Our city centers, high streets and shopping malls have been a sorry sight since the end of the Corona shutdown. People in protective masks wait outside shops for the number of customers to correspond to the officially designated safe amount. Before entering the store, they carefully disinfect their hands, and some even put on disposable gloves. Those who go shopping under the Corona measures are not doing it for fun but to tick off the items on their lists. The COVID-19 pandemic, with its strict regulations, has taken the fun out of shopping for the Germans, and the retail sector faces a deep crisis as a result. That is the official interpretation, but is it correct?
It’s true that the shutdown at the beginning of the Corona pandemic cost the over-the-counter retail trade a lot of money. It’s also true that despite the most stringent restrictions having come to an end, shoppers are returning to the high street far slower than many had hoped. Most people just want get masked shopping over with as quickly as possible. It is the opposite of what we generally mean by the shopping experience.
While Corona has probably accelerated the demise of the over-the-counter retail sector, we are in fact witnessing the final stages of a slow decline that began in the 1990s, and the recent closure of many Karstadt branches provides a good example. For a long time now, customers have wanted to do more than just buy things.
In order to have a future, the over-the-counter retail sector urgently needs to reinvent itself. Three propositions:
Compared to the choices that the customer finds on their laptop or smartphone, the range on display in the typical department store is, at best, disappointing. Virtual retailers like Amazon have deprived the old department stores not only of their customers but also their raison d’etre. Any attempt to compete in an over-the-counter manner with online providers will ultimately fail, so it’s time for retailers to focus on their USP: the experience of the product.
Until now, brands have been content to limit themselves to exhibition spaces in the large city center department stores. But that is no longer enough. Brands need visibility in dedicated brand stores in which every single touchpoint can be designed and controlled according to the core of the brand itself, rather than trusting a department store manager to present a compelling customer journey. The focus should not be on the product itself, but on the shopping experience. Rather than storing as many products per square meter as possible, the shop floor becomes an experience space, and the point of sale becomes a point of experience.
Sporting goods manufacturer Nike, for example, understands this. With a 2,400 m2 space spanning four floors, their new flagship store on the Champs-Èlysées is already a visual statement. Inside, however, there is virtually no focus on product sales. Instead, this “House of Innovation”, the company’s third after New York and Shanghai, offers live sessions with sports experts, digital services, a children’s play room, personalization and recycling programs, and a “SneakerLab” in the basement. The focus is not on the products, but on the customer experience.
Not every brand can or wants to open their own shop. However, the death of the large department store will result in the loss of up to 50 percent of their existing exhibition space. If they are to remain visible to customers, alternatives must be found. The US concept of “retail as a service” can fill the gap. Companies with a focus on experience take over the presentation of products on behalf of manufacturers and provide customers with a unique brand experience.
Examples include the US start-up b8ta, which presents trend products in shop-in-shops or flagship stores. Another is the US company Showfields, which operates an entire mall in which brands can rent shops which place the customer experience at the center. The actual purchases are made online.
In Shenzhen, China, luxury retailer Burberry shows just how far this concept can go. In cooperation with digital company Tencent, a digitalized flagship store has been created in which the worlds of real and virtual shopping are intertwined. Customers can explore the ten rooms in person, or in digital form as an animal avatar which develops as the shopping experience progresses. “Points” are acquired during virtual browsing as a form of social currency, and can be converted into exclusive content or individual on-site experiences.
Shopping as a game. This is the exact opposite of what we currently see on German high streets. It also has the advantage that avatars do not need to wear face masks.