Trend and Future of Retail Space: Part 2

  Jooyun Kim's 
Spacebranding vol.27


"An innovative platform for department stores, shopping centers, and offline retail spaces".

<Why do we talk about retail space?>
Philip Kotler, a Guru in marketing and a professor of international marketing at the Kellogg School of Marketing at Northwestern University, divides the retail market into four stages according to the trend of the times and paradigm in his book Retail 4.0. The beginning of the flow was the emergence of department stores led by Le Bon Marché in Paris, in the 19th century, and this is defined as ‘retail 1.0’.

Archives du Bon Marché Rive Gauche, from edition.cnn.com, https://edition.cnn.com/travel/article/le-bon-marche-paris-department-store/index.html

Opened in 1869, the Bon Marché Department Store is a space designed by Gustave Eiffel, who designed the eternal landmark of a city called Paris, the Eiffel Tower. So, how did this space bring about the ‘transaction cost innovation’ discussed earlier?

<Retail 1.0: Space Structural Innovation and Fixed-Price System>
Like the Eiffel Tower, this space was also designed with a steel structure, which is the epitome of architectural technology at the time, so it was possible to secure a larger storage area in terms of space. As a result, customers can enjoy shopping comfortably while looking around the products neatly arranged in the spacious store without having to compare items one by one as in an arcade shopping mall.

Not only that, even though it is the same product, it was not necessary here to get the desired price through jagged prices and bargaining. Through the establishment of the reconnaissance system, customers were able to ease the trouble of appropriate prices, and department stores were also generous in the refund and return as industrialization progress facilitated the production of industrial products. However, the department store space, which could significantly reduce the cost of transactions, also needed a change.

<Retail 2.0: Automobile Culture and the Birth of Street Shopping Mall>
For department stores, located in the heart of the city attracting customers is the most important factor in their success. As a result, customers visiting department stores had to visit through much worse traffic conditions than in the present era. In addition, depending on the volume of the purchased item, there were inevitably great difficulties in transporting them home. It was the development and expansion of automobile culture that improved the paradigm of retail space by relieving these difficulties in transactions.

Northgate Mall, March 1965 from seattlepi.com file, https://www.seattlepi.com/seattlenews/article/Northgate-Mall-Seattle-NHL-closure-store-history-14189146.php#photo-1095651

Toytown USA, a Christmas attraction at Northgate, Dec.1957 from seattlepi.com file, https://www.seattlepi.com/seattlenews/article/Northgate-Mall-Seattle-NHL-closure-store-history-14189146.php#photo-1095637

With the advent of the so-called 'personal vehicle' era, the geographic range of target customers has expanded, and retail spaces can also be located in suburban areas that are farther from the city center but with low rent. The space that can be secured has also become more relaxed, and the shopping space has also secured a sufficient common area rather than a dense form, creating a street-type store space where you can enjoy shopping comfortably.

At the same time, entertainment facilities such as movie theaters, which were being developed at the time, were equipped with the shopping space to secure the length of time customers stayed in the shopping space, that is, the time customers stayed in the shopping space became longer. These spaces, named 'Shopping Mall' and 'Shopping Center', have become offline retail spaces representing the era of 'Retail 2.0'.

<Retail 3.0: Spreading E-commerce through Mobile Shopping>
However, in the near future, offline platforms such as department stores and shopping malls representing the two eras will be greatly threatened by technological advances. With the emergence of Amazon, which spread the e-commerce market, and Apple, which created a world where you can enjoy mobile shopping in the palm of your hand, the offline retail space faced a major crisis. Philip Kotler defines the period when a new paradigm of e-commerce was established due to the spread of e-commerce as ‘retail 3.0’.

Bezos is seen in 1996, a year after he started Amazon.com. At the time it was just an online bookseller. From Dean Rutz/KRT/ABACA/Alamy Stock, https://edition.cnn.com/2021/02/03/us/gallery/jeff-bezos/index.html

However, offline spaces have not disappeared despite the spread of e-commerce and are attracting customers. As in the existing offline space, retail spaces that provide customers with differentiated brand experiences through convergence with technology as well as simply buying and selling goods are emerging one after another.

<Retail 4.0: Convergence of Digital Advanced Technology and Space>
Offline spaces provide moments of experience that cannot be provided online, such as Nike Rise Seoul in Myeong-dong, which delivers brand value with various multimedia displays and real-time 5G network technologies, and Amazon Salon, which uses AR technology to tell you before and after hair styling. The convergence of accelerated digital technology and space will be one aspect of the ‘retail 4.0’ era we are enjoying.

Nike Rise Seoul from retailtouchpoints.com, https://www.retailtouchpoints.com/topics/retail-store-design/experiential-retail/nike-brings-rise-store-concept-to-seoul

In this trend of technology and innovation, the most recent unexpected variable will be the advent of the pandemic era caused by COVID-19. Inevitably experiencing the non-face-to-face era, mankind became more familiar with the world of online e-commerce due to an unintentional opportunity, and customers semi-forcedly experience that simple purchases can be fully substituted online.

Sounds Forrest in The Hyundai Seoul, Hasisi Park, from thehyundaiseoul.com, https://www.thehyundaiseoul.com/hasisipark/

As a result, offline stores have become more narrow, but in the meantime, what does the success of spaces such as The Hyundai Seoul and Uiwang Lotte Time Villas, which were large commercial facilities opened last year, suggest to us? The offline space of the future will eventually become a battlefield for obtaining customer experiences.

Uiwang Lotte Time Villas © Roh Joonchul

Space based on thorough planning, well-designed design, and advanced technologies such as AI and unmanned technologies that can reduce transaction costs has long been a basic item to attract customers. Now, it is an era where only offline spaces, that can attract customers through differentiated experiences that reflect the flow of the times survive. In the next episode, let's look at examples of offline spaces representing this era with keywords.





<5 Summaries>

"An innovative platform for department stores, shopping centers, and offline retail spaces"

"Retail 1.0: Space structural innovation and fixed-price system"

"Retail 2.0: Automobile culture and the birth of street shopping mall"

"Retail 3.0: Spreading e-commerce through mobile shopping"

"Retail 4.0: Convergence of digital advanced technology and space"



Roh Joonchul
zipggun@gmail.com​







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