Discover how Best Buy, along with other retailers like Apple, Adidas, Disney and Moosejaw Mountaineering are radically shaping the future landscape by leveraging what I call Tornado Effects to re-define the customer journey inside the the marketing funnel and to ensure today’s empowered consumer, is tomorrow’s empowered shopper.

Well, for their event, Nascom asked me to create a challenging presentation, so I thought I would explore the real failings of retail further and, more importantly, find some possible fixes. Not only did I find concrete data and examples showing just how bad US and UK retail is doing economically, but also some great examples of what some stores and brands are doing to try to make retail better using new technologies and approaches.

You can check out the entire presentation here, complete with speaker and case notes.

Is this the future of retail?

In the run up to Christmas, and the mad post-Christmas sales dash that followed, it seemed that the only thing anybody in Cambridge did was shop.

There are two malls in Cambridge, the Grand Arcade and the Grafton, and I live almost precisely between these two shopping meccas. In the days before and after Christmas, there must have been a few hundred thousand people coming in and out of Cambridge.

I realise that the Cambridge economy is fairly booming. According to official reports,  Cambridge retail pulls in just over a £1 billion each year. In the run up to Christmas, the average retail footfall increases by 30% with people spending on average between 2-4 hours of their time shopping (according to a 2008 city government customer survey).

One billion is a hefty amount of money, and more importantly, it’s a hefty amount of man hours going into shopping as an activity as opposed to doing something more philanthropic, such as working up solutions to world hunger, or even using the time to improve ourselves and our lives.

Which brings me to the interesting observation three Cambridge stores; the Apple Store, Build-A-Bear Workshop and Levi’s.  When you watch people in these three different retail environments, you see completely different behaviors.

When you wander into any Apple owned retail store, you immediately notice that people are not just looking at products, they are actively using them! Apple stores are now famous for perfecting Experience Shopping. The notion is that when you have a high-involved product like computers, the best way to sell them is simply to let people experience them in real life conditions. So Apple retail has counters loaded with Macs connected to an in-store wi-fi service that anybody can wander in and start to use.

You therefore see a lot customers dropping in just to check their email, twitter and Facebook accounts, or to surf the web and chat with friends over IM.

An Apple store patron surfing the web

Towards the middle of the store, you have a series of gaming computers loaded with some of the latest Mac-friendly games. Here teens and kids as young as 5 are parked on cushions, playing games for up to an hour at times.

Gaming corner in the Apple Store

Apple is also famous for turning their retail into learning centres. Apple staff regularly hold training sessions throughout the day. At one, I witnessed two pensions learning how to create home movies on i-Movie. At another, I witnessed budding musicians learning how to use GarageBand and USB keyboards to create their tracks.

Wait a minute! These people aren’t really shopping! They are learning, communicating, researching and enriching their lives, all the while, realising that this is what the Apple brand enables. In essence, Apple uses its retail to demonstrate its brand promise every single day. Sure you can still buy at the Apple retail stores. But shopping itself has been made more subtle and de-prioritised to focus on brand experience. The end result is that people feel like they drive the interaction rather than the other way around.

How the approach is working for Apple? In the US, Apple tops the charts in retail sales. Whereas brands like Saks Fifth Avenue are earning $362 per square foot a year, Apple rakes in a chartbusting $4032! They are almost twice as profitable as Tiffany’s & Co famous store in NYC. (source: CNN Money 2007)

Still, some have argued that the Apple approach towards experience centres isn’t for everyone. And so it seems. Nokia has tried for years to emulate Apple’s retail format with their flagship stores and has failed. In part, Nokia really didn’t understand what Apple did. They never successfully made their retail about brand experiences. Their stores were often poorly staffed. Or had too little space in some cases. In the end, Nokia has recently decided to close its flagship stores. So if Experience Retail isn’t the answer to all brands, what are the other choices?

Let’s move across the hall from the Apple Store in Cambridge to the Build-A-Bear Workshop. Whereas Apple is all about experience with the brand, Build-A-Bear is all about brand participation.

Build-A-Bear using kids in store to help them decide on future products.

In fact, their central products, the bears and stuffed animals, are purposely left as unfinished products. Instead, kids are involved in “creating” their own custom product, from choosing the animal casing, which can be anything from the classic teddy bear to lions, leopards, dogs, bunnies and unicorns, to stuffing, fluffing and sewing it. They are even asked to groom and dress their toy in any number of available outfits, all of which cost extra of course.  The kids are then given official adoption certificates and are asked to name their toy. My daughter chose the Jack Russell Terrier toy and named him affectionately, Mac, after a neighbour’s golden Labrador and now treats her toy as her real pet dog.

What Build-A-Bear hit upon was the realisation that kids like to create. No, they love to create! By offering an interactive, family oriented experience in store built around participation, Build-A-Bear doesn’t become just another shop selling you more stuff, they become a treasured childhood experience.

Today, Build-A-Bear now even lends out its Workshop for Built-A-Bear birthday parties where creation becomes the focus of a birthday experience. Personally, this is going a bit too far for my tastes, but I can imagine a lot kids wanting a birthday party there, especially if that becomes their first Build-A-Bear experience.

A Build A Bear birthday party

I would love to say that all of the retail stores in Cambridge are as interesting and involving as Apple and Build-A-Bear, but sadly they are islands in oceans of dreadful shopping. The remaining stores are still living in the retail stone age, focused solely on using sales to drive footfall, offering crazy discounts to get people to buy. While neighbouring stores plastered 70% off signs on their windows, the Apple Store and Build-A-Bear Workshop didn’t have any, and yet, their stores had as visitors as ever.

Is it simply because of their unique formats and products that Apple and Build-A-Bear could make experience and participation retail work, or could it work for other brands as well. To answer this question, let’s look at the Levi’s store, which sits just a few doors down from Build-A-Bear.

Historically, Levi’s can be said to have led the industry with creating in-store experiences. Their famous $20 million flagship store in San Francisco, which opened in 1999, had cutting-edge technology, interactive attractions, and high-quality music and video. It was described as being “part theatre, part art gallery, part museum, part cinema and part rave.”

Greg Ercolino, president of Ercolino Productions, a New York-based technical consultant and systems integrator who designed the store described it as being  “…like a film festival. People want to be entertained, they want to learn something new, they want to experience something.  To do that, you have to be interactive and show them things they haven’t seen before.”

The store features a live DJ/VJ booth for audio and video artists to perform. Activities and attractions at every corner of the new store, such as the four video periscope stations near the main entrance which allow customers a virtual — if not voyeuristic — tour of each floor. Then there’s the 3D body scanner that lets customers get a custom-fitted pair of Levi’s and the “shrink-to-fit” attraction — one of the store’s odder features — that dips you and your new Levi’s jeans into a special bath, then blow dries you and your pants in a human dryer until they hug every curve just right.

Taking custom-fitting even further, the Levi’s Original Spin Program allows customers to choose from a range of cuts and styles and have a pair of jeans custom tailored based on their exact measurements and preferences.  There is also a “Factory Area” where they can watch Levi’s staffers embroider a custom design on a pair of jeans with a 15-color thread embroidery machine, or burn a photograph into them with a special laser-etching machine.

In addition, the store features a range of other multimedia and interactive attractions including CD listening stations, Internet stations, and “Attitude Pods” — specially designed audio/video entertainment chairs

Was any of this impressive, ground-breaking, hi-tech, personalised and entertaining retail experiences in my local Cambridge Levi’s store? No. Not a single one. In fact, the Levi’s Cambridge store looked pretty much like every other fashion store in Cambridge: a small retail space with a bunch of clothes and a few changing rooms.

The more important question is did all of this impressive retail kit improve Levi’s fortunes? Again…no. Sales and profits at Levi’s have been plummeting for years.

In 2008, they saw profits plummet by 98% in the second quarter, which they blamed on weak consumer spending. In the first quarter of 2009, they saw a 50.5% profit drop, which they again blamed on consumer spending. Though they did finally see a sales peak of 5.5% by the end of the third quarter, they were still struggling in the so-called “tough economy.” Meanwhile, sales in Apple stores soared, as did those of Build-A-Bear. Weak consumer spending? Or maybe consumers were just being more selective about where they spend their money.

So, while Build-A-Bear and Apple have made experience and participation based retail models work, why didn’t it improve Levi’s fortunes?

One reason is that their flagship model was impossible to roll-out to all of its hundreds of global retail stores, mainly because, as in Cambridge, most Levi’s retail stores are small. The other problem is that Levi’s still doesn’t own most of their retail outlets, a situation they have been trying to improve since 2005. The main problem in my mind however, is that none of the 3D scanners, video periscopes and other whizzbang store gimmicks were core to bringing the brand to life. Sure you could get your jeans blow-dried to your skin. Or your favourite design laser etched onto your jeans. But is this why you buy Levi’s? Is this what the brand is about, customisation?

Back in 2007, when I was planning for a new campaign launch, I hit about a golden truth about Levi’s. Levi’s is probably the ONLY brand in the world that one could with confidence say was present in every major revolution, youth movement and key historical event that has happened in the last 60 years. Such is their absolute ubiquity that you can be almost certain that somebody participating in or witnessing a historical event or mass movement, was wearing a pair of Levi’s jeans. This impressive heritage with historical moments and youth movements is what the brand is about. It’s history as witnessed by people wearing Levi’s.

What Levi’s and other retailers should be looking for, are ways to bring their brands to life and involve people at retail with their brand experiences, not just product ownership experiences.

With Levi’s this would translate into to creating centres of “history through my eyes” and customised every shop in the world with witnessed history as it happens, providing innovative ways for people to share, talk about and even create memorable historical moments.

With other brands, it’s high time they start to rethink and reinvent. Shopping as it stands cannot be maintained indefinitely. And replacing it with more experience-driven shopping that aids in self-actualisation and real personal or community growth is the key to maintaining strong performance in the challenging years to come.

Sources:
Consumer expenditure in Cambridge

Cambridge consumer shopping survey

Levi’s sales performance

Levi’s San Fransisco Flagship store

Problems with the Levi’s Flagship store