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Tackling the footfall question, creating destination status

A new Retailbulletin/ResearchFarm report, “Store of the future 2012, multichannel hubs, from local knowledge to global wisdom” finds that the store of the future is headed towards fewer, but qualitatively better store locations.

GENERAL MERCHANDISE

Tackling the footfall question, creating destination status

A new Retailbulletin/ResearchFarm report, “Store of the future 2012, multichannel hubs, from local knowledge to global wisdom” finds that the store of the future is headed towards fewer, but qualitatively better store locations.

The report finds that flagships will act as show rooms to celebrate the brand, online as fulfillment, smaller footprints in lesser locations for the supporting store network and more integrated stores in terms of technology.

Tomorrow’s store estate will also be enhanced by other features such as mobile (QR code) walls, pop up stores and click & collect stations. ResearchFarm believes that, especially against the tough macroeconomic outlook and the rise of e-commerce, retailers and landlords need to focus on getting tomorrow's operations and store formats just right – as the footfall question becomes ever more pressing.

A number of players already demonstrate what the store of the future will look like. Many retailers would be well advised to study FMCG/CPG brand shops, such as Adidas (in Russia), Apple (globally), Disney (US), Lego (EU), M&M (US & UK), Nike (globally), Nivea and Ritter Sport (Germany) to name but a few. These players have managed to create a ‘wow factor’ for their respective brands by enticing their customers to shop whilst in their flagships and to return to their online operations, in the case of Apple and Nespresso by establishing an ecosystem around their products.

Flagships need to be able to outcompete on service, convenience and experience to engage shoppers and draw footfall.

In short, a flagship store has to offer shoppers much more than being solely functional and transactional - just like a website. It has to build relationships and should perhaps be seen in the context of a retailer’s overall loyalty strategy.

Looking ahead, it will become increasingly more important to take the wider context into account for the creation of a successful flagship store with a unique point of difference, such as the historical connotations of locations and certain regional or national aspects. In this sense the M&M store in London could act as an example how to draw in shoppers by playing on British iconography such as the double decker bus. Other promising ventures for flagship stores are foodservice/retail crossover concepts and combining leisure aspects in the shopping environment as much as possible.

If brands cooperate on the high street, retailers can do the same
That said, there are other ways of generating footfall and creating destination status, in Germany hard discounter Aldi has teamed up with upmarket grocer Rewe for new store sites – despite the fact that the two companies compete with each other for shoppers and spend. While predominately located out of town in retail parks, the combination has also found its way into the inner cities.

By merging the strengths of both formats, this combination acts as a unique footfall driver for grocery shoppers. The decision to engage in this venture followed research establishing that many German customers shop around for their groceries and use both outlet types, so it made sense to arrange the stores on the same sites.
 
Rewe’s move is surprising, because the retailer is teaming up with Aldi rather than its own discounter fascia, Penny. That said, Penny hardly has the same clout and customer draw as Aldi in Germany. While this cooperation was previously unthinkable as hard discounters were seen as only cannibalising sales of smaller convenience stores and supermarkets and to blame for their long decline (until the format has seen somewhat of a revival in Germany recently), the bold, radical thinking of Rewe and Aldi has certainly ensured that these two have gained an advantage over the competition by diverting footfall away from the likes of Edeka, Real and Kaiser’s Tengelmann and also Lidl, Netto and Norma.

As footfall will become much harder to generate in future not just due to the influence of the internet but also due to the broader macro-economic picture, retailers and property developers need to explore new ways of thinking. Radical departures from the current status quo and modus operandi are required, be it through segmenting store estates into flagships and supporting stores or through combining the strength of competing players – in a way that is sensitive to the intricacies of the markets in question.

If you would like to find out more about this report please click here to visit the website.
Next week we will continue with our series on the store of the future by looking at click & collect and the smartphone revolution

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