Will flagship stores become obsolete post-Covid?

Raj Sangha
by Raj Sangha

The role of the flagship store was already under duress well before Covid-19 arrived on the scene. Now retailers are beginning to question the need for their very existence.

Last year I wrote a piece on the growing number of high-profile retailers closing down their flagship stores on New York’s Fifth Avenue – Tommy Hilfiger and Calvin Klein, to name a few – to cater to the rapidly changing demands of modern consumers. Now, a mere 11 months later, and it feels as if it’s been decades.

The original role of the flagship store was to boost brand awareness and advocacy, essentially acting as one big, giant billboard that screams “I’m Important”. But that was when shopping used to entail day-long trips to the mall or high street, when consumers used to bounce from store to store in the hopes of discovering something new.

Nowadays, shopping is something you do on your phone while eating lunch. And, while flagship stores are particularly popular with tourists, any retailer with one will be able to testify that rental rates on London’s Oxford Street or New York’s Fifth Avenue are ridiculously high – so the cost of rent versus marketing opportunity has long been a topic of heated debate.

Covid-19 has drastically reduced footfall figures to inner-city locations, where the majority of flagship stores are based, and it’s had a major impact on the shopping behaviors of consumers, prompting many retailers to rethink their approach altogether.

We investigate what’s changed, what hasn’t, and provide a few helpful insights into how your brand can continue to reach consumers during Covid-19.

Covid-19 has unleashed the inner omni-channel consumer inside all of us

Omni-channel shopping has long been lauded as the future of shopping, but truth be told, it doesn’t represent ALL consumers. There are some that still refuse to shop online, or only do so when they absolutely have to. And not all consumers look up products on their phones while they’re shopping in-store; nor do they want personalized online offers or the ability to pickup items without leaving their cars.

But Covid-19 has upended many of these outdated preferences by encouraging consumers from all demographics to embrace omni-channel behaviors – and they’re loving it!

As a result, a whole new wave of consumers are embracing a whole new range of channels, not just in-store. These consumers will now be shopping online while they’re in your stores. Or they’ll want a video chat with a consultant online before making a trip to one of your stores. Or they’ll want to join a queue or book an appointment for in-store service right then and there by scanning a QR code. Or they will want to buy products online and collect them curbside without leaving their cars.

Essentially, the divide between online and in-store has become even more blurred, and while flagship stores may have been all about relationship building (which they still are), consumers now expect an omni-channel experience to match.

Flagship stores need to meet consumers halfway

In the last few years, flagship stores have become less about building relationships on a global scale, and more about building a sense of culture and community on a local level. (Take Nike’s Melrose Place as an example.)

With tourist figures down and with the number of consumers visiting inner-city locations still a fraction of what they once were, retailers need to invest in creative ways to meet their customers.

One way to achieve this is to take the flagship experience to local stores or areas. Luxury sports brand, Lululemon, has over 500 stores worldwide, the majority of which are in North America, and these stores are known for being small yet profitable.

These smaller format stores serve as an anchor for the brand’s loyal customers by building a community of followers and repeat customers with free classes, sports events and support for local “ambassadors”— athletes and yoga practitioners.

Despite the pandemic, the brand has experienced a huge spike in online sales due to its comfortable loungewear and is looking to continue with its expansion plans, says Chief Executive Officer, Calvin McDonald, who also pointed out the role experience plays in the omni-channel ecosystem: “If our physical existed only to transact, I would think differently [about expanding].”

Other brands, particularly luxury brands such as Burberry and Dior, are investing in pop up stores that meet consumers in their local neighborhoods or holiday destinations. For instance, luxury leather goods fashion house, Loewe, set up pop-ups in a number of Mediterranean locations, including St Tropez and Ibiza.

Make experience the priority

My final point is quite simple. Whatever initiatives you bring in, whether they’re designed to keep consumers safe, protect store staff or drive sales, the overall customer experience needs to be the priority.

As Mark Limby, the Stores Director of luxury department store retailer, Brown Thomas, pointed out in a recent webinar, consumers come to stores for an engaging and fun shopping experience, and while safety measures need to be in place, they shouldn’t become the focus.

This can be achieved by streamlining the customer journey. Eliminate queues with virtual queuing software. Allow customers to schedule in store visits or appointments with in-store experts. And make curbside pickup or BOPIS services contactless and seamless.

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