The Founder of New Retail and Service Lab at S.POINT
Recently in the new retail salon event joint forced by S. POINT and MBA Innovation & Business Venture League of Fudan University, Georgia GUO, founder of S. POINT retail and service lab, put forward some pragmatic issues regarding the execution on landing innovation projects for the retail industry.
The“new retail” topic became so popular in China, what can innovation consulting do to help? As an innovation consultant, we are not good at talking big concepts such as “retail business model” or “customer traffic”, what we excel is to dig into experience details of users from our ongoing projects with clients. A lesson has learned, we experienced a process of removing the over-layered details, it's always easy to the point of having a new business model but it's never that easy to implement on the details you've ideated.
Talking about new retail, people will think of the “restaurant + supermarket” retail business model which is a big trend now in China. Represented by Fresh Hema, a leading new retail brand in China, their business model is actually not truly what we called innovation, EATALY from Italy has brought this "restaurant + supermarket" retail business model to the world back in 2007.
The first EATALY was founded in Turin. Its founder Oscar Farinetti proposed a combination of restaurant and supermarket, presenting the true self of food in an elegant, relaxed and modern environment. Currently, it has over 30 outlets globally. Unlike many other such restaurants, it was not transient but has stood the test of time.
?? Credit: expedia-aarp.com
First, the floor plan of EATALY is in a perfect match of Italian consumers' habits including Michelin restaurants, and the must-have liquors for Italians are placed at higher floors. Fruits, vegetables, and daily supplies with frequent consumption are placed at lower floors, which can both boost purchase and facilitate consumers. The cashier has been designed and placed on the 1/F so that consumers with less buying needs can get in and out quickly rather than following forced shopping routine. Category information in different areas is labeled with large and remarkable signs, the space outside the escalator is also fully used to deliver key information through giant letters.
Besides the overall layout, the details of EATALY might be what’s really appealing to the consumers. Stemming from the founder’s advocacy of slow eating culture and local market, every POP (point of purchase) detail of EATALY is an effort to restore the essence of food through idyllic approaches. Inspired by the book "Dilemma of Omnivores", Georgia recognizes this perfect combination of product display, visual merchandising, and information delivery as “supermarket literature”. EATALY and Whole Foods in the US are both masterpieces of “supermarket literature”.
The “literature” language of EATALY is primarily expressed through materials, as all the wood, bamboo weaving, and straw weaving deliver a feel of rustic earth.
The brand also expresses its design language through product information delivery. On the fresh food shelves, all the blackboard and written information restore the feel of a local market. For instance, in the display of cheese product, there is detailed information on the type of cow, production place, month of fermentation, and even pictures of farmers, which not only describes product features but also brings about associations of beauty and trust.
In addition, all the literature signs in the EATALY store is also an important part of its “supermarket literature” image. At various corners, you can often see catchphrases with passion, slang, poetic flavor or attitude unexpectedly, which are consistent with space and POP design, and conform to the Italian way of expression, therefore quite natural in the stores and can resonate with consumers in terms of sentiment and recognition.
?? meaning “those who seed wheat will eat good-quality bread”
The success of EATALY attracted a large number of Chinese retail managers to visit and learned from its retail business model and experience. The boutique supermarket in China’s tier 1 cities are thriving, but we found out through on-site visits that the executions can be very different even though they follow the same retail business models.
For example, some new boutique supermarkets adopt a rough industrial design style for better appeals, including unfurnished ceiling, bare cement, and iron furniture, etc. The visual effect does render a high-end feel, yet it also looks deserted when the shop is newly opened with fewer customers.
“Deserted” is one of the most frequent words describing such supermarket on dianping.com (Foursquare equivalent in China), which is by no means good for China’s retail business. Young Chinese consumers decide where to go according to the length of queues, which is herd behavior. The supermarket might need to consider the rearrangement of space and set some busy flow attraction at the entrance.
In EATALY and some benchmark Japanese supermarkets, many retail managers have noticed the importance of linked display. For instance, in the early days some import food supermarkets in China followed EATALY’s way by placing wine beside the fresh meat freezers, which was actually not a strong linkage for Chinese consumers, a quick joke – the more effective way of doing this in China or in the tier 1 cities like Shanghai should be cooking wine for braised meat instead of wine. So this linked display idea didn't last very long.
?? This promotion stall has a rich display of commodities from coffee to soy sauce, but it’s really hard to figure out their linkage and why we should buy them
Another problem is the ability to boost business. It might be quite easy to add a physical touch point in a retail store, but it’s never an easy thing to manage and maintain good business. Buying-and-cooking fresh seafood on-site is another big sell-point of Fresh Hema, but this supermarket (showed in below) is not so popular even its seafood section provides same on-site buying-and-cooking service, with similar price and quality, quite a good location and customer buying power. The main problem is that its seafood buying area is separated from cooking and dining area, customers will have to take the escalator to the second floor to take the cooked food and eat, after buying them on the first floor. We’re not sure about the rationale for such an arrangement, but it does cut off consumers’ desire to buy and eat, as well as information transparency.
We also see that besides the common restaurants and flower shops, some boutique supermarkets also add a cooking classroom, coffee, or even book bar and co-working space, some are planning to integrate more business including art, culture, exhibition and etc. It is possible to engage in those cross business running, but the premises must be an in-depth understanding of customer group so as to integrate and implement by their characteristics, as it might not work just to copy a retail business model from other markets.
Therefore the new retail model is easily accessible, but it’s not easy to create a bonding scenario with customers, and copied retail business models aren’t necessarily entirely effective.
Today we are increasingly aware of the importance of customer scenarios, which is not a virtual concept but many actual details. As retail develops into a phase of elaborate operation where customers want to have an accurate understanding through all the complicated information and commodities are supposed to be telling stories when displayed at the shelves, traditional ways of shelf placement are losing ground. For such projects, our core design task is to create “linkage”, which is answering common questions of consumers in an effective way through our design, elaborating the relationship between "customer" and "merchandise" through designing of sufficient information, dynamic demonstration, and rich linkage.
In a retail scenario, consumers will typically ask before buying merchandise:
a. What is it?
b. What's unique about it?
c. Why should I buy it?
d. Why should I buy it here?
The task of design is to answer these questions through the research of the environment, display, and service, as conversion will take place when the questions are being answered right at where it happened. Another task of design is to reduce dependence on individual service people to ensure steady customer experience. That’s why we suggest retail clients using top-down process when looking for design service providers, focusing on the designer’s ability to understand and build a system, or whether the design team has strategic thinking to drive the whole conversation, because retail is not an individual product nor is it a periodic experience, if the design does not start systematically, brilliance exists in separate project sections are not enough to support the big picture.
In the past, retail brands might be more inclined to solve problems of store plan and retail business model through business consulting, but with more intricate retail competition, the implementation on the retail innovation need to be executed by internal and external teams with high touch capabilities.
In conclusion: Retail Is Detail and Retail Is Tangible.
It can be hard for girls to keep control of their wallet at Lush as its multi-sensory and compound experience is so overwhelming that even the rational consumers will easily spend hundreds in buying big bags of soap every time. Visual satiation, audial ardency, fragrance, and functional subdivision, all systematically linked to associations and feelings brought by Lush, which are easily heightened to emotional linkages of self-affirmation and self-reward. Such levels of details and feelings are what our retail and service lab will be focusing on.