores with the apparel industry being the hardest hit category.
The situation is so severe that Wall Street is starting to value the real estate network owned by these large brands as more valuable than the brand itself.
Online retail sales are steadily increasing year after year. The Middle East hasn’t quite reached these levels yet, with traditional shopping still being more prevalent. For example, when Amazon acquired Souq.com in 2017, a study released that e-commerce in the Middle East only accounts for 2% of total retail sales today.
The same percentage was noted in the U.S. 15 years ago. But these percentages are increasing in the Middle East. During a PWC study, it was revealed that Middle Eastern customers are preferring to shop online because it is more convenient, cheaper, and there is a wider array of products to choose from.
In order for the Bricks to survive, traditional shopping needs more than a new look. It needs a reinvention. As an example, iTunes is considered the first online distributor to secure deals with all four major corporate record labels. Following the proliferation of illegal sharing sites like Napster, iTunes legitimized digital music sales, completely changing how most of us access music today.
Rather than being on opposite sides of the war, the revolution is going to come about when the Bricks and Clicks start to work together. This is where our industry, as interior designers, can have a large impact in partnering with our retail clients.
Designers must create brand experiences within physical spaces for them to be worthwhile to customers. These are no longer spaces where customers are there to buy a product, but rather they need to be immersed in an experience from the moment they walk into a unit. A showroom has to offer a compellingly convenient and high touch experience. Two brands in particular are re-inventing the experience.
Being termed the Face of Living Retail, at Nike’s House of Innovation in NYC, customers use the Nike app to maximize their shopping experience. They can get information on any product, and even purchase items without the help of an associate. The store uses digital commerce data which includes buying patterns, app usage and engagement and the best sellers from their website to stock the store, which means that customers are directly influencing store inventory. Customers have the power to customize a pair of shoes at the Nike Expert Studio by creating a personal look with post purchase embellishments. Customers can even reserve items by phone and have them held in an in-store locker for pick up whenever they are ready.
With Shop The Look, you can scan the codes on a mannequin to browse every item the mannequin is dressed in, then request for all items to be sent to a fitting room for you. The concept uses technology to eliminate all the hassles normally experienced in the traditional retail environment, while also providing the customization and one on one benefits of the online experience.
Similarly, department store brand Nordstrom opened a new 47,000 sqft store in New York City. The technology within this environment enables customers to test products on personal avatars, while a digital kiosk accepts returns without any human interaction. Or if you’ve reserved a product online, a fitting room will be waiting for you with your name on the door to try the product on in the shop before purchasing it.
Other technological enhancements that could pioneer the retail landscape include a QR code reader to find a product online when a particular item isn’t available in-store, and an app with a Style Board feature that sends suggestions based on something that you just purchased.
The blend of service and technology creates a higher quality experience that is beneficial to the Clicks as well. The stores that will benefit the most from the showroom concept are the online retailers who can use traditional outlets to increase awareness of their brand and build increased loyalty with their customer base. Studies actually indicate that online only players who open a store see sales increase by 5 to 8 times.
While technology is revolutionizing the traditional retail experience, there is room for growth with the online experience as well. The greatest weakness being the lack of the showroom experience is potentially leading to innovations such as virtual showrooms created through 3D modelling technology where a customer could zoom in or turn and experience a product, or to even see what a furniture piece might look like in their home before purchase.
Virtual reality is currently being developed with hand sensors and controllers so that customers can even pick up and inspect items before deciding to buy.
As it stands today, there is a debate over whether the Bricks or Clicks have a greater impact on the environment. Overall, online shopping is actually the better option… assuming a customer does not choose the rush order option or a traditional shop is not within 6 miles travel distance. This is due to the fact that extra packaging with online shopping has a lesser environmental impact than the transportation footprint and physical stores require a lot of energy compared to warehouses.
However, there are a few cases where it is actually opposite:
Educated consumers should opt for eco-friendly packaging, purchase more than one item at a time, and not opt for next day shipping.
While some retailers might consider the situation dire, there are some exciting times on the horizon that are set to revolutionize the industry. It is up to us as designers to ensure customers are partaking in an engaging experience, looking for interaction and atmosphere. Integrations of technology should be simple, obvious and easy to use. With technology continuing to develop quickly, designers need to design for flexibility and easy integration.
The blend between the online and traditional shopping formats, introduction of new technology into both landscapes, and showroom based concepts that create experiences and remove inconveniences are all pioneering the industry as it stands today and leading to a Living Retail experience with boundless room for growth as technology continues to innovate.