The Internet empowered us to find our tribes. Retail isn’t keeping up.

Photo by Mike Petrucci on Unsplash

The “retail apocalypse” is logically explained by the rise of e-commerce, millennials choosing experiences over things and the over-building of shopping centers. The “media apocalypse” (the demise of newspapers, magazines and live TV) is explained by the rise of social media and streaming platforms. All very true, but I believe that there is an underlying human need that contributed to the decline of both traditional retail and media.

The Internet empowered consumers to find their tribes. They choose which content to interact with, they tailor their media based on their real friends, aspirational friends, values, aesthetics, etc., they share their opinions on global platforms and they seek out the products, people and brands that align with their view of themselves. Today, compelling creative visuals in glossy magazines or primetime TV ads that drive people to the handful of nationwide retailers that carry your product isn’t enough. Now you have to create “community” and “experiences” that are authentic and express your brand values. Let me translate, “community” is the new marketing and “experience” is the new sales. Perhaps the demise of traditional retail and media can be explained by the Internet offering better alternatives for curating your own community of like-minded people/products and removing most of the friction around connecting.

We still need physical spaces, just better ones

Most legacy retailers like department stores or nationwide specialty retailers are pretty bad at building community. They were purpose-built for nation wide scale with the primary goal of driving in-store sales. As a result, their physical footprints are downscaling to just the markets where there is enough transaction-motivated traffic.

Brands like Glossier and Peloton and fill-in-the-blank hot DTC brand have all proven that to be a successful marketer, you need to start with an online community of brand fanatics. But at some point, like an online dating flirtation, if you are excited about a brand or product, you feel compelled to visit it in person. Tell-me eventually leads to show-me. And that is why the role of brick & mortar is still important. It is the physical and personal manifestation of the community.

Below is a simple framework that I use to help me think about the primary purpose of brick & mortar today. It is a spectrum that starts with the location and the community that is expected to supply the traffic. The more nomadic the visitor, the more importance is placed on creating a differentiated destination. If the visitor has reason to pass the location on a frequent basis, more importance is placed on social connections or human interaction.

Primary reasons for Brick & Mortar today (reasons on top, location type on bottom)

Entertainment

We all get bored at some point, especially our kids — add the social currency provided by Instragrammable moments in interesting locations that say we are athletic, cool or fun loving and you get the modern interactive pop-up experience. These are ideal for high population density areas, with foreign or domestic visitors.

Experiences like the Color Factory or the Museum of Ice Cream promise to entertain your kids (and you) for a few hours and people will travel to get there. Like most one-and-done types of experiences, retail comes in the form of the human desire for a souvenir after a memorable experience. If you are a brand, selling your product adjacent or as part of such an experience help align your brand positioning with the ethos of the pop-up.

Other great examples of well-executed mash-ups of entertainment and retail are Camp in NYC and the Crayola Experience. Many brands have embraced the ephemeral, Instragrammable moment pop-up. Everyone from Tupperware to Away luggage and Yankee Candle has created a pop-up. However, often the objective of these pop-ups feels very brand centric rather than community oriented and if not executed properly can be very expensive with little impact on recruitment or engagement.

Discovery (from a trusted source)

Here’s the problem with online shopping. It is great if you know exactly what you want. Google, black Hermes Birkin bag and you’ll find numerous ways to purchase one. However, try Googling “luxury tote” and you’ll end up in a black hole of frustration. This is where brick and mortar should shine. You kind of know what you want, but you want someone to have curated the options for you, you want to try one on and then another and compare the two. And if it is expensive, important or urgent enough, you want to go someplace to help you with this search.

This is space that multi brand retailers like department stores should own. They should have the credibility of the high taste of their merchant team (see Barney’s circa 2005) combined with the best staff dying to find you that perfect black tote. Unfortunately, this is much harder in execution than in explanation, especially when an in-the-moment transaction is the only means of monetizing this experience. This is precisely why department stores are struggling.

There are some new retail concepts that are interesting in this space. For example, the Real Real, you trust it is indeed authentic luxury vintage, enabling a vintage lover’s scavenger hunt for that perfect Chanel jacket. Goop is a trusted source for taste and wellness, their physical locations provide that curation in person. Amazon Four Star, if you trust online reviews, is the place is to find that something you never knew you needed.

Another problem with online shopping is that you can’t see, touch, hear, feel or smell. That’s where product discovery concepts like the Sonos store or the Apple store come in. In categories like electronics or beauty where the trial process is more complicated than apparel or accessories a space that is purpose-built for trial (connectivity, knowledgeable staff, design that simulates actual use cases) adds real value.

Services where human-to-human interaction is required.

There are a few new concepts in this space; some that combine retail with a core service and some that are just making required services into better experiences. Studs, which mixes the experience of piercing with jewelry retail is a great example; another is Benefit Cosmetic’s Brows a Go-Go.

Perhaps more interesting are businesses like Kindbody, a fertility clinic which I stumbled across on Fifth avenue thinking it was a juice bar or new workout concept. It is quite intriguing to think of all the services we have come to accept as being less-than-pleasurable experiences but could be opportunities for meaningful interactions and complementary products. The beauty industry has figured this out first: DryBar, FaceHaus, Skin Laundry, Blushington, etc. Kindbody may be the beginning of medical services becoming more welcoming and conveniently located.

Other services that can be approached in a similar fashion could include wellness, tailoring, repairs (shoes, jewelry, furniture), medical imaging, photography, memorabilia storage to name a few.

Social connections and enrichment

I’m intrigued with the modern version of a country club. I think of concepts like Soho House or the Wing as “urban country clubs”. These membership businesses gather communities of like-minded people. They create repeat traffic and have demographic and psychographic desirability in their members. These communities are powerful because if they endorse or support a brand or product their members are likely to listen. Imagine these concepts becoming the new anchor tenants and building retail with the community in mind. For example, event spaces for enrichment curriculum such as beauty demonstrations, wine tastings, cooking classes, styling…all sponsored by relevant brands.

Brands and retailers can also create their own version of community hangouts. An example using a more traditional retailer is Michael’s (the craft store) Community Classrooms. Local crafters teach crocheting, scrapbooking, painting, etc. to the patrons of their Michael’s store. Online retailer Bark opened Bark Park, “An outdoor clubhouse for dogs and their people”, which is a super smart way to create social connections for people who love dogs.

Entertainment, discovery, services and social connections. There is a human interactive component in all of these experiences. That interaction creates community. It makes the world slightly smaller when you share a piece of personal advice or an experience. Fundamentally we are social creatures seeking ways to connect with others. The Internet can make the introduction, however, at some point, we eventually want to meet in person and that is why we still need brick and mortar. However, if the retail industry is to survive it needs to evolve to a place where in-the-moment sales of physical goods is not the only means of monetizing human connections.

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Founder Martingale Advisors. Retail innovator. Former luxury & beauty executive.

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Julie Thibault

Julie Thibault

Founder Martingale Advisors. Retail innovator. Former luxury & beauty executive.

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