‘We have an ownership society now, but we’re moving toward an access society, where you’re not defined by the things you own but by the experiences you have.’
Airbnb co-founder and CEO Brian Chesky27
How is this impacting retail? Sites like Rent the Runway and Bag, Borrow or Steal give shoppers today access to luxury items without having to fork out $2,500 for an Anya Hindmarch bag. In the UK, Westfield launched the first ever standalone rental retail pop-up Style Trial in 2017. According to a study from the shopping centre group, nearly half of 25–34-year-olds are interested in renting fashion and around one-fifth would be willing to spend £200 or more per month on unlimited clothing rental subscriptions.28
Outside of fashion, electricals retailer Dixons Carphone has talked of a membership scheme where shoppers would pay for access to a washing machine, for example, including installation and repairs – but without actually owning it.
In the future, it will be essential to create deeper relationships with customers as the focus shifts from product to service. This explains why a retailer like Ikea acquired TaskRabbit in 2018. The online marketplace connects 60,000 freelance ‘taskers’ with consumers looking to hire someone to do chores such as furniture assembly. Now you can buy a Stuva wardrobe without the anxiety of putting it together.
Similarly, Walmart has joined forces with Handy for installation and assembly services for televisions and furniture. This is how retailers can survive in the age of Amazon – removing friction and establishing a meaningful customer relationship that transcends the physical store. (Side note: Amazon is expanding its own home services division, which it has been rolling out across the US since 2015, and was expanded to the UK in 2018.)
We believe there’s an opportunity for hypermarkets and superstores, as a large store format with regular footfall, to consider library-style concessions where shoppers could borrow select items. This would be well suited to products that are expensive to buy outright, infrequently used and/or difficult to store – for example, sewing machines, tents, drills.
In southeast London, the Library of Things is a ‘borrowing space’ social enterprise that stocks everything from kitchenware to wetsuits. It’s free to join and members can borrow up to five items each week, most of which can be rented for less than £4.29 An instore ‘library of things’ could be part of the solution for those retailers who are struggling to fill dead space. Not only would it drive traffic to stores, but more importantly it would allow retailers to tap into the local community and develop a much deeper bond with customers.
Today, retail really is everywhere – in stores, our phones, our homes, in objects, even in media.
Online retailers like Amazon may have given shoppers unrivalled accessibility and near-instant gratification but, in doing so, they’ve taken the touch and feel out of shopping. Bricks and mortar retail must evolve to serve a purpose beyond just shifting product. Stores need to become special and fulfilling again. They need to tell a story, and to appease a growing desire for human connection in an increasingly digital world. Stores need to be focused on the community and provide a sensory, immersive and memorable experience that cannot be replicated online. The aim should be to make the physical space so compelling that shoppers might even be willing to pay an admission fee, as they do when going to an amusement park or the theatre.
The sector will also become more collaborative as retailers recognize the importance of working together to stand apart. But not every single store needs to become an all-singing, all-dancing version of its previous self. There will still be a place for those retailers who can genuinely offer the best value for money, convenience or have a unique product assortment. Aldi and Primark, for example, will not look very different in 10 years’ time.
For most retailers, however, evolution is necessary for survival. Retailers must think of their stores as assets and not liabilities. They must break down silos and change their metrics – same-store sales growth and sales per square foot are no longer valid measures of success. Such KPIs inherently measure the physical store against e-commerce. Retailers are changing gears to measure the success of the physical store alongside e-commerce, with KPIs such as brand impression, digital purchase intent, percentage of online orders fulfilled by the store, inspiration per square foot, return on friction, convenience for associates and customer experience. Now, let’s move on to explore how the store of the future is also evolving to become a hub for fulfilment.
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