Whatever the brand, the solution seems to be the same. A programme of store closures and redundancies. Deciding which stores to close is usually driven by traditional metrics of revenue per square foot, year-on-year comparison and property cost. Whilst this is easy to understand and the data readily available, it neglects some of the critical reasons behind why a physical estate still has value.
Another lens that can provide a more sophisticated view is granular customer need. If retailers understand the myriad daily desires and needs of their consumers, they can build the propositions to meet them. That means having great traditional research, sophisticated ethnography and powerful analytics. Fit-certainty, tangibility, hyper-immediacy, specific advice and reassurance, trial, shared social experience, leisure – these are all needs where the physical estate has at least some role to play for the modern retail consumer. Harvey Nics in Birmingham and the single store test and learn approach at John Lewis are notable examples of good practice in this space.
Figuring out how to serve these needs in a compelling and interesting way provides a blueprint for what physical stores should do for people. It also suggests a new model for estate categorisation that subverts a traditional ‘wealth of town vs sq footage view’. Eg - does your e-commerce data show a clustering of postcodes on the main route from a station? Configure the local store as a collection and returns hub. High footfall shopping centre site? Make it a leisure destination and invite partners to share the cost.
For too long customer segmentation and insight has been the preserve of the marketing team, used primarily to select media. Bringing a sophisticated understanding of customer needs to a property discussion changes the game. It might mean more, rather than fewer closures but at least retailers will be making the right decisions and will understand how to invest in the remaining estate to ensure its seen as a source of value rather than sunk cost.
If you’d like to talk to us about shaping your retail estate to fit customer need, please contact James Easterbrook on firstname.lastname@example.org 07802 698718.