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Post-Covid Retail Should Become People's “Third Place”

As published on LinkedIn by Srikrishna Vadrevu, COO, Retail Solutions, Moving Walls

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After decades of misplaced focus on consumer marketing, Shopper Marketing is finally taking center stage in Retail discourse. High time too! All through the twentieth-century, retailers followed FMCG brands in focusing on the consumer. Retailers overlooked the point that much as they were a B2C entity like the FMCG folks, their “customer” was not the consumer, but the shopper. Their job was to serve the shopper with a variety of goods supplied by often mutually competing FMCG players to convert them from shoppers to customers.

The FMCG brands had all the budgets and the margins, while the retailers looked at themselves as mere realtors working on thin margins and intense competition. They rarely bothered to distinguish themselves from the other retailer down the road. So much so that even larger retail chains started leasing out space to the consumer brands, content with collecting rent! This was even touted as a strategy! Little wonder that soon, retailers became “commodity” and lost their unique place in the community. All retailers looked alike, had similar pricing, often carried similar items, and promoted whatever was sponsored by the brands.

No wonder retail is in the tailspin that it is in today. Industry followers will note that this is more so with multi-brand retailers. For, they had the opportunity of playing with multiple brands, while forgetting their own brand; their own raison d'être! Not surprisingly, even as retail suffered, two sub-sectors did relatively well! Uni-brands (think Apple Stores, Nike), where the product’s customer is the same as the store’s, are doing well! So are retailers who have sharply defined shoppers (e.g., dollar stores).

The data effectively brings out the Retailers’ saga and the price they paid for forgetting their own customers and hanging onto the coattails of product brands to see them through!

The good news is that Shopper Marketing has finally emerged; retail brands have begun spending serious money on shopper marketing. They have started to look at the shopper as different from the customer. The graphic below highlights the differences.

 

 

No wonder, today, giants like Walmart and Target earmark over ten percent of their marketing budgets to shopper marketing. Nevertheless, shopper marketing still has a long way to go. Academic interest in the subject is still in short supply.

Broad contours of the shopper journey are becoming more evident, thanks to the awakening caused by e-commerce and the whole multi-channel phenomenon. My focus here is on the offline retailer, the brick and mortar people. These Retailers realize that the emergence of e-commerce has forced a fundamental change in the way they should perceive themselves. They cannot afford to look at themselves as a place where people buy goods and services. They have now lost their supremacy in this position to e-commerce. Well, almost.

It is time they conceived of themselves as something more. Retailers everywhere should be grateful to Howard Schultz, long-time CEO of Starbucks' who first used the concept of a “third place” as a cornerstone in the creation of the image of the coffee chain. Schultz spoke of “creating a culture of warmth and belonging where everyone is welcome”. It is time retailers, especially malls, took this further to develop their own “purpose”. Most of my readers may be aware that the term third place takes off from where people live (the first place) and work (second place) and refers to the third place that “completes” their lives.

The term was coined by Ray Oldenburg in his book The Great Good Place, where he argues that third places are important for civil society, democracy, civic engagement, and establishing feelings of a sense of place. Third places have also been referred to as "anchors" of community life that facilitate and foster broader, more creative interaction[1]. Another description on point is: "where you relax in public, where you encounter familiar faces and make new acquaintances."[2]

While the merchandise that retailers carry does define what they do and who they cater to, I’d like to highlight here the common denominator that applies to all retailers; what they should focus on to deserve to occupy the “third place” in people’s lives.

First off, it is important to understand that the reason a third place is necessary and vital is that the first two are stable and anchored. The third has to be discretionary and floating; it has to meet the person’s fancy of the day. It should offer freshness and change -- in ambiance, in associations and in interactions. The place that provides these elements refreshes the shopper and makes her visit worthwhile, makes her want to come again.

 

 

Easier said than done. To be able to provide these elements, retailers need to have a pretty deep insight into their shoppers’ lives. What exactly are their homes and workplaces like, and what difference can they make?

I find F&B retailers highly instructive in this context. I am sure most of you may have come across dozens of restaurants that have all the right things in place - the food, the price, the ambiance - and yet fail to survive the year. And then there are those who come out of the blue and become hugely popular right next to the failed one.

There are some who “get” this intuitively. Unfortunately, few of these can explain their intuitions to the less fortunate. The rest of us need a method; a way to learn what the essential ingredients are and a means to secure them and use them in the right way.

Our interactions with retailers of various stripes - from grocers to department stores, from salons to spas and banks to bookstores - across several countries revealed to us that the “third place” idea, is far more than a branding concept. In fact, it has the potential to save the retail sector today! More so in the context of its losing its obvious “purpose” of selling goods and services to e-commerce!

While the specifics will differ in each case, it is evident that the successful ones bring up just the right mix of ingredients. To get these ingredients right, retailers need to start with knowing their target shopper. Who are these people? Demographics, income levels, home and work locations, lifestyle preferences… everything matters. Our research over the past few years has highlighted three essential ingredients for retailers to get the “Third Place Mix” right. These are:

 

  1. Ambiance
    1. lighting,
    2. decor,
    3. layout
  2. Associations
    1. visuals,
    2. colors,
    3. music
  3. Interactions
    1. age,
    2. gender,
    3. community/tribe/cult

Close attention to these three aspects of a place can go a long way in how the target group perceives the outlet and can drive the formation of informal “tribes” that plan visits to the place at set frequencies, almost as a ritual.

 

Moving Walls’ Retail Solutions works with offline retailers globally to deploy cutting edge tools and technologies to help them capture footfall, increase conversion and earn customer loyalty. To learn more

Request for a Demo Today!

References:

[1] Pete Myers (2012). Going Home: Essays, Articles, and Stories in Honour of the Andersons. Lulu.com.
[2] White, Rebekah (July–August 2018). "A third place". New Zealand Geographic (152): 6
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