Navigating the brave new world of bricks-and-mortar retail

How the pandemic helped flagship stores merge the digital and physical worlds

A year and a half after the onset of the pandemic, consumers are returning to in-person retail — 81 percent of Gen Zers say they prefer to shop in store, according to A.T. Kearney — and the time has come for a new era of flagship stores.

Often a brand’s largest and most impressive store, flagships are designed to be “memory factories,” catering to consumers who might not necessarily be looking to make a purchase but want to experience the brand. 

The latest episode of the NRF NXT Webinar Series explored how retailers are merging the digital and physical worlds to create not only a place to shop, but also a place where consumers can have a positive, experiential brand experience.

NRF NXT Webinar Series

Register now for the NRF NXT Webinar Series and tune in every Wednesday in September. Watch previous sessions on demand.

Having fun

At LEGO’s newest flagship store in New York City, it’s all about the core brand proposition — fun. Simone Sweeney, LEGO’s vice president of global retail development, calls it a “digital and physical first concept” focused on creating a playful, personalized experience for two distinct audiences: consumers (e.g., a child who enjoys playing with LEGOs) and shoppers (those who make the purchase).

To cater to both groups, personalization is key. For example, the LEGO Brick Lab is a 20-minute immersive experience where consumers can scan their physical LEGO build into the digital world and watch it come to life.

While a brand discovery experience in the flagship store is important, shoppers are still keen to make a purchase, and LEGO has made personalization easy for shoppers. Sweeney said the Minifigure experience has been reimagined, allowing shoppers to customize and design their own Minifigure, watch it be printed in store and accessorize it with crazy hair or a snazzy outfit.

A look inside LEGO's new "retailtainment" flagship store on Fifth Avenue in NYC.

Sweeney also discussed the economics of having a flagship store — noting there isn’t always a monetary return on investment. “We do see equal value in the store delivering a commercial return as well as a brand impact,” she said. Flagships play a vital role to make sure the company engages shoppers, showcases its portfolio and creates unique experiences.

What’s more, flagships are “a fabulous recruitment opportunity,” she said.

Improving the customer experience

When Google decided to venture into the world of physical retail, it’s no surprise that data and technology were at the heart of the business model. After the abrupt shift to online shopping in the early months of the pandemic, Google started seeing a convergence of online and “near me” searches in the later months of the health crisis.

Shoppers were ready to get back to in-store shopping, but things looked different. Instead of consumers simply looking up directions to a store, they were using technology to see if the item they wanted to purchase was in stock, place a curbside pickup order or search for additional stores on their route.

Google store NYC
Google opens a groundbreaking interactive storefront in New York's Chelsea neighborhood.

Amy Eschliman, Google Cloud’s managing director of retail, said the pandemic caused customers to think about stores differently. They aren’t just a place to shop now; they’re also fulfillment centers and showrooms. And technology is giving Google the ability to think differently about in-person retail.

For example, new technologies allow customers to build a shopping list at home before visiting in person to select their items. And using vision AI, associates can be notified of which items need to be restocked.

In June 2021, Google opened its first-ever physical retail store in Manhattan’s Chelsea neighborhood. Eschliman noted that Google has been focused on developing helpful AI experiences within the store — with a focus on showing (instead of telling) how their technology can be helpful.

Harmonizing digital and physical

According to Daniel Hulme, CEO of Satalia, “For decades, retailers have been dreaming about how to harmonize the digital and physical worlds.” With new technologies, it’s possible to do that in a more integrated and accelerated way — allowing retailers to better understand their consumers and improve the customer experience.

Artificial intelligence plays a key role in helping retailers create a positive in-store experience. Hulme noted that it can help with reducing friction, optimizing the supply chain, reducing the cost of goods and unlocking new types of business models. Discussions continue around the ethics of AI: With companies collecting unique, specific data on their customers, it’s important to use that information in a moral and conscientious way.

Retail’s brave new world

The retail industry is in the midst of a transformation that requires brands to leverage technology and data to revolutionize their customer and associate experience.

While the success of a flagship may be determined by how ‘Instagrammable’ the store is, these venues serve as a key tool to help recruit new customers and allow them to experience your brand.

According to Kate Ancketill, CEO and founder of GDR Creative Intelligence and moderator of the NRF NXT webinar, “If every single customer in your store is taking a video selfie, it means that you’ve cracked it in terms of creating a flagship that is a memory factory.”

Related content

Supply chain challenge: The last mile
NRF NXT Webinar Series session 1
NRF NXT: Consumers, retailers, entrepreneurs and communities work together to put purchases in customers’ hands.
Read more
5 chances to push into the future of retail
NRF NXT convenes digital retailers to prepare for tomorrow’s consumer.
Read more
NRF to Host Inaugural Supply Chain 360 Event in 2022
Supply Chain 360
The National Retail Federation today announced its new annual NRF Supply Chain 360 event.
Read more