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What’s in Store for Brick-and-Mortar?

It’s time to elevate in-store experiences, create next-gen brand destinations and evolve far beyond the transactional.
Report

We’re at the beginning of the retail revolution.

The retail world is changing faster than ever. The intersecting effects of the pandemic, the climate crisis, inflation and technological advancements means we’re seeing developments across the sector. Thanks to frog’s partnerships with leading retailers and consumer brands, we’ve got a front row seat.

In a new report, we hone our focus to an area undergoing fascinating shifts: brick-and-mortar retail. Reimagining physical retail, we focus on the broad set of new customer needs: from seeking unique discovery experiences and on-demand convenience, to the more fundamental need for connection.

Download the new frog report: The Future of Retail: What’s in Store for Brick-and-Mortar?

Via six transformative archetypes, we explore new ways to connect with customers and evolve beyond transactions:

  1. The Showroom: Give customers access to experts by putting “show and tell” front and center.
  2. The Playground: Provide a space for imagination and exploration to take over.
  3. The Clubhouse: Drive loyalty by reimagining the store as a hub for like-minded customers to connect.
  4. The Oasis: Create a refuge from traditional shopping and daily stressors.
  5. The Studio: Unlock the ability of customers to co-create, experiment and customize.
  6. The Garden: Get (and give) stores new life as places to repair, restore and recycle goods in line with brand and customer values.

 

Make space for the untapped potential of brick-and-mortar. 

Thanks to the rise of ecommerce, the humble store (with its origins stretching back to antiquity) saw some of its most tumultuous years. The proclamation, “the store is dead!” grew louder. However, signs point not towards death but towards an opportunity for metamorphosis. 

While ecommerce’s share of retail is expected to continue to grow in the coming years, it currently represents less than 15% of the entire U.S. retail market. The metaverse and other emerging channels are hot topics, yet linger at a fraction of a percentage when it comes to market share. This means storesas unglamorous as they have become for many brandsare still where the battle for customers’ money is won (or lost). Physical retail provides a uniquely tactile opportunity for brands to differentiate and connect with customers. Now’s the time to create in-person synergy and invest in the store of the future. 

 

Brick-and-mortar in numbers

  • 72% of digital shoppers said they consider in-store experience the most important channel when making a purchase. (Invesp, 2022)
  • 82% of consumers are more likely to return if they have a positive in-store experience, and 64% said there’s an increased likeliness they’d spend more. (Raydiant, 2021)
  • +30% is the increase in lifetime value of customers who buy both in-store and online, as opposed to those who only use one channel. (Invesp, 2022)

 

So, what’s next for physical retail?

New measures of success

Store experience will be assessed by the customer lifetime value created across channels, visits and multiple retail revenue streams.

 

From… To…
Transactions. Store as sales and fulfillment channel. Relationships. Store as stage for brand experiences and services.
One-Way. Store as a site for brands to control the conversation with individuals. Multi-Directional. Store as a place where brands invite participation and cocreation by communities.
Closed Off. Store as a single, controlled branded experience with strict rules of engagement. Open and Collaborative. Store as an open platform, enabling collaboration amongst unique brands, products and services.
Fixed. Store as a permanent location, pre-planned with seasonal program. Dynamic. Store as an ever-evolving place to experiment as well as measure, learn and respond to trends.

The decline of the store as solely for shopping

Throughout history, shopping has been synonymous with physical stores, but that link has been disrupted. We’ve seen a decade-long trend of retailers mirroring Amazon tactics: optimizing for efficiency, reducing physical footprints, slimming staff and cutting brand budgets. The ongoing effects of the COVID-19 pandemic and the cost-of-living crisis have contributed to the high numbers of stores closing globally.

  • 50,000 retail stores are projected to close in the U.S. over the next five years. (CNBC, 2022)
  • There has been an 11% decline in the average number of retail building leases from 2019 to 2022. (LeaseQuery, 2022)

 

The rise of the store as experience

To win in this altered landscape, retailers should avoid obsessing over the transactional, efficiency-driven game. Instead, they should master the experience economy, for which stores are the prime stage. Retailers need to unlearn what they know about the optimized store and adapt to discover and deliver new jobs-to-be-done better than any of their competitors.

  • 32% of brands expect to establish or expand their use of pop-up and in-person experiences in the next year. (Shopify, 2021)
  • Brick-and-mortar sales are currently growing at a faster pace than e-commerce sales. (WSJ, 2022)
  • 47% of consumers consider local presence a significant factor when choosing which brands to shop from. (Shopify, 2021)

Shopping around for retail innovation? Download The Future of Retail: What’s in Store for Brick-and-Mortar?

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Ready to learn more about our six store archetypes?
Download The Future of Retail: What’s in Store for Brick-and-Mortar?
Authors
Alex D’Agostino
Senior Strategist
Alex D’Agostino
Alex D’Agostino
Senior Strategist

Alex D’Agostino is a Senior Strategist in frog’s San Francisco studio. Alex’s love of creative problem-solving is rooted in her desire to make things better and make better things. She enjoys retail as therapy and contemplating the consumer psychology and business value of how the two come together 

Kamil Klamann
Executive Director, Head of Strategy, frog San Francisco
Kamil Klamann
Kamil Klamann
Executive Director, Head of Strategy, frog San Francisco

Kamil is an Executive Director and Head of Strategy in frog’s San Francisco studio. Kamil works with leading retailers and consumer brands to help them stay ahead of the pack through world-class products and customer experiences.

Joy Payton-Stevens
Senior Strategist
Joy Payton-Stevens
Joy Payton-Stevens
Senior Strategist

Joy Payton-Stevens is a Senior Strategist in frog’s San Francisco studio. She is a systems thinker who values wide open research to stretch the imagination before narrowing any focus. Understanding that the current state of the world is simply a series of decisions made in the past, Joy is excited to play a part in designing a better future by defining the space where user needs and business values align.

Viral Shah
Vice President, Head of Strategy, frog San Francisco
Viral Shah
Viral Shah
Vice President, Head of Strategy, frog San Francisco

Viral is Vice President and Head of Strategy at frog San Francisco. Viral focuses on helping clients define and achieve their business objectives while pioneering innovative products and services for their customers. In today’s world, where consumers are more discerning than ever before, Viral believes the future is ripe for those that can create products and services that consumers want—well before they know they even want it.

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