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Design Roundtable 2000

At Shopping Center World's invitation, executives from some of the industry's leading design firms gathered to participate in a roundtable discussion of current issues facing retail owners and designers, including the growth of e-commerce and the challenge of designing stores and centers in which people want to stay longer. The roundtable was conducted in Chicago at the GlobalShop conference held earlier this year. SCW Associate Publisher Jon Tuck moderated the informal discussion. An edited version of the roundtable follows.

SCW: As e-commerce continues to grow, will traditional brick-and-mortar retail stores downsize and turn into showrooms? If so, how will this affect store design?

Brian Sullivan: Savvy retailers will recognize that with increasing competition from e-commerce, stores will no longer be the focus of the relationship with consumers. They will become one component in a series of parallel channels and experiences that form a relationship between a brand and its customers. As such, store design will evolve along two complementary, yet distinctly different paths to address consumer mindsets at any given moment.

Specialty stores will leverage authority to edit and orchestrate their offerings. Products will no longer be organized around brands or categories. Instead, aspirational themes, solutions and narratives will provide the backbone for presentation - physical and virtual.

Other non-specialty retailers, such as mass merchants and category killers, will have to leverage their breadth by giving sophisticated tools to assist shoppers in selecting the right product from a vast array of choices. Space allocation assumptions will be called into question and sq. ft.-swallowing behemoths like the cash wrap will be reinvented.

David Amster: You know when you really get down to it over the course of the next five to 10 years, there is very little merchandise that is great for buying on-line. Media stuff, music, is going to be a thing that does grow significantly, also video products. And the traditional retail format, yes, I do see that as more like a showroom creating more of a multimedia visual experience for people to come there and make their CDs.

But with a lot of other products, they are something you want to touch, something you want to interact with personally, and I don't see the Internet doing that.

Shimizu: I think that as more people end up shopping on the Internet, more people will want to go to the showroom and actually see what it is they have been looking at on the screen and to hold it. I think the showroom concept is the direction it is going in.

Look at Michigan Avenue. That's the world's biggest showroom for all the leading retailing trends right now, and probably in 10 years the funds that each retailer will allocate on marketing will be used to build the showrooms. It's a living commercial.

Bill Chidley: I think the Internet is really a business model waiting to happen. People up there have a lot of capital and are just looking at ways to use that capital to build a brand. You've got folks like Amazon and others who are looking at the delivery pizza model, where if you are Papa John's Pizza or Domino's Pizza, eventually you want to occupy a position in the consumer's mind of a phone number or brand or, ideally, speed dial. Now, we want to get those people on a bookmark, as opposed to a speed dial.

So, the e-retails need that physical presence for customer acquisition. Now, whether it's a long-term business model or not, it remains to be seen because PizzaHut started with personal order Pizza Huts and it's developed where they had to establish brands that as they developed a more in-home delivery kind of brand they would move their delivery locations into less and less ideal real estate.

It could be roughly modeled on that. High-profile initial entry like the Gateway stores are now to get the high concept of selling brand awareness established, but we don't know if anybody knows if that's going to be long term and an influence on real estate or not.

Shimizu: I am not too sure of what the benefits are for having a computer terminal in the store to allow the customers to do whatever they do that they can do at home. It seems as though once customers go into the store, they want to be serviced as opposed to having them sit down and punch in the keys. A couple of years ago, Eddie Bauer had a little catalog section stand where there were banker phones and their little catalogs. Basically, it was what you can do at home, and I'm thinking why should I be doing that when I'm in the store.

I took the trouble to get in my car to go to the store, they should be doing this for us. I can do this at home, I can experience the same grief I do over the phone in the stores as I can at home. So, I am wondering if that might be an outlet too or might be a way to make the computer and the distribution aspect sort of transparent once people go into the stores.

SCW: We've seen a lot of the Internet kiosk companies that have emerged within the last six months. Some of them have mall locations and some of them are talking to mall owners but don't have locations yet. How do you think these kiosks will contribute to retail design.

Morbitzer: Well, we've seen a lot of people wanting to use kiosks in stores more for educational [purposes]. If a husband's waiting for his wife trying things on, he can go to the computer and look for similar websites or educational programs that will tell about a product they are looking at or different types of equipment or products associated with the store they are in. That's where we've seen it more than anything, as more educational while someone's standing around waiting and looking for someone else to do whatever it is they're taking care of.

Geoghegan: There are almost two sides to that. There are companies that do get the issue that [shoppers] are in the store already [and therefore] we have to concentrate on making the transaction with them. There are people who understand the idea that it's supplemental to the transaction distribution.

There are other people that don't get it but feel there's technology going into retail - we better do something. It shows with their programming. There were several retailers that were more catalog-oriented that had phone catalog connections in their store. To a degree, it's a loss of display area for product presentation, but they felt unsure they were doing everything that they could.

I think that the multimedia companies making the kiosks really should make an effort to educate retailers on how it can benefit their stores.

SCW: Are your retail clients becoming even more specific with the demographics they are targeting?

Sullivan: A core tool in creating successful retail solutions is thorough market and user research. We work with fully integrated teams of designers and researchers to identify industry blindspots, unmet consumer needs and new opportunities. This information can provide a basis of understanding for every phase of the design process including strategy development. Effective solutions can't be created in a vacuum. To ensure these solutions will be viable in the marketplace, we have to understand the current market climate and direction.

Chidley: What we find is an enormous amount of paranoia with clients who feel the need to change, but are afraid of betraying their core customers, so the majority of the research that we do and how we design our process is to reduce that anxiety.

Our experience anecdotally is that, when you're a successful business, you tend to be very leery of killing the goose that laid the golden egg. You think all the things you do are different and the consumer notices, when in fact we find that very few of the things that you do [are] different.

Illuminating these issues, even their core customers are not sensitive to [the fact that] in the initial stage the design can give them some liberation in terms of wanting to be more comfortable in making changes. Usually the demographics follow the money. We don't have the benefit of having a lot of clients that are chasing [Generation] X's or Y's right now.

But we do have clients that have older customers and who are trying to find young families or people in that life stage. There are some pretty compelling things you can do to attract that specific niche. It's a pretty big niche, but we find that with shopping center rents going up all the time, it is harder and harder for customers to be extremely narrow. You need to maximize that mall or center traffic in your store.

Turick: We find the opposite of our customers looking to not focus on their traditional demographics. Right now, we are doing four traditional urban brands and we do a lot of vendor shops. Right now we are doing Puff Daddy's line Sean John, Russell Simmons' Phat Farm, Karl Kani, who's the granddaddy of the hip-hop business, and Lugz.

All of them are saying we don't want to be recognized as an urban brand, we don't want to be niched and put on the urban section floor, we want what Tommy Hilfiger did by accident. We want to go in the opposite direction, we want to go from being like a preppie vendor to a real urban brand. They want to appeal to everybody. Russell Simmons says, "We don't want to sell to our traditional customer, I want it to be Tommy Hilfiger with my name on it."

The same thing even with big bulk stores. For instance, Home Depot is expanding from builders' training. You go to Home Depot at 8 a.m. and the lot is full of vans and pick-up trucks, but the Home Depot Expo stores are taking a completely different direction. They are beautifully designed stores with top-of-the-line profit in every category, so the retailer is developing a second market altogether from its contract business.

SCW: As designers, do any of you get involved or offer market research to your clients?

Shimizu: We don't, but I think we should. As designers of more brick stuff, it seems like there is a whole bandwagon of designing websites. It's analogous to a lot of customer interactions. It seems to me understanding your customers is primary and takes precedence over all these other vehicles to capture your customer. Market research, whether called demographics or psychographics, is or should be a service that is offered. It really anchors your design company as one that really knows what your client's customers should be.

Chidley: What we found is that our clients wanted research and they were screwing it up because typically the research is done with methodology that is good for designing packaging or things that aren't environment. What we found over time - and this dates back to the mid-80s when we did the interior environments for the GM Saturn division - GM wanted to be very customer-focused and research-driven, so we did a lot of variations on interior decor to fulfill the needs they had to do the research.

Basically, it was a research-led process, and what we found was that the consumer didn't have any basis for making a decision on looking at interior environments, so we found that we had to create a methodology that would get the right kind of results the designer could act on vs. ambiguous results that would leave marketing people in the dark not knowing what to do. So, we did [market research] because we saw a real need to facilitate what our clients wanted in a way that had some meaningful outcomes.

There is a lot of talk about video photography and watching shoppers perform actions and analyzing videotapes. We find it can be effective to do things incremental to the business, such as to move a display closer to the door, to move ties closer to shirts and things that might befine-tuned if you hung out in the store long enough yourself. But we don't see those as being ways of really transforming a brand.

Amster: We do a little bit of alternative home-grown research with some of our clients. When they want to look at expanding the types of products they have in their store, we'll do some focus-group-type research with their customer base. But, we have not really done more traditional research. We would partner with another firm to research something.

SCW: What are the challenges of designing stores and centers that will attract people to spend the day vs. those that will attract people to run a quick errand?

Sullivan: To encourage today's time-crunched consumers to embrace a "day of shopping" will require that stores become more inspirational and aspirational places to be. Again, with e-commerce raising the stakes, retail spaces will shift focus away from merchandising to creating personal experiences that are meaningful and sustainable. Consumers will demand full immersion and participation, and expect that each return visit will be a progression from the last.

We may increasingly see stores appealing to consumers in much the same way as the current plethora of magazines that are focused more on lifestyles than on any more specific topic. In the future, we may see publications such as Vogue or GQ offering stores that sell and represent their style, selling all those products and services they promote through their pages in a physical and fully absorptive environment. We can see that some fashion and homestyle stores now have their own magazines, why not vice versa?

Shimizu: The trend we have seen is families dedicating one day to be together in one of these environments. You know the entertainment center was a spin-off of that. Precision shopping was again the buzzword we heard starting a couple of years ago, where, with strip centers it was very convenient to go in your car on your way home from work, park and grab the couple of things that you needed.

I don't know exactly where the trend is heading right now, but I do know that a lot of these entertainment centers are dying because the restaurants and cinemas and those kinds of venues are doing extremely good business, but the more traditional in-line retailers are not. Their turnover rate is incredible. So, you will see a lot of these retailers not doing well, but the restaurants, your Pucks and your Cheesecake Factories and all your national food brands are doing exceptionally well.

Morbitzer: Do you think that is a result of not having your traditional anchors at those locations or [because there are] not a lot of retail offerings [for] somebody [to want] to go to the shop?

Shimizu: I don't know. Personally, I don't want to shop when I want to eat and relax and be entertained. I think there's a division between the two. They certainly overlap, but for me when I'm going out to eat in the evenings, at an Irvine Spectrum-type project, you know the last thing I want to do is go into a Banana Republic and just look at stuff (laughter), so I don't know if it's a time constraint.

Morbitzer: I think people are a little hesitant to carry stuff into the restaurant with them, or something else to cart around.

One nice thing from visiting Disney recently - the way they handle their retail sales is that they will hold that package for you and send it to your hotel. Until we see something like that - if they could take it out to your car for you or whatever it is, I think that would be advantageous to retailers to offer that type of service.

Shimizu: We worked on the Oasis at Sawgrass Mills project, and that is where some of my information is coming from - some of the in-line retailers there, who are not restaurant-related or [don't] have a major brand like Polo. I think they are struggling. It's really brand awareness at that point, between 6 p.m. and 9 p.m., when it is a rush to be in that center to eat.

During the day it is a very successful project. It is so big. I don't know how people use those kinds of centers -whether they do the whole loop, which takes at least three days, or whether they're in there for only 30 minutes and they target one area.

Geoghegan: That might be a sign that the developers themselves might be experimenting with that same question, you know the time-sensitive shopping. The building, the center is immense. The Mills Corp.'s formula has changed over time from being like Gurnee Mills, where there is no loop, to Sawgrass, where there is a loop. Then they're building an extension and maybe even experimenting with [the idea that] people don't want to commit to the whole shopping center but will commit to a couple of hours' stop. That might be an example of the developers experimenting.

Shimizu: I know that, like with Mills, Gurnee Mills, they wanted to brand the Oasis addition as a separate destination. That was very perceptive on their part to do.

SCW: So, they are also making an effort to keep the dining and entertainment separate from the center itself?

Shimizu: Yes, that what it seemed like. At the time, entertainment centers were still a big thing, especially with Mills, and entertainment wings or components to projects were a big business. Now the numbers are finally coming back to the developers and/or the leasing agents, and they're realizing, "Whoa, we can't package these kind of retailers with these kinds of restaurants together."

Chidley: There is a lot more competition, too, for that shopping trip as entertainment, with people being on-line at home, whether it's shopping or just recreationally. DVD players and all these electronic things are competing with getting these people out of the house. I believe shopping is a hard thing to do together and eating is not. Eating is inherently a social thing where you can go with two or three friends and family and have a good time, whereas going with young kids in the store there is always somebody in the party that doesn't want to shop, whereas there is usually nobody that doesn't want to eat. (Laughter.)

I think one is very focused and one is like you are on a mission when you go shopping and you want to have fun and you want a social experience when you go out to eat or to a movie.

Bookstores do reasonably well in relationship to restaurants, but the main reason is that they're open until 11:00. So, if you're having a leisurely dinner, you can come out of there at 9:00, 9:30 or 10:00 and there still is a store open that you can go to. Most of the other shops aren't necessarily open, and a lot of shopping really is a browsing kind of situation and that doesn't mix up well together with eating. (Laughter.)

Turick: You're right about that shopping after the eating, because with my own personal experience, I tend to do exactly that. I'll take my wife and my son out to dinner and we will be done by 8:00, because it's the middle of the week, and then we go to the Barnes and Noble somewhere and kill as much time as we feel like, and we won't keep our son awake after 10 p.m.

Chidley: We tend to look at the most innovative edge of things. We talked about lifestyle centers, but it's kind of an off-lifestyle center that's happening under everybody's nose. That's the success of retailers like Family Dollar and Dollar General, who go into areas where there is [a shift in demographics] and you end up with a center that used to be very robust with a check cashing store and a bingo home. (Laughter.)

It used to be that there were many investors in Family Dollar and Dollar General, because a couple of years ago they were taking advantage of the facts that there's a huge segment of the population that can't afford to go to department stores, and we need other stratifications of retailers to come into their area and fill the bill. I see those being not the pretty end of the lifestyle centers spectrum, but certainly the most profitable. Unfortunately, there is not a whole lot of design opportunity with those types of locations, but as far as looking at retail, period, those are pretty robust.

Shimizu: The situation is interesting because if you read the Generation Y numbers, I don't know how the wealth is going to be distributed, but if you have more people each has less to spend. That might be a real interesting way to cater to that segment of the population.

Morbitzer: Easton Town Center opened about a year ago. What people were trying to determine is how successful that center was going to do. The initial feedback that I've gotten from a lot of people is that it's a great place to go to shop, but nobody can really afford to buy anything there, so they go and look around, but are not necessarily buying anything. A lot of people I've talked to will go across the street and shop at the strip center afterward.

SCW: How do you balance good design with being on a tight budget? Are clients realistic about what they need to spend for their store designs?

Sullivan: Good design does not automatically mean high cost. It is the percieved value that gets across to the customer that is key. When budgets are tight, it's the designers responsibility to help the client understand where the best value can be achieved. A clear and concise understanding of the objectives is required by both parties. The best results are usually an evolution of a number of smaller initiatives, rather than a revolutionary process.

Geoghegan: In this age of less shopping, new shopping center development and more refocus, retailers are also looking at the boxes they have, and maybe not opening new stores but focusing on that existing shop. They may be putting more money into messaging and product communication and maybe not so much in the environment. Fixture design has really been held-up in that direction.

Turick: We do many of the vendor shops that are fixture-driven soft shops - 5-minute quick shops, car centers. Most of the brands understand at what budget level they have to be in that arena. We are talking about the same kinds of materials first, and pretty much the same kinds of furniture, tier table sets, combination merchandising units, and, from their own research and their decision to get into that arena, they know what their budget should be.

I find a general understanding of what they want to spend in making concept design proposals to them up front. If they like the look, they like the feeling of what we are presenting initially, we can usually shape the budget and still capture that feeling and scale down if necessary to keep the core elements.

Shimizu: I think the Oakley store at the Spectrum is a pretty wild example of spending - $500 to a $1,000 per sq. ft. or something - on a flagship showcase, which still doesn't have the name on the store. It's got the logo, which assumes all these other issues, but it seems as though the mentality there is, okay, spend a lot of money on this marketing, this real, live commercial advertising, and the sales will come from all the Sunglass Huts and all these other ads from distributions and sales. But it's an outrageous amount of money to push these items that are between $50 and $200.

Chidley: We do a lot of work with clients that have franchisees for dealers, so the actual client, so to speak, has to sell the product to another contingency. We find the most issues with costs because you are spending someone else's money. For instance, what we've found is a lot of times they've left the stores to the point they need infrastructure work, like heating and ventilating, the roof needs to be repaired and the lot for the parking area needs to be resurfaced.

The client doesn't incorporate those types of needs into their budget when they do their business logs, and the franchisee or the dealer sees this sale being pitched, this project that might be seven figures to them and part of that is because they need to bring a facility up to a level that should have been maintained at prior. So, if there is anything, I guess, from our experiences directly relevant to Shopping Center World to say, it is when you are in a franchise situation, the cost sensitivities go way up.

Shimizu: Why don't certain developers spend as much money on outfitting the interiors of their centers, like fixtures, furniture, flooring and storefront stuff as they do on the opening party? Different budgets might be the case.

Geoghegan: I would think this one topic really would be a major concern to 90% of the retailer folks reading your publication. They don't look at it as balancing good design vs. a budget, it's more of this is our budget, how far can we make that go.

Morbitzer: When we're designing a store for someone who knows they've got a budget, we try to get it on a little bit more than they are asking for, and, if they see the need arise or a cutback on the budget, we can do, so the core elements are there. Basically, design is still there and we offer some extra incentives or extra features to the store.

Let's say, they want to kick in an extra few dollars or they see a location where they want to upscale the store and have a little bit more presentation to that location, they have the opportunity to do that. It is something that they are always asking us to head up certain budget figures. So we typically try not to present anything that is going to be way up and above what they are asking us to give them. As a responsible designer, we try not to do that.

David T. Amster President, Integra Design Group, Nashville, Tenn.

Thomas M. Morbitzer Design Director, Cowan & Associates, Worthington, Ohio

Joe Geoghegan President, Robert G. Lyon & Associates Inc., Chicago

Bill Chidley Chief Creative Officer, Design Forum, Dayton, Ohio

Albert Turick Creative Director - North Carolina, Nomus, East Bend, N.C.

Taku Shimizu Design Director, Communication Arts Inc., Boulder, Colo.

Brian Sullivan Fitch Inc., Worthington, Ohio. (participated via e-mail)

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