Direct-to-consumer brands embrace old-fashioned brick and mortar, meanwhile inspiring legacy retailers to create immersive retail playgrounds that merge curation with technology

Physical retail space has become an enigma within the industry over the past decade. From the onset of digitally-native D2C brands to the evolution of experiential store spaces to several legacy brands shuttering store locations—the retail industry is at a crossroads to create successful in-store environments.

Physical store spaces have always played a crucial role in retail and will continue to do so. While the look and feel of physical stores may have evolved over the past decades, brick and mortar still has a prominent place in successful strategy today. Astute retailers will understand that, moving forward, a core pillar of success is going “back to the future.”

The evolution of in-store started with department stores

Department stores were once the center of physical retail space. They offered a central location for shoppers to find highly curated, unique and local products that couldn’t be found anywhere else. Years ago, Bloomingdale’s in New York City would have provided an entirely different selection and experience than its Los Angeles location, as each was representative of its individual city and local designers.

This strategy was forgone starting in the 1990s as stores moved away from highly curated and selective offerings and more towards becoming efficient inventory machines. Merchandisers who used to be tasked with understanding local tastes were now repurposed into spreadsheet-wielding national volume pushers. It was no longer good enough to sell-through in Minneapolis; merchandising considerations had to work at all locations to be considered successful, causing merchandisers to be incentivized by generic appeal. While this shift may have been successful for a short time, recently this has been a major hurdle for legacy retailers—department stores especially—as they try to compete with modern experiential stores. Now, consumers are craving hand-picked products and unique store environments.

Where we are with 2019’s modern physical store space

Over the past decade, the image of physical store spaces has very clearly evolved due to the onset of changing consumer taste and retail technology. The integration of tech like AR/VR, robots, smart mirrors and AI have changed not just what physical store spaces look like, but also what they’re meant to accomplish for a brand’s bottom line. A great example of this is Reformation’s New York boutique, which offers shoppers everything from smart dressing rooms to mobile checkout, to enhance the in-store experience from start to finish.

Today, when a consumer enters a physical retail space they don’t expect to see product-stocked shelves, but rather feel the essence of a brand exuding from every display. Direct-to-consumer brands have been a driving force behind this movement and proved the blueprint for successful implementation. With their roots online, D2C brands still saw the opportunity in physical store spaces to better connect with customers. They rethought the traditional experience to become something new—brands like Glossier and Casper have both been leaders in this case.

Glossier flagship store.

Glossier’s flagship store not only allows consumers to buy makeup, but also snap an arsenal of Insta-worthy photos to share on their feeds. Casper, on the other hand, opened its first experience store in 2018 and recently hit unicorn status with a $1.1B valuation.

These spaces are not just an opportunity to move product or increase sales: They are immersive brand theater. Physical spaces are an essential touchpoint for long-lasting and multi-faceted relationships between customers and brands.

While some brands have been quick to transform physical retail strategies, others are a bit more hesitant to implement experiential trends. Several legacy brands shuttered their flagship stores across the country last year, leaving many industry leaders asking, “What went wrong?” Pivoting too little and too late into the experiential future of physical retail was partly to blame. Years of sticking to the status quo and the belief that customers needed to see all variants of inventory available for sale instead of focusing on the emotional journey of in-store experiences is the critical pitfall.

The future of physical store space—melding old with new

At Shoptalk this year, Nordstrom president Erik Nordstrom expressed the brand's recommitment to a local strategy that drives physical retail sales due to its positive effect in driving online sales as well. If department stores—and brands with physical store space in general—focus on the local, highly selective offerings that were once so popular years ago, they will find themselves moving towards more profitable in-store strategies.

As retail moves into a new decade, brands need to consider what motivates their customer to come into their physical stores. In turn, to drive profits and customer loyalty, retailers must up-level in-store environments by blending the old with the new in a combination of relevant modern technology and local, highly-curated offerings.

Lead image: stock photos from Andriy Blokhin/Shutterstock