- June 1st, 2015
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Craft Cocktails to Glass Cubes: How Apple, Nordstrom Put Rad in Traditional
In today’s retail, the cost of failure may be success.
There simply are too many stores out there – too many concepts and strategies in a fast-paced environment in which methodically working toward perfection does not guarantee success. Last week I wrote about the stream of online merchants and manufacturers opening “traditional” stores. Yet as evidenced by their innovations, little about these locations is traditional, or perfected.
Stores are migrating from hunks of building material to fluid beings, and the retailers willing to direct the flow – rather than go with it – are those that will determine retail’s future. They are doing away with the cookie cutter in favor of the free-form rollout, willing to try less-than-perfect concepts to create buzz.
The status quo certainly isn’t cutting it anymore. U.S. retailers are planning to close more than 6,000 locations in 2015, according to Investing.com. These closures, ranging from 180 Abercrombie & Fitch to 400 Walgreens locations, in part emphasize a decline in discretionary spending. They also underscore the need to constantly evolve the retail network and make the shopping experience compelling – worth the cost of entry.
This shortcoming is not lost on merchants; roughly 80 percent of retailers plan to increase their customer experience budgets in 2015, according to a survey of 225 senior marketers by the consultancy SDL.
That spending could translate to billions of dollars in new investments in retail and with it, ideally, a new direction for the industry. Pointing the course for some of the best brands is the expanding collection of customer information gleaned from digital apps, loyalty programs, iBeacons and online transactions.
Let’s look at three examples across retail sectors.
Nordstrom started in 1901 as a small shoe store, but its expanding footprint over the following 114 years is due to its willingness to take feedback and walk the customer talk.
Most recently, the Seattle-based chain is transforming a handful of high-traffic stores into international destinations, catering to out-of-town visitors who are increasingly important to domestic merchants. (Roughly 40 percent of sales on Chicago’s Michigan Avenue, for example, derive from visitors to the city, Neil Stern, senior partner at McMillan Doolittle, a retail consultancy, told The Seattle Times.)
The amenities, inspired by European shopping destinations, include craft cocktail bars, natural lighting via windows (a curiously rare feature in modern retail) and curbside pickup – a feature that would appeal to online shoppers.
These investments, part of $1.2 billion in capital expenditures in 2015, signal “the changing role of the brick-and-mortar retail store as a place for entertainment and awe, in addition to shopping,” the Times stated.
They also complement Nordstrom’s ongoing technological investments. On May 20, the chain launched a shop-via-text service, TextStyle, at all its stores. With it, consumers or sales staff can send product images and descriptions via text, and consumers can purchase those products by simply replying “buy.”
The in-store innovations at Nordstrom may lack the shiny-object sheen of its emerging technologies, but they answer to nuanced preferences that encourage shoppers to stay longer. Nordstrom does not draw a direct correlation between the store upgrades and the data collected through its Nordstrom Rewards loyalty program, but the program is clearly integral to strategy. In its annual report, Nordstrom said it signed more than 1 million new accounts for three consecutive years through 2014. Sales from members represented about 40 percent of its total 2014 revenue of $13 billion.
H-E-B, deep in the heart of Texans
Described in one story as operating on a culture of “restless dissatisfaction,” the Texas-based supermarket chain H-E-B is a case study of reinvention, assigning the same shelf life to its strategies as it does its perishable products. Changes range from completely new formats, such as its Mi Tienda chain of Hispanic grocery stores, to an app that pinpoints an item’s specific location in the store.
The chain is not afraid to test. In 2013, it trialed “Fast Scan” checkout aisles with 360-degree scanners that automatically registered items as they traveled down the conveyor belt. Its recently launched app enables members to check product availability, create shopping lists via bar scans and then sequence those lists by store layout.
With these insights, and combined with its Points Club Rewards information, H-E-B can send digital coupons relevant to specific shoppers while gaining a better sense of what is in high demand (or not) at individual locations – particularly among high-spenders.
Which bring us to what may be H-E-B’s most important strategy – to innovate to its identity. This is a Texas chain, and it is Texas-proud. Its stores feature roving tamale carts and fresh-made guacamole, and its private-label products are rich with Texas references. Add an abundance of free samples, tear-off coupons and wine-tasting, and you’ve got a basketful of perks that persist beyond any technology.
Apple puts “i” in innovation
It’s been 14 years since Apple redefined traditional retail, and it continues to do so, spooling out locations with every new product. However, while its gleaming Genius bars and interactive displays make it incredibly easy to test and understand Apple products, what makes some of its more than 450 locations radical is they are space-agnostic.
If Apple products can improve lives everywhere, then why not sell them anywhere? From its Edwardian location in London (complete with modern glass staircase) to its glass cube store on New York’s Fifth Avenue, Apple does not hem itself in.
It is curious that a company whose products are so easily identifiable builds stores in locations so completely different, but these wide-ranging locations are what make for compelling, iPhone-selfie-ing experiences. Apple moves beyond the simple idea of a 20,000-square-foot, cookie-cutter box and instead looks to the classic importance of location, location, location. Then it takes what it has and makes it a wow experience. Think: Would you visit the Shanghai store if it looked just like the Cincinnati store? But what if it were built underground and provided access via a glass spiral staircase?
These merchants excel at innovation because they invest in the means to understand their customers and then deliver on their fundamental needs. This does not always require jaw-dropping technology; in fact, I’d submit that it takes a mix of newfangled innovation and adherence to basic principles of execution, insight and an appreciation of the human condition.
Regardless of the mix, the commonality of these merchants is agility. They are willing to take creative risks via pilot stores or simply testing and then nimbly rolling out the success. There will be failures, and they shouldn’t be a surprise. Once a retailer accepts loss as part of the win equation, it has taken the most important step toward innovation.
This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.