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Are concept stores a good bet for retailers?

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Why the rise of online sales has forced many retailers to rethink their business strategies.

Businesses could take advantage of the growing appetite for experiential retail, with pop-up and concept stores, potentially boosting profitability over the festive season and throughout the year ahead. But are these agile stores going to give lasting value or will it be a case of here today, gone tomorrow?

Online retail

With an ever-increasing number of online sales, it has forced many retailers to rethink their business strategies, with the likes of John Lewis and Waitrose, The Body Shop and H&M all creating concept stores as part of their retail proposition. Whilst the speed and convenience of online shopping has won over many shoppers, a number also value the human interaction and real-life experience that you get from a store and can share with others.

Whereas online retail sales are mainly influenced on price, concept stores offer consumers something more that draws them in and keeps them there, with the thought that the longer the customer stays the more opportunity they have to spend and buy products.

What makes a successful concept store?

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Providing a place for customers to meet friends, share experiences and engage with the brand while creating memories is key for a successful pop-up and concept store. Allowing businesses looking to increase brand recognition to engage with customers in a more direct and memorable way.

Effectively the concept store has allowed retailers to reinvent the shopping experience to reach more customers than your traditional store. As this is more than just a shop it can bring people in that otherwise may not have thought to visit their website.

The primary aim:

However, the primary aim of a concept store and pop-up shop is to sell products, several of them double-up as cafes, offering talks, interactive features or filmic screenings. With the aim to create a community feel, encouraging people to relax and spend more time in the store offering an informal sale platform.

How to make it a success?

For a concept store to work well, it needs to be all about discovery and the experience, although this sounds straightforward it is not easy to achieve. A lot of thought, innovation, ingenuity and investments are often needed to make a success of a concept store.

The design of the store can be particularly important as you need to make a strong visual impact, as your store needs to stand out and create just the right brand atmosphere. This may require a more imaginative use of floor space and a large amount of staff training, all of which can be costly. Failing to achieve the desired result could render the concept store an expensive experiment.

It doesn’t work for everyone

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Although a concept store may seem like a quick and creative solution to boosting sales, the nature of a concept store does mean they wont work for all retailers operating in all sectors. They can have high start up costs and once operational a huge drain on resources. Before deciding to launch a concept store, retailers must focus on their business objectives and base the decision-making process on financial metrics, such as cashflow forecasting and cost-benefit analysis.

Although they are unlikely to save the high street, concept stores could be retailers secret weapon in 2020 – creating excitement, value adding dimensions to their proposition, and enhancing the brand recognition in the process.

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Posted in Blog, Retail

Roberto Lobue - FCA

Partner

Roberto Lobue is a Menzies Partner with a wealth of audit and compliance experience. Roberto also provides international accountancy and tax advisory.