#GlobalShop19: Retailers must learn the media value of their store estates

Physical stores will continue to form an important part of the relationship between retailers and consumers – but companies must learn new ways of measuring the impact those stores have. This was the message given to the audience at the opening keynote presentation at GlobalShop @ RetailX in Chicago yesterday (25 June 2019).

Retail futurist and author Doug Stephens, billed as the Retail Prophet, was the opening keynote speaker for the event, which has been formed from the combination of Globalshop and a number of other related retail events.

Stephens outlined the impact that online retail has had on the US retail market, and predicted that the current state of online retail is only ‘the end of the beginning’. He outlined developments in technologies such as augmented reality, and the rapid impact this is having on consumer behaviour, and the accelerated pace of change in the sector.

“I believe that by 2033 the online economy will outgrow the offline economy,” he told a large, international audience.

But despite that growth in online sales – and a corresponding fall in offline sales – Stephens felt stores will be around for a long time. “There is a lot of disruption going on but I don’t see it as the end of physical retail,” he said.

Listing examples of online retailers moving into physical stores, and the uplift these can create in local online sales, Stephens concluded that “Something about physical retail is compelling.”

He then traced the development of human interaction and communication, from the traditional marketplace, through newspapers, and then via radio, television and the internet. Once it became possible to buy digitally, media effectively became a store that people could access wherever they chose, argued Stephens. But, as the digital world has grown and achieving standout has become difficult, the situation has reversed.

“Now, the store is media,” he told the RetailX audience. “It’s becoming the most manageable and measureable media, media effective wherever people gather… and it’s becoming increasingly difficult to reach consumers by digital. The new place is physical stores.”

Stephens illustrated his point with examples such as the 98m consumers per week who visit a branch of Starbucks, compared to the 2.5m per week who buy the Sunday edition of the New York Times; and of an unnamed national jewellery retailer which was welcoming 7m customers a year to its stores for extended browsing – and attempted to calculate what that exposure would cost in traditional media terms.

The problem is that retailers are not taking this media value of traditional stores into account when they look at their balance sheets, says Stephens.

“You don’t see the media value of stores listed in the P&L [profit and loss]. Retailers are using outdated metrics,” he said, presenting the position that retailers should measure and develop the physical media value of their stores.

“They have to stop thinking of stores as places that distribute products and think of them as places that distribute experiences,” he said. Stephens uses a formula that takes the number of in-store consumer impressions and multiplies it by a retailer’s Net Promoter Score (NPS) to do this.

This is leading retailers to take either a ‘Super High Fidelity’ approach, with stores such as those run by Apple or Eataly, which place a high value on experience and interaction; or a ‘Super High Utility’ approach, such as that offered by Amazon, said Stephens.

Predicting a future with “Fewer stores, and more stories,” Stephens outlined a retail world of rapid innovation, with new experiences, and live and limited edition retail that emphasises the fear of missing out (FOMO) caused by constant change.

In return, he promised rewards that he described as a return on experience, rather than a return on investment. This, he said, leads to greater customer loyalty and, ultimately, profit. He summed up by telling the audience that “Return on experience is f***ing awesome.”