Brick-and-mortar retail is not dead—here’s proof
April 01, 2019
April 01, 2019
We continually hear that “retail is dying,” but there are many foundational retail types essential to consumers—here’s a look at 3 of them
Depending on whom you ask, brick-and-mortar retail stores are not just on shaky ground, they’re on a precipice of complete oblivion. Honestly, I am exhausted by the constant death knell for retail. I question the statements that I read over and over from economists and journalists who say that brick-and-mortar is done and that we’re moving wholly toward a digital, on-demand retail future.
Sure, the retail industry is changing, but I don’t believe for a second that all brick-and-mortar retail is dying. There is still a place for—and a need for—retail services that help consumers live their daily lives.
There is still a place for—and a need for—retail services that help consumers live their daily lives.
One type of retail is made up of a variety of essential service/product-based segments, that seems to be, if not immune, less impacted by or compatible with increasingly digital consumer spending trends. I call these retail types essential services retail (ESR).
ESR is consistently non-luxury based. These are basic-service providers, made up of a variety of retail types acting as a vital resource in the day-to-day lives of consumers. ESR is just that—essential.
ESRs aren’t selling seasonal fashion or luxury goods that can easily be ordered online. They’re selling essential services. When discussing the importance of an ESR provider, we should recognize and evaluate two key indicators:
Following are three specific ESR examples.
Regardless of how you feel about “fast food,” more than 50 million American consumers are eating at QSR locations across the country every day. Ubiquitous QSR brands like McDonald’s, Starbucks, and KFC are literally feeding and fueling the country.
The design of the built environments supporting QSR is a heavily research-driven process, incorporating massive consumer intelligence into the application of every element and feature of the spaces, from the design of the drive-through window to the types and quality of the materials within the interior space. Each surface and system is designed to be appealing and long lasting. Countless concepts and mock-ups are created and tested by consumers to ensure that the ordering process is efficient and pleasant. The visual appeal of the interiors, and the statement made by the restaurant exterior, are mindfully created by top design talent with the input of marketing and advertising experts. This is serious business.
Food retailers know their business and their consumers. It’s essential, because when it comes to food, we are fickle creatures. There are too many options. Sure, it’s “fast” food, but we still want to enjoy the process of ordering it and consuming it. Every step is choreographed, with design and consumer research firms supporting this multibillion-dollar industry through an extensive variety of services focused on maximizing the appeal, experience, and even the cache of the brands.
So, why are QSRs on my list of ESRs? It comes down to their place within our economy and our lives as a source of vital products and as an economic driver:
For example, McDonald’s is the world’s biggest buyer of beef, pork, potatoes, lettuce, and tomatoes. When you consider that the farmers and ranchers selling to McDonald’s are producing some of the largest crop segments in the world, supporting the employment of millions of people, and providing the basic fuel for multiple economies—the impact of QSRs is truly staggering.
The ability of any American to go into a grocery store and have the wealth of options that are available, laid out in front of you in artfully displayed and organized rows, is incredible. Regardless of your preferred grocer, the options are mind-blowing.
While millions dine at QSR locations daily, most of the 325-plus million US consumers are not exclusively eating at QSR locations and are still cooking for themselves and their families. That results in a US grocery store industry with sales in the range of $600+ billion in 2017.
The science behind the design of these environments is fascinating. Like casinos in Las Vegas, Nevada, everything about the consumer experience is planned, from how and where you enter to how you move through and exit the space, all to ensure that you see as much of the merchandise as possible while you’re shopping and can check out as seamlessly as possible. Of course, some grocery retailers are better about the last bit than others, and it makes a significant difference in how they are perceived by consumers.
All future-focused indications are that this retail segment will continue to grow. Potentially helping to drive this is the surging interest for alternative diets, and organic, locally-sourced, and non-GMO ingredients. In the US alone, organic food sales reached an estimated $47 billion in 2017.
There is a lot of buzz around online grocery services and apps, but the data is mixed. There is a trend upwards for the use of online grocery shopping services/apps, and all “expert” predictions point to massive increases in utilization of these services, but at the same time, the response from most grocers is rather tepid. Except for Amazon-owned Whole Foods Market, few grocery retailers are making it a priority, yet.
I believe that’s because people still have the fundamental desire to physically experience their food. The ability to hold ingredients in your hands and make personal choices about the things you’re eating is, at its core, a human need.
So, why are grocery store retailers on my list of ESRs? Once again, it comes down to their place within our economy and our lives as a source of vital products and as an economic driver:
Light, bright, and open spaces, with warm wood accents seem to prevail in retail branch bank design, a far cry from those historic marble and bronze banking “palaces” of yesteryear meant to impress and make you feel as though your money was being put to good use. You can still find those historic branch locations occasionally, and the experience is still grand, but the prevailing retail bank branch experience is now more about convenience than grandness. They are instead designed to provide fast, easy access to tellers, advisors, and the ATM.
Personally engaging with and managing our money is, in fact, the human bottom line in our consumer-driven economy. The landscape of retail banking is growing across all streams, including brick-and-mortar branch banks, and that is due in large part to the desire from consumers to have both digital options and human retail interactions.
According to J.D. Power, consumers who utilize digital-only banking are less satisfied with their experiences than those who utilize both branch and digital.
It seems the ability to speak with a banking professional when you need to, particularly when negotiating the tricky world of loans or financial planning, is extremely important to most US consumers. And that’s true of Millennial and Gen-X consumers, too.
McKinsey, an acknowledged leader in market intelligence, states that “the more that customers use digital channels, the more they want human interaction.” That is a powerful statement and supports the idea that personal interaction is still a vital requirement when it comes to satisfaction with our retail experiences.
So, why are retail banks on my list of ESRs?
Yes, things have changed, but there is still thriving retail. ESRs are not always the sexiest iteration of the breed, but it’s these ESRs that are helping us live our day-to-day lives more efficiently and effectively.
Acknowledging that the retail services I’ve included here—and many more not mentioned—are still vital, and that they shouldn’t be lumped into the alarmist and counterproductive “retail is dying” mantra, returns a little of retail’s allure. It is something I believe we’re all starting to miss.
Personally, I miss being able to spend a leisurely afternoon at the mall window shopping or enjoying a street full of boutique shops drenched in a local vibe. Something as simple as the social aspect of being in a space with so many other people, one that isn’t the office, is fun and engaging. For me, people watching is still one of the best sports out there.
In the design industry, I believe we should make it a priority to ensure that retail sticks around. Personal experience over digital. Engaged lives over disconnected connectivity. Instead of swallowing the line that this industry is over and just dismissing it, we should instead be thinking about what we can be doing to tempt consumers to reengage and make the customer experience more exciting, more essential, and more fun.