AW360 Interview with FITCH on the Future of Legacy Retail

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As more and more digital native brands are desperate to get brick and mortar retail locations (think UntuckIT, Warby Parker, Caspar, AmazonGo), legacy retailers have the opportunity to make yesterday’s real estate investment tomorrow’s secret weapon. In this interview, AW360 sits down with brand and retail consultancy FITCH’s strategy director Michelle Fenstermaker on viewing retail as an activity, not just a place, how to exploit the sweet spot between the physical and digital, and create a roadmap for the future of legacy retail.

Q: Now that more digital-native brands are setting up brick and mortar retail locations, what are the challenges and opportunities facing legacy retailers?  

The biggest challenge I see is creating spaces and experiences that people want to spend time in.  So much effort and resources have gone into making the in-store experience more frictionless and convenient – saving time has trumped spending time for many.   Where some might see a challenge with thousands of brick and mortar locations, we see an opportunity to leverage those assets in new and different ways. Digital brands don’t have that kind of proximity to their customers.  And the ability to test and learn using a few key locations is priceless!

Another important lesson to remember is that one size doesn’t fit all.  Be willing to explore a variety of formats and expressions. Offer the customer a Landscape of Experiences – put them in control of how, when, and where they want to experience you.

Q: What can digital native brands learn from legacy retailers, in terms of do’s and dont’s?

Don’t assume the “build it and they will come” mentality just because your digitally native brand has loyal followers. Give them an experience worth getting up from the couch. Legacy retailers have found that out the hard way. Invest in the humanness of the brand at retail – digital-only brands have struggled with that (aka think Amazon). And while people are important to that, humans can manifest themselves in a variety of touchpoints, including in-store digital technology.

Don’t assume the “build it and they will come” mentality just because your digitally native brand has loyal followers.

Q: You mentioned the importance of “PHD” for legacy retailers as they plan for the future.  Can you elaborate?

Future survival requires that legacy retailers change their brick-and-mortar approach and get their PHD –  a combination of factors that make a physical location successful, including Physical (Immersive, Immediate, Tactile,); Human (Empathetic, Approachable, Kind); Digital (Infinite, Interactive, Storytelling). So many of these companies’ legacy retailers have been laser-focused on figuring out what do to with the D (digital) part of the equation that the H and P have been neglected.  Many of these legacy brands are handcuffed by old, antiquated systems and use that as an “excuse” for not progressing to the level that customers expect. What they need to recognize is the most powerful technology lies in the hands of their customers – by adopting a mobile-first mentality it puts the responsibility on customers as they continue to upgrade to the latest and greatest smartphone with little to no care about the cost.

 When it comes to Human assets, there is power in people.  But that power is only realized when people are empowered to do things on behalf of the customer.  And this includes putting the right tools in employees’ hands so that they can help customers continue on the journey in-store that the undoubtedly started online before they arrived. One sure way to frustrate a customer is when they have to start their journey over once they walk through the door.

Q: How does a legacy retailer balance operations with customer-centricity?  Does one trump the other in terms of strategic importance?

We know how important it is to be operationally sound.  But where it goes wrong is when an organization allows operations to dictate decisions that fail to consider customer wants and needs.  This is why so many legacy retailers are siloed in their thinking and struggle to collaborate successfully when it comes to ideating on things such as Store of the Future.  Everyone comes into the conversation with their own agenda. That’s why we approach ideation and innovation from a customer-centric perspective. But let’s not forget that operations can also drive a strong customer strategy.   The opportunity to truly differentiate happens when companies who are “operationally excellent” turn that into an outward customer-facing advantage (e.g. logistics expertise could mean unlocking new ways to deploy people, etc.)

Q: Does a legacy retailer’s approach to brick and mortar stores lend itself to innovation?  Why or why not?

We get dozens of “Store of the Future” briefs from legacy retailers who think the first step to innovation is understanding the pain points and fixing the fundamentals – those are table stakes, not innovation. 

Define innovation? It is definitely an overused and misunderstood term in the world of retail.  We get dozens of “Store of the Future” briefs from legacy retailers who think the first step to innovation is understanding the pain points and fixing the fundamentals – those are table stakes, not innovation.  What they fail to realize is that customers’ expectations are being shaped by those brands and experiences outside of their category. If we can shift their thinking into changing the brief to “Experience of the Future” then we might have a fighting chance to create true innovation.

Q: What other components of a physical retail space are critical to a good store experience? 

Sometimes retailers forget how impactful and meaningful those smaller surprise & delight moments can mean to an overall customer experience.   Recently, we were auditing best in class experiences for a major sports apparel brand. We walked into Lively [an intimate apparel brand started online and acquired by Wacoal]…after a 20 minute try-on session, we were offered our choice of LaCroix flavors while we sat on a lovely sofa and contemplated our purchases.  Nothing complicated, fancy or high cost – just a nice gesture that valued and respected our time and tastes. A huge win and a big reason why we will return.

Q: Any final thoughts?

Let’s not forget – frequency equals relevancy.  Out of sight does mean out of mind…and eventually out of business.  The more points and opportunities to engage, the more likely you are relevant.  And this means P, H and D all need to be considered. It is the seamless combination of those three that are the recipe to success.


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