Flagship Stores and Omnichannel Distribution [Video Transcript]

One of the reasons that pushed the growth of the e-commerce sector is linked to the limitations embedded in traditional retail distribution. If we compare physical and digital retail we can that traditional retail has the following limitations:

• Stores need to be placed in prestigious and expensive locations, creating a high-cost threshold for any organisation wishing to place stores in an attractive spot.
• Stores need to make choices in terms of the selection of goods sold as shelf space is limited and the selection of goods available can make or break the business.
• Stores need to be run by capable managers and brand ambassadors in order to provide a quality experience to your customers. This is the last mile in terms of bringing the goods to market, but at the same time, it’s the first point of connection with the customer.

These are not simple challenges to overcome, and usually only established brands can afford direct distribution instead of resorting to intermediaries.  E-commerce websites, on the other hand, are much more customer-centred as they revolve around efficiency. Still, there are aspects of a shopping experience that simply cannot be digitised. And this is when a flagship store changes the retail game.

In reality, a flagship store is not to be confused with traditional retail. A flagship store cannot be built with the sole purpose of increasing sales, but with something much grander in mind.  A flagship store’s goal is to draw customers into the brand. Flagship stores need to be imagined as theatres, where the story of the brand is narrated to the visitors. A flagship store is a place of entertainment and education, rather than sales.

Due to their prestigious locations, they can be tourist attractions by their own right. Luxury brands thrive on the country-of-origin effect and leverage prestigious premises to further reinforce a brand’s association with national culture and a reputation for excellence.

This type of store is capable of:

• Introducing, reinforcing and enhancing the retailer’s position and status as a credible luxury brand.
• Flagship stores provide the retailer with the retail space and opportunity to develop new business propositions, such as diffusion ranges,  as well as using cafès and restaurants to “experiential-ise” purchase. Moreover, it can use the location to expand its product range. Home furnishings represent an example of frequent range expansion.
• The function of the flagship store is to stimulate, strengthen and support the relationships existing between the brand and three key stakeholder groups: distribution partners, fashion media and customers.

The benefits do not end here, a lot can be said about the ways in which this typology of stores are able to provide new shopping experiences by implementing omnichannel distribution strategies such as:

• Buy online, pick up in store. This allows merging the ‘webrooming’ behaviour with a luxury purchase experience.
• Reserve in store. If your customer does not trust online transactions, purchasing an item in the store can help conversion rates.
• Localise store. In the era of global tourism, finding a store nearby can make a customer feel close to the brand, wherever they may be.
• Try out in the store, ship home. This can allow customers to try clothing in store to find the perfect fit. If the right size is not available in the store, then the specific size can be requested and sent to the customer’s home address.
• Browse the shop’s shelves through a pad in the physical store. Retail locations are so expensive that only a selection of items can be displayed on the shelves. By allowing customers to browse the online catalogue through a pad enables them to see the full extent of your collection while educating them on how to shop on a digital platform.
• And last but not least, request size and ship home, in case size is not available in store.

All in all a flagship store seems to encompass all of the issues connected to old-school retail but in reality, it creates a completely new brand dimension capable of reaping benefits on a variety of levels.

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