The great store shuffle continues.
A record number of store closures continue as retailers look for new strategies and technologies to entice consumers to shop in real life. But knowing which ones to use can be tricky.
“There’s a flood of technology out in the industry,” Jennifer Spaulding Schmidt, senior partner at McKinsey & Company, told WWD. “It’s unclear which ones really work and it’s unclear which ones work together.”
Her firm, McKinsey & Co., a global management consulting firm, might have the solution.
The company is opening its first concept store, a 4,700 square-foot retail space dubbed “Modern Retail Collective.” The store, which opens Friday in Minnesota’s Mall of America, will house four brands, a mix of retail and cosmetic brands, which will rotate every three to four months.
The purpose of the space is twofold: It allows brands, many of which are digital natives, to introduce themselves to new markets while letting shoppers interact with physical products. It also serves as a learning lab for both brands and McKinsey alike, giving them the opportunity to test new retail strategies and technologies and see which ones work.
“We’re going to learn and experiment, as are the brands,” Schmidt said. “We’re curious. We want to understand how retail technology interacts in a physical environment to enhance the customer experience.”
The four inaugural brands are intimates apparel brand ThirdLove, Kendra Scott jewelry, Elevé Cosmetics and deodorant brand type:A. Schmidt said McKinsey selected brands that were fast-growing and could benefit from insight in how technology affects the consumer experience.
While McKinsey had originally planned to experiment with concepts and technology in its Chicago offices, Schmidt said the company wanted actual consumer feedback. And the Bloomington, Minn., shopping complex, located about 10 miles south of downtown Minneapolis, was the perfect testing ground with its roughly 40 million visitors each year.
“The hope is that over time, these brands would take the technology that works for them and put it in their own stores and network and environment,” Schmidt said.
Heidi Zak, cofounder and co-ceo of ThirdLove, anticipates that insights gained from the Retail Collective will help ThirdLove better serve customers both on and offline.
“At the same time, the Mall of America is the largest shopping and entertainment complex in North America and expanding our footprint to this iconic location is another way for ThirdLove to increase our brand awareness,” Zak said.
The space will include a lounge area and four to six fitting rooms for ThirdLove bra shoppers, as well as a color bar where Kendra Scott shoppers can virtually mix and match jewelry. Each area uses imagery and colors from its respective label.
“It flows together nicely; it feels like it fits together,” Schmidt said. “It’s very light and bright. We wanted to keep it open and modern.”
The consulting firm has also teamed with a variety of technology companies, such as RetailNext, FaceCake and Zebra Technologies, as well as advisers like Farfetch and Microsoft, to bring the store to life.
Some in-store features include mobile hotspots, virtual jewelry try-ons, smart mirrors with extended product catalogues, advanced payment options, including the ability to accept cryptocurrency, and technology that allows McKinsey to track the customers journey in store, such as how long each person interacts with various products and ultimately if they buy.
All profits from in-store sales will go directly to the brands, each of which provides its own inventory. The retailers, however, pay a small fee for participating in the experiment, which Schmidt said covers operating costs.
The second batch of brands will arrive after the holidays in early 2020, with a focus on personalized products and customer experiences. While the intent is to continue rotating retailers in the store, Schmidt said if brands are interested in staying longer, McKinsey will consider it.
Meanwhile, the store is set to remain open for at least 12 to 18 months. But Schmidt said it might stay longer if the results are positive.
“If we find that we continue to learn and we bring different brands together and find new technologies that really interact well together, we will continue to do this,” she said. “As long as we keep learning and can share that with the brands.”