It’s a buzzword floating around the internet and facility management circles, you seemingly stumble across a few times a week these days – “Retail Apocalypse.” Articles related to the hype-machine phrase used to describe the supposed demise of the brick-and-mortar industry shoot across news feeds from LinkedIn to Yahoo on a regular basis. It is true the record 105 million square feet of retail space that was shuttered in 2017 will likely be surpassed in 2018, and yes, that can be pretty scary, especially when you look at the big brands which have closed hundreds of physical locations over the last few years
. However, when you fly below that view from 30,000 feet and dig into the details, you get a sense the industry is actually more likely in the midst of a transition phase rather than dying a slow death. First off, according to ABC News
, 85 percent of all retail sales took place in physical stores in 2017 so don’t worry too much about e-commerce (the supposed catalyst to the apocalypse) swallowing physical sales anytime soon.
Secondly, a study from IHL reported retail stores and restaurants opened 4,080 more locations in 2017 than were closed down
. In fact, it found for every chain with a net closing of stores, 2.7 companies showed an increase in store locations in 2017. There’s no denying the emergence and growth of e-commerce has shaken the physical retail tree, but it’s not all doom and gloom by any stretch for a facility manager. Instead, today’s most successful retailers have embraced the change and are beginning to play by the new rules of physical shopping. While there are a number of ways retailers are pivoting in response to the changing landscape, we are going to focus on one of the most interesting (and maybe the most exciting) of these changes and how that impacts the Facility Management industry as a whole.
The Customer Experience
Let’s start by zeroing in on two of the most successful retailers in the physical space today – Apple and Urban Outfitters. As you may know, one of the key metrics retailers monitor to gauge the health of their performance is sales per square foot, and in 2017 no one did better in that department than Apple.
Apple has broken away from the traditional retail spectrum. That shift is immediately noticeable and palpable when you step foot into one of their stores. You’re first welcomed by tables full of electronics designed to allow customers to interact with Apple’s products. Each customer is then given a personal, knowledgeable, and friendly staff member to walk them through their journey. When it’s time to purchase, the employee “takes the order”, goes to retrieve the item(s) in the back of the store, and returns for checkout. Meanwhile Urban Outfitters, in their own way, is successfully changing the in-store feel as well, after being in the cutthroat business of fashion retail for nearly 50 years. They are known for frequently changing their in-store layout and altering the environment of their store by utilizing temporary pop-ups. Some U.O. locations are even dipping their toes into the casual dining scene within their physical locations. Some sites are offering a bar experience, small cafes, and even pizza from their recently acquired high-end pizza business Vetri. Of course, these are just two examples, but there are many more out there such as in-store order fulfillment. With this, large retailers have had great success by bringing the omni-channel experience full circle by allowing customers to order online and pick up their orders in-store for free. According to Multi-Channel Merchant, 40% of Target’s online orders were fulfilled from stores
. This brings the customer into the store where they have the potential to spend more. What this all boils down to is one thing – customer experience. Consumers demand more from physical retail stores in today’s world. They need to be guided through a journey – one that feels personal to them. The most successful physical retail stores out there have realized this, and are in the midst of changing their thinking and how they interact with their customers.
The Facility Management Role
A physical retail location is the face, and one of the more tangible representations of a brand. Who is at the forefront of maintaining it all from the facility to the reputation? That’s right – the facility manager. It seems the days of the Facilities Department being solely responsible for fix and repair situations are starting to come to an end, as the approach to physical retail changes. And if it hasn’t happened in your company just yet, it sure looks like it will sooner than later. With marketers and brand managers becoming much more focused on storytelling and the omnichannel customer experience, companies are beginning to elevate their focus on the facilities department. No longer are Facility Managers solely responsible for protecting the physical location, they are also involved in maintaining the customer journey and brand image. What’s also become interesting is the necessity for strong relationships and communication between different facets of a company. It is paramount that a consistent customer experience is felt from the beginning to the very end of their journey, and with how often that journey flips back and forth between a digital and physical experience, the importance of teams having unified goals grows. Not only do these changes signify a shift in the level of responsibility for Facility Managers but it also puts a highlight on technologies and partnerships which can take some of the burden off of the FM’s shoulders. Finding national vendors
and software partners who are forward thinking and use data analytics
can be key in helping Facility Managers achieve their goals more quickly, drive better decision making, as well as improving collaboration with other teams. Bringing this full circle, this is not a depressing or bleak time for the retail industry or facility professionals for that matter. Instead it’s a time of change and if you’ve ever read “Who Moved My Cheese?” (if you haven’t you should) you know by embracing the change, leaning into it, and learning how you can improve with it, this can turn out to be quite an exciting time as well.