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Hearth & Home April 2019

The Evolution of Retail

By Tom Lassiter

Your customers want to understand who you are, what you stand for, how you’re connected to the community – and they also want an experience when they come in.

Any specialty retailer who says she’s not concerned about online competition hasn’t realized that it’s not 1993 anymore. That was the year before debuted. Jeff Bezos’ startup proved that consumers loved the convenience of shopping for books online.

What the visionary Bezos knew then, and we know now, is that people love the convenience of buying just about everything online.

Amazon collected nearly 50 cents of every dollar spent online in 2018, according to a report by the online news site TechCrunch. That amounted to $142 billion, or nearly 5% of all retail sales, according to the website Digital Commerce 360.

It’s predicted that Amazon may double its take to 10% of all retail sales by 2020. Amazon, Wayfair, Hayneedle, and other online-only retailers sell plenty of outdoor furniture, barbecue grills, and hearth products. These and other products are the mainstays of brick-and-mortar specialty retailers.

Where is all of this heading? Are specialty retailers with storefronts, sales staffs, and utility bills going the way of the dinosaurs?

If anyone has a clue, it’s probably the folks at Sphere Trending. The consulting firm includes futurists, technologists, strategists, and other forward-thinkers who study market trends, social forces, technological developments, and other change factors to envision what the future holds. Two of their areas of concentration are the home environment and retail.

Hearth & Home spoke with two Sphere Trending executives to get their perspectives on the challenges facing retail as we enter the third decade of this new century.

Susan Yashinsky is Sphere Trending’s vice president of Innovation Trends. Mandi Mankvitz is vice president of Engagement Trends. The following is an edited version of that conversation.

Hearth & Home: What are the long-term prospects for brick-and-mortar specialty retailers?

Susan Yashinsky.

Susan Yashinsky: “Everybody’s freaking out about the ‘death of retail,’ and it’s not really the death of retail; it’s the evolution of retail.

“When the Big Box stores came in, in the 1960s and ’70s, everybody thought specialty stores would be done for. Specialty stores ended up thriving. So people have to adjust.

“The biggest issue in the third decade of the 21st century is agility to market. Agility to market is very important, because the speed of change is much quicker now. You have to understand where the consumer is, you have to understand the competition, and you have to react much quicker; you don’t have three years to develop a plan to be relevant today.

“Specialty stores have a huge advantage over online and traditional Big Box retailers in that they have expert service. Human service is becoming one of the most important attributes to consumers. Having a human being, an educated person, providing this personal touch – in a world where increasingly we’re feeling isolated by technology – is becoming one of brick-and-mortar’s best advantages.

“Also, if we’re going to drive to a brick-and-mortar (store), we actually expect an experience. We expect it to be inspirational. We don’t want to see a sameness.

“You see, the most successful retailers don’t stand still. They’re constantly evolving. For a Mom-and-Pop company, there are a lot of small things that don’t cost a lot of money that actually add to the experiential element. You can provide the great expertise; you can have a place to sit and explore; you can offer coffee so that your guests feel welcomed.”

Where is the balance between offering personal service and a shopping experience, and the instant gratification of shopping from home, ordering a product online, and having it delivered two days later?

Yashinsky: “The reality is that it’s a multi-channel world. And for anyone to think that online is not going to get bigger is ridiculous.

“But people still love to shop, especially Millennials and now Gen Z, they love being in brick-and-mortar (stores). But it has to be exciting brick-and-mortar. It has to feel like an inspirational journey. They want to touch and feel, particularly for higher-ticket products. Are we more comfortable buying furniture online? And are we getting more comfortable every year? Without a doubt. But online is co-existing with brick-and-mortar. That’s why we say omni-channel.”

Mandi Mankvitz.

Mandi Mankvitz: “Physical stores need to be dabbling in the digital, to be making sure that they’re not just a store but also a digital presence. They’re a social presence. They’re having inspiring conversations with consumers, to really showcase their value as a local store.”

Where is the power of the brick-and-mortar retailer to answer that unlimited, incredible selection that’s online?

Yashinsky: “I think it’s emotion. The consumer is saying, ‘You need to emotionally connect to me.’ Your website is the first point on the consumer’s journey of discovery. It has to be updated, inspirational, and interesting. You have eight seconds when a consumer goes on your website to actually connect with them.

“There’s so many Mom-and-Pop stores that don’t think the online component is important, but they don’t understand that the store’s website is the first point of the journey of discovery.”

Mankvitz: “People are going to your website for a story, for an experience, to understand who you are and what you stand for. How are you connected to the community? What unique events or collections do you have, and how are you inspiring me? Whether they find that through Instagram or Facebook or the website, that will drive them to your store. People feel that going to the store is a luxury now.

“If I’m going to go to the store, it’s a luxury moment for me. I want to sit in the chair or touch the fabric or talk to someone who understands.

“I can’t have that conversation when I’m on I can’t even call someone at Amazon into that conversation. But I do have that opportunity at a specialty retailer, so the website needs to reflect that. That’s a competitive advantage that needs to be shouted: This is our story, this is who we are, and this is how we can help you.

“You don’t have to sell anyone on the entire story in the eight seconds; you have to compel them to continue reading. When they land on that website, or that social media page, do they get a feeling that inspires them to learn more and to know more?

“You’re not going to win against an Amazon with a sale. You’re going to win against an Amazon with a story.”

Let’s go back to this notion of an experience. We all understand what we mean when we say “the Starbucks experience.” We’ve learned it by repetition over 20 years. But what can a Mom-and-Pop do to create an experience?

Yashinsky: “It can be as simple as having events at your store that indicate you are part of the ecosystem of your neighborhood, meaning the restaurants and the people that are around your store. You have to fuel traffic to each other by creating events that are related. If it’s a luxury to drive to a specialty store, you expect to be rewarded with something that’s kind of fun.”

Mankvitz: “REI is an excellent example. There’s always some sort of event, clinic, or class. They’re partnering with the charities. They have a lot of experts in the store who will talk to you about cycling or paddle sports. They are a big chain but really embrace the idea of experience at the local level, and that experience is very unique to them.

“They’re staying true to what they stand for, and they’re still providing an experience. They’re constantly innovating. They know who their customers are, and they speak to them in really engaging ways all the time.”

Photo Courtesy: Getty Images.

Isn’t creating an experience a bit more challenging when the store is selling outdoor furniture and barbecue grills?

Yashinsky: “Grills are a fun thing. Team with a local party supply shop to make an event. Showcase some of the new recipes that people are doing on the grill. Crate & Barrel and Pier 1 are doing classes like how do you decorate the outdoors. A Mom-and-Pop retailer can do the same thing.”

Mankvitz: “You see lots of people educating on how to extend the seasons. Those are things that specialty retailers really own, because they understand that more so than the bigger retailers.”

When a consumer is won over to visit a specialty retail store, how do you ensure that they are fully surprised and satisfied and engaged, beyond the educational experience?

Yashinsky: “A first impression is critical. Every store owner should walk into the store with some friends and say, ‘What’s your first impression?’

“Do I smell coffee? Do I smell cookies? Do I see a place to sit down with a bunch of magazines so I can get inspired? Does someone come up to me right away and they’re easily recognizable as a store employee? Is the store cluttered? Is the store clean?

“So many stores have not been updated in a long time. Update might just mean a fresh coat of paint, or adding a coffee machine, some cookies, and a seating area.”

In the online shopping world, brands sometimes seem to be less important than the source, such as Amazon or Wayfair. How important are brands these days?

Yashinsky: “In the casual furniture industry, brand is not something young people have any awareness of. In furniture, they don’t go by brand; they go by the store; like West Elm or Crate & Barrel. That’s the ethos that they go to. So what’s really critical is being a leader in design and consumer relevance.

“You have to really understand the pulse of the consumer. Since brands aren’t the criteria of being relevant to the younger consumer, the assortment is critical. Is the design correct?”

Mankvitz: “Younger consumers want to be known for being able to create an eclectic space that tells people about their character, but they don’t want the brands to stand out; they want themselves to stand out. The brand isn’t necessary to telling their story.

“It’s the style, and the design, and how it fits into their beautiful home; when they take that picture for Instagram, that tells the story.”

Yashinsky: “In your industry, the store is the brand. There’s no question. Because people can find outdoor furniture anywhere.”

Mankvitz: “Anywhere.”

Yashinsky: “The store is the brand. No question. And that goes back to all the other stuff we talked about. How do you make that brand relevant in people’s lifestyles? How does it provide inspiration?”

Mankvitz: “How does your store make them feel proud about shopping local? When people feel proud, they’ll shout it. They will share about a great experience they had. They’ll feel really good about buying from a store in their community that supports the Little League team or that gives back to the park down the street. That’s very important and meaningful to the consumer. Amazon doesn’t give them that good feeling when they buy a piece of furniture from them.”

Yashinsky: “That’s incredibly important to Millennials. Shopping local, supporting local restaurants, supporting local retailers. That goes back to that whole emotional component – becoming a bigger part of the value equation.”

Photo Courtesy: Getty Images.

What else do specialty retailers need to concentrate on to thrive in the next few years?

Mankvitz: “I think that specialty retailers don’t spend enough time cleaning their digital house. They’re great at running a store, they’re great at choosing merchandise and product lines. They need to spend time figuring out what their digital strategy is going to be.

“A lot of times those things get left by the wayside – ‘Oh, quick! We’ve got to put something on Instagram!’ – without any thought. But that’s actually a very long-term strategy.

“You should have an editorial calendar, thinking about content every month. Consider working with an agency over the next two to three years, to really reach the younger consumer. Spend time cleaning your digital house and figuring out what your strategy is going to be.

“Then really stick to that calendar and that strategy, because you will let down a young group of consumers if you promise a newsletter and you don’t deliver, or if you promise to have inspiring things on Instagram and then it trickles off.

“It also connects back to that physical presence. So clean your digital house and get your strategy in order, so that in three or four years, when that consumer is knocking at your door, you’re ready.”

Photo Courtesy: Getty Images.

We’ve enjoyed very long, sustained economic growth. When the inevitable economic slowdown arrives, what encouragement can you give specialty retailers competing in this omni-channel world?

Yashinsky: “The good news is, they’re in a home industry. That’s the one place people are spending money. They’re not spending it on apparel; home purchases have now actually surpassed apparel purchases.

“We love our homes; we’re spending more time at our homes. Millennials spend the most time at their homes. It’s become truly their entertainment center, work center, leisure center, connectivity center. So you’re in an industry that is actually predisposed to what consumers want to spend on.”

Lately we’ve encountered some casual furniture retailers who have focused less on the high-margin special order business in favor of stocking a more limited selection of goods for immediate delivery. This is counter to a trend that’s developed over the last two decades, a trend that focused on near total customization for the consumer. How do you see this progressing in the years to come?

Yashinsky: “The best policy is a combination of both.”

Mankvitz: “Right. You need a line of core products that you can immediately deliver to your customers, and you need the specialty products that they’re willing to wait for.

“Those are two very different needs. That’s why stores like Aldi and Trader Joe’s are doing so well, but also why specialty grocery stores that offer every artisan thing under the sun are also doing well.

“It’s just that middle that’s not doing well. So, unfortunately for the specialty retailers in your industry, they need to offer both Aldi and the luxury grocery in the same experience. How they execute that is a challenge. But offering both of those two directions is the right way to win those consumers.”

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