5 rules for a retail town square: What Apple, Whole Foods Can Teach Us
Here's a potential formula for retail of the future: One Apple squared equals a community experience minus the traditional sales space.
I am talking town square, as was used to describe Apple's new concept stores. The plus? That depends on how well the formula is executed, and Apple may be among those setting the standard, along with Whole Foods' new stores, called 365.
Apple's next-generation stores won't exist merely to sell computers, Angela Ahrendts, Apple's senior vice president of retail, told attendees at Fortune's Most Powerful Women Summit. It will instead focus on "enriching lives," with classes and workshops for children, adults and teachers, as well as visits from artists and musicians. By the end of 2016, Apple plans to operate 95 such next-generation stores.
Whole Foods, meantime, is pursuing a similar "Main Street" retail approach with its 365 by Whole Foods stores. These include independent vendors called "Friends of 365," which could range from local juice bars to bike repairers. Whole Foods operates three of these 365 stores and plans to open an additional 16 in 2017 and beyond.
The sum of these efforts may be greater than mere store numbers, however. Indeed, two influential retailers plus two similar concepts could equal forced change among competitors. And this could transform what consumers come to expect at the store.
Replacing product with experience
If Apple and Whole Foods' community-type store concepts are to take hold more broadly, the retail experience could be rooted not in product, but in how a retailer positions the lifestyle nature of its brand. This would mean a potentially major change in how retail space is used.
And a change in how retail space is used would alter the overall experience.
Picture department stores replacing their first-floor cosmetic counters with workshop spaces where shoppers can learn makeup design, style tips or jewelry making. The actual selling could take place on the upper floors or at the store perimeter.
Extend this experience to mobile devices and the implication is the retailer's focus on product would have to shift. Would this mean product is to be upstaged by experience? I would argue product plays a key role in making the experience.
5 rules for a town square
For that town square experience to work, regardless of what one is selling, there needs to be rules of authenticity. Following are five guidelines for operating a real "Main Street" store that balances the products we would like with the experiences we seek.
1. Be open to all
A town square, or a Main Street, serves many functions and therefore requires a variety of complementary product offerings and attractions, from bakeries to record stores. Similarly, Whole Foods' 365 stores complement its products with those of independent businesses. "We're connecting you with really incredible food, products, services and experiences. Even if they don’t come from us," Whole Foods writes on its Friends page. Indeed, Whole Foods 365 is not limiting its "friends" to food merchants; it invites all independent business owners (including record shop operators) to apply.
2. Be a familiar (not forceful) face
What distinguishes the Whole Foods and Apple concepts from other store-within-store brand partnerships (think CVS and Target or J.C. Penney and Sephora) is the inclusion of local, familiar faces. Bringing a town musician into an Apple store means drawing the musician's fans and followers, which could be a great way to capture new sales. But tread deftly. Visitors should not feel pressured into buying anything. It's like wine stores that offer tastings; a good number of tasters, but not all, will buy a bottle or three. The trade-off is the store has created a local gathering spot that makes people feel happy, and that feeling oftentimes translates into positive word of mouth.
3. Be a good neighbor
Being a town square retailer means shifting the product focus to local players. This can be challenging if the business partnership does not work out, particularly because visitors may be more loyal to the neighborhood vendor than to the national brand. For this reason, the larger retailer, the "landlord," should make the terms and conditions clear and easy to understand. Whole Foods' Friends, for example, must agree to meet Whole Foods Market quality standards before they set up shop in its stores. Further, they are responsible for all operations, including staffing and making the space their own.
4: Location, location, location: There's a reason gazebos are popular centerpieces of town squares; they are the congregation areas. Similarly, retailers that want to create communities within their walls should be mindful of where to locate their attractions and products. Removing the sales space from workshop areas diminishes the risk of visitors feeling they are being marketed to. Yes, retailers do need to sell products to survive, but it does not have to be a hard sell. Apple's approach may be perceived as self-promotional (I don't imagine it is using competing devices in its workshops), but there is a middle ground. A cook teaching a class at Sur la Table can use a blender that is on the sales floor without drawing attention to the fact.
5. Be device-ive, not divisive
Look, even if a store featured a musical fountain in which children could play, its visitors would still be looking at the devices in their hands during their stay. So the merchant might as well be part of it. The trick is being a relevant part of the experience, among all of the apps, mail and texts vying for her attention. If the retailer wants to alert visitors to a special deal on fragrances (if a department store) or oranges (if a supermarket), it can do so by giving them the option to purchase it online, right there. Or it can offer to package the items up and have them waiting at the checkout.
All of these steps would guide a retailer toward more of a town square experience that might shift sales space but not compromise sales. It could, in fact, change the formula for what consumers expect in the sales equation. That is, until the next trend comes along.
This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original storyhere.
Bryan Pearson Bryan Pearson is President and CEO of LoyaltyOne Inc. and the author of the best-selling book The Loyalty Leap: Turning Customer Information into Customer Intimacy. www