FT Business of Luxury Summit 2016: Downsized Retail
One of the key topics at this year’s FT Business of Luxury Summit was the changing shape of the bricks-and-mortar retail environment – specifically, the relevance of a smaller footprint, and the influence of digital interactions on physical configurations.
Ganesh Srivats, vice-president of sales for innovative US automotive brand Tesla, explained its use of relatively small stores, often in malls, rather than conventional showrooms in building brand awareness: “There are millions of people who don’t know anything about Tesla, who don’t necessarily have us on their shortlist, but they are ready to buy a car,” he said. “They aren’t going online and searching for Tesla. We want to be somewhere people will be surprised to see us and we can tell our story. We use the stores to provide a great educational experience.”
Tesla currently has nearly 400 North American stores, which average only 2,500 sq ft. See also Innovations in Automotive Retailing and Retail Design Expo 2016 (Reimagining Convention: New Improved Formats).
Joseph Sitt, chief executive of international real estate developers Thor Equities, described the fluctuating role of the flagship itself. “My advice is: don’t think the word ‘flagship’ means ‘big’,” he said. “You must have a physical presence. It’s branding, it’s advertising, it’s experience and it’s entertainment for the consumer. But you can do it in a much smaller space than people thought of before. You just use technology as your friend instead of size.” See also Downsized Retail Destinations (Diminutive & Digitised: Omni Micro Stores).
On the topic of big data’s store-side influence, Daniella Vitale, chief operating officer of US department store Barney’s New York, said: “We have so much data now, which influences the way we design our stores, because we know how the customer is shopping – including what brands they are cross-shopping with. It actually forces us to take more risks within the physical store because we are putting things next to each other that are maybe a little bit unexpected.
“I also know from some of the online behaviour and editorial that customers consume they are very interested in our restaurants and they are very interested food, so now there will be a restaurant in every one of our stores as we continue to renovate.”