Why the fashion industry needs a new self-image
While stationary fashion retail is going through hard times in this pandemic, online retail is benefiting without exception. Physical stores will nevertheless remain important touchpoints, but this requires a change of perspective in fashion retail.
E-commerce is booming: In 2020, the turnover of goods in e-commerce amounted to 83.3 billion euros — an increase of 14.6 percent compared to the previous year. The Bundesverband E-Commerce und Versandhandel Deutschland e.V. (bevh) even predicted that the 100 billion euro mark would be exceeded in 2021. Accelerated by the crisis, the development is taking its course and continues: According to the KPMG study ”Fashion 2030", in ten years’ time, online fashion retail will have as high a market share as stationary fashion stores.
Although the pandemic revealed that most things can be ordered very conveniently via the Internet. At the same time, however, Covid has also left its mark on consumer behavior. According to the Zukunftsinstitut, during the crisis, a deep-seated need arose to meet in order to pursue common passions and interests. Encounters and experiences with friends or family are the new incentives — qualities that only brick-and-mortar retail can provide. Physical stores will continue to be important touchpoints in the future, but a new self-image in fashion retail is necessary for this.
Using the physical space more as a brand touchpoint
Economically, we are currently moving into a new age, which requires a fundamental rethinking. The pandemic is leading to a sharpening of the roles of individual channels. While the digital space, especially e-commerce, focuses strongly on the topic of sales, the physical space must rather define itself as an experience touchpoint. Less as a place for selling goods, but as a brand touchpoint with a variety of functions:
As an inspiring destination for target groups, as a creator of their own content with digital extension to other channels — from e-commerce to social media. A place where experiences and brands are impressively staged as experiences in order to inspire customers sustainably and transform them into fans.
The path to a new understanding of retail
In the vast majority of cases, the new role of physical space requires a radical change in thinking of how space is designed. Many older concepts were based on merchandise advertising and product staging. In the future, spaces will function more as places to meet up and will offer inspiration, by being ideally adapted and aligned to the interests of the target groups. Retailers should make sure that people feel good (“convenience”, “inspiration”), want to come back (“loyalty”, “recurring business”), and actually show up at the store (“physical cookie”, “store log-in”) rather than on maximizing what’s in the shopping cart. When it comes to design, three new dimensions are important:
Immersive room design
In the future, when designing physical spaces, the concepts that will prevail will be those that integrate hospitality, service or even entertainment. Spaces that serve purely for product or brand presentation will proportionately decrease.
A good example of this is the Off-White’s flagship store in Miami, whose concept rethinks the way physical stores work in light of the increasing popularity of online shopping. A flexible store, which only functions as a storage room for the offered garments, is designed in such a way that a variety of brand activities, such as art and music events, lectures and other cultural events on site, can also take place there without any problems. But also, if necessary, can be a café or a catwalk. Such a room can be adapted as desired by movable facades, which creates new room constellations that allow very different types of use.
Other examples of this kind of “retailtainment” are the temporary experience spaces of Gucci in Berlin, Milan and London: “Gucci Circolo“ pop-up stores and event spaces are all in one. There visitors can discover the stylistic codes of Gucci and different chapters of Alessandro Michele’s “Aria” collection and shop at the same time. In the listening lounge one can listen to the sounds of the house’s musical accompaniment, and, if desired, register on the occasion of the 100th anniversary of the house. In addition, a photo booth and a Gucci-style café will provide for entertainment. And last but not least, there is of course a shop for the customer’s purchasing pleasure.
Digital linking
A smooth transition to the digital world is becoming more and more essential. This can be accomplished by introducing beacon technology, near field communication (NFC), or AR technology into the store. In the New York flagship store of the Swiss running brand On, customers can take part in a split-second digital running analysis. Through the use of NFC technology, customers can get more information about the products by simply holding their smartphones up to them. Such digital connections put a face to millions of previously anonymous customers, and the retail space is essentially doubled in size through the addition of a digital retail space. The next possible step is then to move into the marketing of personalized in-store advertising.
Also, Farfetch’s Browns Flagship Store in London shows how online and offline experiences can be linked. When entering the store, visitors log in with their smartphone, which allows sellers to view customers’ profiles, including their purchase history or items saved on an online wish list. The networked clothes rack records the items taken by customers and stores them in a smartphone app, where they can later swipe left or right to edit their selection. Another technology is smart mirrors, which allow customers to request items of a different size or color, search for alternatives, and even pay without leaving the dressing room. Finally, Farfetch has also developed a holographic display that allows customers to design and order individual shoes, so that they can try out different colors or types of leather.
Nike also takes an omnichannel approach, and delivers good examples of this, in which they always focus on the personalized shopping experience using both online and offline elements. The latest experiment “Nike Rise” combines technology with real customer interaction: As an “adaptive store”, it responds to member data and sports moments in the city in real time.
Conclusion: A good retail experience must be “phygital”
Digitization, today’s infrastructures and the possibility of being able to purchase products 24/7 across time and space create completely new requirements for the physical space in fashion retail. Retail must become a brand ambassador, a place of experience or a community destination instead of acting as a mere sales channel. As the foundation of brand activation, spaces are used as a medium that generates attention, moves people, and creates brand experiences — — these will ultimately make the difference, as products become more and more interchangeable. However, the opposition between digital and stationary must gradually disappear if the path to a new understanding of retail is to succeed. Modern store approaches offer exclusive content, possibilities for digital interaction and “instagrammable” experiences in order to constantly create new visitor incentives for consumers. A good retail experience must be “phygital” — a multidimensional experience that combines the best of the physical and digital worlds.
About the author
Mathias Ullrich is Managing Director at LIGANOVA, innovation leader in the field of brand & retail experiences in the phygital area. Over the past ten years, as an industrial engineer, Mathias Ullrich has advised clients from the brand retail sector on positioning, growth and digital transformation. At LIGANOVA, he heads the Experience Solutions division where, at the intersection of people, brands and products, he designs retail locations and experience areas for premium global brands from the luxury, sporting goods, automotive, fashion and retail sectors.
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