Creating a Store of the Future: 7 Lessons from the Real World
When picturing a store of the future, or talking about in-store innovation, it is easy to get carried away envisioning laser beams zigzagging across the ceiling. By believing that all innovation has to involve high tech, retailers often end up creating token digital experiences that add little customer value and ultimately create friction where they were supposed to alleviate it.
The Home Depot’s former Director of Innovation, Albert Vita, shared this insight in a recent Applause webinar. Speaking from his experience creating a store of the future for the world’s largest home improvement retailer, Vita warned against what he calls “random acts of digital.” For the last 15 years, the industry has been putting up digital touchpoints without a true understanding of its impact on the customer journey, said Vita.
The most successful stores of the future offer modest, deliberate flairs of digital that holistically integrate with the store’s physical experiences and play a defined role within a wider omnichannel strategy. Using his experience in designing a store of the future for The Home Depot, which has over 2,200 stores across the US, Canada and Mexico, Vita shared his tips for in-store innovation:
1. Rethink the store’s potential
The first step toward creating a store of the future is understanding the role that the physical store will play. Make no mistake, physical retail is here to stay. Even though US e-commerce sales grew by 30% last year, the fastest growth rate since 2002, Forrester predicts that 72% of retail sales will still take place offline in 2024. For many consumers, the act of buying, as facilitated by e-commerce during the pandemic, simply does not match the experience of shopping.
The rise in e-commerce has changed the role of the physical store, not its popularity. Retailers no longer only talk in terms of revenue-focused metrics such as sales per square foot. Vita identified four new ways in which retailers are using the physical store:
A logistics hub. In a press article, John Mulligan, the COO of Target, said that it is 90% cheaper for the company when a customer picks up an online order in-store as opposed to having it shipped to them from a warehouse.
Immersive brand experiences. Dick’s Sporting Goods lets customers try out their goods on an Olympic-grade sports track, a rock climbing wall and in a batting cage simulator.
Touchpoints for existing customers. Community events like Cosplay parties bring customers to the store for reasons other than direct sales.
New customer acquisition strategies. Free garden kits at Lowe’s SpringFest offer an example of how a physical store can serve as the centre point for new customer acquisition.
2. Optimize product discovery
The average Home Depot store is 105,000 square feet, making it a challenge for customers to find items on both a macro and micro level: macro in the sense of finding a department, like home decoration, and micro in the sense of finding a specific product, like a paintbrush. While clear signage can help with macro wayfinding, micro is more difficult to solve.
Inspired by the Apple Genius Bar, The Home Depot piloted a customer help desk in their store of the future to provide specialized advice to help customers find the right products. The goal was to answer any question a customer might have regarding a complex project, like remodelling a kitchen — in other words, to educate. To create a space for inspired learning and education, The Home Depot partnered with Starbucks to offer free coffee, provided mobile phone charging, 85-inch monitors and customized digital experiences.
Vita identified voice as a technology that holds real promise to help tackle micro wayfinding in scenarios where the customer needs more basic assistance. A customer deciding on paint brushes, for example, could ask the aisle’s voice technology which brush works best for a specific paint, or have it explain the difference between available brushes.
3. Make customers feel at home
For the store of the future, Vita embraced a “more home, less Depot” design principle. Home improvement stores in particular can feel far from personable with their sprawling aisles and concrete-steel aesthetic. To improve two key customer experiences, buy online pick-ups and returns, the store of the future reworked the customer experience desk by taking away the desk. An island-like pod allowed associates to interact with customers “belly-to-belly.” The pod featured built-in snack shelves to help customers feel at home and provide design inspiration.
4. Rethink core merchandising areas
The key to a successful store of the future, said Vita, is working out when consumers want to shop and when they want to buy. Where retailers run into trouble is when they invest in providing a shopping experience where the primary consumer aim is simple replenishment. In these scenarios, consumers are only interested in purchasing at the right price as soon as possible. Identifying the products that customers prefer to shop for in-store is a key step toward creating a store of the future.
Few departments in a home improvement store have the potential to be as friction-filled and frustrating as flooring. Online, customers find it difficult to come to terms with the difference between hardwood, laminate or vinyl. Many consumers also struggle to choose between carpet versus hard flooring. Identifying flooring as a key area where customers prefer to shop in-store helped The Home Depot to prioritize an enhanced customer experience.
There are other merchandising areas that attract customers to the store because they are simply fun to shop, such as houseplants. Whereas departments such as flooring are about educating the consumer, others like gardening are all about creating drama. Stores of the future will design areas that cater to consumer needs for a particular set of products, rather than treat all areas as equals.
5. Avoid the friction trap
Retailers may be tempted to introduce a new UX or UI each time a problem arises in-store. Yet in an effort to reduce friction, they end up creating new friction. If a retailer is going to make a customer slow down and stop for a new digital experience, or learn a new UI, the benefit to the customer needs to outweigh that friction.
When working out which digital experiences could benefit the store of the future, Vita advised using what he calls the “if-to-benefit score.” The “if” refers to the behaviour a consumer might engage in, such as walking past a digital technology or trying to use it. After all, the customer might not use the new tech. If they engage, how long do they engage for, and does it improve their experience? Voice technology performs well here because it has multiple potential applications and consumers recognise how to use it.
The next rule for digital experiences: three clicks or less. A new UX should be rapidly comprehensible to someone who hasn’t seen it before. A complex, confusing new digital experience is worse than if the retailer had nothing in that space at all. Being cognisant of speed is crucial.
6. Take inspiration from social media
By partnering with Pinterest, The Home Depot identified a home improvement trend around “she-sheds” or “he-sheds,” backyard sheds that people have remodelled into recreational spaces. Taking lessons from social media posts, the store of the future created an outdoor she-shed showroom and provided customers with the information and products they needed to design, build and personalize their own outdoor living spaces.
7. Measure success strategically
In a McKinsey study, two-thirds of respondents cited omnichannel and digital shopping as the industry’s most significant trend and greatest challenge. Despite this, just 35% consider how their moves affect omnichannel. For Vita, this suggests an ongoing disconnect in terms of how retailers think about in-store and online experiences as holistically integrated.
Retailers need to be able to speak knowledgeably about their pilot store of the future once it is done. Financial metrics such as returns on investment cannot be limited to in-store data but need to take into account online impact in the postcode that the store serves. If a store of the future has served its purpose, then its impact will be felt across all channels. Sometimes, existing metrics are not adequate and retailers need to create new ones.
Understanding the associate impact is just as important as measuring the customer impact, said Vita. Customer experience (CX) is the new buzzword after omnichannel. Thinking about how the associate experience corresponds to CX is crucial for a successful store of the future. Retailers need to talk to store associates when they launch a new experience to understand if they alleviated problems or inadvertently created new ones.
Prioritizing quality over quantity
Applause concurs with many of Albert Vita’s conclusions. First, it is better to create fewer, high-quality in-store digital experiences than many unremarkable ones. Second, digital experiences are only exceptional if they seamlessly integrate with the store’s physical experiences and play a defined role in a broader omnichannel strategy. Third, as we have seen from customers for years: voice technology is set to have a tangible impact on the retail industry, but it’s still in its infancy.
Through our Product Excellence Platform, Applause provides retailers with testing solutions including but not limited to UX, functionality and customer journeys. We make sure that real consumers from your target audience have the best possible experience when interacting with your digital interfaces in-store and online. However complex your omnichannel strategy, we’ll make sure that the customer experience is consistent across all digital touchpoints. Learn more about how we can help at applause.com.