Concept Stores - A boon or Bane?

Customers often look at buying with a two-dimensional focus: either the physical, brick and mortar stores or the online, etailers. As consumer expectations has changed, many brands are juggling around strategies that include both physical and online stores.

An emerging trend is, - while traditional physical store businesses are moving online, e-tailers are deciding between brick and mortar locations versus “concept stores”. Concept stores, Experience stores or Guideshops, choose the descriptor that works best for you. These terms are all being used to put the brand at the center of digital age and augment human experiences. To simplify, concept stores are essentially a version of showrooming approach allowing consumers to touch, feel and try the product before ordering an item to be delivered to their desired locations - there are no physical inventory sold in the stores.

RetailWire’s article on concept stores beautifully highlights how Bonobos, a popular menswear etailer has chosen to lead the charge when it comes to concept stores. It’s an interesting dilemma for businesses. Here I share my two cents on what this trend has to offer and how it may impact businesses.

What are the pros?

1. Concept stores are a great way to express the brand’s vision and values to their customers by engaging the customers in experiencing their products in real world. While physical brick and mortar stores have traditionally been focusing on increasing the ease of product discovery and purchase for customers, they have been very vague about expressing the brand value to the customers. With an experience store, businesses can create an atmosphere of immersive engagement between customers and their products through story-telling which brings out an essence of inner culture and brands evolution.
2. Concept stores is the most naturalized channel to exhibit and promote new products and capture customer insights & feedback in real time. Concept stores serve as soft launchpad for new products before moving to the sales channels. It’s easy to sample out customers and collect feedback that can be quickly incorporated before product is launched in other channels.

What are the cons?

The obvious drawback from my perspective is, while concept stores give customers a real time experience on products, a happy customer will be left empty-handed because they are unable to purchase instantly because concept stores do not store inventory. The bigger risk involved is, what if your product is being sold through third party channels like marketplaces? Consumer could potentially experience the product in your concept store experience and then walk out the door while ordering from other channels offering other benefits like free shipping etc. a potential revenue risk. If your store is being used as a showroom you need to be sure it’s your goods that end up being purchased.

On the other hand, a valid question to be asked is, are concept stores a way of surviving against the rise of online sales?

• Not really. Concept stores mean different for different retailers. Typically, a concept store helps captivate the market presence while they are heavily focused on other sales channel to generate revenue. Concept stores are a lucrative marketing platform for retailers whose customer segment is heavily brand conscious and attract the first-time buyers. The ultimate idea behind a concept store is to establish brand loyalty among the customers by giving them a real time experience before they decide to buy through other channels.

Having said that, should more businesses launch concept stores?

• A concept store is an ideal marketing strategy for businesses who sell niche brands to their customer segments. Also, concept stores make more sense for certain specific industry for example: fashion, accessories, sports retailers are likely to benefit from a concept store where brand loyalty is crucial to attain considering the heavy competition.

While I am sure there is a lot to be vetted out before you launch a concept store, I hope my two cents clears some air on the outside picture!!