Where is Physical Retail Heading? Navigating 3 Diverging Strategies

Although all retailers are now operating in the same pandemic era, there is definitely no consensus among them on what in-person shopping should look like. Learn about three unique approaches to physical retail in 2022.

Signs illustrating the diverting paths of in-store retail.

Originally published in Total Retail.

There’s no doubt that the way people shop in stores is changing.

Concerns of safety still exist, and many people continue to practice social distancing. Plus, with the emergence of COVID-19 variants, in-store shopping behaviors are prone to shift overnight. For retailers, that means being prepared to pivot is key.

Although all retailers are now operating in the same pandemic era, there is definitely no consensus among them on what in-person shopping should look like. 

What we do know is that the strength for all brands and retailers with a fleet of stores lies in the edge that bridging the physical-digital gap can provide when it comes to their online business: from services like buy online pick up in-store (BOPIS), to online lay-away services that allow shoppers to try items on in-store, to unique, social-media-friendly moments at physical locations, there are many ways to upgrade, improve, and integrate the brick-and-mortar and online experiences. 

Both standalone retailers and department stores have been experimenting with a variety of approaches designed to entice today’s shoppers. 

Some are redesigning store layouts to help shoppers get in, find what they need, and get out quicker, while others are taking the opposite approach: creating plush spaces that encourage shoppers to eat, drink, and hang out inside. 

In the pandemic era, is there a right way to approach physical shopping? Will one of these routes lead to success, and the other to failure? Let’s examine three emerging approaches. 

In-Store Shopping in the Pandemic Era: 3 Takes

1. The “in-and-out” strategy

For some retailers, like Ikea, winning over modern shoppers means departing from the “treasure hunt” store layout in favor of designs that promote convenience and speed. 

A shopper uses a digital display at a home decor store.

In 2020, Ikea announced plans to open 50 locations in urban areas, and began rolling them out this year. Instead of its traditional, maze-like layout—which forces shoppers to walk down multiple aisles before reaching checkout—the new, smaller-format stores put convenience front and center. They feature more curated merchandising in-store with a greater selection of inventory online.   

In addition to helping health-conscious shoppers avoid spending unnecessary amounts of time inside the store, the decision to launch the new store format comes in response to a general shift in consumer preferences. When shoppers could more easily shop online, convenience is pertinent to creating a satisfactory in-store experience. 

2. The “stay a while” strategy

On the other end of the spectrum, there are retailers like La Samaritaine, a 151-year-old department store in Paris that just reopened after a 16-year closure. 

Unlike Ikea, La Samaritaine invites shoppers to spend time inside the store by providing a highly experiential and “Instagrammable” environment. Inside the architectural landmark building that houses La Samaritaine, you’ll find photogenic decor, restaurants, bars, and nail and hair salons.

A luxurious department store display, showcasing high-end physical retail.

During a time when shoppers have demonstrated they are willing to spend big online, luxury retailers are looking for more ways to draw shoppers into brick-and-mortar stores, too. 

“Bricks and mortar is not dead in our mind,” Eléonore de Boysson, DFS Group President for Europe and the Middle East, told The Financial Times, “but we do have to offer something different than just product—we need to give the client a real experience, which goes far beyond shopping.” 

3. The “somewhere in between” strategy

Somewhere in the middle of this spectrum there are stores like the new Bloomies in Fairfax, Virginia, which combines a smaller footprint, highly curated product selection, technology, and food and cocktails via an in-store cafe. 

It includes some staples of the traditional department store, like alteration services and in-store stylists, as well as some pandemic-era offerings, like curbside pickup and a “tech-enabled stylist service model” to facilitate better in-store product discovery. 

A tablet showing an AR physical retail experience.

In the new Bloomies, convenience and experiential retail are equally important to the customer experience, and both play a direct role in the store’s physical layout. 

Which Physical Retail Strategy Will Win?

Your instincts might tell you retailers that invest in in-store hangouts will surely lose. After all, how can an environment that encourages idling in an enclosed space mesh with COVID-related precautions?

To that end, retailers that take this approach will need to consider what kinds of rules and standards they will set to ensure cleanliness and safety for shoppers. But the question of which in-store strategy will fare best in the pandemic era and beyond involves many more considerations than just social distancing.

Merchandising, convenience, technology, and perks like food and drink are all important components. Deciding the correct proportions depends on the type of retailer and its clientele. 

The luxury handbag shopper is not the Ikea shopper—at least, probably not on the same day. Consumers go to these retailers in pursuit of different things. Subsequently, they desire a different kind of experience from each. 

Let Shoppers’ Intentions Determine the “Right” Physical Retail Experience

The shopper who has set out to find a wooden shelf, light bulbs, and soap dispenser probably desires to find these items as efficiently as possible. For Ikea, opening stores without the maze-style layout seems like a logical move—it promotes convenience and helps people exit the store quickly.

On the other hand, an in-and-out experience probably doesn’t appeal to the shopper who is ready to dish out $2,000 on a new designer handbag. 

Presumably, this shopper wants an experience that feels more glam and pampering. A few photos against an Instagram-friendly backdrop, a cappuccino, and friendly conversation in an elegantly furnished lounge seems like the perfect setting for a special purchase.  

The key for any retailer to succeed is understanding who their shoppers are and what elements of the customer experience they value most.   

Whatever Route You Choose, Be Prepared to Pivot

The pandemic has taught all of us in the retail industry many important lessons. Curating the customer experience to fit the evolving preferences of your clientele is one. Staying agile in the event of the unexpected is another. 

Regardless of the route you take—in-and-out, stay a while, or somewhere in between—retailers must stay agile so they can quickly adapt the in-store experience to our rapidly changing conditions. 

That means it’s a good idea to have a plan for transforming experiential stores into spaces that enable quick and efficient journeys, should the need arise. It also means in-and-out stores may want to consider how they could create more immersive in-store experiences as pandemic concerns lessen, when such layouts might make them more competitive. Flexibility will be the differentiator as brands and retailers continue on the path towards finding the ideal format for physical retail. 

Originally published in Total Retail.

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