Well designed
Keeping the pace of change
It’s hardly news that digitalization represents a number of challenges to retail: The changes are for all to see. But they follow on from a tradition of change — one that’s seen grocery stores become supermarkets and supermarkets become department stores and then malls. Teleshopping habits and mail order companies started a shift away from physical retail stores years ago. And online shopping has picked up where they left off. But this level of disruption is by no means over: More than ever, retailers are fighting to retain customers — frantically offering incentives and benefits.
“What’s most important is helping clients to comprehend the advantages of the ecosystem economy and its associated retail services. Afterall, they’re numerous. But for clients to be able to recognize and appreciate the benefits of digital processes, they need to be clear.”
Jan Domin | Partner at SCHMIDHUBER
The future of stores
Anyone looking at current survey results amongst retailers can see where things are headed: 75% of retailers think that in 10 years’ time payment systems will be redefining their sector. No one need ever wait in a long line again—they’ll simply leave the shop and the amount for their goods will be automatically deducted from their bank account—powered by the data held in their digital profile. More than half of those asked believe stores will become showrooms where products can be tested and then ordered from the retailer’s online store. And here’s another compelling figure: One in two assume that the value add of goods on offer will increase noticeably with the use of virtual reality and that store opening hours will need to mirror those online—24/7.
But what does this mean for the development of design?
Easy Shopping!
At the Expo Milan 2015 the supermarket of the future was on display. Coop and Amazon Go presented their vision of the physical store very clearly: And to meet every day needs they are all about information, service, time and environmental awareness. Interactive displays offer all kinds of information imaginable on ingredients, recipe suggestions, product origins and ecological footprints. Not to mention provide essential navigation support through the store itself and its various offers.
The logistical advantages are obvious: Purchasing behavior can be processed in real time via a merchandise management system, as can the customer’s need for information. This sees the customer elevated to more than a just a user. It makes them an enormously important contributor to the system. And the reason why is clear: With digital transformation and the permanent exchange of data, customers can provide information and feedback about their experiences. As well as what can be improved. And yet in contrast to Asia, this level of transparency is (still) viewed critically in Germany. Even though it represents a huge service advantage through which supply and demand can be balanced faster—making it more customer-centric than ever before.
Alongside redesigning the shelves and in-store signage, focus naturally falls on the checkout area—after all this is where the time factor comes into play. Through the connection established between the customer’s smartphone and the supermarket’s digital payment system, queues are a thing of the past. The customer’s purchases are automatically recorded and the amount debited from their customer account.
The theme
of sustainability
Jan Domin, Associate Partner at SCHMIDHUBER, thinks it’s the digital aspect of design that counts the biggest now in physical retail stores: “What’s really important is exploiting the advantages of this ecosystem and making all of its numerous associated commercial services transparent to the customer. The digital process must be clear to the customer so that they learn to recognize and appreciate the personal benefit”. Retail techniques are changing online all the time and are then adapted to meet challenges offline. This means that digital change only becomes visible after a certain time delay. “We, as designers, are almost exclusively still working in the transition between online and offline—waiting until this change process is complete. But we can already start to see some of the great potential that lies around the corner. Think of the space that will become available if, for example, large supermarkets and parking spaces become surplus to requirement. If the supermarket comes to us or we pick up our orders at a drive-through—there’s tremendous space being created “.
But let’s not forget the other areas of physical retail stores that are also being affected by change. “In the past, stores placed special emphasis on product presentation, but today communicating themes or messages are more important. The aim is to answer the customer’s questions about personalized services, for example, or on the theme of sustainability. This is how you convince your customer of your brand”, says Michael Ostertag, Managing Partner at SCHMIDHUBER. “We have to be aware that in the future physical stores will mainly be there to influence purchasing decisions. We are going in the direction of flagship stores that work together with an online retail platform”.
“Whereas shops once placed special emphasis on product placement, today dialogue plays a much more important role. This is about responding to customers’ concerns whatever they are. Whether it’s the need for personalized services, sustainability, or something else—you create brand loyalty when you engage in two-way communication.”
Michael Ostertag | Partner at SCHMIDHUBER
Pioneering spirit
pays off in the long term
An experiment into the field of store architecture was kicked off some time ago in Hamburg in 2015. HAUSGERÄTE & FRIENDS was an attempt by a household appliance retailer to combine classic retailing with online shopping components. The stores were equipped with digital product configurators as well as displays, which made it possible to experience all appliances in their original size. This experience world — backed by digital technology — formed the center point of the shop. It was intended to cover the entire spectrum of customer needs through virtual reality with the added value of a physically present salesperson. This concept went exactly in the right direction by combining all the advantages of physical retail such as; personal advice, more trust in local dealers, and clear service lines, as examples, with an infinite range of online retail products. It comes as no big surprise that the concept proved not to be a long term success.
“The change isn’t worth it” and “The customer isn’t ready yet” are the sentences most often heard when explaining why visionary projects such as these aren’t pursued. Michael Ostertag explains: “Real purchasing behavior cannot be captured digitally. There is still a noticeable lack of empirical data. Ultimately, it comes down to taking a more long-term perspective: Retailers must be prepared to wait out the period between now and customer’s purchasing behavior changing.
The potential is huge — retailers just need to take a risk and a deep breath — and it will pay off in the future”.
This article is based on a lecture given by Jan Domin, Associate Partner at SCHMIDHUBER, for the IHK Regensburg on August 1, 2018.
Photos © Jörg Hempel, Aachen
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