The Future of Retail

A stroll through Indigo (IDG.TO)

For a book store, there sure are a lot less books at Indigo than there used to be, and that (maybe sadly) is likely a good thing for the store itself. I will say, when I go to the mall, Indigo is one of the few shops I ever have a desire to simply browse through. They have a lot of unique items that call out to impulse buying. This, however, was not the reason we went to the store. Indigo hosted a Paw Patrol event and us along with what was at least 200 of our closest friends showed up to the event as well, an impressive feat on its own.

On the event itself, it was pretty bare bones, which is ok and really just shows what a low-bar there is to get families out to a store to find some entertainment that doesn’t break the bank. Indigo advertised some arts and crafts and an ability to play with some Paw Patrol toys and that was enough to get 200 people to show up to the store. This is noteworthy in itself. 

Also noteworthy was that the staff was clearly unprepared for the demand they saw. This was probably a good problem and looking around the room you could see a lot of missed potential. It was crowded, the space was not conducive to over 100 children running around and it was understaffed. Not to mention there were no clearly communicated deals or offers or discounts to really encourage you to buy something. This is not complaining by any means and more likely a shortfall from those higher up the chain opposed to those running the event itself. Regardless, it was easy to see how this event (and ones like it) could lead to increased traffic and sales if it gets improved over time. If Indigo gets on top of these types of events across all stores, you can start to see some leverage and benefits their retail space could have. 

Spin Master (TOY.TO) and Paw Patrol

Spin Master has had to navigate some rocky terrain with the closing of Toys ‘R’ Us over the last year or two. They are also having a hard time finding that next blockbuster toy that rivals Paw Patrol but so are all their competitors. Say what you will about Paw Patrol, it is still very popular amongst children. At the event, kids were flocking to play with the toys and do crafts with Paw Patrol themes. Looking around the store, there were also very few toys we could see that really jumped out as a potential ‘rival’ to Paw Patrol. Peppa Pig is certainly popular but does not seem to be overtaking Paw Patrol.

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The current state of retail 

The other thing I noticed while walking through the mall is that I had no desire to go into any of the other shops or stores. They don’t give you a reason or excuse to shop. Unless you have something specific you want/need at a specific store, theres little that entices you to enter. Even finding a store you are looking for can be difficult or tedious assuming you even have an idea of what stores are in the mall in the first place. I am obviously not the target market here but the general point is that it does not make discovery easy and the experience is hardly fun (again, I am not the target market but I too need to buy things!). You walk into a store and while customer service is ‘ok’ it does not really elevate or make the experience any better or easier than just buying it online. Indigo had the right idea of at least giving us a reason to go into the store and wander around and Costco at least gives free samples!

The future of retail 

If retail wants to compete with the online landscape they need to do one of three things in my mind.

  1. Be lower cost (hard to beat online for this)
  2. Be more convenient
  3. Offer some sort of experience

On the lower cost piece, maybe Wal-Mart and Costco (I might argue Costco offers a bit of an experience as well) can do this, but unlikely many others can compete on the cost front.

On convenience, again maybe Wal Mart offering a one-stop-shop type of experience and services where you can have delivery people place the groceries right in your trunk (or deliver to your door) can be more convenient. Overall though you have a really high bar to beat convenience of ordering something in your pajamas and having it delivered in a day or two.

So that leaves us with the experience. I think this is the real area that retail can compete nowadays but it does not seem many companies or stores are taking drastic actions to adjust to this. If you give people a reason to come to your store that is more than a straight transactional experience, they will. It is more than having a nice looking floorspace though. This could be through good relationship building with sales people and great customer service where you simply enjoy popping in saying hello and maybe testing out a new product. Or it could be an event that aligns with the store itself. It does not have to be a premium experience, just something that provides a bit more of a tailored and unique interaction that you don't get online and provide some sort of value you don't get from the simple transaction over a computer.

The other piece that gets missed a little here is that particularly in malls and strip malls, a rising tide lifts all boats. When you attract a couple hundred people to one store, they will walk by the stores on either side, so all locations get a potential benefit. So while doing some sort of event or promotion every week might be a big expectation, sharing the duties with complementary stores and products is likely doable. 

If customer service is not the area to compete, then it needs to become an experience of some kind. Give people a reason to go to the store, to interact with others who have similar interests, share ideas and educate your customers or just plainly make a destination that is fun to be in and interact with. Apple get this and I think Indigo is starting to catch on as well.

Much ink has been spilled over the death of retail and a lot of stats show this to be coming true. The reality is that retail will always have a place in society, it will probably just need to look a lot different than it does today. The companies that can execute on this early or companies that can help make the physical shopping experience more personal and tailored whether it is through digital aids or not, will have a certain type of first mover advantage and will be the ones to watch.

*As a side note, this is simply anecdotal and observational and hardly an endorsement of any stocks mentioned here.

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