HOW THE ONE-TIME BATTLE FOR RETAIL’S FUTURE HAS NOW RECONCILED INTO AN ALLIANCE OF PHYSICAL-DIGITAL INTEGRATION
Not long ago, in a galaxy not at all far away, the rise of online shopping inspired a wave of speculation forecasting an apocalyptic end to brick-and mortar-retail. In 2013, driven by the emergently urgent need to compete with online giants like Amazon, real-space retailers like Wal-Mart and Target announced plans to remain open on Thanksgiving.
For some, the extension of Black Friday into “Black Thursday” seemed like a final gasp of desperation. Had Amazon put the nation’s two major discount shopping chains in a panic? Had “brick and mortar retail…" entered "a death spiral”? Today, the competition between brick-and-mortar retail has reconciled into a broader history of hybrid "mixed-reality" consumer experiences.
2013: The So-Called "Death" of Brick-and-Mortar Retail
The media loves a good story, and the immanent fall of brick-and-mortar retail was a (literal) blockbuster—unavailable in stores, streaming exclusively on Netflix. The anxieties of 2013 were inspired by Blockbuster’s then-recent announcement that the nation’s largest video chain would close all domestic retail activity by early 2014. Netflix had knocked Blockbuster’s block off. Who was next? Having seen Blockbuster drown in a tide of streaming video, the media forecast a series of sci-fi-like sequels. Coming soon: Amazon and iTunes, sparring like Godzilla and King Kong amidst the rubbled remains of Best Buy and Toys R Us! Even the phrase “brick and mortar” seemed to proleptically reduce the real world of built commerce into a metonymic assemblage of broken bits, as if the fall of built stores were little more than a foregone conclusion.
Yet, despite recent stumbling blocks, the real world of brick-and-mortar retail stands strong. Truth or fiction, the story of brick-and-mortar’s immanent fall to online markets nevertheless commands attention. And herein lies the real story: To remain competitive, built retail will need to find ever new ways to draw on new technologies that involve consumers in stories. It’s a staple of branding wisdom: Consumers don’t simply buy products; rather, they buy products that facilitate immersion in stories. As applied to branding, narrative psychology suggests brand stories offers entry into broader narrative trajectories that give purpose and meaning to the purchase of products. For the owner of a Harley Davidson, the purchase offers more than a ride; it offers a role—not just as a spectator—but active participation, a driving part in one of the great comeback stories of American Industry: The Reagan-era survival and robust return of the motorcycle industry in the face of lower-priced foreign competition.
The Journey to Phygital Commerce
History repeats itself, but with a difference. This time, the competition for American retailers does not lie on foreign shores, but in e-commerce. Harley-Davidson’s survival was built largely on the power of an American comeback story. Harley Davidsonbecame the Rocky Balboa of the motorcycle industry. As with the Harley Davidson of the 80s, the future of brick-and-mortar retail also depends largely on the industry’s capacity to tell new, powerful stories that inspire consumers to see new, real-world possibilities.
As marketers bank on the narratives contained in unique brands, shopping floors offer vital staging grounds for the stories that shape the lived performance of brand consumption. Among the nation’s first department stores, Macy’s first set the stage back in the late 1800s, through the design of elaborate window displays that showcased the purchase of products as entryways into idealized lifestyle storylines. Cultural historians like Princeton University’s Rachel Bowlby have argued that these displays created new visual experiences that mixed shopping with fantasy in ways that would transform the role of consumption in American life.
As media scholars like the late Anne Friedberg have explored, these early window displays pre-figured the impact of large-scale advertising billboards. Today, these window displays have emerged as the industrial-age analog to the interactive windows that have come to define the screen interface of the digital revolution. The recent renovations to Macy’s Flagship Herald Square store include "One Below," a 53,000-square-foot staging ground for experiments in hybrid combinations of real/digital retail experience. Designed for millennials who came to age shopping on Amazon, the new Macy’s features “Selfie Walls” and touchscreens. An ambitions, $400 million project, Macy’s renovation teamed with high-end innovators in video and digital integration like Premier Mounts to develop new “phygital” retail experiences.
Disney's Star Tours
Another leader in this tradition, Disney has long modeled the integration of virtual and real environments to frame consumer experiences in a range of Disney storylines. Consider Star Tours. Now in its 30th year, the popular ride offer’s visitors a “tour” through the Star Wars universe. According to Jim Pine, rides like Star Tours have played a transformative role in the theatrical imperatives of what he famously calls an “Experience Economy.” More than clever wordplay, the shift from Star Wars to “Star Tours” enacts a transition from the marketing of products as mere objects to the marketing of products based in a consumer’s immersive identification with a brand as a story. At once real tourists in the fictional world of Disneyland, riders on “Star Tours” maintain identities as “tourists” traveling through the virtual-cinematic world of the Star War universe. Translating the “role” of tourist across real and fictional spaces, the “Star Tours” ride exits directly into the “Star Tours Store.” More than mere gift shop, the Star Tours Store stages the transformation of store-space into story-space, an immersive narrative environment where consumers purchase products as props: Masks and light-sabers offer opportunity to own and further extend the Star Wars story further in real space.
Disney’s “Star Tours” ride epitomizes the company’s creative capacity to market products as extensions of brand narratives. As a model for the future of brick-and-mortal retail in an age ecommerce, the Star Tours Store introduced the singular power of employing complex digital display technologies to transform how customers experience shopping in real spaces. Star Tours anticipates the hybrid integration of physical-digital retail into what Alexa Frias has called a “Total Experience Economy”: An economy suited to “a real-time digitally enhanced world where Millennials feel compelled to check their phones every three minutes to enhance their personal experiences.” Online venues bank on the value of convenience; brick and mortar stores, however, deal in the sale of a singular customer experience: The vital prospect of products marketed as live encounters. And, as at the Star Wars Store, producing these experiences do not require retailers choose between virtual and real environments. Rather, the success of real-world retail requires the creative integration of digital media in lived space.
MarketScale at NRF’s Big Show of 2017
The drive for new ways to integrate physical and digital space remain the top priority of the retail world. Last week, at the National Retail Federation’s annual “Big Show,” MarketScale, in coordination with MicroSoft, joined over 35,000 industry representatives from over 3,300 retail companies to check out the latest in solutions engineered to enhance retail's progressively phygital frontier.
Reporting from the conference, MarketScale's Director of Operations, Brandon Morgan, says that, amidst the changes, "the mood is good... Companies have had a great 2016 and are optimistic about 2017." Brandon reports that attendees have been particularly excited about the opportunities to be found in cloud migration. Interest in "upgrading brick and mortar with connected technology is big," including solutions designed to support the flow of "real-time data... to and from brick and mortar to ecommerce." To this end, presentations at the show’s “Innovation Lab,” will feature quick-fire demonstrations of products in categories like augmented reality and virtual reality, robotics and artificial intelligence, and wearables—all of which promise new ways of connecting with consumers in stores.
The Best of Both Worlds: Amazon Go and the Future of 'Phygitalization'
Just a few years ago, the rise of e-commerce seemed to mean the end of real-world retail. This year, Amazon’s release of Amazon Go suggests a new story. A real-world grocery store that employs computer vision, sensor fusion, and deep learning to eliminate check-out lines, Amazon Go integrates the convenience of mobile-e-commerce to enhance real-word shopping experiences. Customers simply go in and pick out what they want, while sensors automatically track their choices. To purchase, customers simply scan their Amazon Go app on their way out.
Amazon’s vision of “Just Walk Out" shopping—currently piloted at a single, modest location in Seattle— has provided more than another version of tomorrow's in-store retail experience. Whether the store proves successful is secondary to its meaning for the future of retail: As the world of brick-and-mortar moves to optimize the kind of online shopping convenience pioneered by Amazon, Amazon Go in turn represents Amazon's ambition to build on the value of real-world experences traditionally offered in brick-and-mortar locales. Symbolically, Amazon Go suggests that the move from brick and mortar to digital has come full circle.
Maintaining a close watch on changes in the world of retail, MarketScale brings expert support to the marketing needs of B2B companies whose solutions are transforming how customers experience tomorrow’s consumer spaces. Our partners enable real-world retail venues to achieve the digital parity required to provide consumers with experiences as streamlined and efficient as those available online.