Things used to be so simple. We bought nails at the hardware store, books at the bookstore, coffee from a coffee shop. We lived in communities made up primarily of dwellings, and commuted to work away from our homes. It was an easy time to be a retailer: put up a sign, stock your shelves and open for business.
It would be an understatement to say that life has become more complex. The internet, urbanization, the sharing economy and the disappearing middle class have given birth to changes that require brands to be more innovative than ever before. For retailers, success has meant adapting quickly. One of the biggest shifts has been the rise of new formats, from temporary pop-up experiences to gigantic experiential showrooms. An evolution of these formats, driven by the popularity of co-working spaces, is the multi-purpose retail environment.
MULTI-BRAND, MULTI-PURPOSE RETAIL IS A BIG TREND
Aside from the rise of entrepreneurship and tele-commuting, which has created a need for co-work spaces, there are other factors that are contributing to the rise of multi-purpose spaces. One is condo living. No wonder The Myst offers a range of facilities for residents to enjoy, including a clubhouse, BBQ pits, and a tennis court.
Mixed-Use Retail Spaces
As cities become more dense, families become smaller and housing prices rise, more people are choosing to live in condo towers. Mixed-use spaces, with retail, hotels and other services on the first few floors and family dwellings above, are now becoming the status quo for new developments. According to Green Street Advisors, getting the retail mix right is critical to the success of new developments. Rent and property value in successful mixed-use buildings can be up to 25 percent higher.
There are benefits for retailers as well – a thoughtful offering can return a higher per square foot investment than a mall or high street store. What works best are offerings that contribute to the creation of a community. Small format grocery stores can integrate with seated foodservice offerings, breakfast-to-go and cafés. Gyms and yoga studios can extend to offer attire, athletic and wellness products, nutritional consultations and community running groups. When thinking about how to add value for consumers in mixed-use developments, naturally connected offerings that encourage people to connect with others are ideal.
Co-working spaces are such a big retail trend that even mall owners are getting in on the action. A new app called Spacious allows foodservice brands to rent their restaurant space to co-workers. While we may shortly come to capacity on co-working space, the evolution of co-work is co-living spaces. This can look like an apartment-meets-dorm shared living space for grown-ups or, more relevant to retailers, stores that act as a living room where you can just hang out.
A few excellent examples include The Lounge by AT&T, a store that features less products and more baristas, and offers customers a chance to play with tech or just read a book. Nike’s new flagship in SoHo allows you to come and shoot hoops, while MM LaFleur allows customers to rent their showrooms to host private events. Thinking about how brands can create a multi-purpose retail space that extends to touch more of a customer’s life experience is an area for innovation and increasing brand loyalty.
Quickly responding to change has become a must for retailers, but some brands are taking this an extra step further by making constant change a part of their business model.
A great example of this is Story, an ever-changing retailer that renovates every few months and re-opens to tell a new curated retail story under a theme such as “out of office” or “love.” While not every brand can shut down for a week every few months, changing products more often has worked for Zara, and brands like Nike are getting even more granular. The Nike by Melrose location specifically features the most popular products purchased within that locale and overhauls their entire stock every few weeks.
Retailers are embracing a more nomadic approach to the physical space, continuing to use pop-up and mobile concepts, but also shifting their own traditional spaces more frequently. Larger brands are exploring partnerships to create mini pop-ups within their own space; for example, farmer’s markets setting up shop within a bookstore. Department stores are leading the charge, with Nordstrom, La Maison Simons, Bloomingdale’s and Holt Renfrew all integrating partnered and/or curated pop-up spaces to keep things interesting.
Interconnected Lives, Interconnected Brands
As work, life and play become more closely interconnected, retail brands will have to respond with more interconnected experiences. Partnership, mobility and modularity should all be used to provide customers with access to the brand in a way that fits the way they live, work and play. It may require some strategy to ensure retailers stay on brand, but when executed well, multi-purpose retail experiences deepen brand loyalty and sales.