Why Are Concept Stores key for Retail Brands
With the rise of the online sales and consequent decline of brick & mortar, brands are facing a significant challenge: how to engage with the most demanding generation of consumers to date. Their lack of loyalty and expectation of immediacy on delivery and unparalleled customer service is making retail operations one of the biggest headaches for brands to solve.
Why were concept stores in fashion in 2019?
It’s no longer just about the product, but the experience that the overall brand can offer. What are their brand values? What do they stand for? Who do they align themselves with?
In luxury particularly, this is extremely relevant, where consumer expectations are higher than in any other sector. Customer experience, customer care, delivery, in-store experience and the complete online journey must be seamless. In addition, and becoming ever more critical, knowing if materials are ethically sourced will make or break a brand.
On that note, online and offline must fuse into one, offering an on-brand experience wherever the customer is and making sure that there are enough touchpoints that will make them engage and want to become part of what the brand has to offer.
The pros & cons of retailers launching concept stores
The ‘concept’ of a concept store is what helps a brand further engage with its customers, by creating a sense of community. It puts one theme or objective at the centre of the store, such as sustainability, food & drink, design, or remote working, to associate the brand to that concept and encourage customers to view and engage with the brand in a new way.
This allows brands to position themselves ahead of their competition and differentiate themselves from the traditional values customers might associate them with. As we’ve seen across sectors in 2019, ethics and values matter more to customers than ever, so this is an essential attribute to successful concept stores.
However, the cost of creating a concept store adds up; not only for the chic or expensive interiors and decoration but also because you are filling up the venue with less product and more entertainment for customers. From a traditional, sales-driven standpoint, less product range means fewer sales and less income.
Plus, it is hard to measure ROI. How do you prove that the ‘concept’ is working if sales aren’t higher? Brands require testing following the store’s existence to see if has changed perceptions of the brand, which adds extra cost to the exercise.
Concept Stores vs Online Sales
I don’t think concept stores should go against online sales but be aligned to them instead. According to a new study by the International Council of Shopping Centres (ICSC), the interaction between online and offline channels is called ‘The Halo Effect’. The key finding of this study was the realisation that bricks-and-mortar stores serve as the hub of a brand, feeding the rest of the online channels, including online sales. Every time a new store is opened its brand’s website traffic increases by 37%; and when stores close website traffic falls accordingly.
Should more retailers launch concept stores?
The answer is yes, but only if it genuinely resonates with their brand. In line with all other activity within a brand’s strategy, it must be authentic to their offering.
In the last few years in Manhattan, we have seen an array of luxury boutiques opening their doors with retail or concept stores. Some of these brands have actually gone from online to offline, rather than the other way around, which allows them to have a business model with digital at its core, leveraging their online sales as their primary channel and using the concept stores as the ‘experience’. The successful concept stores can even become a destination for some brands, for example, Farfetch, Matchesfashion.com, Man Repeller, Glossier, Sezane and The Ordinary.
