In 2017, pre-pandemic, Starbucks founder and Chairman, Howard Schultz, said that the way forward for brand-businesses is making your branded space an “experiential destination.” The Starbucks CEO, Kevin Johnson said, “To survive, merchants need to create unique and immersive in-store experiences.”
Today, after several years of lock-downs, people are shopping outside of their homes. People desire something other than the four walls at which they were staring for three years. Providing a spatial and sensory shopper environment is now an incredibly strong driver among retail brand-business owners.
It is all about Place.
Employees, product, service, price and promotion all have an effect on the successful delivery of the brand-business experience. And, so does place. In fact, when it comes to delivering a relevant, differentiated total brand experience, place is becoming increasingly critical.
Place is the face of your brand.
Place is multidimensional. Depending on the brand-business, place can be a website, a restaurant, an office, the waiting room, the hotel room, the customer’s office, a tablet, a mobile phone, a showroom, shelf space, buses, vans and trucks. It can be a drop-down menu, an app on a mobile phone, or a watch. Place can be a virtual chat room, an online community or an airline club. Place can be the customer’s home place, as it is for products such as invisible dog fencing. Or, as it used to be for Avon door-to-door beauty products or Tupperware parties.
No matter where or what place is best for your brand-business, that place must attract and not detract from the brand-business. The brand-business interface must be kept in good repair and kept up-to-date with the forces that shape the world. “Nothing happens until it happens at retail” wherever that occurs. Retail is the moment of truth. Place is the most powerful, most intimate, most credible brand-business message.
The focus on the total brand experience as a physically and emotionally “immersive” destination is not a new concept. But, it is a concept that has new traction as we navigate a virtual, digital, post-pandemic environment.
In 1998, B. Joseph Pine and James H. Gilmore wrote a pivotal, highly influential article for Harvard Business Review titled, “Welcome to the Experience Economy.” The authors stated that experiences are distinctly different from products and services. Increasingly, brand-businesses are “explicitly designing and promoting” engaging experiences, and charging for these experiences. An experience happens when a brand-business “… uses services as the stage and goods as props… creating a memorable event.”
Retail establishments are making huge investments in changing the physical spaces where customers interact and, hopefully, bond, with their brand-businesses. Department stores, such as Macy’s and Nordstrom, are betting on smaller spaces. Fast fashion establishments, such as Zara and H&M, are betting on larger establishments. In both instances, the desire is to create a more powerful, more compelling, more affinity-creating brand-business experience.
Last year, Macy’s decided that smaller stores, based closer to where its customers’ live, is a more attractive and compelling – as well as profitable – format. According to The Wall Street Journal, Macy’s decision to create smaller format stores with fewer items and more digital services reflects a customer base that is increasingly suburban and prone to more frequent grocery shopping and in-store pick-up of pre-ordered items.
Macy’s smaller format stores take into account many pandemic-changed attitudes and behaviors, such as digital purchasing, purchasing without touching or trying-on and fewer human contacts. Macy’s smaller stores offer a more frequently updated product array of both staples and “trendy” items. Macy’s smaller stores also serve as pick-up and return venues that allow returns from online shopping or purchases made at other stores.
Macy’s also discovered that its smaller stores benefit employees, also, as these smaller stores are easier “to stock and staff.” Data show that small size formats “…allow for elevated customer service.”
Nordstrom has also opted for smaller-format stores that offer a multitude of non-shopping services. Aside from offering pick-up and return services, Nordstrom’s smaller stores provide clothing alterations and salon-type offerings such as “stylist appointments.” In this way, Nordstrom’s can more visually emphasize its core benefit of personalized service.
On the flip side, are fast fashion brand-businesses such as Zara and H&M. Zara and H&M are betting on a larger space offering all sorts of features such as beauty salons, repair, coffee shops (like Starbucks inside of Barnes & Noble) and digital offerings including the ability to virtually explore the store. Data show that these larger formats tend to increase the duration of the shopping trip.
Research on duration of shopping implications for brand-businesses indicates that length of visit has an initial higher purchase ticket, but over time, length of visit leads to a smaller purchase ticket. The research posits that, perhaps, we are just too quickly and easily bored. After a while, the new is mundane. To be fair, the research does indicate the brand-business’ experience can become stickier even when the customer is purchasing less. Affinity may grow while purchases are smaller.
By offering a world of side services, Zara and H&M hope to make their places destinations, in the way that the original Nike stores were destinations.
Zara’s executives believe the larger, roomier stores are more personal because these spaces eliminate the sense of “crowd.” And, the larger spaces can house small boutiques that feature “individual” collections – just the way department stores operate or used to operate.
H&M’s executives believe the larger format allows customers to become “inspired” and engaged with the H&M total brand experience.
As department stores become smaller and fast fashion stores become larger, it seems as if the two forms of retail are just exchanging formats looking for a new dimensional way of delivering brand-business’ expression. Department stores are downsizing while fast fashion stores are upsizing. Place is increasingly becoming a very fluid concept.
In a Plan to Win, after articulating the brand-business’ Purpose and Promise, the next step is to describe the 5 Action P’s: People, Product, Place, Price and Promotion. Then, state the way in which the brand-business will manage Performance. The Five Action Ps of the Plan to Win define what the brand-business will do for its customers. In other words, the 5 Action P’s define the total brand experience the brand-business wants to deliver. The Five Action Ps are the brand-business’ essential, common, must-do-now list.
Regardless of offerings, Place, as an action P, is undergoing massive restructuring in a world where anyplace or any-space, can be a brand-business Place.
Many brands create spaces that become destinations where the customer can be immersed in the core essence of the brand-business experience. REI in Seattle opened in 1996 with its REI Rock Climbing Pinnacle, a 5’9” wall (the third largest indoor rock climbing structure in the world, apparently). Before it closed due to safety threats and thefts, Portland, Oregon’s Nike Town was a great Nike experience. Dave & Buster’s and Chuck E. Cheese are restaurants that are entertainment destinations with food.
Hopefully, the emphasis on place does not happen at the expense of people, product (service) price and promotion. Hopefully, purpose and promise are not negatively affected. And, hopefully, performance measurement shows improved performance. All the 8 P’s are essential for generating more customers who frequent the brand-business more often, who are more loyal and more profitable. Each P must reinforce each other P.
Department stores and fast fashion stores may be experimenting with each other’s’ layouts, where size seems to matter. But, the reality is that whatever changes are made, whatever size matters, Place must still represent the face of the brand-business’ core promise. Becoming a destination only works if the place creates a space where the customer can develop affinity, love and trust with the brand-business.
Contributed to Branding Strategy Insider by: Larry Light, Author of The Paradox Planet: Creating Brand Experiences For The Age Of I
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