The Death Of Retail Or A Retail Renaissance — Which Is It?

0aaFunda Denizhan Valtech Sweden

Both property companies and retailers are reporting a crisis and the death of retail. Stores are being shut down or shrinking their footprints, and the traditional retail format with merchandise lined up on shelves is a dying breed.

Yet at the same time there is a renaissance going on in retail, and we are seeing examples of brands and retailers that are able to reinvent their businesses and adapt to a new market and new consumer behaviors — allowing them to increase customer loyalty in the bargain.

So what are the success factors driving this? And what will the stores that succeed in reinventing themselves in a world where the digital is merging with the physical look like?


From Product Display To Experiential Retail

In the United States and China — the main markets we monitored — it is clear that the retail sector is undergoing a transformation. Much of the transaction volume is moving online, where 80% of purchases are initiated, but retail spaces are also undergoing transformation in order to attract consumers back to brick-and-mortar shopping. The fact is that 64% of major retail purchases are still made in-store, and that the value of each store visit has tripled over the last five years. The stores that succeed are the ones that shift away from traditional product display by reimagining themselves as experiential arenas and places of inspiration that enhance customer loyalty, where the personal touch is paramount.

  • Runner Camp, a shoe store in Shanghai, has transformed its store to an experiential arena that includes an indoor track and a gym where customers can exercise and try on different shoes. Customers can also get real-time data as they run. Once the customer has decided on a pair of shoes, the purchase is made online using an iPad, and the shoes are delivered home to the customer.
  • Another of our absolute favorites is American Girl, a brand that sells dolls. Entering the American Girl store is like walking into storybook world where you can follow the life of a doll, share her story, and develop and learn with your doll. Children come here with their dolls to have a snack, to sit down with attentive store staff who braid their dolls’ hair, or to buy a book and read about investing. Walking into an American Girl store is a powerful feeling. It’s not a toy store, but a world of a thousand possibilities where you can spend hours with your doll.

By being relevant, personal and context-specific, experiential stores not only manage to bring customers to the store, but to strengthen their bond with the brand. If you have experienced Runner Camp or American Girl, everything else pales in comparison.

Experiences Both Inside And Outside The Store

The experience of the brand and its products is not only important in the store, but outside of it too. Brands and retailers can get a step ahead of the competition by creating experiences where the products can be used in real life.

  • Cotopaxi, a company that sells backpacks, is a good example. They focus on the context in which their backpacks are used, and get their customers involved by hosting a 24-hour adventure race called the Questival.
  • Toyota’s Drive to Go is a car rental concept that focuses on the destination rather than the car itself when customers rent cars, offering them coolers, binoculars and picnic chairs with the rental. The rental location combines car rental with a cozy café where customers can relax and recharge before their trip.
  • IKEA Place is an example of how augmented reality is used to move physical retail right into the consumer’s home. All of a sudden the piece of furniture is right in the middle of your living room, with exactly the right proportions and the right color, giving you a completely different sense of what it will feel like in your home compared to what you get from looking in the IKEA catalog or online.
  • Mio is another example of a store personified in the form of a robot that goes to where the consumer is. Consumers can use an app to order products and have them delivered to wherever they happen to be.
  • The Swedish start-up Wheely has also developed a self-driving store, Moby, which both replenishes its own stock and drives itself out to the customer to deliver orders. The customer uses a mobile app to open the store and is greeted by a hologram.

Product Offerings Are Being Developed In New Channels And Contexts

If in the past retail was about making a transaction — about buying merchandise in a store — these days it is more about feelings, entertainment and interactions. Technology and data are used to draw learnings from customer behaviors, making it possible to provide them with services and products that are as personalized as possible. The traditional retail environment is giving way to new contexts, and value is being created for consumers at moments that did not exist before.

A few examples of companies that have moved their business into new contexts include General Motors, Lufthansa/Rewe, Volition and Castorama.

Participatory Retail And Consumer-To-Business

Participatory retail, the practice of bringing customers closer to the brand and making use of them in product development, is becoming more and more common. The customers are no longer passive consumers, but are both able to and expect to have a hand in the development of the products.

  • Volition is a company that has benefited from this behavior, and it gets its customers involved in its product development process. Customers can submit proposals for new ideas and concepts. The ideas that garner the most votes are implemented by the company, and the customer gets to share in the sales proceeds generated by his or her idea.

Other examples of companies where customers are highly involved in the product development process are Rent The Runway and B8ta, which both harness technology and data collection in order to obtain continuous customer feedback (Consumer-to-Business, C2B) so that they can improve their services and products.


Funda Denizhan works as a consultant manager and business developer at Valtech’s Commerce unit, focusing on helping customers spread their offers across all channels, where digital solutions increasingly get into the physical space.

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