Future of retail spaces: stores are stage, customers are audience

Retail is dead – a preposterous narrative that started earlier this year, fueled by plunging oil prices, economic downturns, and a little virus refusing to quit its rampage has gotten the whole industry to come together as a unit to innovate and transform – and after a long time – think about the distant future.

Amongst the many challenges the retail sector had been facing, was shortsightedness that made coping with the economic repercussions of the pandemic more difficult for some than the others. As they say, we are all in the same storm but not in the same boat.

Unsurprisingly though, we saw a whole digital shift and adaptation happening much faster than was initially predicted. In all GCC economies, e-commerce is expected to witness growth in excess of 50% from 2019 to 2030, as a result of which e-commerce that accounted for 0.4% of GCC GDP in 2018 is set to increase well over 2 percent of GDP by 2030, according to a report from Frost and Sullivan. This year we saw that number go further up, with 49% of UAE consumers surveyed by Dubai Economy and Visa revealing that they have been shopping online more because of the pandemic.

Then began the new preposterous narrative that “physical retail is dead”. So does that mean that the GCC’s retail sector, which is expected to grow to $554.13 billion by 2030, is going to solely be dependant on e-commerce operations? The quick answer to that is, no. But equations between physical and digital retail are going to change and so are the functions and functionalities of the actual and virtual spaces.

With the ongoing internal debate of ‘convenience versus experience’ consumers have today, retailers have had to modify their offerings. But do the consumers really know what they want or are they cognitively adapting to what they’re being fed online? Are today’s so-called forward thinking retailers really thinking far ahead or are they still sticking to text book trends that have lost its relevance in today’s world?

To examine this, it is important to understand how both the platforms for retail are going to transform individually and perhaps even interchange in purpose and notion, all while neither of them perish.

Store as stage; Customer as audience

How would a customer define a retail outlet or a shopping store? It will most likely be along the lines of a place where people buy things. That definition worked really well in the pre-digitisation age, but not anymore. Stores can’t just be places for transactions as e-commerce platforms have emerged with convenient and comfortable offerings to entice the busy, lazy, and smartphone-addicted customers of today.

Retail Theatre by definition was about using music, art, light, and smell to allure customers to spend more time in the store and subsequently spend more in the store. However, in the future, chances are that the word could be taken quite literally. Not just theatre, but imagine a concert, a theme park, an exhibition, or even a museum… that is what experiential retail is going to evolve into.

Zurich-based Interstore is a retail design agency that has been developing concepts to transform retail spaces all over the world, including Dubai, to promote the idea of store as not just a place to buy and sell goods, but a place for shoppers to have memorable experiences.

Speaking of the future of retail spaces, Nathan Watts, the creative director of Interstore said, “Stores will move from being static places of buying to living, working environments and ecosystems. Retailers need to think of themselves as a host or a curator. If I think of a food retailer, customers already expect them to be a specialist and an expert”.

“Newness is going to be critical. Retailers need to think of themselves as entertainers as well. It is going to be about how to create this moving story”, he added.

If retailers are essentially entertainers then retail spaces will have to be media for brand experiences and stories. It could be a visual magazine, or a radio channel, and a marketing portal – a space that can create a powerful, and emotionally galvanizing experience, to create an essential level brand affinity, trust and allegiance.

Yes – the spaces may be smaller, the footfall will be lesser, but the impact of the store is going to be much higher. A recent survey commissioned and published by Epson revealed that 92% of respondents in UAE indicated they would change their shopping behaviour if more shopping destinations had an experiential element, rising to 94% of Generation Z and 93% of Millennials. The study also revealed that such experiences in retail stores would attract increased spending. 24% of consumers in the UAE claimed they would shop in a store they had never visited before if it offered an experiential element.

“Retailers will need to think harder about how to attract new audiences and build frequency. By building relevant offers and services around their key businesses, whether through diversification or strategic partnerships, retailers will need to establish their own new retail paradigms to engage and remain relevant, ultimately providing more reasons to visit and where people can spend more time”, he said.

Even the way customer acquisition was seen and done would likely change. Earlier retailers had to pay huge amounts to bring customers into their store, but the store of the future will have customers paying to experience what it has to offer – again, like a concert or an exhibition or a theme park.

“Customers will want to get in a car and drive to an experience instead of places that are just warehouses with products. The retail store of the future maybe smaller but will be more experiential”, Watts said.

He added, “As an entertainer, retailers need to start thinking about their competitors, which are now exhibitions, museums, theatre etc. We need to think about how we can engage more with the customers through our stores. Think of them as art galleries – creative, engaging places that are sensorial, which makes that store part of a customer’s leisure time”, he said.

But how is digital going to be integrated into all of this, if at all?

“The element of technology is interesting as we see it in two ways. We see the smart store evolving with hidden technology, which is the backbone of the store that is making the experience more seamless for the customer. But technology as an element of entertainment or theatre is a different aspect. We are seeing tech being part of the envelope of the space – we see moving content or digitized surfaces to create a wow factor. Retailers are also starting to deploy automation and robotic system to create a sense of theatre”, he said.

Another term, people associate with shopping is ‘retail therapy’. This concept is going to be more prominent as smartphones are increasingly contributing to the “loneliness epidemic”. With Covid and everything from schools, offices, and even co-curriculars moving online, we’ve seen the emergence of terms like ‘screen fatigue’ and ‘zoom fatigue’.

“We can get hung up on how digital is going to be the driving force – but people still seek real life social interaction, so shopping as a social experience will re-emerge and evolve. Some retailers have already wised up to the fact that shoppers dwell for longer and spend more money when they have things to do with their friends”, he said.

Hence retailers have the opportunity of providing their space as an escape – a place where they can keep their phones down and take in actual experiences and perhaps, that is value proposition against the e-commerce giants that are threatening the very existence of traditional spaces.

“It is in the interest of every physical retailer to get people off their screen to get the physical experience of that space. So bringing all the technology is probably not the answer”, he said.