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17 mar 2020

Stra­tegic opportunities and chal­lenges in the new retail landscape – the physical store

Thoughts

At the beginning of February, a group of senior executives from different retail companies met for a round table discussion for the second time at Capacent’s Stockholm office. Again, the purpose was to discuss strategic opportunities and challenges in the new retail landscape but with focus on the role of the physical store. The theoretical starting point was The Kahn Retailing Matrix from the book The Shopping Revolution by Barbara E. Kahn.

In recent years, the role of the online store has grown and created changing customer behaviors. This raises the question “How should retail companies act when looking at their physical stores?”. Sara Rosengren, professor at Handelshögskolan in Stockholm with focus on Retail, has in research identified important roles for the physical store due to changing purchasing behaviors.

For example, the physical store is better at attracting/activating customers, building awareness and creating experiences. Customers are also more likely to try new products in physical stores than online. On the other hand, the online store is better at keeping existing customers and building repurchases.

Trends affecting the physical store

The positioning of the company will play a role in understanding how to act, but regardless of the position there are trends affecting the physical store network. For example:

  • To what extent will time and convenience play a role?
  • How does the social need affect the role? Do we want to be in a context where there is a social meeting point?
  • If vertical integration becomes more common, how will it affect the physical stores?
  • Which future innovations will affect the customer journey?

Location is an important variable

The round table discussion also resulted in some insights regarding the roles of physical and online stores and how they are changing. Different stores in our elongated country will have different services and designs depending on where they are located. This might also change more often which can be an incentive to have shorter rental agreements and thereby be more flexible.

New type of stores

Changing customer demands might also create new type of stores which work with omni channels and are not obtainable with online stores such as inspiration stores or self-service stores. Understanding the changing customer behaviors should also increase collaboration between online stores and physical stores to increase competitiveness. This could be implementing digital solutions to be able to adjust the assortment faster or designing so-called superstores, physical stores with larger inventory than usual to be able to reduce lead times and increase service throughout the country.

Want to be a part of our retail trust?

If you are interested to be a part of our Retail Trust. Check out our new dates for Retail Trusts below. And if you are interested – contact lotte.kylberg@capacent.se, pontus.andersson@capacent.se or peter.magnusson@capacent.se.

Stockholm
25 mars: Kostnadseffektivisering i tuffa tider
28 maj: Kundupplevelsen i fokus för konkurrenskraftig retail

Göteborg
17 april: Utmaningar i och erfarenheter från ett nytt retaillandskap
Sensommar: Kundupplevelsen i fokus för konkurrenskraftig retail

Read more about our Retail Trust here!

Get in touch!