Interbrand’s Tom Custer has a front row seat to the store renaissance

By | 3 minute read | December 14, 2018

When Tom Custer first began working in the retail industry more than 20 years ago, big brands reigned supreme as they expanded their footprint of large stores around the world. Times, he said, have changed. Now, unimaginative brands that sought physical growth above all else are closing up shop as customers move to more convenient and exciting alternatives.

“I think some retailers emphasized what may have been a real estate strategy, where you have to be in every suburb or every block to be close to customers,” Custer, the Executive Director of Consumer and Retail Brand Experience at the consultancy Interbrand, told Industrious. “I think some of those retailers are now facing challenges and they’re reassessing their strategy.”

Today, Custer spends his time with retailers pursuing a new approach to brick and mortar, one that acknowledges changing consumer habits and emerging technological capabilities. Retailers today, he said, believe stores are important; they just have different ideas about what role the store plays and how they should support their brand experience.

“Today and going forward, I think we’re going to have smaller stores, different formats, and more experiential retail,” he said.

Custer’s daily experience confirms some of the latest research in the industry. According to an IBM-sponsored report from RSR’s Brian Kilcourse and Steve Rowen, the store is no longer an island of retail, but rather a vital component of the overall brand experience.

Today’s best-performing retailers, the authors find, are by and large not closing stores. Instead, they’re exploring new ways to make those stores more convenient, more personal, and more inviting—and they’re using technology to make it happen.

“It’s clear that retailers recognize the importance of the store, both now and in the future. Surprisingly few plan to reduce their store counts. Rather, they see opportunity on the horizon. While over performers are more eager to move forward, even their more poorly performing counterparts recognize that a renaissance is afoot,” Kilcourse and Rowen write.

At Interbrand, Custer works with many of the forward-looking retailers leading that renaissance as they seek to attract new customers or reposition themselves in the market. In his experience, those retailers are no longer aiming to make stores look and feel exactly the same regardless of the community they serve. In a world when fast order fulfillment is just a click away, he said, his clients are looking to offer personalized content and more localized products to set their stores apart from physical and digital competitors.

“It’s easier to design a standard prototype store and then just roll it out to a thousand stores. It’s harder to create that ‘store of the future’ brand experience and have these points of difference—localization, personalization, etc.—as you roll it out,” he said. “But from a design perspective, that makes it much more exciting.”

Retailers are challenging themselves, Custer said, by fundamentally rethinking the role their physical space plays in their business. Companies like Starbucks, for instance, are investing heavily in their mobile apps and transforming their spaces to better serve as distribution centers for in-store pickup. Others are taking the opposite approach, he said, by making stores less transactional and more fun. At Sephora, for instance, the store is as much a laboratory for experiencing products as a place for selling them. Technological innovations—like an app that allows customers to try on products virtually—can make those experiences highly personalized.

Both kinds of store models, Kilcourse and Rowen argue, require customer-facing employees to be trained to serve new functions. Despite predictions that retail will have fewer customer-facing employees in the future, they find that the best-performing retailers see their role only becoming more important. Custer agrees.

“It’s not just about the transaction. Especially at big box retailers, it could be more of a consultative role. Target, for example, is testing different versions of a beauty concierge as they grow to compete with other beauty retailers like Sephora and Ulta,” he said. “The role of that employee has to change.”

Those roles—like stores themselves—will likely shift further in the years to come, Custer said. But in this moment of extraordinary disruption in retail, the ability to take those changes in stride is not just an asset—it’s essential for survival.

“The retailers that try new things are the ones that succeed because they’re evolving, they’re thinking about lifestyle changes and habits, and they’re testing things for the future,” he said.