The product-less store

Finding its role in a digitised world, offline retail is forgoing merchandise altogether.

Earlier this year, luxury retailer Nordstrom opened a new store in Melrose Place, one of Los Angeles’ busiest neighbourhoods. But unlike its usual stores – or most stores, for that matter – the Nordstrom Local, as it’s called, has no products for sale. Instead, the store is designed entirely around customer service.

Acting as a local hub for customers to collect their online orders, try clothes in changing rooms, get their items tailored, have their nails done, and grab a coffee, Nordstrom Local offers everything a restless lifestyle consumer would need on their way home – so long as it doesn’t involve buying products. “We know there are more and more demands on a customer’s time and we wanted to offer our best services in a convenient location to meet their shopping needs,” said Shea Jensen, Nordstrom’ SVP of Customer experience, in an interview with The Wall Street Journal. In a retail world dictated by the convenience and efficiency of e-commerce, Nordstrom Local re-aligns the physical store with the benefits of its digital counterpart, and finds a new reason to exist in people’s lives.

Product-less stores are emerging as a new strategy to address consumers’ simultaneous need of convenience, service and experience. With 72% of millennials saying that they prefer to spend money on experiences than on products, according to a study by technology company Harris Group, brands are reorienting their retail around such experiences – and the product-less store represents the latest manifestation of this trend.

This has been a gradual shift. Towards the start of the decade were the first-wave of omni-channel retailers, pioneered by concepts, such as Sneakerboy in Melbourne, which blurred digital and physical commerce. Then came the lifestyle stores, such as those rolled out by the Kit and Ace clothing brand, which blended merchandise with coffee shops, cafés, and spaces to host out-of-hours events and dinners with locals. More recently, stores such as Sephora and Topshop have explored virtual reality, where shoppers can immerse themselves in runway shows and virtually test products. But in each of these cases, product sales were still the goal – unlike the product-less store, which has no immediate interest in getting people to buy things. Samsung paved the way for this in 2016 when it opened its Samsung 837 store in New York’s Meat Packing district. Described as a ‘physical manifestation’ of the brand, customers can attend events in an amphitheatre, discover tech-based art installations, and experience Samsung products.

While product-less stores offer bags of experience, the real value comes from having a purpose within a physical community. US wine retailer Zachys’ retail store in Washington forgoes the sale of bottles in favour of neighbourhood services; it is a delivery point, storage area for clients’ collections, and a co-working and event space for tasting activities, training and corporate meetings. As well as creating a sense of togetherness for local wine lovers, it builds loyalty among urbanite customers through offering them a kind of utility that makes their lives that little bit easier.

To be successful, though, brands entering this seemingly non-commercial space should still be honest about their motives. A case in point is technology giant Apple, which was criticised this year following the positioning of its latest retail concepts as ‘town squares’. “It’s funny, we actually don’t call them stores anymore. We call them town squares because they’re gathering places where everyone is welcome,” stated Angela Ahrendts, the brand’s Senior Vice President for Retail, during the company’s conference. The brand’s new stores aim to create a lifestyle and educational environment, enabling customers to come dwell, but also to learn how to code, take pictures and videos, and develop apps. Ahrendts adds that the ultimate purpose is for users to “relax, meet up with friends, or just listen to a local artist on the weekend.” However, articles in The Financial Times, Forbes, and The Washington Post quickly reminded Apple that town squares are, of course, public spaces that afford people certain rights and freedoms that retail stores as private spaces definitely can’t.

There is another reason why retailers are opting for service over product: data collection. These spaces of experience, gathering and convenience will not only provide insights on customers’ buying patterns – such as dwell time, their customer journey, or their shopping basket – but will also give access to lifestyle-oriented information, connected to their social, leisure and collective habits, providing a comprehensive knowledge of consumers through in-store collected data. Brands will be more empowered to personalise content, promotions and offers by accessing a multi-dimensional array of data. It will allow these retailers to reach a greater level of customer adoption, where previous strategies, such as beacon technology, failed to make an impact due to them creating a feeling of intrusion and a complication of the customer experience.

The product-less store will serve as a proximity hub for consumers to access services, connect with a local community, and experience the brand universe in an environment that is perceived as primarily non-commercial. And rather than replace traditional physical retail, these premium convenience stores will offer an important specialism within the ever-widening eco-system that is modern retail.

– Margaux Caron