It’s Not Just Good, It’s Good For Business

No one can argue with the benefits of scale when it comes to retail. Large-scale retailers provide deeper assortments at lower prices than their ma-and-pa competitors. But there’s a problem with all this scaling up. Mass-scale stores have become divorced from the communities where they sit. Most big-box retail stores look like they have been dropped in place by the mothership, and show little connection to where they are. All retail should have a sense of place. Now that we’re used to all those benefits of scale, customers yearn again for the relationships they had with their stores when they were owned and operated by their neighbors. Prediction: the next big wave in brick-and-mortar retail will combine the power of scale with the benefits of old-school mom-and-pop retail relationships. This is the transformation of big-box stores to come.

Whole Foods Shows the Way

The relationship-economy movement has already begun. We need look no further than Whole Foods, a leader in this way of thinking. They get involved with the local communities where they do business. Plus they give their GMs some autonomy to broker the local relationships. Whole Foods is genius at forming smart local partnerships to accelerate community engagement. For example, last fall they inked a deal with Smorgasburg, an artisanal food fair launched by the founders of Brooklyn Flea, a popular local marketplace. Smorgasburg features local prepared food providers in month-long pop-ups at the Whole Foods on the Bowery in Manhattan. Every month the pop-ups change out, providing the elusive “refresh” all retailers lust for, and the traffic driver that gets customers into the store again and again.

Now Whole Foods is piloting Wellness Clubs, with test programs running in Dedham, Massachusetts and Princeton, New Jersey. They provide educational programming and social activities around health, nutrition, exercise, cooking and lifestyle. They keep a steady calendar of events and experiences, a combination of free and paid classes, and programs for the kids, too. They have assembled a team of Wellness Experts to design the programs, which run under a membership model. This uses the store as a platform for something very much sought after in modern life—a place to gather, get well, and get stronger. You can’t get that on Amazon.

When You’re Too Big to Get Local

The folks at Target tipped their hat to the local connection movement with less success last spring with “The Shops at Target”—giving five small businesses a thumbs-up and introducing their products in the national chain. They just announced they’re shutting it down. “The Shops” showed an awareness of the value of small businesses, but it had the equation backwards. It gave these small businesses the American Idol treatment, hurtling them onto a national stage, rather than creating a local network that nurtured hundreds and hundreds of small businesses in the communities where they already have their stores. Why? Because it is much harder to do the latter, especially when you are working at the scale of Target.

It gets real hard, real fast to adapt to “local” when you’re as big as Target. The large-scale methodologies for dealing with thousands of stores in a chain simply have to be rock solid, which allows for little flexibility in the operating model. While the Shops are, I’m sure, thrilling for the lucky few business that go along for the ride, they still perpetuate a standardized approach to customer experience design that people expect at Target. The reality is that when you are in a Target, you could be in any Target, anywhere. In all fairness, Target does an excellent job of developing the communities it serves through its philanthropic work. They just haven’t started to integrate that localized effort into their customer experience yet.

Big Boxes Morphing to Smaller Boxes

For retailers offering special services, the pressures to have smaller footprints and slough off square footage can work to their advantage. The big-box Petco customer experience is quite impersonal, and yet they offer useful services like pet training, inoculation services, and grooming in that big-box environment. Services require a relationship, and sadly, the big Petco experience feels entirely transactional. Design-wise, it’s an unforgiving environment for the human touch.

In counterpart, in my own neighborhood in Park Slope, Brooklyn, I’m able to shop one of the 65 “Unleashed by Petco” small-box stores, that have a distinctively neighborhood feel. My local store operates at human-scale, while offering the price advantages of mass-scale. As a result, it is a much more conducive environment to buying services. They offer the same grooming, training and pet-washing services as well as vaccinations and pet insurance. They’ve also figured out how to partner with complementary local businesses, and build good will in the small business community. In Alexandria, Virginia, for example, they partnered with a local dog party business to stage Valentine’s Day parties in their stores.

How Design Accelerates Community Engagement

So what is the glue that holds community engagement together? Design! Strategy and design are powerful when they are developed in parallel; but strategy without design to anchor it often leads to wasted time and effort. Why? Design is a naturally integrating force. Integrated design takes strategy conversations that can spin endlessly and accelerates them to an inflection point. Design is the conduit that can resolve an unprecedented number of cross-functional conversations through an holistic approach. Healthy organizations use systems thinking, as opposed to silo thinking, to enhance the customer experience. And integrated design guides the effort forward like a North Star. It provides a roadmap for a shared vision.

Big-Box Transformation Playbook

Any meaningful retail transformation in delivering community engagement requires a shift in operating model. It can’t be shopped for in parts. Community engagement will not be achieved with just a great store design. It won’t be solved by exciting new merchandising schemes. It will not be the result of a team of innovators. Nor will it be solved by a new website or app. It will be solved by weaving all of these elements together seamlessly. Transformation is in the integration. A modern approach is for the store to behave more like an organism than a box filled with things. All parts of the retail experience have to move in synchrony—staffing, training, marketing, digital tools, fixture design, the look and feel. If even one part is out of step, the customer experience will fail. And it pays off: the more internally integrated the organization is, the more integrated the customer experience will be.

Ultimately, engagement requires new tools that big-box retailers may not be used to honing: social activity design, community moderation, and event production, just to name a few. Retailers will need to design and implement outreach programs, behaving more like an educational provider, creating classes or providing a community center. These engagement capabilities, when combined with the powerful supply chain and e-commerce distribution capabilities already in place, will be essential to the inevitable transformation of big-box retail.

This article was originally published in The Robin Report.