• Americas

Retail Newsline: Welcome to the Age of the Retail Mashup

By Garrick Brown, Vice President of Retail Research, Americas

Shoes-White_Black_weddingThe Whole Foods possibly adding tattoo parlors to their new Whole Foods 365 stores story has taken off and some variation of it has pretty much appeared in every local business journal and in most of the trades.

But with all the fascination towards the possibility of tattoo parlors within Whole Foods 365, I think the bigger picture has been lost.

First off, the tattoo parlor thing may or may not ever happen. What it really comes down to is that Whole Foods is looking to partner with interesting and potentially outside the box retailers for store-within-a-store space at their new Whole Foods 365 concept stores. But check out their website; Friends of 365. There you will see that while they mention that they are open to any type of business “from food and drinks to fashion, body care products, services, and more…” The ideas of record shop and tattoo parlor are thrown out there almost as teasers. In fact, there is a whole lot more substance on the portion of the webpage that lists new store locations and opening dates. Now I am not saying that there won’t be any tattoo parlors ever opening in Whole Foods 365 stores. What I am saying is that this entire story is big for two reasons that I don’t see being mentioned in most of the coverage out there.

First off, this entire story itself is an incredible public relations coup. This will build major interest in the rollout of the new Whole Foods 365 concept in a way that any standard advertising campaign likely would not. With millennials as the target market, dropping the notion of vinyl record stores or tattoo parlors (whether you go there or not) just announces to the world that you have hipster street credentials. I would say this wins the P.T. Barnum Showmanship Award, except that it would suggest that I think this is all flash and no substance. But there is nothing I see as further from the truth.

Welcome to the age of the retail mashup.

On the surface, the Whole Foods 365 move of adopting a store-within-a-store platform may not look all that different than JC Penney’s highly successful move of adding Sephora locations a few years back. But that move was driven by pretty conventional logic. JC Penney basically was able to bring in an up-and-coming cosmetics chain that had strong customer demographics and loyalty from a client base that Penney’s wanted to attract. In replacing their own cosmetics counters with Sephora they got out of a business that wasn’t at the core of what they did. Sephora, meanwhile, got instant growth and exposure to the traditional JC Penney shopper. Penney’s bolstered their sales and mitigated risk, Sephora got inexpensive and immense, nearly overnight growth and both parties benefited from reaching a new audience of consumers. But, again, that move had a lot of conventional wisdom behind it.

If anything, the Whole Foods 365 announcement is the next evolution in the store-within-a-store movement. I believe that we are going to see more of these seemingly unconventional marriages in the year ahead. And remember, this isn’t even the first of these…

You might remember back in November when Urban Outfitters purchased the small Philadelphia-based chain Pizzeria Vetri and announced that they may be adding a pizzeria concept to some of their stores. The Whole Foods 365 store-within-a-store concept follows a lot of these same ideas. A clothing store where you can buy a slice of pizza? A grocery store where you might be able to get a tattoo?

These are not random, disparate moves. These mashups have a crystal clear vision behind them and that is the targeting of the millennial demographic.

What’s one of the hottest new retail concepts out there today? Shinola. What is Shinola? A bicycle shop? A watch store? A hipster trinket dispensary? No, it is a lifestyle store.

What do you call an Urban Outfitters where you can buy a craft beer? A lifestyle store. What do you call a Whole Foods 365 where you can get your knuckles tattooed? A lifestyle store. By the way, I was in Miami last week and ran into a guy who had NEED tattooed on the knuckles of one hand and AJOB tattooed on the other. Nice!

And there is one last thing that I also think is behind these moves. We talk a lot about experiential retail in this industry. Some retailers get it. Others don’t. There are plenty of forms of experiential retail out there. But these moves are experiential retail at its simplest… and that is to make your concept interesting. In the omni-channel age, when faced with the dual challenges of increasing e-commerce market share and a frugal consumer we have trained to be on the hunt for discounts, we have seen one retailer after the next playing it safe, betting on “the sure thing,” when it comes to merchandising. The result is we have a retail marketplace that is now largely homogenous. Go into a Class A mall in San Antonio. Go into a Class A mall in Portland. Go into a Class A mall in Minneapolis. For the most part, the stores are the same. The goods are the same. The experience is the same. And it is, all too often, boring. By playing it safe, American bricks-and-mortar retailers are actually risking the very thing that they fear most… driving more consumers to the internet.

So if the retail experience is ultimately going to be the dividing line between failure and success in the new retail age, you have to give it to Whole Foods… and Urban Outfitters for that matter. The simplest and purest form of experiential retail is to simply be an interesting concept.

Be sure to check out our latest research reports by clicking here. Please also feel free to check out my webinar forecast 16 Retail Trends to Watch in 2016.

This post is commentary from the latest weekly edition of our Cushman & Wakefield Retail Newsline, which you can subscribe to for free by e-mailing garrick.brown@cushwake.com.

garrick-brownGarrick serves as Vice President of Retail Research for the Americas. He speaks frequently at industry events and has been a keynote speaker at symposiums, conferences and market forecasting events for groups like the Appraisal Institute, Urban Land Institute, CREW, ICSC and PRSM. He is also a member of Lambda Alpha International, an invitation-only land use society for those who are involved in the ownership, management, regulation and conservation of land, but also those who are involved in its development, redevelopment and preservation.

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