better box

What Walmart, Tesla, and Burberry stores have in common

June 17, 2014
Obsession
How We Buy
June 17, 2014

Walmart’s announcement this year that it was going to start focusing on the small store format may be the beginning of the end of the big box store.

Since they first appeared in the early 1960s, and expanded hand-in-hand with the suburban sprawl that’s come to define much of the American landscape, big box stores have been on a perpetual race to create an even bigger box—one with a footprint that appears to defy zip codes, a selection of products that can feed, clothe and house entire countries, and aisles seemingly wider than football fields. Thankfully, you’ll find someone bucking the trend and creating a better retail experience.

Granted, these big box stores have served a purpose—and still do—to a great number of Americans who live far from urban centers and who rely on a weekly trip to load up on household essentials.

But times have changed and so have we. Much of the population is moving back toward city centers and seeking “walkable” areas that don’t require the use of a car. Perhaps more important, the birth of the internet, followed by the rise of connected devices, has changed virtually every aspect of customer behavior, from discovery to purchase to service. As a result of these changes, companies—especially retailers of all shapes and sizes—are rethinking not just what they sell, but how they sell it. Their aim is not to build a bigger box, but a better box.

It’s a smart maneuver. Today’s customers no longer want an impersonalized and, let’s face it, dreary trip to the supermarket or department store. They want an environment that—like shopping online—is easy to navigate, convenient, and fun. Stores that are seizing on this sentiment and building these “better boxes” are vastly improving the shopping experience.

It may be hard to comprehend that Walmart—which is synonymous with “big box”—is at the forefront of this movement. For example, next year, the store will open as many as 300 new Neighborhood Market stores which average about 38,000 sq. ft. (a far cry from its suburban-based 200,000 sq. ft. behemoths). It will also expand its convenience store-sized Walmart Express stores, which average about 15,000 square feet. Bill Simon, Walmart’s US President and CEO, says theses smaller, friendlier formats will help the company “usher in the next generation of retail.”

This “next generation of retail” is blurring the boundaries between physical and digital. New digital tools and technologies aren’t just fancy add-ons, but the building blocks around which the rest of the retail experience is built. Smart brands are creating meticulously designed, seamlessly integrated experiences that make shopping in-store more like online giving shoppers greater control and convenience. For example, Walmart shoppers can now use their smartphones to create voice-activated grocery lists, be guided to the product they are looking for in store, do price checks, skip the checkout line, and scan and buy goods. Customers walk away from Walmart’s better box with two things: a good experience and a good story to share with their friends.

Though in a vastly different category from Walmart, Tesla is operating under a similar formula that could change the way we shop for a car. Rather than set up a giant vehicle-stuffed “box” off the highway, Tesla stores are a kind of Apple-inspired retail kiosk—they house few cars and are set in areas with high foot traffic (often shopping malls). The stores are natural and relaxed, with a remotely-managed network of interactive stations set up throughout the store. This hands-on experience is meant to draw customers in and get them interested in the cars, but with an understanding that staff members aren’t there to push. For the car market, the idea of no-pressure sales environment is downright revolutionary, which is why Tesla decided to sell its cars directly from the manufacturer than go through a dealer.

This philosophy extends to the actual purchase. With the Tesla “configurator,” potential buyers can create, modify, and save their car designs at the Tesla store as well as on their PC or tablet. Through this system, customers are given ample time to realize their perfect car, as well as to simply consider its purchase (after all, Teslas start at $70,000). There is no rush by sales people to have customers sign on the dotted line at that very moment, keys shoved in hand. Elon Musk, Tesla’s CEO, says the company’s technology is different, its car is different and as a result, its stores are intentionally different. In turn, they are instilling the kind of customer advocacy and evangelism that reverberates through social media—something advertising money just can’t buy.

As many retailers abandon their brick-and-mortar locations and go web only, Walmart and Tesla are part of a trend that is adopting a third way: merging the virtual and the physical. Burberry has taken this concept to a high art at its flagship store on London’s Regent Street. Adorned with full length screens, live-streaming hubs, and radio-frequency identification chips that can detail product information for customers via interactive video, the store is a digitally integrated showroom that mimics a website, personalizing the experience for customers.

Retailers are beginning to understand that customers no longer desire massive square footage: like their experiences on the web, consumers want something more personalized, unique, and engaging. While Walmart, Tesla and Burberry operate in very different markets, and likely attract and engage very different customers, they are all on a similar mission: to build a better box. Those retailers that fail to follow their lead, do so at their peril.

Follow Conrad on Twitter @ConradLisco. We welcome your comments at ideas@qz.com.

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