This article was originally published in the Robin Report, Robin Lewis interviews Ed Schlossberg

Robin Lewis: What in the world was Best Buy thinking when they discontinued their Studio D and Escape small store concepts several years ago? You designed these neighborhood boutiques to customize these stores for specific niche demographics and lifestyles. What’s the backstory on this?

Ed Schlossberg: I had this idea in 1998 to do something called a Digital Playground. I thought if these technology companies were going to be successful, they needed to let people play using digital stuff so that they could see what would work. So I made a presentation to Brad Anderson who was CEO of Best Buy, and he said, ‘This is fantastic, we would love to do this.’ He hired us to design the first Digital Playground. It took some time to get it going. When Brad hired James Damien as their visual merchant, he was really excited about it, and we kind of became his team.
RL: What was the design strategy?

ES: Each store was designed and imagined differently, with customized merchandising and service strategies, and all were highly educational. Our design strategy was to work from the customer’s perspective into the design and not from the product or store out to the customer. It was to create a model based on the needs and interests of the customer and then create a way to meet those needs in the store using physical design, staff, virtual tools and an online component.

For Studio D, our customer was a 20-something married woman who had little access to software or hardware, but sought solutions to her digital needs –- composing, creating, managing, etc. We decided to create relationships with both virtual and physical community organizations. We actually gave those groups a percentage of the profit of the sales of their members to connect Studio D in a meaningful way with the community. Our offering of classes was especially popular and proved that people would pay to learn about how to use new software and hardware.
For Escape, our customers were 18- to 30-year-old men and women who loved the newest and greatest hardware and software. We created a relationship with a company that modified cool Japanese tech that was unavailable anywhere else, so we could exclusively offer really hip stuff. We created spaces where new video games and other software could be tried out, and we created a membership program where members could reserve spaces for friends and get email blasts about new gear. We also did an outreach programs to the colleges in the vicinity.

RL: Why was this so radical at the time?

ES: For Studio D, we introduced a sense of community centricity focused on local ethnic groups and women. The challenge with a traditional single centricity strategy is that you as a customer don’t know that you’re in a store that’s marketing to you. It’s not personalized to your wants and needs. It helped the merchants buy merchandise better, but it didn’t help in the retail experience that much. We were problem solvers and developed community centricity to merchandise to a particular customer by knowing where she was in her shopping cycle and a variety of other behaviors. For Escape, with that age group, the membership program was as radical as the ‘try before you buy’ program. The early-adopter product strategy was radical for customers, and the 6,0000 square foot store model was new for Best Buy.

RL: What were the revenue implications of changing the design?

ES: At the time, the stores typically cost about $2.5 million, and they would produce about $21 million in revenue the first year. So, not a bad deal. But the new design prototype store that we did for the West Hollywood store produced $35 million because the products were given more room; the vistas were clear because of lower fixtures. New comprehensive signage and wayfinding made the experience more inviting. And not using permanent walls for ‘area creation’ made changing and refreshing the interior environment much easier.

RL: Did you use a matrix to measure the customer experience?

ES: They used sales per square foot. Period. That’s not a bad thing to measure with, but that shouldn’t be the only thing you measure with. We made alternative measurements a really active idea because there were a number of new tools we could use. There were heat maps of stores, so you could actually measure ‘does this end capture attract anyone?’ What are the sales per square foot depending on where you place things? How could you experiment with that? So we wanted to build, which I never got to do, but we wanted to build a store in which we could evaluate and measure every single piece of furniture and fixture based on a test store. It could help define and perfect what made a difference.

RL: What role does physical design and experiential design play in retail profitability?

ES: Design has to be based on customer needs, and then you need to work with these needs into designing the experience. Separating out physical, visual, or experiential design elements is meaningless. The customer has only one experience and that is the whole experience of the store. Profitability is a measure of that total design experience integration.

RL: What lessons can we learn from the Best Buy experience?

ES: Integrated design works. Working from the customer in, rather than from the product out, works. Innovation requires an organization that takes risks.

RL: Didn’t they just reintroduce something though? The ‘Connected Store?’ They’re coming back with this now, right?

ES: Best Buy is coming back with the connected store design concept but it seems to be physical solution, not supported by all the other elements that makes for a successful store experience. As you say, a solution in retail is a solution that involves how the physical store works and how the staff works, the digital solution and the level of interactivity and the training programs, and the advertising programs. You can’t solve it isolated with any one of those. Ever.

RL: How do you see the future of innovation in store design today?

ES: Stores need to be intersections in the complex communication and experience world that we are now living in. That means that stores and experiences need to be designed online as well as in-store. And they need to serve a vital social link in their communities.

RL: What is your impression of what JC Penney is trying to do?

ES: I think that Ron Johnson’s approach is really interesting. And I’ve been sort of rooting for what he’s been doing. I think it may take too long, because he’s asking the audience to behave differently, and that’s not easy. My point about saying this is that I don’t know if his customers can evolve to his vision in a short enough time to produce results. I mean, you love people who have an idea, and a rudder, and know what they’re doing. It’s satisfying.

RL: Finally, do you have a guiding philosophy about designing the customer experience?

ES: There’s a section in the Timaeus, Plato describes the process of culture. He says that what we do in culture is we take parts of our body out of ourselves, and make it big, and then learn how it works, and then we make it small and we swallow it again. And he says the best thing is, you see it poking its head out and smiling. It’s such an unbelievably brilliant insight into the role of culture in life. Which is what we do all of the time, that’s how we learn and create culture.