Stores Can Reignite the Flame With Consumers Through Flagships

Presenting the next generation of brick-and-mortar retail

Brick-and-mortar shops are transitioning to flagships that can offer more unique experiences to consumers. Getty Images
Headshot of Peter Sheldon

It’s no secret that the traditional department store experience has fallen out of favor. Consumers no longer see value in the large product selections that traditional mass merchants are known for. With the ability to open multiple browser tabs, shoppers today have zero tolerance for high markups and experiences that haven’t been updated in decades.

The store has become obsolete.

Despite declarations of a retail apocalypse, the reality is that brick-and-mortar has a genuine shot at survival, but only if it abandons its traditional ways. Retail must embrace a different mindset, one that blends physical space with digital technology and keeps savvy consumers on their toes.

Enter the flagship experience, the next generation of brick-and-mortar retail.

The flagship experience reaches beyond what digital technology and physical spaces can achieve independently: It’s interactive and immerses the customer in a useful, fun setting. It’s also an opportunity to focus on the experience—genuine value, inspiration and personal connection—rather than simply fulfilling a transactional need, like processing a sale or distributing goods. For the customer, the flagship experience is an essential part of the research process of buying.

Create an immersive experience

For retail industry veterans, the core aim of flagship experiences is rather counterintuitive: They don’t focus on the actual act of buying.

Apple and Microsoft have long understood the value of physical space with their famous stores, which are just as much destinations for purchasing as they are gathering places and immersive experiences.

Retail must embrace a different mindset, one that blends physical space with digital technology and keeps savvy consumers on their toes.

A crop of businesses has followed the computing giants’ lead in an innovative effort to meet the needs of the modern consumer. For example, Nordstrom recently opened its first Nordstrom Local, a 3,000 square-foot store (compared to the average Nordstrom establishment at 140,000 square feet) that doesn’t stock any inventory and instead offers an experience: personal stylist services, manicures, tailoring and refreshments like wine and coffee. In fact, you cannot buy any of the merchandise on display.

Similarly, Shinola’s 23 U.S. brick-and-mortar stores focus on the experience. The brand’s Detroit headquarters is home to a flower shop in addition to the watches, bikes and leather goods the brand is known for, while its Los Angeles location includes a tattoo parlor.

It’s not just consumer retail undergoing massive change. B2B merchants must transform their selling strategies, too.

Steelcase, for example, makes office, hospital and classroom furniture cool with its showrooms that bring the manufacturer’s products to life and provides customers with a hands-on experience before they purchase. Kiosk provider Zivelo calls its showroom an “experience center.” The space allows customers to directly touch and feel its complex kiosk product, which embeds inside a variety of more than 500 other suppliers’ products such as receipt printers, card readers and touch screens.

Follow the incentives

The flagship experience represents the future, one where retail success hinges on the ability to put the modern customer at the center. Today’s consumers shop on their own terms, gravitating only to experiences that are convenient, fun and whole.

But before brands hastily go off to build their own flagship experience, they must think carefully about business models and incentives. Curated experiences like Nordstrom’s new small-store concept or Steelcase’s showroom are no doubt expensive. Those investments have the potential to pay off over the long-term, but only if they deliver true value to the customer and if they align with the brand’s overarching priorities.

Brands must unite business incentives across digital and physical channels. This might mean thinking creatively and shifting longstanding tactics in one channel to better align with the other. For example, Rockar Hyundai “auto boutiques” feature tests vehicles alongside 42 interactive digital screens that reduce intimidation and help customers make informed decisions. While the digitally-enhanced space is itself an innovation, Rockar has taken measures to match its business model. Showroom associates aren’t paid on commission, and their role is purely to help visitors browse if those customers want the assistance.

The future of retail relies on redefining “store.” The very beginnings of commerce started with the physical exchange of goods and currency. Decades later, the introduction of digital and ecommerce turned every industry upside down.

Today, a new wave is upon us, intertwining the physical and digital in unprecedented ways. The new wave presents both a challenge and an opportunity for brands to take customer engagement to a whole new level, one that goes beyond the transaction to focus on whole, personalized experiences. The brands with staying power will be the ones to snatch up that opportunity.

@peter_sheldon Peter Sheldon leads corporate strategy and business development for Magento.