The transformation of physical stores, combining online with offline, is underway in Barcelona, highlighting the need for brands to align their capabilities with a new set of retail characteristics.
A gradual recovery in retail spending, combined with steady urbanisation and increasing connectivity, has supported new developments in the Spanish retail sector. Online, leading retailers have captured headlines, including:
- Dia expanding its partnership with Amazon Now
- Mercadona piloting its new ecommerce service
- Carrefour pledging digital transformation by 2022
Offline, retailers have been actively developing their store-based models with many examples of store reinvention. PlanetRetail RNG’s four key characteristics of the store of the future – experiential, frictionless, social and curated - are increasingly evident in Barcelona.
Building a frictionless experience with online to offline integration
Media Markt Digital is a step towards a smaller, more digitally integrated consumer electronics store. Opened in 2017 and the first of its type in Spain, product ranges have been almost entirely removed from the sales floor. Instead, over 20 large-sized interactive touchscreens dominate, providing shoppers with online product content. Over 5,000 items are available immediately through in-store click-and-collect. A robot at the front of the store picks online orders from lockers for out-of-hours collection.
This is supplemented by a range of services, including consultations. The store also holds workshops, such as digital photography classes, while shoppers can trial new concepts like the latest experience in VR gaming.
While experimental, Media Markt is able to service a wide range of needs through a much smaller, more frictionless, digitally transformed store. In particular, the focus on customer service combined with rapid and flexible fulfilment options highlights the need for highly agile and responsive supply chains to support store-based development.
Positioning the store as a social hub
Caprabo is a strong regional operator and part of the larger Eroski group. Its flagship store highlights Caprabo’s local knowledge throughout the fresh produce department, food counters and Mediterranean-themed freshly cooked meal zone.
However, it is the social engagement element that stands out in this store through the Chef Caprabo facility. Chef Caprabo offers culinary classes for up to 14 customers at a time. The daily two-hour sessions provide ingredients from the store, tuition and the opportunity to create new dishes, with a monthly programme featuring many different styles, from Asian street food to Mediterranean seafood.
Positioning the store as a social hub can be a challenging characteristic for retailers. However, Caprabo has chosen a different approach beyond traditional in-store dining. The programme is both educational and social, creating a unique way in which to engage shoppers and ensure the outlet remains relevant to the local catchment.
Differentiation through product curation
Re-opened in 2017 as part of the wider Les Glories shopping centre redevelopment, Carrefour’s latest hypermarket format looks to blend digital with a focus on high quality fresh ranges. There is a strong degree of curation with impressive regional food ranges, branded displays and a prevailing ‘green’ message, most notably in the Bio department.
Freshness plays a particularly important part of the curation. Local produce has its own display, with products carrying colour-coded tags to identify the day on which it was picked at source.
Major brands also feature significantly. The curated Coke Zone, as well as a wall of curated health & beauty brands, show how brands can play a role in reinvented big-box stores.
Creating a memorable experience
With stores across Barcelona, the El Corte Inglés food hall in Avinguda Diagonal is a particularly good example of strong food assortment and retail theatre. However, the ‘experience’ is fully delivered through the food concessions – such as a branded Lindt ‘shop within a shop’, dining options, and the Club Del Gourmet department. Club Del Gourmet features a selection of high quality fine foods in its own distinctive zone, creating a unique and premium shopper experience.
Experience, however, is not just for large assortment retailers. A recently opened Dia & Go store, Dia’s first dedicated convenience store format in Barcelona, was able to create its own novel experience through a short-term loyalty incentive. Alongside new features like a coffee station, juice bar, pastries and chilled alcohol, an inflatable dinosaur encouraged engagement with and promotion of the programme.
The development of Barcelona’s physical stores overall suggests a direction of travel that no longer relies solely on range and price. The Store of the Future needs to differentiate through experiences, curation and digital integration, and become a place where consumers can be inspired, learn, co-work, socialise, and experiment with new products. The opportunity for brands will be to align their capabilities with this new set of retail requirements.
RECOMMENDATIONS FOR SUPPLIERS
The digital transformations underway at Carrefour and Media Markt point to a future where brands will need a strong presence and high visibility both online and offline. Suppliers must align resources to ensure brands capture their desired share of trade as shoppers move seamlessly between both and spend shifts.
Smaller, more digitally integrated stores will compromise the linear space available for traditional product display. Brands must consider the most appropriate category solutions for smaller stores, targeting products that are a good fit for the shopper missions captured by each store type.
Likewise, suppliers must optimise product assortment for both online as well as offline. Online, brands must also work with retailers to ensure digital content is appropriate and conveys product information effectively.
Stores like Carrefour and El Corte Inglés are creating differentiation through in-store experiences and curated assortments. Retailers need support to develop these concepts. Brands can seize opportunities through initiatives such as branded zones, sponsorships, shops within shops and exclusive assortments to support the drive towards differentiation.
At a tactical level, close co-operation with retailers can drive creative promotions and the identification of new solutions by meeting the needs of new shopper missions and regional or catchment-specific requirements.
The movement towards ‘health’ and ‘healthy indulgence’ is strong as retailers seek to stand out on curated assortments. Strong ‘free-from’ and ‘organic/bio’ ranges in particular are gaining linear space. There are opportunities for suppliers to recognise the interest from shoppers and tailor brand variants accordingly.
The pace of development is fast. As stores in Barcelona indicate, new retail format and in-store innovation is quickening. Suppliers must be agile and responsive to change, seeking new solutions as retailers push further with Store of the Future concepts.