Last March, I described how fashion retail will change its store format strategy. As an example, I explained how grocery retailers where segmenting their store formats (hypermarket, supermarket and neighborhood stores) to respond to different shopping occasions. In grocery, shopping area and assortment are aligned, from a wide and deep assortment in large stores, to narrow, shallow assortment in convenience stores.
From a one-fits-all retail model to a curated one
Some retailers that are adapting their store format to location are Nordstrom, IKEA (“City Center”) or Decathlon (“Decathlon city”). A few years ago, the strategy was localizing stores in high streets or shopping venues, where most of the shopping traffic happened. As customers seems to look for a different experience and feel part of a community instead, fashion brands are decentralizing their retail locations while curating their collections at “local level”.
The “flagship” store is adapting to new retail, creating new experiences in different store formats. Retail urban integration is definetly mutating.
It is important to note that the change of store format is not only a retail trend but a strategical business move. Today, digital technology is disrupting traditional operations and now every business is a digital business. Technology, big data and analytics are the enablers of the current hyper-segmentation that the business of fashion is living: segmented design, segmented manufacturing, segmented logistics, segmented point of sales, etc. In my opinion, today apparel is more science than art, and niche is the new black.
H&M Mitte Garten
H&M recently opened its first “hyper local” boutique. A 300m² store in the Mitte district, Berlin. By “local”, I mean not only selecting a curated assortment for the store (analyzing local trends and transactions to know what is the right style, color or categories for this specific store) but also including external brands that have a special meaning for the potential, segmented customers in the neighborhood (external brands are mostly Berlin based). Grocery stores use a similar approach due to new customer trends like the preference for sustainable, proximity, personal, local products. The new H&M store at Mitte will host yoga courses, lectures and fashion talks too.
If H&M is increasing its brand portfolio and testing new store formats, Inditex keeps a different strategy: large stores, as explained in the latest financial results article from the blog. At Inditex, the new stores opened in 2018 are on average 39% larger than those opened in 2012. Again, I´m still suprised by this retail strategy while other big players like Nike are betting on segmenting their store model.
Nike by Melrose is the new curated store from the company from Beaverton in Los Angeles. Stores that renew their assortment every week/month according to what customers, in the area, are looking for (offline and online). Nike recently announced new Live stores openings in Tokyo and Long Beach.
If mainstream, large brands will keep investing in large shopping areas to support their made-to-stock business model, other players with a differentiated product will conquer urban communities with a curated approach.