This article is written by Ghalia Boustani for the LFA’s (Lebanese Franchise Association) retail observatory annual report. (Pictures inserted in this post are extracted from the retail observatory booklet).
What makes a retail format so special? Is it the product that it holds or the shape that it has?
In times when retailers are striving to earn an extra dollar from sales by offering unique products and lines, customers are looking for novelty as they are constantly bored with what they currently have.
Retail as we know it is in metamorphosis; what lasts are not brands or businesses that have built “stability”; rather, successful are those brands that can survive evolving patterns of a “liquid society”.
A voyage through retail format development
Looking back to the late 1800s, the townscape was governed by single-product stores that gradually changed with the emergence of department stores where different products and brands were found in one location. Then, retailers extended their reach of household in rural areas, thus eliminating the disadvantage of distance from city shopping centers.
After World War I, efficiency became a compelling trend. Mass retailing advanced leading many retailers to engage in activities related to warehousing and discount stores driven by competitive pricing and resulting from volume and low-cost. A new retail model took hold.
Direct marketing and technology such as online retailing were developments that made it easier for retailers to survive the 20th century. Consequently, retail evolved by building up on previous formats, though some of these were favored over others. Current formats have retained their original characteristics, with brands and retailers putting forth efforts to deliver a better experience through the designated channel.
It seems that the greater focus of today’s retail literature lies on store experiences, retail experiences, and experiential retailing. The “experience economy”, as presented by Pine and Gilmore, had presented the natural progress towards experiences with the metaphor of the cake: “As a vestige of the agrarian economy, mothers made birthday cakes from scratch, mixing farm commodities that together cost mere dimes. As the goods-based industrial economy advanced, moms paid a dollar or two to Betty Crocker for premixed ingredients. Later, when the service economy took hold, busy parents ordered cakes from the bakery or grocery store, which, at $10 or $15, cost ten times as much as the packaged ingredients. Now, in the time-starved 1990 s, parents neither make the birthday cake nor even throw the party. Instead, they spend $100 or more to “outsource” the entire event (…) staging a memorable event for the kids – and often throwing in the cake for free.
Experiences are not services. Experiences occur when brands use their spaces, props and goods to engage their customers in a way that generates a memorable event. They talk to their customers on a personal level and act out the experience over time. The brand then, goes beyond being a “seller” and becomes a “stager”; the customer is a “guest” looking for “sensations”. Brands that fail to provide them face customer apathy.
From omni-channel to multi-channel retailing
Customers are becoming more difficult, more complex to understand and sometimes unpredictable. Brands that focus their efforts to meet customer’s needs are able to gain competitive advantage and satisfy customers by offering them a “seamless experience” that integrates all forms of technology and channels deemed as relevant.
It is true that choosing a multi-channel retailing approach is not too obvious and not too easy to manage and maintain; however, it generates various advantages to brands. First, it engenders an improved customer perception. Then, it secures a variety of “engagement points” for customers to make a purchase. Third, brands have greater chances of collecting valuable data; and using this date efficiently. Finally, when retailers consider using multi-channel retailing, they offer their customers more options to get access to information or make a purchase; either in store, from their living rooms or via their mobile phones. This will only make sense for customers when they are exposed to a consistent message, but not necessarily the same, across all brand platforms.
Brands understand that multi-channel retailing should be transformed to an integrated-channel retailing where customers have a “consistent experience” presented by a consistent took and feel of each channel, the offering and the displaying and manifestation of the shopping ease throughout these channels.
Retail excitement and alternative retail formats
Now that brands understand the value of experience to customers and have the ability to transmit this experience throughout their representations, be it at any level or any channel, they need to heed the fact that retail formats have to be caterers or generators of retail excitement.
New retail formats are emerging to meet changes in the retail environment and customers’ needs for innovation, excitement and experience. This is the age of ephemeral retailing. Back in 2008, the attention shifted towards alternative forms of retailing; this was mainly due to the economic recession.
Pop-up stores have existed for a long time and were concentrated mainly around the festive seasons to sell holiday-themed products. Today’s retailers saw the opportunity with this retailing formats to attempt to penetrate new neighborhoods or markets, test, create awareness or communicate their brands to target consumers. Landlords have become more lenient towards their estate’s leasing contracts and warmed up to the idea of short leasing as pop-up stores can turn a short-term lease into a long-term opportunity. This, however, places a major stress on brands because they have to keep creating more excitement and more ways to generate customer experiences through retail stores.
The temporary characteristic of pop-up store, along with several other demographics such as timing, price and locations are generators of curiosity and intrigue. The famous defining statement “here today, gone tomorrow” perfectly describes how pop-up stores create a sense of urgency for consumers to visit, discover and come at a closer contact with the brand: Customers are better connecting with brands, they are more aware of the brand and they are being able to engage and interact with it.
A new era of retailing for the Lebanese market?
The Lebanese market has also had its share of the recession and brands have been struggling to survive the suffocating times and uncertain events affecting the retail environment. But the Lebanese market was not the only market to feel and fall under the effects of recession.
Brands have to continuously find new ways of connecting with their customers and find the ideal channel or presentation as well as the right dissemination of information to make the offering more relevant to customers. This comes at a price, undoubtedly.
Pop-up stores are alternative retail formats presenting retailers with various ways of boosting, supporting or helping the brand. Pop-up stores cannot perform miracles if they do not fall relevantly under the brand’s channel representation. And in this context, brands have to rethink their strategies in order to make sure that they are not having the “illusion” that pop-up stores, done once or several times, will pull up the strings of the brand from failure to success. This is an erroneous view that Lebanese brand managers need to be aware of.
To be sure, pop-up retailing might not always work for the brand. If it does work for the brand, so be it; if it doesn’t, why force it? Moreover, pop-up stores might present success stories overseas; it is not a rule of thumb that they will equally succeed in a different geographical location and/or a different target audience. Previous research showed that most retailers expand abroad by transferring some elements of their format, and therefore their value chain, unchanged, while adapting other elements. If brand managers aim at introducing retail formats, pop-up stores, to the Lebanese market, they need to rethink their relevance and applicability locally.
Owners of successful brands understand that what they offer goes beyond mere commodities. They stage experiences to create value to their customers and present a reason for customers to agree to engage and hopefully pay for the ownership of that experience and not the mere product or service being offered.
Alternative retailing? Maybe. Alternative forms of retail will never cease to appear and manifest in a retail environment as pop-up stores are presently. Brands and retailers have to integrate any retail format within their brand’s strategy to create a seamless experience across its channels and offer an enhanced customer value and experience.