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Humanizing Retail: Five design trends likely to loom large in 2014

BY CSA STAFF

By David Weinberger, CBX

Looking ahead at a year that will most certainly see a continued evolution of what retail is and what it does, I am excited at the prospects of participating in, toying with and influencing that evolution. For this forecast, I am concentrating on physical retail since I believe this is where the innovation will — and indeed, must — occur. E-tailers and hybrid-tailers will continue to make transactions easier and safer while adding algorithms that suggest products and services tailored to the individual. Online purchasing will become more intuitive and smarter, connecting you with various electronic devices, apps and, soon, even your refrigerator and closet.

Because of this, retail designers will focus on humanizing the in-store experience. The goal is to give consumers a reason to get out of their pajamas and walk into a store. Here are five trends likely to influence the evolution of retail in 2014.

1. ‘Pop Up’ turns to ‘Drop Off’
Pop-up stores have traditionally taken advantage of empty storefronts for short periods of time and have been used to promote products and generate buzz. This year we’ll see a dramatic increase, not of pop-ups, but of “drop-offs”: storage container-sized retail spaces dropped off in the middle of public spaces. If successful, these concepts will stay for months or even years.

In the shadows of the Flatiron building in Manhattan are two examples of this trend: Flatiron Green Cafe, which offers a wide variety of natural, local and organic foods, and Ilili Box, which bills itself as “inspired Mediterranean takeaway.” Both are small and placed in the tourist oasis where Broadway crosses Fifth Avenue. Keep an eye on highly trafficked parks, urban gathering spots and similar locales in the coming year you’ll likely see more concepts dropped off in 2014.

2. Enhanced person-to-person interaction
Cash wraps are getting smaller or being replaced altogether by roaming sales people armed with iPads. Apple instigated this “death of checkout,” and many other tech-related retailers have followed suit. We also see this in smaller retailers where two or three associates cover the store. The trick with larger stores is having enough associates, otherwise, shoppers are forced to jockey for position and form impromptu queues in the middle of the aisles. Burberry recently opened a technology-enhanced store with no checkouts, and larger retailers such as Nordstrom and The Home Depot have offered mobile POS checkout for a couple of years now. This trend will continue in 2014.

Removing the sales counter allows for more human interaction — the feeling that you’re in this together. Thanks to this trend, sales associates are becoming more knowledgeable. The best of them become de facto consultants. Why is this important? The proliferation of underwhelming, online review sites is part of the reason. Consumers are waking up to the reality that the likes of Yelp are only as good as the mass of people participating in them (“Hey, this dish stinks. How can @slickharvey57 have been so wrong?”). Little wonder in-store help will come back into vogue in 2014.

3. Use of emotion
Retro versions of consumer packaged goods — throwback Pepsi, old Doritos and Miller Lite retro cans — have grown increasingly popular over the years. CPG companies have learned this is a way to reconnect with consumers through emotion. I see retailers trying their hands at this game in the coming year. It is much more costly to build a retro store, but the gamble might just pay off by creating nostalgic spaces that consumers want to linger in. RadioShack, for example, recently opened CBX-designed retro stores in Texas and New York. They play up the retailer’s history and all the fun stuff we remember about technology.

4. Wasting real estate
“Stack it high and let it fly” has long been the battle cry of retailers. Walk into your local grocer and chances are this applies (unless it is Mrs. Greens or Fresh Market). In 2014, we’ll see more retailers devoting space to things that don’t sell: Art-like exhibits, entertainment and lounges will all find their way into retail spaces in order to draw people in and connect. One example of this is Uniqlo. While the international retailer does have massive amounts of product in its stores, it also devotes huge areas to art exhibit-like sculptures.

With online saturation of gorgeous product photography from Instagram and Pinterest, consumers also have elevated expectations of presentation. Because of this, more and better propping is being used in stores. One example is Brumby’s Bakeries, one of Australia’s largest franchise groups, whose new stores bank heavily on attractive visuals.

5. Unexpected use of materials
Building on your brand strategy is the right place to begin for store design, but I see the physical design of many retailers zigging and zagging in 2014. This will be true, not just of retro stores, but also of unexpected use of materials.

A new Pep Boys concept store in Tampa made me do a double take when I drove by. The exterior makes heavy use of wood (or, more likely, an aluminum panel that looks like wood). I don’t know about you, but nothing about wood makes me think of automotive design, which focuses on sleekness, technology and the appearance of speed. And yet wood is a material that feels inviting. The Tampa store even includes wood in the interior — no doubt an attempt to make an intimidating selection of merchandise more palatable. This store even has a lounge, which could be an attempt to make this experience easier for other family members and, by extension, Dad.

Incidentally, Pep Boys also brought Manny, Mo and Jack out of retirement for the new stores. Quite nostalgic.

All of these trends relate in one way or another to a basic imperative in retail today — humanizing the shopping experience. Some of these efforts will fail. Others will conquer. But take note of both the winners and losers as they emerge in 2014. After all, this amounts to a glimpse into the fast-changing future of retail.

David Weinberger is a branding expert at CBX who has designed and directed innovative retail experiences around the world. He can be contacted at [email protected].


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A.Boon says:
Feb-12-2014 04:05 pm

Interesting article. Innovations such as this will help retailers boost their sales, improve shopping experience and stay in the business longer. I work for McGladrey and there is a whitepaper on our website that aligns well with this article, it talks about the future of retail and what retailers can do to grow in a post recessionary economy, readers will find it interesting. @ " Post recession strategies for retailers" http://bit.ly/18Skei5

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PwC: Grocery, drug, discount and mass M&A deal volume up third year in a row

BY Marianne Wilson

New York — Retail and consumer (R&C) total transaction value in the United States for 2013 surpassed $100 billion for the first time since 2008, according to PwC’s US retail and consumer deals insights 2013 Year in Review and 2014 Outlook report. Deals in the food and beverage sector and private equity (PE) investment in the apparel, footwear and accessories sector continued to drive activity in the R&C industry.

The report finds that transaction value for announced deals with values greater than $50 million was $107 billion, up 32% from $81 billion in 2012 – and this five-year high was due largely to the $28 billion Berkshire Hathaway/3G and Heinz mega deal.

Deal volume for announced transactions with values greater than $50 million declined slightly, by 2%, to 126 deals in 2013, partially due to the abnormally higher deal volume during fourth quarter 2012 when many deals were pulled forward prior to the fiscal cliff and tax rate changes.

“Although total retail and consumer deal volume fell during 2013, the sector represented about 12% of total U.S. deal volume for the year – and R&C deal value increased to a five-year high,” said Leanne Sardiga, partner and PwC’s US retail & consumer deals leader. “At PwC, we’re tracking five macroeconomic megatrends that are shaping the world and economy that have implications on M&A strategy. They consist of accelerating urbanization, demographic shifts, climate change and resource scarcity, shifts in global economic power and technological breakthroughs.”

The retail and consumer sector continues to be largely driven by food and beverage transactions both in terms of deal volume and deal value, according to the study. For announced deals with values greater than $50 million, food and beverage transactions accounted for 24% of R&C transactions in 2013.

Grocery, drug, discount and mass deal volume for transactions greater than $50 million continued to grow for the third year in a row, reaching 15 deals in 2013 compared to 13 deals in 2012 and five deals in 2011.

Restaurant deal volume for transactions greater than $50 million continued to decline for the third year in a row, plunging to three deals in 2013 compared to 10 deals in 2012 and 13 deals in 2011. This led restaurant deal volume as a percentage of R&C deal volume to decrease to 2% in 2013 from 12% in 2011.

Private equity continued to play a pivotal role in the apparel, footwear and accessories subsector accounting for 53% of transactions with values greater than $50 million.

“All signs point to positive momentum for R&C deals outlook for 2014, but a number of factors will impact the market,” added Sardiga. “Continued cross border activity as companies invest in emerging markets to bolster stagnant organic growth at home will be a factor. Another will be PE investors in the retail and restaurant sector, in addition to companies expanding their omnichannel capabilities to increase their competitiveness. Consumers will remain cautiously optimistic in 2014 as home value improvement continues and economic headwinds retract. And the potential limited availability of high-quality assets for sale despite buyer appetite will be another factor. All of this emphasizes the underlying importance for companies to have a disciplined M&A process in today’s competitive deal environment.”

The report notes that IPO volume and proceeds improved significantly from 2012, with total R&C proceeds having reached $10.3 billion in 2013, representing a 220 percent increase over the prior year. Overall, the year saw 29 IPOs compared to 22 in 2012. The improvement, according to PwC, was largely due to the increasing investor appetite for growth companies, low volatility, and strong equity markets in fourth quarter 2013.

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Report: Bebe considering sale

BY Dan Berthiaume

Brisbane, Calif. – Bebe Stores Inc. is reportedly considering selling the business. According to Reuters, an anonymous source with inside knowledge said Bebe has hired Guggenheim Securities to help evaluate a possible sale.

Neither Bebe nor Guggenheim commented on the article. Bebe has experienced some recent financial disappointment. During the second quarter of fiscal 2014, Bebe reported a net loss of $5.5 million. Net sales declined 4.1% to $130 million, from $135.5 million reported for the second quarter a year earlier and same-store sales decreased 1.9%. Bebe expects flat same-store sales for the third quarter of fiscal 2014.

For the remainder of fiscal year 2014, the company plans to close up to six Bebe stores and one 2b Bebe store, which will result in approximately an 8% decrease i6 total store square footage from the end of fiscal year 2013.

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