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This Euromonitor presentation indicates that despite the advent of eCommerce, specialist retailers dominate the retail spending pie. However, it also indicates the growing influence of eCommerce as a channel, especially in the apparel and footwear industry. The rate at which eCommerce retail is capturing share of wallet is a sign that, while in-store retail is unlikely to disappear, it will surely decline from its current position. Which begs the question – if in-store sales will decline, is there merit in keeping these investment-heavy physical stores open?

This Forbes article argues in favor. “Stores serve as showrooms that drive customers online,” the author writes. “Stores serve as fulfilment points for e-commerce operations. Stores are billboards for a retail brand.” We are increasingly seeing this trend where retailers are remodeling their stores into hangout places and experience centers to get target customers to stay longer and ‘browse’ more. At a Kith shop, customers can indulge in ice-cream. Kith is a sneaker and apparel store! IKEA is just as famous for its restaurants as it is for its furniture. In 2016 Nike opened a giant store in New York that features an in-door basketball court, a treadmill that simulates running in different locations, and a soccer enclosure. Adidas soon followed suit. Previously in this blog we’ve written about how Target and Walmart are focusing on store remodeling. eCommerce might make it easy to sell, but stores help communicate the brand more effectively.

Billboards and stores have some similarities. Both need to be tailored with local sensibilities and preferences in mind. The same billboard may not work in both California and New York. It might not even work in all the cities of California. Language and demographic are also key to determine which billboard will work. A store is no different. Ice-cream works in some regions, but probably doesn’t work everywhere. Or maybe ice-cream does work but flavor preferences are different across different regions. But here is where the billboards analogy is problematic. Relatively, billboards are displayed for a much shorter duration, cost less, contain only one component (the ad copy), and can be turned around quickly. Stores, not so much. Stores are a more permanent fixture, cost a lot more, contain multiple components, and a turnaround could take months, if not years. This makes it vital for retailers to make the right choices in a store remodeling exercise.

Experimentation can help you determine which component of an in-store remodeling will work before you embark on a full-scale roll-out. With the right test-control setup and a series of experiments, retailers can execute the perfect store remodel – consistent in the brand communication, yet tailored to the local demographic or preferences. In a region dominated by casual shoppers, an ice-cream shop may induce shoppers to stay at the shop and learn more about the products on offer. In a region where there is considerable brand following, an area of the store, dedicated to detailing the immaculate craftsmanship of your products or a history of the brand, may encourage followers to invite their friends along and make them learn about your brand. For practical shoppers, an experience center might do the trick. In areas dominated by young adults, say near a college campus, a hangout place may make more sense. All these decisions can be made easier through controlled experiments.

The role of a physical store is undergoing drastic changes. From just a point of sale, it is transforming into a brand showroom. Unlike a website or a billboard, decisions made regarding store remodels are investment-heavy and permanent, which makes it important for retailers to conduct controlled experiments and get it right the first time. Nike, Adidas, Kith, and now Target and Walmart have realized the significance of the store in the digital age and are experimenting with it. How about you?

About Trial Run: Trial Run is a cloud-based product that lets companies conduct business experiments on sites, markets and individuals BEFORE they implement. It helps companies scale their experimentation capability efficiently and affordably by providing insight into which decisions will work and which will not.

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