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Jennifer Pierson: Enhancing the Retail Experience

The internet may play the ‘ultimate middle man’, but retailers can still attract consumers by offering in-store experiences that cannot be achieved between screens.
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There is a line in “Pretty Woman” where Julia Roberts’ character, Vivian Ward, says to Richard Gere’s character, Edward Lewis, as she tries to understand what he does for a living, “So you don’t build anything, and you don’t make anything?” This line ultimately shifts Lewis into wanting to contribute something to the world instead of just being the middle man, capitalizing on what other people build and create, or tearing their creations apart in Lewis’ case. “Pretty Woman” came out in 1990, and that scene pointed to the idea that we are more worthwhile as human beings if we contribute to society by building or making something—something that others can use.

This concept is playing out in the retail world as the internet, the ultimate middle man, displaces many businesses that had strong business models acting as the middle man, not making anything. The old model of department stores, electronics stores, and office supply stores are just a few examples of the hundreds of retailers who don’t make anything, but carry other companies’ goods. These retailers who don’t make anything are starting to get nervous, and understandably so. Their bottom line is suffering because they are getting bypassed. The ease of shopping via the internet is creating a super highway right past their store. But there is a solution: enhance the experience. The buzz word of 2017 is “experiential.” If these retailers can create something special or unique within their stores, drawing the customer out of their home and into the retail environment, they will not only see sales increase, they will thrive.

We also have the companies who do “make” something: Apple, Lululemon, Ralph Lauren, TOMS, Nike, to name a few. These companies have one safeguard against the internet in that they make their own goods and sell them directly to the consumer, or at least they control the middle man, the internet. But these retailers are not resting on that enviable position. They too, are striving to get the consumers’ attention by creating something special within their stores.  They are continuously trying to create a special environment. At Whole Foods, you can shop with a glass of wine; taste cheese; buy sustainable, recycled clothing; try natural mineral makeup; and pick up your groceries.  At the Lululemon Store on Knox Street there is a bowl of dog biscuits because it is so close to the Katy Trail. Last week, I saw a couple come in just to visit, and to give their dogs some biscuits. They felt at home, and I am certain that when they need workout clothes, that store will be their first stop. And it goes without saying, all of this is on top of making a quality product.

This “experiential” concept is not only changing how the retailer approaches their customer, it is changing how developers of all types are approaching their customers (who in the retail market, are the retailers, and ultimately the consumer). Ten years ago, the name of the game for developers across the country was: one, find a site; two, find some tenants; three, find some debt; four, make sure the numbers pencil; five, build a giant, tilt wall structure with a large parking lot; and six, make an eight to twelve percent return, depending on the year and call it a day. I am making it sound easy but it wasn’t, and isn’t. Development can have all kinds of complications. If you didn’t know what you were doing, you could lose a pile of money in a hurry.

By comparison, today the ante is much higher for the developer, and the stakes are greater. Again, it is too easy for consumers to stay home and order everything they need online. Now, the developers are getting smarter—more creative, really—and producing these fabulous environments that attract the retailers and ultimately the consumer. They are being creative in their approach to aesthetics and sustainability, as well as in their understanding of the history of the community, and ultimately how they will enrich the lives of those experiencing their project. Developers are incorporating art, green spaces, cultural programing, outdoor games, and unique food in these new environments. They are creating a place of community. They are not only giving us places to shop, live, play, eat, and work, they are creating an environment that is food for the soul. They are getting us out from behind our computers and allowing us to have a chance encounter with a human.

In a world where it is very easy to point to the bad, there is so much good. We are getting better, smarter, more creative, more connected, and more thoughtful. Change is scary because it creates fall out. The first Sears catalog was published in 1888, and it was brilliant. It changed lives. But, we have passed that stage in our development, and it is time to march on. And we will all be okay—better than okay.

Jennifer Pierson is a founding partner at Pierson Retail Advisors.

 

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