Strategic Designer Insider – Mariann Wenckheim

Category killers were all the rage for many years when their primary attributes of large out-of-town sheds with car parks and massive ranges of products were regarded as the key to success in retail.

Things have clearly changed and at 20.20 we’ve had a number of briefs to turn these sheds into something a little more exciting. This follows on from the work we did with Pets at Home back in 2005 when the objective was to create a destination store from its first out-of-town shed.

The live animals were brought from the back of the shop to the centre and placed at child’s eye height. We made space for the experience at the expense of prime selling space and squeezed the product into other areas. We concluded that customers need to see and feel the uniqueness and the excitement. And the store became more efficient as a result.

For people to travel out-of-town we reckoned it needed to be a destination store. Such sheds are no longer solely focused on convenience and making life easier. The internet now fulfils that objective rather well thank-you very much.

The question we have pondered is whether every former category killing out-of-town shed now needs to be an experience? And it arguably does. It’s rather surprising that many such retailers still haven’t fathomed this out.

Retailers need to tell a story in-store, but unfortunately far too many, like Toys R Us, are failing to do so. Its out-of-town stores simply sell brands, with an increasingly poor margin.

If you have a big shed then you have to have something ‘live’ in there – whether that is humans, animals, craft classes, specialist clubs or demonstrations etcetera – that keeps things changing and prompts shoppers to return again and again.

Thankfully some merchants are recognising the fact that change is required to their category killing sheds. Tesco is re-thinking the experience in its larger stores and is almost morphing into a department store of sorts.

Its introduction of Harris + Hoole coffee shops, Giraffe family restaurants, gyms, and Euphorium Bakeries into its larger stores is very sensible. It shows it is using its customer insight (from Clubcard) to help decide how to improve its out-of-town experience as opposed to using spreadsheet management to make its space stack-up financially. It has started with what its customers want.

It has worked on understanding the emotions of human beings and the changes it is making are absolutely complementary to its core food and general merchandise offer in-store. It has also been realistic about what its brand does not stretch to and has been courageous in buying in the expertise.

There is a gradual realisation by out-of-town operators that the only way a shop is going to make money in the future is by becoming something much bigger than a box through which products are sold. The experience aspect needs to come to the fore combined with recognition that community will be an increasingly important element of store-based retail.

It is no longer about flogging goods but is more about enhancing the physical proposition by proffering knowledge and expertise and selling services. For instance, Toys R Us could advise on how kids are best entertained and be an expert on kids parties linking it into the local community. Whatever it does it has to move its offer beyond the core products on the shelf.

At the heart of these changes is a fundamental re-think of the big-shed proposition. Increasingly this will involve an injection of technology to take them from being one-dimensional assets towards multi-channel-faceted offerings and own brands that are truly unique.

Whatever ultimately works best, within each retailer’s own stores, there is no doubt that the category killer of old and its brothers the other large out-of-town shed operators are in urgent need of developing a new USP – sooner rather than later.

Mariann Wenckheim is a partner at strategic design consultancy 20.20