I have recently read about an emerging retail model that’s commonly referred to as an “unstore.” It goes something like this: A brand or a retailer sets up a storefront built around being an “experience” or a “destination,” at which consumers can sample their offerings. These so-called “interactive stores” are showcases for products, but they have no on-hand inventory. You might remember reading about Amazon opening such a bookstore, called Amazon Books, in Seattle back in February. Rumor has it that Amazon will be opening 300 to 400 similar storefronts, and they won’t be limited only to focusing on books. Samsung recently opened a 40,000-square-foot flagship store in New York’s meatpacking district. It has no inventory, and it focuses on the user experience. There are on-site technicians to answer questions and help with technical problems, but all sales are made online. Other retailers, such as Target and Staples, are experimenting with these techniques. Since ad-blocking software has become more commonplace on browsers, brands that were previously Internet-only, such as menswear line Bonobos and eyeglass giant Warby Parker, have begun to explore brick-and-mortar retail as a better option for consumers to learn about their products. And, they’re opening “pop-up stores,” at which consumers can “test drive” products they might then purchase online.
What makes these stores unique is that they embrace the concept Best Buy has complained of, and MI retail stores have had to endure, over the years: “showrooming.” Showrooming is the trend wherein consumers try products in retail stores, and then order the product online at a lower price—often from an online-only retailer like Amazon. MI retail stores have been experiencing showrooming for years, going all the way back to the catalog days, when it was common for customers to walk in with a page torn out of a catalog and ask if we could match the price. The frequency of that trend and the attendant loss of margin, about which I spoke in two previous columns— “The Myth of MAP” (December 2015)and “A Changing Tide: Why Competition Is Key” (June 2015)—has only increased since the dawn of the Internet and the age of smartphones. With the rise of mobile technology and the tendency of consumers to price check from their smartphones before committing to a purchase, they can now order products online while standing right in your store and using your complimentary Wi-Fi network.
Most independent retailers have begrudgingly accepted the fact that shifts in the retail landscape affect our industry. However, I’ve found that MI retail owners have not fully absorbed the degree to which emerging trends matter. This continues to be truest with regard to the Internet. Many in our industry have written columns on Internet best practices, they’ve given NAMM Idea Center sessions on everything from Web site design to search engine optimization and they’ve explained repeatedly how much consumers rely on the Internet. I myself talked about the importance of embracing SEO and mobile technologies in my column entitled, “Missed Connections” (January 2016). However, despite all the available information about the importance of these things and how small businesses can implement them, many storeowners still have their heads in the sand. Expecting your sales to grow year after year when you can’t be bothered to make sure people can find your Web site is foolhardy at best; it’s retail suicide at worst.
It’s important to be aware of these trends, because the overall retail experience to which consumers become accustomed affects their expectations of what a store is and what they will encounter when shopping. Don’t believe me? The term “floor model”—the model of something displayed outside its packaging—is synonymous with big-box retail shopping. Usually, if the store is down to just the floor model, the consumer gets a discount because the display is usually subjected to wear and tear. Now, though, that term has become part of the public consciousness. Although the term is used considerably more when referring to keyboards, customers are now asking if high-end guitars hanging in my store’s humidity-controlled acoustic guitar room are “floor models.”
I talked about the reliance of consumers on bad information due to their low expectations of the in-store experience in “User Reviews: They Can’t Put Anything On The Internet That Isn’t True!” (April 2015). Lowered retail expectations have driven more and more shoppers online, particularly for disposable, down-ticket items. Because big-box retail stores for some time have been feeling the pinch of shrinking in-store sales, owing to economic pressures, they’ve had to get creative in strategic future planning. All of them have long since had e-commerce Web sites, and stiff competition from Amazon has driven them to offer new options, such as “ship to store” next-day pickups. Much of this traces to the lowered margins of eternal price wars and the high cost associated with keeping deep inventory at every location. The unstore concept is just the next iteration, and it’ll greatly reduce the amount of square footage and overhead required to have a store. What they haven’t done—until now, at least—is to invest in elevating the in-store experience to anything loftier than what the typical Wal-Mart or Best Buy offers. So, what kind of in-store experience will consumers come to expect? How will that affect MI retail in the future?
It’s not hard to envision Guitar Centers where customers try out products in the store, buy them and then have them shipped from a warehouse to the customer’s home. Several MI retail brands have also embraced selling direct to consumers; it’s a trend I believe will likely continue. So, what’s to stop a Fender unstore, at which you can try the latest Stratocaster models, from popping up next to a Samsung unstore, at which you can try the latest VR headset? It’s an unsettling thought.
I think that, ultimately, it will be a long time before we see MI retail unstores, if we ever do. The business model scales better with brands that apply to as many customers as possible; for better or worse, only a small percentage of the population has a real interest in musical instruments. I do believe that, if the commoditization of instruments we’re currently seeing continues, and if the perception that each instrument isn’t different or special continues to seep into the consumer consciousness, this might eventually become a real problem. I think that, for the non-instrument segments of the market—microphones, speakers and other technology-related electronics—it’s already becoming an issue.
However, in the short term, as consumers become more accustomed to these unstore retail experiences, they’ll be seen as the norm. Big, flashy displays and limited inventory, coupled with online ordering and fewer personal relationships, are becoming part of the retail experience’s “new normal.” As consumers grow accustomed to, and frustrated with, these circumstances, in-store service and goods that are unique become more compelling reasons to visit independent retailers. As applied to MI retail, it then becomes prudent to eliminate redundant product lines and focus on unique items that our customers are more likely to bond with in-store (and less likely to believe they can easily replicate with an online purchase). This, coupled with high-concept stores, as well as staff members who are informative, friendly and who develop personal, lasting relationships with customers, is a clear path to relevance and survival in this brave new world.
What do you think the future holds? How do you plan to weather the coming changes? Write to me at email@example.com.