A NEW POSSIBILITY FOR DEPARTMENT STORES – CORPORATE

“Physical Retail” is a new concept that’s being tried in a few department stores across the U.S.  This is a concept based on the idea of the marketplace, using an ever-shifting arrangement of internet-native brands.

At the Neighborhood Goods stores in Plano, TX, for example, a customer can chat with brand advocates about popular over-the-counter medications while sipping a hot drink in the in-store cafe while at the same time perusing onesies that first found success on the internet but now are appearing in “offline retail,”  (ref. WSJ).  When the customer is ready to check out, the transaction is completed on the store app.  Like tracking with Uber, the transaction progress can be tracked and an in-store salesperson appears with the purchase slip in hand.  The sales representative knows just where the customer is located because of the use of the indoor-location technology which provides a visual picture of each shopper.  These new versions of department stores have secured the investment backing that has previously been reserved for tech companies rather than the brick-and-mortar retailers.  bSta is a company that has 17 stores that specialize in consumer electronics.  The company’s CEO says that he believes “that what’s happening now with physical retail is the next generation of all commerce.”  The company is also participating in the reboot of Toys “R” Us and supporting the back-end software of Macy’s “Market @ Macy’s” – the company’s next-generation retail.  Other companies that are trying similar approaches are: Bulletin, focusing on female-founded brands; Showfields, touting itself as the “most interesting store in the world,” and Camp, a kid-focused “family experience store.”  Some of the new retail attempts offer brands the possibility of renting space in their stores and keeping what they make.  In this way, both groups benefit – the brands from the sale and the retail marketplace from the rental agreement.  The cost of finding new customers through expensive online advertising stacks loses out to the better proposition of paying for shelf space in a retail store.  Thus far, the new store versions have been tested in major metropolitan areas where there is an abundance of a well-off and novelty-seeking demographic.  One downside with the current arrangement is that new brands are rotated in the marketplace stores every few months – a possible detracting feature for those who like to return to purchase favorite brands.  To date, the commonality among the new store versions is an ability to attract customers based on the promise of an experience.  It remains to be seen how attractive the idea will remain.

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