As consumers shift many of their purchases online, will physical retail stores even have a reason to exist? That’s the difficult question AT&T retail executives asked themselves two years ago as they began a process to redesign and reinvent all 2,300 company-owned retail store locations in North America. In August, AT&T customers in La Grange, Illinois, a suburb of Chicago, were the first to experience a new concept store AT&T leaders believe reflects the future of retail.
Prior to the store’s opening I spoke to Paul Roth, AT&T’s president of retail sales. “We began with a blank sheet of paper—literally,” Roth told me. Roth says that despite the huge increase in e-tailing (Forrester Research predicts that online retail sales will grow at a compounded annual rate of 10 percent through 2017), retail stores will continue to be relevant, but only if they serve vastly different purposes than they do today. “The future of retail is all about personalized service and education,” he predicts.
Roth believes AT&T’s new store design serves the purpose customers demand from a retail store location because it will offer the following the three components.
1. Highly personalized services. What customers in La Grange will not see is almost as important as what they will see. Cash registers? Gone. Counters and terminals? Gone. All of the store’s retail staff (consultants) will be equipped with tablets supported by a mobile point-of-sale system so customer transactions can occur anywhere in the store. Roth says instead of being ‘transactional,’ the communication and experience takes place side-by-side, creating a more personalized experience.
AT&T’s research found that consumers who want to buy a specific product and have it delivered to their home will simply do it online. But for those who enter a store, their purpose is to learn, to experience, and to speak to a person. It means the physical environment of a store must change to reduce the communication barriers between employee and customers.
For example, in the center of the newly designed AT&T stores, customers will find circular “learning tables.” These are set up around concept of “exploration, education, and interactivity.” You’ll notice in the photo below that the learning tables are round and not rectangular, removing barriers to facilitate a more intimate, personalized conversation. The tables also encourage education and interactivity. For example, let’s say a customer buys the new Nokia Lumia 1020 smartphone because they read positive reviews about the camera’s 41-megapixel sensor. The camera and the device come with many new features. With the exception of early adopters, however, the majority of consumers will want learn more about the phone’s capabilities. AT&T employees will be able to escort customers to learning tables to help them set up their phones and learn to use them.
2. Solutions, not transactions. AT&T’s research found that consumers go to the web to conduct ‘transactions;’ they go to a store to discover solutions to help them live, work, play, and learn. “In our prior merchandising scheme, we offered smartphones and accessories in different parts of the store. That’s not a solution. It’s a transaction. If we put them together to show how they work, now we have a solution,” says Roth.
I find this concept to be the most intriguing of the redesign. AT&T stores will have connected ‘experience zones,’ where a complete set of products will be displayed together. For example, in the music zone, a customer will see smartphones flanked by various speaker options in different colors, sizes, and styles. A customer can play music on a smartphone and move the sound from speaker to speaker. Other zones will showcase digital home automation and entertainment products. This is called “lifestyle merchandising” and, according to Roth, has been shown in pilot experiments to boost sales of products that consumers didn’t appreciate until they saw the product used as a complete solution. “Prior to putting it together as a complete lifestyle solution, consumers didn’t see the value. Now they can discover solutions they didn’t know existed,” says Roth.
3. Emotionally engaging experiences. Customers also told AT&T that want to be “rewarded” for a trip to a store. This means the physical design must be open, warm, and inviting. Customers visiting redesigned AT&T stores will find a colors and materials designed to a signal a high-tech experience (white tables with high gloss or matte finishes) combined with warm and comforting materials made of reclaimed teak wood. Interactive digital displays will replace printed brochures and in-store posters, which often take up to eight weeks to print, ship, and install. Displays will show targeted messages relevant to the local community and, in some areas, reflect a language popular in the region.
AT&T’s new store design will take some time to roll out. The company expects to redesign 15 to 20 stores by the end of the year with an accelerated rollout in 2014. The goal is to convert 100 percent of AT&T’s store portfolio to the new design.
Roth has an ambitious goal of making AT&T a premier retailer in the area of customer service. As evidence that he’s getting closer to meeting the goal, Roth cites J.D Power’s latest study, ranking AT&T as the best performing wireless provider for “overall customer service as measured across its retail stores, online, and call centers.”
AT&T’s experiment carries a valuable lesson for all business owners, whether or not they own a physical retail store. You see, Roth did not start with the question, “How do we sell more product?” Instead he asked a question far more profound: How do we want people to feel when they enter our store? According to Roth, “We want people to say to themselves, ‘It feels good to be here. I would like to spend time in this store. I will find something that I didn’t know existed, but which is relevant to me and my life.’” Enhancing the customer experience begins with asking the right questions. Only time will tell if AT&T’s redesign will be successful, but it’s off to a strong start because it began its reinvention process with the right questions.