The Future of the Shopping Experience
A look at the changing dynamics of purchasing in person and how to take advantage of a digital-physical hybrid approach.
Changing Retail Landscape
The first half of 2020 brought significant changes to shopping patterns and habits. Overnight, Covid-19 shifted the way consumers purchase goods, and though many retailers have reported significant increases in fully online or digitally-supported transactions, the increase in eCommerce revenue has not replaced lost brick-and-mortar revenue for most. And as retailers gear up to resume a more normal state of operations, there are fears that in-person revenue will be diminished for good.
This fear isn’t entirely unfounded. The way Canadian consumers view commercial transactions has changed. Shoppers adapted to online shopping and quickly found digital to be better, faster, and easier than they expected. New habits have formed that are likely to stick around. So what can retailers do to make the best use of real estate in this new landscape? To answer that, we need to look back to an era long before digital.
In 1952 a man named Victor Gruen invented the American shopping mall. Gruen wanted to create a place where people could browse and walk with ease in a centralized experience that made shopping simple for the consumer and gave them an enjoyable activity at the same time. He envisioned indoor spring garden cafes during long winter months and window merchandising that invoked the experience of being at a market in Europe, rather than Minneapolis. He understood the importance of the whole experience, not just the moment of transacting itself.
As retailers start to reopen their doors, it’s more important than ever to reflect on Gruen’s original vision for shopping malls. The reality of the brick-and-mortar experience has already changed, but it’s not disappearing. And the need to create an experience that makes consumers’ lives easier is more pressing than ever. The question now is: how can we adapt Gruen’s vision for our current reality, and reclaim his dream of a total shopping experience in a digitally-inclined world?
Digital-Physical Hybrid Solutions
Already we’ve seen businesses adapt to the changed retail landscape with a host of new options for customers, ranging from curbside pick-up to pre-scheduled shopping appointments. Those two solutions are just some examples of the new approach to blending digital and real world interactions together and they provide additional opportunities for customer experience enhancement, something every retailer will need to be able to do adeptly in the near future.
Cadillac Fairview, an iconic name in Canadian real estate with properties including Toronto’s Eaton Centre Mall and Pacific Centre Mall in Vancouver, are working hard to drive innovation in their mall experiences. As leaders in the space, their actions will shape how Canadians shop for years to come.
José Ribau, Cadillac Fairview’s Executive Vice President of Digital & Innovation, spoke to the RBC Disruptors recently about the increased need for new experiences because of shifting customer expectations. To meet those changed expectations, Cadillac Fairview invested in creating their own digital app that gives customers vital information about the mall and their shopping experience. Their priority is delivering value to customers in a safe and comfortable way, and they’ve found the perfect complement to their in-person experience with a digital solution.
NewStore, a Myplanet partner, offer another great example for a digital-physical system made for this new landscape in their work with UNTUCKit. Focusing on Omnichannel-as-a-Service solutions, they equip customers to navigate through the search →select →buy journey in the channel of their choosing— without the overhead of a bespoke-built experience. By bridging the technology gap between the digital and physical worlds, it gives control to the customer for how they want to engage.
Jason Cottrell, Myplanet CEO, explains why NewStore is a preferred partner in our retail engagements:
“We work with NewStore because they understand that siloed experiences are a thing of the past. We need to think multi-interface in order to impact the many moments a customer can enter and exit a journey for brands today.”
Challenges and Opportunities
As we look at the changed landscape, it’s impossible to ignore the impact of marketplace commerce solutions. Marketplaces make browsing and shopping online easier than ever, and early adopters like Walmart and Amazon generate huge revenue because of it. In their “Future of the Mall” study, Deloitte notes that 35% of Canadians have an Amazon Prime account, with 50% of members having increased their spending with Amazon in 2020. This shift in consumer behaviour is bound to impact footfall, which could have a trickle-down effect that causes some companies to have less appetite for investing in their flagship retail stores.
That said, though they offer compelling opportunities for retailers, marketplaces are incapable of delivering the same experience you get in-person at the mall. The easy, casual fun of bouncing in and out of stores, grabbing a bite to eat in the food court, and spending time with friends are all aspects of the experience that digital can never really recreate. To keep pace with changes, then, executives need to ask how digital can improve or augment the customer’s experience in a mall?
A good example of bridging digital and physical is VR/AR. The retail industry is seeing the second-largest implementation of AR and VR in the Asia Pacific region, especially in China where 81% of spending in this category went in 2019. Brands and shopping centers are creating experiences that offer something beyond just buying. Take this example of AR in Citiplaza in Hong Kong, where animals have been superimposed into the space for families to enjoy while shopping (parents will always need ways to occupy fussy children while accomplishing their goals). Or consider how Tmall’s physical showrooms offer interactive displays for customers to browse and shop collections, creating a more engaging experience in store.
In another study from Deloitte about 3D technology offering value for retailers and customers they say:
“Consumers today still prioritize value, product, and convenience while making their purchasing decisions.They want to feel confident that they have found the right product, for the right price, and that it’s not too hard to obtain. What’s more, these attitudes seem to have held steady for generations of consumers in the United States, no matter what technology or social trends we may be in the thick of.”
Malls and in-person retail experiences still offer the best opportunity for consumers to experience products, and digital support channels can help consumers interact with those products with ease.
One other emerging opportunity for shopping malls lies in their business model. Traditionally shopping malls have maintained a landlord/tenant relationship with retailers. In a post-Covid-19 world, where more consumers are looking for online convenience, shopping malls can help play a bigger role in the warehousing and product fulfilment process of retailers. By optimizing this relationship, shopping malls can help reduce costs for retailers, while improving their digital-first experiences at the same time, securing lasting partnerships with brands for the future.
It’s unclear how long the current disruption will last, but the retail world will be forever changed regardless. Malls need to find new ways to meet customers where they are and as they want to be served, and to do this successfully they need to be the ones helping define a hybrid future, asking and answering questions like: What considerations need to be taken into account for the next-wave of digital experience platforms? What’s the best approach for closing the gap between the physical destination and the digital experience? Who do we need to partner with today to ensure we’re spearheading change in the future?