The national unemployment rate continues to hover around 9%, the stock market is performing erratically, and household incomes are stagnant. So there may be few logical explanations for why we have seen 14 consecutive months of growth in the retail sector, and the National Retail Federation expects holiday retail sales to increase by 2.8% in 2011, slightly surpassing the 10-year national average of 2.6%. Even though household incomes are not growing, consumers have significantly lowered their debt levels, possibly making it easier for them to spend—cautiously. Also, many retailers have learned to deal with consumer uncertainty as part of the “new normal,” and are getting on with their business plans with these realities in mind. And there is always the argument that there was nowhere to go but up. So while the retail sector is by no means booming, levels of activity and opportunity are picking up enough to resonate with the A&D community. The competition for discretionary dollars is fierce, but design can be a real competitive advantage. More than ever before, bricks and mortar retail concepts are all about the customer experience.

Small is Big

“There is a huge trend in small-scale retail,” says Mark Janson, a partner in the New York City-based design firm Janson Goldstein, whose clients are particularly interested in expansion into European cities and trendy North American cities like New York, Los Angeles, and Miami. This is happening in much more low key ways than in boom years gone by, however, as today, designers must be very sophisticated with limited design budgets. Labeling current retail concepts “edgier, more sculptural, artistic, and having attitude,” Janson cites a trend toward found spaces or pop-up spaces that are, nevertheless, “designed to look like nothing was done.”

Charles Sparks, CEO, President, and Creative Director for Charles Sparks + Company in Westchester, Ill., is also finding that smaller is bigger in retail today. “The business model of doing more with less continues to translate to smaller, more focused assortments in smaller, more efficient store formats, targeting more narrow audiences,” he says. Pressure to reduce capital expenditures and occupancy costs, and to increase the leveraging of existing real estate assets has led, he says, to “designers having to do more with less in their designs, materials, and scope of work.”

The more intimate brand experience offered by retailers in local markets is also being translated into a strategy for department stores. “In large-scale retail,” says Janson, “image brands are designing their own space within a space.” Effectively, department stores are becoming big boxes that hold lots of little stores, as brands compete to create their own alluring environments within.

For Janson Goldstein, which does work for Toronto-based department store chain Holt Renfrew, this boutique trend has changed the way department stores are designed. “Our job is to create an environment that reflects a larger brand,” continues Janson. “We set aside the space, and the individual brands bring in their own design teams.” In this case, the path that the customer takes through the store becomes the most important element of the overall store design. “The way customers see the space unfolding and the interconnection of areas and levels are key to the experience,” he says.

Local Relevance

The long trend of cookie-cutter design is coming to an end as retailers come to understand that consumers want a more authentic shopping experience that speaks to place. According to Sparks, “As a reflection of a more cynical and cautious consumer, smart retailers increasingly try to minimize the impression of overt commercialism, homogenized prototypes, and pretense.” This translates into store designs that use indigenous materials and palettes, and introduce references to local neighborhoods, architecture, and cultural influences. “It is the antithesis of designs being rolled out across the country,” agrees Janson. For many brands, gone are the days of having no visual clues whether you are shopping in Atlanta or Orange County.

Sparks cites two iconic brands as examples of once-standardized retailers that are changing their store concepts to capture a more local design flavor—no pun intended. “Starbucks, as an important part of their strategy to ‘re-ignite’ their offering, stipulates that each store shall include strong references to the locality it serves,” he says. “Even McDonalds has been discarding references to cookie-cutter roll-outs in their buildings and environments while pursuing a much wider variety of approaches to their buildings and interiors.”

Technology

Video did not kill the radio star, nor has online commerce killed off our intense interest in going shopping. But the relationship between technology and bricks and mortar continues to evolve. In the past, screens, kiosks, and interaction points inside of physical retail space were deemed progressive. Today they are no longer effective enough to engage a very wired and tech-savvy consumer base. “It’s not about the technology, it’s about the experience,” says Sparks. “Smart retailers are dematerializing the technology so it is more seamless and unnoticeable. The customer’s mobile device is becoming the service avatar. Shoppers’ established social networks and existing digital world are being integrated into retail stores.”

In a July 2010 article for VM+SD online, Brian Fleener, Vice President of Retail Store Development for MulvannyG2 Architecture in Bellevue, Wash., wrote how the better integration of virtual and physical in retail is particularly important to capturing the attention of the much-discussed Generation Y. “GenY expects social media, as well as community building, to be integrated into the retail experience,” wrote Fleener. “Retailers who take the lead in using it to drive shoppers to stores now will appeal to greater numbers of GenY as this age group progresses into its peak spending years.” Fleener advocates the convergence of social media and face to face—connecting online and the in-store environment-to build consumer loyalty. “This sense of belonging is crucial to attracting GenY,” he says. “Make it happen by connecting online and store environments with design techniques and events.”

Overall, retail is abandoning pretense in favor of accessibility and a more authentic approach to customers, making way for scenarios like Forever 21, the young women’s discount clothing retailer, launching a flagship store at 5th Avenue and 54th Street in Manhattan, within steps of Bottega Veneta, Pucci, and De Beers. “We are seeing more untraditional and diverse approaches to design, locations, and offerings being cross-pollinated between various formats of retail,” observes Sparks. Says Janson, “There is a co-mingling of high and low that people previously have not been comfortable with. It’s actually very interesting.”