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Why big is no longer beautiful

So many of the people I meet are telling me that the age of the large retail space is over. That in so many sectors where organisations are looking to save money, reduce overheads and increase profits, the cost of large retail spaces simply does not add up.

 

Let’s take three sectors that I know well, Telecoms, Banking and Automotive. As organisations in these sectors drive their customers towards serving themselves through digital portals, call centres and such like, the need for large retail spaces diminishes. And it is a trend I am seeing across Africa, the Middle East and the Sub-Continent. Organisations are opting for smaller, ‘express’ style retail spaces that offer customers greater convenience. By placing stores where customers actually are, combine this with a high-tech experience and a human touch and you find that brands here are waking up the the concept of convenience and service… at last.

 

In the Middle East, as is a growing trend across the region, community living is the norm. These communities are served by small satellite malls, offering supermarkets, coffee shops, small restaurants and of course banks. These are places of convenience, where people go to shop.

 

In the telecoms industry, it always confuses me as to why organisations build huge retail spaces that are, on the whole, empty… in this sector too here in the Middle East, brands are waking up to the concept that big is no longer beautiful… I have been saying for years, ‘look at the data’, 'speak to your customers’ and 'get out of the boardroom'. Only by doing this can you really understand what customers want from your retail space. Decide what is needed intelligently, inform your decisions with data and DO what best suits your customers and business model… I will be very surprised if one size fits all and you decide to exclusively focus on large spaces… make change happen.

 

The reality of the modern world is that the traditionally transactional function of a large retail space (in banking, telecom and automotive), can more often than not be accommodated by online or digital services. So the purpose of the retail centre has changed to be more experiential and service oritented - now so is the format.

 

Let’s look at the automotive sector, in many ways, this sector is precisely where banking was five years or so ago. Large empty showrooms (read branches for Banks) full of cars, huge overheads and bored staff. When I ask the question ‘why?’, I am left without a conceivable logical answer. That said, unlike Banking, a car salesman will tell you that once you get your customer behind the wheel and take them for a test drive, you are 80% of the way to a sale. However, a test drive can be arranged, a car can be delivered to a customer to try - especially in low labour cost markets like Middle East - an experience can be crafted to be personal and meaningful, individual and not generic to one where the buying experience is elevated from a transactional sales driven environment to a service driven culture.

 

Why then are organisations still insisting on building large showrooms that are, on the whole, empty? The answer is simple, there will always be a place for showcasing brand and experience in high footfall or highly visible areas, but of one thing I am sure, we will see other industries taking a lead from the Banking sector and developing smaller format, cost effective retail spaces that serve these larger hubs, are full of technology, staffed by knowledgable friendly people and are great places to do business. 

 

My hunch, watch the automotive sector next. There is a whiff of change in the air.

 

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