No Such Thing as a Store

No Such Thing as a Store

By Lee Peterson

They don’t call them stores. They call them galleries.1 It sounds a bit pompous, but those are Elon Musk galleries. Tesla doesn’t do anything the way everyone else has always done things, which begins to explain why their 200 locations aren’t showrooms, either. And most certainly not that 20th century anachronism: "stores".

Tesla isn’t really trying to sell cars first, after all. Instead these 200 galleries are where an entire worldview—a future without combustion engines—is on full display. Tesla is doing more than selling electric cars directly to consumers; it's promoting Tesla the brand as much, if not more, than merely cars and energy products.2 That’s why Tesla “stores” look more like Apple or Warby Parker locales than old-school car dealerships and portend a new future for retail entirely.

There is no such thing as a store anymore.

Case in point: A few years ago, Apple Stores simplified the branding of its retail locations,3 editing “store” out completely. Ever since, the tech giant’s “stores” are referred to simply as “Apple.” Its Apple Union Square—not Apple Store, Union Square. “The store becomes one with the community,” is how Angela Ahrendts, Apple’s senior VP of retail, described the change during the opening of the Union Square location, along with the broader repositioning of the company’s locations as community hubs and gathering places.4 Not to mention, you don’t just buy Apple products anymore, and the entire brand ethos has evolved into a lifestyle: You can buy bike helmets that communicate with your iPhone, jump ropes that count your hops, and smart controllers for your lawn sprinklers.5 Other retailers would be wise to follow the examples of Tesla and Apple and accept, as a recent headline in The Atlantic put it, “The Future of Retail is Stores That Aren’t Stores.” 6

Stores exist in a three-dimensional space. But they are one-dimensional in function; You can only buy stuff there.

This shift is bigger than semantics, though. Stores exist in a three-dimensional space. But they are one-dimensional in function; you can only buy stuff there. Usually only a specific category of goods or services. Think specialty retail. Or grocery. Or books. (What does The Gap do? It sells khakis and jeans.) Now consider Amazon: It not only sells whatever it wants, it does whatever it wants. It is more than The Everything Store, as writer Brad Stone christened the ecommerce giant in his landmark book.

It’s an Anything Engine.

And increasingly, Apple is too. For starters, it is no longer merely a tech company. With iPhone sales slowing down,7 it wants to be an entertainment company, too, and will spend $1 billion on content to8 compete directly against Netflix, Amazon, and HBO.

This isn’t just big tech firms spending the massive cash reserves on their balance sheets, although that certainly helps come execution time. But the modern customer—aka what we call Digital Natives—is now accustomed to companies that can do and sell everything. There’s no inherent conflict in the minds of young consumers anymore. They will buy clothes, watch TV, order web services, and get the steak and broccoli they want for dinner delivered from the same company. The DOJ might eventually decide it doesn’t like it,9 but consumers sure don’t seem to mind.

Less than a decade ago, when Walmart was the world’s most dominant retailer, there was talk that Walmart had “permission” among its loyal customer base to be more than just a retailer. It could also expand into TV, restaurants, cars, etc., all because people believed in the Walmart brand. As we all know now, Walmart never did that.

In the interim, Amazon exploded within consumer culture, doing all the things Walmart had hesitated to do. The Amazon credo is simple: It does whatever it wants. It tries anything because it believes it can do anything. There are no hard boundaries on product categories. Convention is the enemy, not the rule book. And there’s certainly no pre-existing trap of the one-dimensional box that is a store.

That’s one reason why what we used to call ‘stores’ in the 20th century can’t survive today. They are still the same. And they are still good for only one thing: transactions. A mere store can’t survive in a consumer culture ruled by Amazon. If stores want to survive, they must become something else entirely. They must become “anything engines,” too.

The next evolution, the next Store of the Future isn’t going to be competitive if retailers remain stuck in the “stores-as-experiences” paradigm. If we accept as a first principle that there’s no such thing as a store anymore, the brain space opens to start remaking the entire concept of retail. To do so, we must start by having a more vibrant, fresh and shared language.

And the first convention to get rid of is the age-old focus on transactions and purchase first. That’s secondary, or maybe not even secondary, the least important thing. Store brands must also finally reject the outdated metrics of same-store sales. When there’s no-such-thing-as-a-store, there’s no such thing as same-store sales, either. (Which is why Amazon got away with not having profits, and only marginal profits even now for its retail business as long as it did.10)

If stores want to survive, they must become something else entirely. They must become anything engines,' too.

If we are going to define some terms, let’s start here: Besides Amazon, what exactly is an Anything Engine? Broadly speaking, it gets us whatever we want, anytime we want, however we want it, and, most importantly, pretty much now. Or at least the same day. Yes, if you are thinking that sounds intimidating and downright impossible, hold on. Anything isn’t merely product. It’s also information, videos, photos, communication—all those things that can get delivered immediately.

Smartphones, laptops, TV, social media—all of them provide multiple services—and this is having a larger effect on the broader economy and culture, informing the way other companies operate, too. Anything is fair game. This reflects the willingness of Digital Natives to see companies as multi-functional, while demanding more from them than ever.

Now consider why in a no-such-thing-as-a-store world, the side-by-side comparison between a store and a phone suddenly feels like such an unfair comparison. Consider what can be done on a phone today. It’s mind-boggling. Limitless. A traditional store, on the other hand, has physical and spatial limits. It is stagnant, offering only one thing: A place to buy something. And that’s simply not enough anymore.

If store brands can’t figure out a bigger vision, they will just become a piece of the “anything” pie. Stores reimagined as Anything Engines get to be something more. Not just one-dimensional sellers of shoes, or books or records. This shift helps explain why Urban Outfitters bought a pizza chain!11

That all might sound a little breathless. A little too transgressive to the status quo. But there are larger trends behind this seismic shift. How can store brands stuck in the one-dimensional box of single-function stores embrace these changes strategically?

This reflects the willingness of Digital Natives to see companies as multi-functional, while demanding more from them than ever.

Adopt the Tesla/Apple/Amazon Attitude of Anything Goes: These spaces reflect a horizon-free vision of brand. There are no limits. No boundaries. Tesla gets to do rocket ships, too! Apple gets to be an entertainment company. Amazon gets to be—well, whatever it wants. This is an era of when consumers want anything tools from any company! It comes down, in most cases, to the brand: Do they believe in its worldview? Do they believe it can make anything possible?

Rethink Principles About What a Store Is: If specialty and traditional store brands have any hope of surviving the dominance of Amazon, they must break out of the one-dimensional box and not focus on transactions. Not only must stores play a role as a space for identity formation and social environments, giving consumers a place to be “seen” in real life, they must begin to see their competition not as other stores, but the anything engines that travel in consumer pockets. Amazon is an anything engine just like the phone in their pocket.

Evolve or Die: Stores simply can’t compete, as they currently function, against anything engines. We are in the first few battles of what will soon become a zero-sum competitive battle. If stores stick to selling one thing, they won’t be selling anything very soon. Abercrombie only sells clothes. Period. Meanwhile, Amazon does a million things. They are an anything engine just like a phone is today. This is what the modern consumer expects. And expanding outside the box of the store into an anything engine mindset means you are no longer stuck in one lane.

1 Source: https://www.investopedia.com/articles/active-trading/072115/what-makes-teslas-business-model-different.asp
2 Source: https://www.businessinsider.com/tesla-showroom-and-mercedes-dealership-comparison-pictures-2018-4#in-contrast-to-my-time-at-the-tesla-store-i-wasnt-asked-if-i-needed-help-for-over-ten-minutes-once-i-replied-that-i-didnt-i-wasnt-approached-for-the-rest-of-my-time-in-the-dealership-22
3 Source: https://www.digitalistmag.com/customer-experience/2016/09/13/new-apple-stores-arent-stores-04468573
4 Source: https://9to5mac.com/2013/02/12/cook-apple-stores-arent-just-stores-they-are-gathering-places-entertainment-venues-and-prozac/
5 Source: https://www.businessinsider.com/apple-store-surprising-products-you-can-buy-2019-6#a-bike-helmet-that-communicates-with-your-apple-watch-3
6 Source: https://www.theatlantic.com/business/archive/2017/09/future-retail-experiences-juice-bars/539751/
7 Source: https://www.nytimes.com/2019/01/02/technology/apple-revenue-decline-china.html
8 Source: https://www.nytimes.com/2019/03/17/business/media/apple-content-hollywood.html
9 Source: https://www.wsj.com/articles/tech-giants-google-facebook-and-amazon-intensify-antitrust-debate-11559966461
10 Source: https://www.investopedia.com/how-amazon-makes-money-4587523
11 Source: https://www.bloomberg.com/news/articles/2016-07-20/why-urban-outfitters-bought-philadelphia-s-pizzeria-vetri
Lee Peterson
Lee Peterson
Executive Vice President, Thought Leadership & Marketing
WD Partners
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