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Redefining the retail space | October 2, 2008

The Experience Manifesto wrote a really provocative article about the purpose of the physical retail space back in 2006.

“…what is the value of real estate for retailers today? Does a record store really need to exist as it’s been for the past 40+ years? Or banks, grocery stores, fashion retailers? If, thanks to the internet, people are much more comfortable getting their purchases sent to them, rather then getting them right away, do we need that much space dedicated to merchandise? So, if we can do away with the inventory portion of most retail spaces today, what else would you do with the space? How could you make it a much more social environment, rather then being a retail environment? After all, this is exactly why places like Starbuck’s or the Apple stores have boomed — they created a social space, rather then a retail space.”

Today, their words ring truer than ever as brick-and-mortar sales continue to tank while eCommerce grows. With rising gas prices, competitive deals and convenience found on the web, and our growing comfort with shopping online, people are shopping online more. Many retailers (Gap, Victoria secret + JC Penney) are experiencing double digit sales growth while their brick-and-mortar sales steadily decline. Internet sales are expected to surpass $200 billion this year, up from $175 billion in 2007. So, if people are doing their buying online, what is the value of the physical space? Or, what value do we as marketers need to bring? Retail as experience is by no means a new thing. But has anyone nailed it yet? Has anyone really cracked the future of brick-and-mortar stores? I would say not entirely, or sales wouldn’t be tanking.

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