As life emerges from the pandemic, the internet and smartphones continue to answer commodity-driven needs, but fashion and lifestyle enhancing purchases must be part of a personal journey — a highly experiential activity, be it Main Street shopping combined with local dining or a Disneyesque day trip to what was once the local mall.
A recent Retail Marketing Society webinar examined the concept of the “small is beautiful” trend, driven by the shopping attitudes of millennials and Gen-Zs toward small, localized neighborhood stores. The panel, moderated by Robin Lewis, CEO, The Robin Report, included Ann Cantrell, owner of Annie’s Blue Ribbon Store in Brooklyn, New York; Jasmine Glasheen, CEO, Jasmine Glasheen & Associates and Warren Shoulberg, business journalist and contributing editor, The Robin Report, forbes.com and The Business of Home.
Driving the Trend
The concept of small neighborhood stores is being embraced by both entrepreneurs and some of the larger industry retailers like Target, Walmart and Nordstrom. For example, Target has about two dozen college campus stores, with about 35 more on the drawing board over the next year.
Walmart is also testing its small store strategy. According to Lewis, these newly localized models, whether independently owned or part of a major retail chain, will dominate the retail landscape in the future. “It does not mean that the large urban and suburban flagships will become totally extinct, but only those who represent distinctive and differentiated experiences will survive,” Lewis said. “Why is this going to be the future? Because the consumer is going to make it the future. The biggest consumer cohort, the millennials and Gen Zs, are driving everything in our lives. It’s a culture with a whole new set of values and desires, and they favor that shopping option when they want a personal and localized experience.”
Community support is driving this trend. Cantrell recommends checking out The 3/50 Project. “It’s the idea that more money stays in your community. The premise is to spend $50 in three different local stores every month. The idea is to keep more money in the community, so these small stores stay in the community.”
“One of the things that COVID-19 has changed is consumers’ awareness of the impact of every dollar spent,” said Glasheen. “It was such a reflective time where people were by themselves on social media and really looking at how they functioned in the world. We’re heading towards a more sustainable future and that’s why we see retailers bringing consignment and thrift into stores. Gen-Z loves that. They’re not afraid of being different. They’re not afraid of being an individual. They’re afraid of falling in line with something that doesn’t work for the future that they want to create.”
Redefined Needs
“The internet, AI and analytics, along with the new all-powerful consumer, have starkly redefined needs, needs like convenience, speed and value (read: Amazon) separate from desires,” said Lewis. “There’s a different shopping journey for each of those. Simply stated, needs can be fulfilled by the click of a keypad and delivered or made available in a nanosecond. However, fulfilling shoppers’ personal desires requires the creation of an emotional connection, one that is compelling enough for them to leave their keypad to go to and physically embrace the experience provided, which is best executed by small neighborhood localized shops or by the transformed giants, like Target. Think global, act local.”
Glasheen pointed out that creating brand connection with Gen-Z requires quality products, services and active engagement. “Active engagement comes from creating a differentiated experience, but don’t take my word for it. A recent white paper from the National Retail Federation and IBM found that quality was identified by 66% of Gen-Zs as the most important brand attribute. That means no more cutting corners for advertising. It all comes back to the product. That’s what they’re looking at first.”
The Neighborhood Village
Another model is the open-air, mixed-use community settings embedded with experiential events. Two examples are The Grove and The Americana in and around Los Angeles, California.
Shoulberg described one of the newest retail concepts: Magnolia Home Store. “Chip and Joanna Gaines from Fixer Upper have built a terrific empire in media and in the home furnishings business. So, they’ve opened what I call a retail campus in Waco, Texas. It has about a dozen different stores, all of them Magnolia branded. It’s also got an open area, a little ball field, a restaurant, a bake shop. And it even has a church,” he said. “Tour buses come here, and they expect you to spend the day. And now they expected you to spend the night. They’ve opened a B&B and they’re talking about more hotels. This concept of retail as campus is catching on in other places. RH Yountville is doing this up in Napa Valley on a certain scale and some other folks are looking at it. I think you’re going to see more of this; it really plays to the theme of ‘small is good and small is big.’ In an age when we’ve got superstores and megastores, these smaller stores are the next big thing.”
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