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#GlobalShop19: How the next generation of physical stores will be about community, community and community

A glimpse of possible retail futures was available at GlobalShop last week, at a conference session where a group of growing retailers which use non-traditional business models discussed Living in a Phygital World as a Digital Native.

Session chair Melissa Gonzalez, founder of retail strategy and pop-up architecture agency The Lionesque Group, set the scene by referring to a variety of figures from recent surveys.

These showed that 55 per cent of shoppers consider the presence of a nearby physical store important if they are considering an online purchase from a retailer, a figure that rises to 64 per cent among millennials. They also reported that emerging brands see a 45 per cent boost in web traffic in areas where they open a physical store, while even established brands see a 36 per cent boost.

“So physical is not dead,” said Gonzalez. “A lot of the time digital brands grow quickly and scale to around $10m – and growing online makes a lot of sense economically. And then they have to expand… and growing [further] online becomes very expensive. Complementing that with a physical presence really helps to bring down their average cost of customer acquisition,” Gonzalez told the audience at GlobalShop’s Pop-up Stage.

L-R Melissa Gonzalez, Molly Beller, Stephen Kuhl, Haviv Zahav
L-R Melissa Gonzalez, Molly Beller, Stephen Kuhl, Haviv Zahav

Gonzalez then introduced a trio of retailers to discuss ways that having a physical store presence has impacted their operations. A clear common thread emerged when it came to the benefits these diverse companies gain from physical stores.

Burrow began life as a made-to-order direct-to-consumer sofa company, and now has showrooms in New York and Chicago. Called Burrow House, these spaces meet an obvious need. ‘Sometimes, you just need to sit on it’ says the company on its website. But the stores are also used to frame the sofas in a variety of room sets designed to show them in different domestic settings and styles, emphasising the versatile nature of the products.

Stephen Kuhl, co-founder and CEO of Burrow, says the company broke down the kind of experience it wanted to create for its customers before searching for its first site in New York.

“We wanted to create an experience, create a space, that would allow us to connect with our customers… and develop a relationship. We’re talking about community,” he told the audience in Chicago.

“When you go into our store in SoHo you walk through a series of environments that are very different. One is like an artists’ loft… then you walk into a beautiful bohemian chic place with hanging plants and skylight… you can see how this product would work in a lot of different environments,” he said.

Burrow sees the chance to have face-to-face conversations with its customers as an opportunity to conduct informal qualitative research, learning about what they do and what they care about, as being as important as simply selling from a physical space. And regular events make the most of the opportunities for social interaction.

“We do things like a comedy night, or… industry events. We know a lot of our customers have pets, they have dogs. So we have dog adoption parties,” said Kuhl. “We’ve found that by tweaking that model we are engaging our audience, engaging our customers, and then they want to come back.”

Chicago was chosen for the brand’s second store because it had already grown to be its second-largest market online. Burrow didn’t pick an established retail area for its store, instead picking a fashionable West Loop location close to lots of bars and restaurants. “There are tons of people moving to that area. We wanted to cement ourselves there,” said Kuhl. “There’s not a lot of retailers there yet but that’s ok.”

Molly Beller, creative director of jewellery brand Stella & Dot, related how the company – which sells through individual stylists who host jewellery parties – has driven uptake with the use of physical pop-up stores that seek to encapsulate its ethos and lifestyle.

Like Burrow, Stella & Dot values the community aspect of physical spaces.

“For us, the number one thing at first was to include our stylists… they are the fire of what we do and they are who we need as we grow,” said Beller. The pop-up project was seen as a metaphor for going into a customer’s home, which is where they usually encounter the brand.

“When you walk in there would be a living room, a bar set up. It was a chilled and loving atmosphere, we even had a basket with kids toys, in case people brought their kids in, so it could really be a wonderful, warm X-ray into our brand.”

The space was used to celebrate female empowerment and community as well the brand and its products, said Beller. Features such as sending postcards to heroines through the ages sparked conversations and helped the brand get closer to its stylists and customers, she added.

Showfields was established to meet a different demand: to allow small brands to get access to a physical store. A turnkey system lets brands configure a space and get it fitted out and staffed, with up-to-date retail technology, for a monthly fee. The retailer describes itself as ‘The most interesting store in the world.’

Showfields head of brands Haviv Zahav described how the retailer curates the brands it stocks, and then presents this a cohesive lifestyle offer. He said that 80 per cent of the brands that work with Showfields, even ones which are already established, view the store as a “discovery model”.

“For us, it really came down to making sure that all the brands made sense to their own story,” he said. The store, at 11 Bond Street in New York, has been designed so that each brand has its own distinct area.

“We’ve created these moments where brands have their own spaces within our walls. It stall has somehow this kind of naked open feeling, but each brand has their own dedicated space,” Zahav explained. This allows the store to locate diverse brands next to one another without being concerned that the adjacencies will jar or look odd.

Customers are generally intrigued and keen to explore the different areas in search of something new. The store is located over four floors of a building, and Zahav reckons that most multi-level retailers are pleased if 30-40 per cent of visitors go to all of the stores.

“We are somewhere north of 90 per cent of people making their way through the entire journey,” he told the show audience, crediting the discovery model for this – though he did concede that the slide accessed only from the third floor helps: “Curation is really more about engaging the customer with brands they want to meet, less about where they sit next to one another.

“Really, for us, community is the centre of everything,” Zahav added. The store has opened up a loft level to allow brands to stage unique events, and it plans to stage around 300 of these per year. “It creates this amazing thing for our customers… something new, a reason to come back. For the brand, it’s a place they can build with the community for further engagement.”

Host Melissa Gonzalez says that community building is one of the most useful benefits of developing physical stores, including pop-up units. “This space is an opportunity to build community, and when you build community you build emotional connection. And when you build emotional connection you build more stickiness with your customer,” she told the GlobalShop audience.

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