For the first time in centuries, the role of traditional retail shopfront is changing. How should companies adapt?

The value of the retail store for physical goods is continually evolving, driven by changes in distribution infrastructures and continual rise of virtual goods. The eBook market share is rapidly rising, music distribution has changed, traditional video retailing is as good as dead and collaborative consumption plays a major role in the way we consume today and even more so in the future.

Times of transformation create opportunities. Retailers need to adapt their current business models and integrate local, personalized services with online convenience. With these opportunities come new roles for the retailer that will redefine the appeal of the retailer as we know it.

Consumer satisfaction at retail stores is declining annually. Retailers that used to define the diversity of retail environments, from bookstores, fashion to consumer electronics and home goods, are closing weekly. Brands are searching for strategies to react to the change in customer expectation and to combat the effect of online retailers who continue to win on pricing and convenience.

In this article by Method, they reveal 4 insights into surviving retail uncertainty.

1. Think Like an Editor

We are overwhelmed with choice, and most products advertised to us do not match our lifestyle expectations. Too much choice results in confusion and indecision, the stumbling blocks for purchases. Additionally, as products become commoditized, the perceived value must come from the user experience. Nordstrom’s online and in-store growth can be attributed to their innovative approach to handling inventory to match shopper searches. The recent launch of their redesigned website includes editorial features for a magazine-like shopping experience. Online shoppers looking at products can see where they are available nearby and reserve them for pickup. By creating a fluid and personalized online and in-store shopping experience, Nordstrom has increased same-stores sales by an average of 8%.

Brands such as National Geographic are beginning to move into experiential offers by opening highly curated entertainment and educational destinations. National Geographic’s offering has expanded from a lifestyle publication to include a TV channel, educational website, museum, and store that nurture lifestyle interests and offer products that match lifestyle goals. These brands recognize that the competitive advantage lays in differentiating based on audience desires and not the range of products and services.

2. Learn From the Fashion Industry

Fashion stores have radically changed in the past decade. Previously, customers purchased clothes once every season, limited by narrowly managed fashion trends. Now, customers return regularly, anticipating new discoveries as part of the experience. Zara’s secret to success is through encouraging frequent shopping and continuing to inspire by regular reorganization of store layout and rapid turnover of merchandise.

Conversely, e-commerce still lacks browsing and discovery experiences that satisfy curiosity. The current standard for online shopping revolves around instant satisfaction initiated by a specific search. Etsy is one exception, with rich interfaces and interesting browsing options (color, time spiral, local) that stimulate exploration.

Increasingly, online magazines on platforms like the iPad will be directly linked with e-commerce convenience. The fashion mentality must be applied to online stores, improving on discovery.

3. Embrace Hospitality in Your Brand

Brands have the opportunity to become destination spots. Retail spaces can relax customers, offer refreshments, and provide entertainment while creating the conditions to engage in a conversation that builds brand loyalty. Nestlé’s gourmet coffee brand, Nespresso, successfully crafts various types of encounters with their customers. Although the machines are available in several stores, the capsules are only available from the company via mail, phone, Internet, or in Nespresso Boutiques. The boutiques are designed to develop and maintain a continuous relationship, even offering a club for coffee connoisseurs. The boutiques offer complementary coffee, distinguishing the purchase of new capsules from other repetitive shopping rituals.

This new lifestyle showroom for demonstrations and hands-on workshops could be applied to the Apple App Store and its labyrinth of apps. While few people have the time, patience, or desire to spend money to select an app that may or may not provide the expected value, an entertaining demo setting can provide a bridge for product sampling.

4. Own Your Community Network

Brands can extend relationships with customers by providing a community or gathering around shared events. Pop-up stores are the testing grounds for this format. Starbucks was the original force behind the idea that customers should linger and mingle when they made WiFi a coffee shop standard.

On the other end of the spectrum, small pop-up brands are riding the trend. For example, the traveling Rapha Cycle Club pop-up is a combination gallery, cycling shop, and WiFi café. The club organizes events around cycling races, is a meeting hub for biking enthusiasts, and also generates revenue from foot traffic. It is an early example of differentiation in an otherwise saturated market for coffee shops and cycling stores.

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