Sense and sensibility

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For more than 30 years, Andrew McQuilkin has held leadership roles with major architecture and planning firms specializing in retail design. He is currently responsible for leading BHDP Architecture’s retail design and architecture expertise in branding, store planning, interior design and merchandising.

McQuilkin and his teams have received more than 70 design honors, including “Store of the Year” awards for Aveda, Tokyo (2003); Toys “R” Us, Times Square (2001); Richards of Greenwich (2000); and Saks Fifth Avenue (1995). A design advocate, McQuilkin served multiple terms as international chairman and president of the Retail Design Institute, where he remains a member. In 2010, he was named an Institute Fellow for his commitment and service to the association.

Is the “Amazon effect” affecting the business of designing bricks-and-mortar stores?

There’s not as much new prototype work based simply on the fact there are not many new malls being built, and that’s one driver for retailers to rethink their current strategies. I’m not saying there are no new concepts today testing the waters. Take a look at the winners of the Retail Design Institute’s annual design competition and you’ll find retailers and brands that are committed to physical spaces.

In 2018, we saw new approaches to everything from new quick-service restaurants and grocery stores to fashion brand pop-ups. There’s a lot of good work coming from mass merchants and department stores, too. For our firm specifically, department store retailers are a big part of our business and many have aggressive plans to renew key locations. Department stores are comfortable at moving in new shops or tweaking their adjacencies based on changing merchandise. … Other formats are not as comfortable with that approach, so they wait to undertake a whole store remodel, for example, when leases require a refresh.

And that’s an issue?

Yes, it is. It’s no secret that bricks-and-mortar retailers are trying to reclaim the advantages they once held … when they owned location, selection, price and quality. Ecommerce eliminated advantages of location and price, even selection, so most retailers understand they’ve lost control of their customer. We did research to figure out what the customer owns now and found the balance of power changed. The number one thing customers own now is the choice of where to shop. So how do you combat choice?

How does a retailer do that?

Just because you’re a national chain doesn’t mean all your customers and every location are the same. When decisions are centralized and made at the corporate level for a local community store, they’re usually disconnected from that customer.

Retailers need to stop centralizing every decision and rely on localized data and observable customer behavior that can be quantified. Ecommerce retailers have that kind of data and easily can make decisions to customize a particular customer’s experience. That’s not so easy for the physical retailer, and that places them at a disadvantage, even though more sales transactions take place inside bricks-and-mortar stores.

As an industry we’ve seen what’s happened as retailers have spent the past 30 years getting their store footprint into the hundreds or even thousands of stores. For the retailers who went public in order to expand, they had to keep increasing overall revenue. … In fact, to get all those stores open it wasn’t the merchant in charge of the retailer anymore, it was the chief financial officer, who had no idea that there could be a return on investment between experiential retail and sales. To them it wasn’t provable.

But is it now provable?

When you have a CEO or president who doesn’t walk the store, or their corporate office isn’t in a flagship they can easily access, they become removed from the customer. The store managers, who were integral to the process and closest to customers and selling process, have now become just operators. They could make adjustments, because they were so close to sales data and with the customer who shops that store location.

Is localization the key?

We partner with a privately held grocery client who allows us to help it localize its store’s personality by creating a design platform that provides a way to connect to its neighborhood customer. What we’re looking to do is get more retailers closer to the information about the behavior of the people in their spaces, and put together relevant planning and design solutions so they can invest incrementally into their stores and not wait every seven to 10 years to renovate.

Just because you’re a national chain doesn’t mean all your customers and every location are the same.

Through artificial intelligence, we are the only architectural firm with a division that has technology to measure people in a specific space. … So, we’re taking our office capabilities and expertise and leveraging being able to understand how many people use a space, how they move through a space. When we marry that with the retailer’s sales data, we can directly translate that information into planning and design decisions.

Our technology knows right now how many people are in this conference room and where they’re sitting. It’s learning through artificial intelligence the behaviors of occupants and identifying their behaviors. These are things that are directly translatable to how people behave in retail environments. We can understand how people are moving through that space, behaving in that space, engaging in that space, and then marry the data to create behavioral maps from which we can glean actionable insights.

Why isn’t sales data enough to make store planning decisions?

Armed with relevant shopper data, we’d like to bring back the store planner, who was … the liaison to all the different expertise that bring a retail environment to life. Over time as the businesses centralized, the store planner became pigeonholed as a fixture counter, but the store planner was the one person or team who worked with all departments and divisions to understand the business at that location.

Instead of doing what data gathering, beacon or sensor companies would do, where they gather all the data and say, “Here you go,” as the store planner, we’re taking a collaborative and scientific approach. We’re proposing an iterative strategic store design methodology that can optimize retail environments by integrating real shopper
behavior into our design process.

Can you share an example?

Let’s say your data says every time someone buys a Coach handbag, 60 percent also buy earrings. We might create a hypothesis that plays with adjacencies and/or with fixture design. We would first benchmark with sensors and observation to validate the behaviors and current space.

But before making that change, the retailer is going to measure productivity, then after making the change we’re going to keep measuring and see what’s going on. We can use that data to run two or three experiments in four or five locations. Now, let’s say those tweaks begin to show sales increases, and you know that because you have installed our proprietary AI sensors. You can take the sensors and move into another location to solve the next issue. Maybe it’s a visual merchandising thing, maybe it’s a paint color, maybe it’s lighting, which usually makes a big impact, or maybe it’s a circulation thing.

Together with the retailer and maybe including the store manager, we’re looking to make changes incrementally in each area. Let’s say three stores prove that kind of adjacency, or that kind of visual merchandising or that blue wall is making ROI. We would then roll out the incremental adjustment to more stores instead of reinventing the whole store every time.

Janet Groeber has covered all aspects of the retail industry for more than 20 years. Her reporting has appeared in AdWeek and DDI Magazine, among others.

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