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Retail Trends To Keep an Eye On

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Podcast October 22, 2019

Retail Trends To Keep an Eye On

Trends come and some go while others mark permanent industry shifts. It can be hard to figure out when to invest in a new idea and when to walk away. In this episode, we speak with Janet Groeber, Director of the Retail Design Institute and Susan Reda, VP of Education Strategies from the National Retail Federation about what’s hot now and what has legs.

Transcript

Melinda: Hi, I’m Melinda and you’re listening to Think Retail. Trends come and some go while others mark permanent industry shifts. It can be hard to figure out when to invest in a new idea and when to walk away. Today I’m speaking with Janet Groeber, Director of the Retail Design Institute and Susan Reda, VP of Education Strategies from the National Retail Federation about what’s hot now and what has legs.

Janet and Susan, thank you so much for joining us today. Can I get each of you to tell us a little bit about yourself? Maybe, Janet, you can start us off.

Janet: Well, thanks. It’s just a delight to be here with you today and to share some thoughts with your audience. The Retail Design Institute is an association, that’s going to turn 60 years old in 2021. Right now, I have sort of a broad brush of responsibilities for the association, and I’m actually turning a lot of attention to that 60th anniversary. It’s really a lot of fun to look back in our archives and to see where we’ve come from. We were founded as the Institute of Store Planners, and that was with the ages of the American Institute of Architects. And so, we’ve traced our history back there, and we’re looking forward again to not only looking at our past but looking at the future of retail.

Melinda: Excellent. Susan, how about you?

Susan: Thanks for having me as well. I am a member of the Retail Design Institute, but my day job is with the National Retail Federation where I’m a Vice President of Education. For many years, I have run the National Retail Federation’s Publication known as Stores Magazine. So, I spend my days immersed in all things retail and thinking about how to tell retail stories from various conferences and RF events.

Melinda: I wanted to sort of start off with a really common topic and that’s in recent years, we’ve gone from hearing bricks and mortar retail is dead and now we’re seeing a retail renaissance where digital-first brands are trying to get into bricks and mortar. Where do you think we see the relationship between digital and physical retail going in the years ahead?

Susan: Well, I’ll start off if that’s okay. I think it’s entirely possible for both physical and digital to sort of peacefully coexist. Let’s be honest, in that space we’ve seen the direct to consumer retailers looking to physical retail for the opportunity to make an emotional connection with people right in front of them. I can remember Everlane, which is such an incredible direct to consumer brand, when they first started, the CEO was just kind of shaking his head and saying “absolutely will not do physical retail, it’s not for us.” And lo and behold, they now have a handful of stores and the stores are doing great and people just love to get in there and touch and feel. Shopping is a social activity, people enjoy that. So, even though we have a generation, now several generations that have grown up shopping online, they still like to get out there and see the product in person. So, I look forward to seeing how the two will continue to blend. I think it’s really going to be very transparent to consumers

Melinda: Janet, what do you think?

Janet: Oh, I totally agree with Susan. And yet from the perspective of our members, I do know that there are firms that are looking to reach out to marketing organizations. And maybe they’re going to do some collaborations because they’re trying to understand how the physical and the digital are going to come together. So, I see a lot of collaboration there. We’re bringing in some new expertise and I do know of one of our members, the firm that he runs has just hired a digital expert. I think we’re going to see a lot more crossing over, I think we’re going to see a lot of experimentation, both online and in-store, just to figure out a couple of things that we’re going to be talking about as we go through this interview. But it really does have to do with what is the best blend as our consumers are getting older and this new, as Susan mentioned, a digitally native consumer is coming up and is becoming quite important.

Melinda: Absolutely. If we were going to look at formats that are doing really well, what are the top performers right now?

Janet: Well, I’m particularly fascinated with food. And I see food as fashion and I also see it as something that’s essential. So, when I look at some of the formats that are blending, morphing, and becoming all kinds of things to all kinds of people, I first start with a grocer. And I look at a traditional grocer. I’m here in Cincinnati, home base of Kroger, and I’m looking at what they’re doing with expanding formats, contracting formats. Again, this whole rightsizing and then I see somewhere from the mass merchant trying to add food or convenience to their mix. Go take a look at Home Depot. When you first walk in you wonder, like, what are you selling here? And I’m going to get to the point that I think that there are a lot of formats doing well, but I think they’re trying to figure it out and I think they’re trying to be as convenient to their core customer as absolutely possible.

Melinda: Susan, what about you? What are your thoughts on that?

Susan: Personally, I’m really smitten by stores that invite me to experience a product in a different way. So, while I can’t always fit into everything that Lululemon sells, I do love their stores and do love the opportunity to participate in a class and to sort of immerse myself in the brand and what it represents. I look at Nike’s House of Innovation here in New York, I’m based in the New York area, just an invitation to blend physical and digital to play, to touch. Look at another direct to consumer retailer like Casper, where you can actually go in and nap, It’s a product and you get to nap at the same time. So, I think about those things because I think if you engage me, I am going to grow closer to your brand. And hopefully by growing closer to your brand, I spend more money with you.

Melinda: Yeah, absolutely. Janet, I think you mentioned department stores. There’s been a lot of shifting around in that world. Who have been the winners and why? Maybe, Janet, you wanna start us off on that?

Janet: Well, I’ll just take it from some of the headlines that I’m reading and I see Macy’s, also based here in Cincinnati, doing a lot of experimentation. I noticed that what we call mass, or in the case of Target, mass with class, they’re actually going around their stores and they are creating departments and distinct areas where they’re doing what department stores used to do with lots of vignetting, lots of inspirational and aspirational displays where people could really see the product, immerse themselves, even if it’s in, you know, 100 square feet or 50 square feet, they’re actually getting a sense of what’s on offer. And I say that because this boutiqueing, you know, we have seen it in the supermarket, we know about it in department stores, it’s just a way to be different, to show what you have that’s different from your competitors, and that gets us back into these collaborations with celebrities and other influencers.

The department store is a tough format, but it’s not going away. I don’t think it’s ever going to go away, I think it’s going to morph. I just think the whole department store mindset of trying to be a lot of things to a lot of people, its time isn’t yet up. They’re still convenient and they still have a lot of point of view, and I think that’s what our customers are looking for today. They still want that store to be an editor and they want them to pull together maybe the best of the best, or the things that’s right for them, that customer.

Susan: Now, you also mentioned big-box operators, I think that we’re seeing a bit of an evolution on the big box. And again, it forces those retailers to think differently about their footprint. You know, I just saw the reopening of H.H. Gregg who had closed a whole slew of stores but is now opening in a smaller footprint in an attempt to think the way that customers are thinking. You know, the one thing we hear from consumers over and over is this, “I’m time-pressed, and how are you going to make it easier for me to get in and out and get what I want?” So, I think you have to think about the footprint of the store and about maybe the way product is merchandised so that the most sought after product is upfront and the items that you want to spend time with a sales associate learning more about merchandise a little further back. Again, I still think that these various concepts have legs. Costco  continues to be a tremendous performer for retail and look at the size of those stores. So, if it’s right, it’s right.

Melinda: Yeah, absolutely. I mean, my husband is a huge fan of Costco. So, what about the mall? Are we still going to the mall? And if we are, what kind of retailers are really doing well there?

Janet: I can tell you what’s been happening in a medium market such as Cincinnati and I think it’s true across the country. Our top-producing mall is a super-regional and it has some of the expected players that you might read the tenant list and expect to see, but it’s missing a Gap store. They closed that Gap store and the Gap store is now in a more open-air shopping sort of…I wouldn’t call it a super-regional strip center, but it is more of a lifestyle center. So, I think we’re sort of watching that re-tenanting of the mall and then we’re also looking at the repurposing of malls if they’re not being torn down entirely.

Columbus, Ohio had a lot of just regular old malls with, you know, a Lazarus anchor and a Sears anchor, that sort of old-timey, let’s put the two anchors on the end and everything else will benefit. And now, it’s not that way at all. I mean we’re seeing that an REI can anchor a center, lifestyle center, or it can be anchored by a Whole Foods. So, the whole concept of what a mall is–it’s like every store is going through sort of an analysis, they’re having to rationalize who should be there.

But then I noticed too that our Anthropologie store moved from that regional, or that neighborhood lifestyle center and went up to the super-regional where they tell me their business is much better. So, I just see a lot of rationalization happening. The need for fewer stores per retail group is pretty well written. And now it comes down to where is your customer? And where will you find them? And what is your store going to morph into? The ones you have left, will they be, as Susan said, a place that I can come in and engage and learn? I mean I’m really very much a believer that the stores, all stores will morph to include more service and education and then we get, from the education, inspiration and aspiration. But as far as driving up to a mall and saying, “I think I’ll spend a half a day here,” I see more people just drive up, get closest to the door where their store is and treat a mall just like a strip center.

Melinda: Right. Susan, what about you? What are your thoughts on malls?

Susan: I think they continue to have relevance as long as they continue to think about today’s customer. And much of that is embodied in what Janet shared. I think that, again, as you think about replacing some of the anchors that have had big footprints, you know, is it going to be a store that encourages engagement, that delivers entertainment, that feeds the need by way of food for you to drive up, do some food shopping, and then remember, “I need a birthday present,” just hop right in and get what you need? I think that there’s a lot of evolutionary thinking about malls. And so, there are a couple of things that are coming up now, which suggests to me that people are spending a lot of brainpower on what is next.

Next month in New Jersey, we will see the opening of the American Dream Mall, the first…version is not the right word, but the first grouping of stores and the first grouping of entertainment situations inside that mall will open late October. And so, they’re going to have the indoor ski slope, they’re going to have, I believe, an ice-skating rink, they’re going to have a water park, along with lots of retail. They are expecting this to be a place where somebody comes and spends the day and there will be childcare and there will be incredible eateries and there will be koi ponds. You know, will it work? Well, that all remains to be seen. But it says to me that there’s a lot of mental energy going into what’s next.

Melinda: So, if we were going to move over to design trends, maybe Janet, you can start us off by talking about some overall emerging trends that you’ve noticed in terms of retail design.

Janet: You know, we see an awful lot of innovation come out of brands like Nike, or like Apple, and they are pacesetters for a variety of reasons, and they have what would seem to be almost bottomless budgets. So, what are some takeaways? They may show us what the colors are, or how to lay something out, but increasingly, stores just need to be flexible. They need to be able to accommodate different amounts of merchandise or special events, or a pop-up or, in the case of someone like Lululemon, there’s going to be a class. Any retailer can look at these flagship stores and take away either a materials palette and use that palette or modify that palette. The other thing I noticed is this hyper-localization and that’s really pretty exciting because stores are no longer really cookie-cutter. Yes, they’re very similar, but they do seem to reflect the community where they’re based.

And I see that when we put our call for entries out for our annual design competition and it’s fun to sort of look at all of the class, that’s what we like to call it. So, we’ll be inviting the class of 2019 to make their entries and we’ll have sort of a look at what could be considered a trend. And I do see a lot of natural materials depending upon the retailer and their location, and a lot entered last year from the Pacific Northwest and the vibe is very different from what you might see in the Midwest. Our entries from Canada are very very sleek and refined, they use a lot of natural materials. But a chain organization might use more laminate, or they may use more hard-working materials that sort of suggest the locale or their roots if you will.

I see an awful lot of trends that are sort of coexisting. And the minute you say, “Well, everyone should have a white box,” somebody comes out with a black box. So, I would say that the trend is localization, I would say that it is making the stores reflect the level of flexibility for customization and then you’ve got to have an Instagramable moment. So, we see a lot of stores that have something iconic, where the customer will come in and want to get their photo taken and post that to their social platforms.

So, lots of things happening out there but I would say flexibility and then also, I see more actual display, and that’s not a bad word, visual merchandising helping customers understand, again, the offer, how to use it, and creating spaces where we can actually test product. That was particularly true with the Lexicon Store on 5th Avenue that opened with a great deal of fanfare and hands-on experiential. It was meant to be a highly flexible space so they could bring in all kinds of special events. So, big signature statements, materials that tell your story, and the opportunity for lots of customer engagement, I would say are the trends.

Melinda: Susan, have you got anything that you would add to Janet’s list?

Susan: Not a lot. Janet was super comprehensive on that!

Melinda: It was pretty comprehensive.

Susan: I mean, she is absolutely right. Green is the new black, you know, although black was never a design color. But everything about sustainable and about telling the story of being sustainable and your carbon footprint, these things matter to consumers now, we’re told over and over again. The word that I hear from everybody now is wellness. So, if that theme is somehow conveyed in design, in a few places we’ve seen a wall of greenery, a plant wall, that just sets the stage for who that retailer is and what’s important to them. In terms of the actual mechanics of it, I’m keeping a close eye on Amazon Go and the technology that is used there to enable the consumer to get in and out quickly. While Amazon Go stores are not all over the place, there are so many startups who have a version of that technology that they’re looking to deploy and test. I think retailers continue to be interested in that because, again, we are just so time-constrained that it seems like a good thing, but it’s really difficult to make it work.

And finally, I look at someone like a Bonobos, which again, they don’t have a ton of stores but their stores are used kind of like a showroom. So, you go in there and you make your purchase, but it’s sent to you at home. And forgive my New York mindset again, but when you go into a Bonobos store and you try on a couple of items…well, not me, I’ve done this with my adult son so this is what I’m going to attest to. He’ll try on a few items, and because he got there by way of a Citi Bike, he has no desire to have a shopping bag with his purchases in it. He’s only too happy to have them say, “It’ll be on your doorstep tomorrow morning,” and he’s on to the next thing. You know, my husband would be like, “But I just bought that, what do you mean I can’t take it home?” But the mindset is different and retailers who think about how young people want to make purchases and that they’re okay with that. “Yeah, it’s fine, just send it to me. Thanks. Bye-bye.”

Melinda: Yeah. If you were to think about the year ahead, if each of you could tell me about one either retail concept or format or one brand that you’re really excited to see what they’re going to be doing in the coming year, what would it be?

Janet: We did discuss wellness, green, sustainable, and cannabis when we were side barring. And I just would say that I see interesting pairings all the time. Some of this is not new, but it’s coffee and bikes, it’s barber and menswear. I think maybe that thing that we’re all waiting for is still out there on the horizon. It doesn’t mean that there aren’t some fun things being done and that there aren’t some innovations, but I do look to specialty one-offs, I look at independent stores. For me, I am sitting in a city that is having a renaissance in its central business district as well as some of the streets that were once occupied by the German settlers of the city. It’s where Kroger chose to put its newest urban concept of a grocery store and it replaces the store that was a couple of blocks over. It’s their first store in the downtown area in 60 years, so we’re really excited to see it.

Again, I’m all about food and fashion and I agree with Susan with wellness. I love to see what the urban areas and all of these secondary cities, kind of second-tier cities are doing because they’re all celebrating their downtowns. We know when all of those independents come together and even with an anchor, so to speak, of a Kroger store, we just know there’s going to be a lot of innovation, like how New York City is with all of its independents. These are places for large brands, other independents and large brands to go to school because there’s a lot of really great thinking in that specialty store independent-owned market.

Melinda: Absolutely. I’m also a big fan of the indie store, the one that’s in your neighborhood that you might not otherwise have known about but is doing something really unique is always a lot of fun. Susan, what about you? Is there something that you are looking forward to in the coming year?

Susan: Well, my crystal ball is a little cloudy right now, but I think there are a couple of concepts that I will always watch for innovation, one of them being Sephora. I just think that there’s always something around the corner with Sephora. They are just really incredible about the way they think about retail.

There is one emerging company that I’m watching. So, if you make a trip to New York, visit Camp.Camp NYC is based in the Flatiron Building, and it’s a children’s concept but it’s set up kind of like an exploration. The kids go there, and they can enter through the magic wall that suddenly opens up and they track through a campsite. And they explore and do different things and then they have an opportunity to do crafts. And there is an area where you can…there’s a partnership with Momofuku and their Milk concept. So, there’s desserts and coffee and there is, of course, a retail store associated with this where they have some very unique children’s items and toys. And again, it blends that retail entertainment, retail engagement.

Moms and dads are in love with this here in New York and as a result, they do have a couple of stores set to open outside of the New York area. I know one is in Texas. And there’s a lot of folks just keeping an eye on it because it’s so different. And we haven’t had that kind of energy in the children’s space in a little while. And so, there’s a whole slew of parents who miss Jeffrey, let’s face it, we miss Jeffrey. We’ll see if Jeffrey’s going to make a comeback because he might but, in the meantime, I would definitely say to check out Camp, I think they’re one to watch in 2020.

Melinda: Well, thank you both so much for joining us today and sharing your thoughts on what’s happening in terms of design and format and concept.

Janet: It was a pleasure.

Melinda: Janet and Susan covered a lot. So, I’m going to try and summarize the trends into overarching ideas. One is the idea of flexibility, being able to move things around easily, quickly, being able to customize, to be local, and to experiment. Another idea they talked a lot about is the idea of hands-on experiences that go deeper than a traditional store like Camp or the American Dream Mall. They also talked a lot about storytelling either through merchandising, showrooms, aspirational displays, iconic imagery, not as a new trend, but one that’s reemerging. And lastly, they talked about the time-pressed consumer and figuring out how to meet them where they want to be. Four very relevant themes: flexibility, hands-on experiences, storytelling, and time-pressed consumers. Four great topics for future podcasts I think, so thanks to Janet and Susan for that. Did they miss any key trends? We would love to hear your ideas as well, so please feel free to comment on our podcast page at SLD and thanks for listening.

About

Susan Reda is Vice President of Education Strategy at the National Retail Federation, responsible for curating session content and lining up speakers for various NRF conferences and events. Reda is also editor of STORES Media, NRF’s official publishing division.

Janet Groeber is Director of the Retail Design Institute, the industry’s oldest and largest community for design professionals. She has more than 25 years experience in the retail design industry and publishing.

Think Retail is a podcast where top designers, strategists, thought leaders and business people discuss what’s coming next. For more information, email info@sld.com.