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Retail Transformation

BY CSA STAFF

It’s no surprise the trend of opening retail spaces in historic buildings is booming and shows no sign of slowing down anytime soon. With urban redevelopment picking up steam in many cities across the country and vibrant mixed-use urban communities increasingly becoming a familiar feature on civic landscapes, opportunities for repurposing, renovating and reimagining historic spaces for contemporary retail use are abundant and in high demand. They present an appealing option to retailers looking for great space in dynamic and growing markets.

Challenges

For all of the advantages that come with space in a historic building, there are plenty of challenges, as well. From design and functionality to safety and technical issues to coding and regulatory limitations, a historic space may require a number of expensive and/or time-consuming steps and solutions that can lead to delays, have an aesthetic impact and potentially affect the utility of the space.

Understanding the scope and scale of some of these challenges — as well as the strategies and best practices retailers can use to accommodate or overcome the most common obstacles associated with occupying space in a historic building — is an important first step for any retail decision maker considering such a move.

One of the most common challenges a retailer is likely to face when selecting a location in a historic building is adapting and working within the design and operational limitations that may be in place.

Many retailers have developed their own criteria and brand standards for what their space is supposed to look like and how it is supposed to operate. Those standards may include everything from the way they stage their merchandise to the overall look and feel of the facility. This might sound like a minor issue, but it can present a significant challenge when a retailer’s standards and practices butt up against historic and potentially limiting rules and regulations.

If a brand or a business is used to doing things a certain way, it can be tough to accept that it simply isn’t possible to continue doing so in a new space. The open ductwork and exposed brick that are so popular in many stores today may simply not be possible in a historic building, both for reasons of historic preservation and the difficulty and expense of modifying existing infrastructure.

Costs and complexities

Space in older buildings often comes in non-standard shapes and unusual footprints. That alone can be an impediment for some retailers, and it may require comprehensive redesign or reimagining of how the store will function. It is common in many urban markets for available spaces to be multistory units, which can be a challenge for retailers used to stores and layouts that occupy a single level. They are also more likely to be longer, rather than wider, posing additional design and layout challenges.

The challenge of a multi-story space extends well beyond the basics of store layout and customer flow. Multiple levels add a whole other layer (both literally and figuratively) of complexity regarding HVAC and other infrastructure.

In general, the cost per square foot to do any renovations or tenant improvements tends to be more expensive in a historic property than in a traditional suburban box. These are complex buildings that may have hidden issues and almost always come with more requirements and specifications. Those historical complexities can become more significant when changing uses — adapting an old warehouse to a retail space, for example.

One common expense and design and development headache that occurs in such instances involves dividing a building up into smaller spaces or individual units. Such a step is considered to be a change in occupancy, and any dividers would need to be fully functional fire walls, for example.

Changes to the façade or the exterior of the building may face particularly restrictive regulatory hurdles and proposed changes may first have to make their way through a complex approval process. In the city of Detroit, for example, that step alone can take 60 days. In other scenarios dealing with state or federal approvals, 90 to 120 days is more typical.

Costs

One of the appeals of a historic space is the potential to take advantage of historic tax credits. While such a financial benefit is certainly welcome, a historic property designation and corresponding tax credits come with a very specific set of rules about what is and is not permissible when it comes to renovating the space.

A slight deviation from those guidelines would result in punitive damage in the form of a loss of those (sometimes valuable) tax credits. Unfortunately, miscommunication between landlord and prospective tenants is all too common, and retailers may not have all the information they need in terms of design restrictions. Consequently, a question that needs to be asked and answered early on in the process is: “Are there any design limitations relative to historic guidelines?”

Most established retailers have a formal process for identifying, evaluating and selecting potential spaces, but some of that procedural standardization can be less of a help and more of a hindrance when it comes to looking at historic buildings.

Retailers need to be thoughtful and flexible as they evaluate potential sites, and they would be wise to work with an experienced consultant or other real estate partners familiar with historic properties and the issues facing retailers.

Renovating and retrofitting historic spaces for a contemporary retailer is equal parts art and science. The result, when executed correctly, can be a retail space that is both an aesthetic and experiential triumph, a space with the potential to deliver outstanding ROI for the upfront cost it takes to reconfigure and renovate.

Bob Kraemeris a co-founder of the Detroit-based Kraemer Design Group.

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GameStop Updates its Analytics Game

BY Deena M. Amato-McCoy

GameStop’s shoppers are becoming increasingly digital — an evolution that is also narrowing the window between when shoppers purchase merchandise and when they expect to receive it.

Eager to stay engaged with shoppers within this shrinking post-purchase gap, GameStop launched a new e-commerce strategy just prior to its holiday rush focused on driving post-purchase revenue and creating more satisfied customers during this critical selling period.

GameStop’s director of multichannel, Bill Graham shared his thoughts about the initiative — and expectations — with Chain Store Age.

What is GameStop doing to improve the post-purchase experience for customers?

Our strategy, which we call the “new moment of truth,” focuses on the shopping experience after shoppers click the submit button and their transaction is on the way. The post-purchase experience is just as important as the discovery and purchase portions of the journey.

For example, more than half our customers will track their package to find information about delivery and more. It’s up to us to streamline how that information is presented and to continue engaging with the customer wherever they are post-purchase. That’s why we created a branded custom tracking page that keeps shoppers in our ecosystem versus directing shoppers to third-party sites for package information.

The page, which we created with the help of our partner Narvar, lets shoppers track deliveries, view product recommendations and link back to our site to find trade-in values for their previously played games, consoles and electronics. These pages are all delivered responsively, so they can be viewed on any computer or mobile device.

How do you accurately measure customer usage?

Our Narvar product has given us a significant amount of post-purchase analytics we can learn from and act on. We analyzed activity to see what potential improvements we need to make in terms of packages arriving on time, proactively working to solve any carrier hiccups, and allowing guests to sign up for package alerts — another new service launched in November.

This is an artificial intelligence chatbot on Facebook Messenger, also through Narvar, as well as our traditional SMS/ text message package alerting. Shoppers can opt in for these services for free to receive messages about their online orders. Both messaging options have about a 20% opt-in rate, with 25% of shoppers using Messenger and 75% using SMS.

Can you share some results?

At least 30% of folks hitting our branded tracking experience are clicking back through to our website.

These shoppers are also converting back to shoppers at a competitive rate. The experience shows customers more items they may want or may have missed the first time around.

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Robots Set to Revolutionize Store Experience

BY CSA STAFF

Steve Carlin, VP and general manager of SoftBank Robotics, spoke with Chain Store Age about how robots are helping to reinvent the in-store shopping experience.

What trends are advancing interest in robot technology at the store level?

A few trends have helped set the stage for in-store robotics.

As online retailers continue to grab customer wallet-share, there is mounting pressure on physical stores to remain both profitable and relevant. Meanwhile, with the influx of technology into the everyday lives of consumers, shoppers seek and expect new and interesting experiences at the stores where they want to spend their time and money. This is exacerbated by gadgets like smartphones, Apple TV, Amazon Echo and Google Home that make it increasingly easy and natural for shoppers to interact with devices.

Another trend is the need to track customer demographics more closely, and most importantly, in real time. The right data — and analytics — can help a retailer better understand customer preferences and quickly change a brand message or experience accordingly.

How important is the interaction between robots and humans, from both customer-facing and workforce perspectives?

When a business is considering robots to engage with their customers, the form factor is half of the experience. The other half is the message that robots relay to the consumer. If those are aligned, then the experience is seamless and the customer is ready for more.

From a workplace perspective, robots are not here to take jobs but to support their human colleagues. By taking on low-level tasks, robots allow colleagues to work at a higher level.

In addition to communicating a specific brand message, as robots evolve, they could eventually be connected to a company’s cloud-based system, like Microsoft Azure. This integration would allow robots to answer questions like product availability, size and color, which alleviates the sales associate from researching those questions, and allows them to more deeply engage the customer.

How could a disruptor such as robots significantly change the retail business?

The future of retail will be driven by direct, real-time brand engagement. Called the next platform after mobile, robots will revolutionize the in-store experience and shake up the way businesses develop their marketing strategies.

Retailers are eager to use technologies that add personalization to their brand while creating opportunities for deeper interactions with customers. By increasing direct customer engagement through robotics, marketing messages can be honed or changed at any time, and those engagements can be tracked and analyzed.

Where should retailers be looking for a return on investment when deploying robots?

With our robot, Pepper, there’s incredible upside when utilizing its functionality as a brand ambassador or sales support. Among our current retail partners, the most important features of Pepper are its form factor and its ability to attract and engage with customers who otherwise might not have shopped in their store. In recent U.S. pilot programs, Pepper has increased foot traffic, customer engagement and, ultimately, sales across various retail locations.

Retailers exploring the concept of integrating robotics into their brick-and-mortar stores will be able to mix real-time customer insight, CRM data, social selling, in-store promotion, and, most importantly, brand engagement into one strategy, with the power to truly impact their bottom line.

How can SoftBank Robotics help retailers pursue their robotic endeavors?

The social robotics space is in its infancy, and retailers are currently exploring best-in-class technology to enhance their in-store experience. Robots, such as Pepper, can help retailers increase sales, while improving the customer journey and in-store experience.

We provide an intuitive solution to allow retailers to customize their needs into a user-friendly application on Pepper without a deep knowledge in application development or coding. Applications can engage, inform or attract customers based on the retailer’s knowledge of their target demographic and be A/B tested to further fine tune the experience.

Tell me about your robot, Pepper?

Pepper was developed specifically for customer engagement. The 4-foot tall robot has arms, hands and fingers that gesticulate just like a human would during a conversation. Its eyes are big and round, and appear to blink when it’s thinking or speaking, and it turns toward the person it is interacting with, making the experience personal. These features are key to engaging and entertaining shoppers.

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