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Wednesday
Nov142012

The Resurgence of the Department Store: Guest Experience

Selfridges London Photo credit: Kathleen Jordan

Over the past year Kathleen Jordan, a principal in Gensler’s New York office and leader in the firm’s Retail practice, undertook an investigation into the future of the department store. Her premise was simple: for years she’s been hearing and reading about the upcoming death of the department store, but so far it hasn’t happened. To learn more, she spoke with industry leaders, visited successful examples around the world, and read a lot of articles. The result is a set of distinct advantages she sees for department stores in today’s business and retail climate, and a set of bold strategies to regain the competitive advantages these stores once held. This is the fourth post in a six part blog series that conveys her findings.

A recent New York Times article highlighted the potential tensions that can exist between online and in-store customer experiences, noting examples where retailers are using physical locations as an advantage to leverage against online retailers. The flipside of this being that online retailers offer the same goods at lower price points. The sweet spot between is the guest experience. Department stores are well poised to take advantage of this opportunity, but first and foremost they must align the online and in-store worlds, and truly deliver a superior and consistent brand experience. But the online world can be utilized to push customers to the store. This is the new order of retail.

Consistent pricing

Thanks to technology, customers can now surf the web for a better deal for the same product - while in your store. Retailers must be prepared to match that price or lose the sale. John Lewis Partnership is an excellent example of this, prioritizing consistency between the website and the store, including pricing, for which they were recognized by being voted the UK’s #1 Online Retailer in 2011 by Which.co.uk. JC Penney, as part of their on-going effort to define their pricing strategy, adopted a price-matching strategy. This certainly has existed in the appliance and electronics world for some time. But the goal should be to take price out of the equation: make the in-store experience so fantastic and easy that the customer isn’t even tempted to go elsewhere.

Technology, at least in the short term, is probably best suited to streamlining operational efficiencies, tracking inventory more closely, and giving the customer the widest range of choices possible while still presenting the product in a curated fashion. Bring the world to her (and him, too). Recreational online shopping often stops just short of the sale, as customers still want to touch & feel the fabrics, to try on clothes or shoes, especially if it’s a brand they’ve never purchased from before. Use that criteria to drive traffic to the physical stores. Make that in-store experience easy & enjoyable, and you’ll get the sale. Online pricing must be consistent with in-store pricing, as inconsistency breeds mistrust and undermines customer loyalty.

Toys "R" Us time square flagship New York, New York. Photo Credit: Kathleen Jordan

Express the Local

For pricing, consistency is the gold standard. When it comes to the store environment and the guest experience, diversity and individuality of locations leverages the advantage of a physical store and fosters the desire to visit. Customers and tourists are increasingly seeing the same product and store environments everywhere they go – it doesn’t matter if they’re in Paris, London, New York or Singapore. Stores that can express a local personality and culture while remaining true to their brand are the ideal. For the Italian department store La Rinascente’s Milan location, this meant creating a “design supermarket,” which culls together new and unique products created by Italian designers, reflecting Milan’s design reputation, and aligning with the huge Milan Furniture Fair that attracts international visitors annually. This localization effort also included creating a restaurant where an apparel department had been, and opening existing windows to allow exclusive views of Milan’s iconic Duomo. Not every store will have such a gift of location, but look closely at what you have and capitalize on what you can in order to relate to the local market.

Coca Cola Experience Store at Walt Disney World, Orlando, Florida Photo credit: Kathleen Jordan

Experience over technology

Everyone seems to be looking at technology as the great panacea for improving the guest experience. And while these experiential elements may fill a void for a short space of time, I fear that once they’ve been used once or twice, they become white noise unless they add real value. What provides real value? The gifts of time and convenience to the customer. People are pressed for time, they’re stressed out, they’re multitasking every minute, and they’re tired. So while some of these emerging interactive moments may have entertainment value (enter “retail-tainment”), which should never be underestimated, the greater value is getting the customer what she wants when she wants it, and how she wants it.

Put technology into service for your store and your customer to deliver the best possible experience. This means integrating both your physical and online presence with a customer’s personal digital life. With every new technology, instead of rushing to implement, consider what value it will add and how it can combine with the overall experience to make the customer experience easier, better, or hopefully both. Do your research: one technology alone may provide for an interesting experience, but combining technologies may yield broader opportunities.

NYU Bookstore, New York, New York. Photo Credit: Gensler

Understand your customer

Once you make the shopping experience easy, then you can go about making it memorable. To do that, you need to know customer preferences and create “moments” that cater to them. This could be a smoothie bar, a coffee shop, a lounge, a museum/gallery – understand your target audience, understand the cultural and entertainment voids in the local market, and deliver experiences that build bridges with the community and garner customer respect, and ultimately their loyalty. Moreover, create moments that show your customer that you care about them, and that you respect them, that you welcome them into your brand community, and that you want to reward their loyalty.

For the American Eagle flagship in Times Square, this meant giving customers Andy Warhol’s proverbial 15 seconds of fame – when a customer cashes out, their photograph is taken, then posted on the store’s façade with a time delay for the guest, and the world, to see. This same massive LCD screen laden façade has also live streamed the royal wedding of Prince William & Kate Middleton, as well as Alexander Wang’s Fall 2011 fashion show. Similar to La Rinascente, Aeropostale dedicated a room in their Times Square Flagship to viewing the bustling urban activity from above, sacrificing valuable square footage to allow customers the opportunity to catch this rare glimpse of NYC from above. Macy’s took a more pragmatic approach, outfitting their stores with WiFi to enable staff and customers to utilize QR codes to access product information, coupons and in-store promotions.

Aetrex in Englewood, New Jersey. Photo Credit: Gensler

What If?

If customers are constantly comparison shopping, how can you get them into the store and make the purchase? What if you offered customers the option of beginning their in-store shopping experience in a virtual shopping lounge, allowing them that same benefits of sitting at home on a Saturday morning surfing sale sites on their iPad. Perhaps the opportunity lies in creating a prominent, comfortable space where they can grab a coffee (or tea, or a smoothie, or a macaroon), charge their phone, and shop the in-store collection online first. It allows them the time to map out their day in your store: locate the product preferences, define their destinations, and digitally map their day. It takes “power shopping” to a whole new level. Macy’s Cosmetics departments reported a 30 percent sales increase where iPads were incorporated to support information on product offerings and combined product synergies – just imagine if this strategy was applied to all other product classifications.

The online experience must be translated to a mobile experience via Apps. Provide your customers with an app that makes their in-store experience fun AND efficient. For example, give them the ability to deliver specific items directly to the dressing room awaiting their arrival, apparently bypassing the store altogether and saving them time However, along the way, deliver targeted suggestions for additional complementary products, perhaps calling attention to sale items, all the while enticing the customer with new purchase opportunities.

Whatever strategy you employ, consider traffic flow carefully and right from the beginning. None of your other strategies are going to work if your store is hard to navigate – the last thing you want to do is to confuse your customers. Recognizing the enormity of its scale, Harrods has created a terrific app that not only provides in-store navigation tools, but allows users to research the flagship’s many restaurants, view their menus, and make reservations. In summary, make it easy, make it fun, and make the sale.

Epcot Center at Walt Disney World, Orlando, Florida. Photo Credit: Gensler

Kathleen Jordan
Kathleen Jordan is a principal in Gensler’s New York office, and a leader of our retail practice with over 24 years of experience across the United States and internationally. Kathleen has led a broad range of retail design projects as both an outside consultant and as an in-house designer. She has led projects from merchandising and design development all the way through construction documentation and administration, and many of her projects have earned national and international design awards. Contact her at kathleen_jordan@gensler.com.

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