The Future of Retail Is Etched In Vinyl

To forge ahead, the retail industry might want to look back.

Rapid growth of online sales has vastly outstripped traditional retail sales by a considerable percentage. Since 2012, online commerce has grown by roughly 14 percent annually¹ while traditional in-store sales have ticked along in the low single digits.² As a result, it has been forecast that the social utility of retail real estate has run its course, to be replaced in large part by online shopping. Certainly, during the height of the pandemic, it seemed as though this prophecy might come to pass, with online sales climbing impressively. 

As the COVID countdown ticked away, the American consumer slowly reawakened after a long and lonely slumber, and it became abundantly clear that there is still demand for retail experiences. Indeed, brick-and-mortar retail sales continue to rebound strongly and well above the five-year average.³ The question is why, when it is so convenient to simply browse and click to order. 

Humans seemingly cannot overwrite their own DNA. Even in the digital age when buying just about anything is a keyboard stroke away, we remain social creatures who generally prefer to be around one another and we actively seek out ways to remain entertained and connected to authentic experiences. Retail experiences that fully engage the senses and create memories, even if fleeting, are what inspire consumers to leave their homes for the great American pastime — shopping. Thus, the brick and mortar resurgence.

Many consumer goods are actually better when bought online, saving time and sometimes money. But there are other consumer categories that still make more sense face-to-face and they typically fall into one of two categories: needed services or authentic experiences. 

For example, in the category of needed services, the surge in brick-and-mortar healthcare venues in more accessible locations, such as traditional retail venues, is a seemingly logical response to both consumer demand and market availability. With Walmart, CVS and Walgreens all channeling primary care demand into their existing and new stores, the trend is well underway. And there are numerous standalone healthcare start-up concepts opting to grow quickly through the rapid addition of physical locations such as Carbon Health, Forward, One Medical and Tend, a dental concept, among others. This all makes perfect sense as ultimately, patients will likely need to actually visit a doctor and the more convenient the location, the better. There is typically nothing more convenient than retail real estate. 

More interesting perhaps, is the post-COVID proliferation of unique and highly differentiated retail brands that fall into the authentic experiences category. Concepts such as Blue Nile, Ebisu, Showfields, Climbzone and even a reinvented Nike community 

store concept, along with many others, are quickly populating this sector. Concepts like these have made immersive and authentic experiences a hallmark feature in order to drive foot traffic, increase brand awareness and create differentiation, not only from other retailers but also from online experiences. The premise is simple. Authenticity, uniqueness and differentiated experiences create positive feelings that appeal to humans in the most basic ways. As a species, humans want to be delighted, seek out memory-making moments and typically value community-focused experiences. But more than anything else, humans are consistently drawn to that which is authentic. The “real feel” versus artificial, impersonal, if not overly manufactured experiences is what seems to be driving a brick-and-mortar resurgence not seen in over 15 years.⁴

But what does “authenticity” mean in a retail context? To connect at a visceral level with patrons, retailers will take pains to tie their brand to the guest experience. Underpinning this ethos is the concept of being one’s authentic self, or the desire to be perceived as real and not synthetic. Retailers want their brands to be inspiring, genuine, more curated and even empathetic.⁵ Companies that have cultivated “real” brands and authentic retail experiences are ultimately perceived as more connected to the essence of what makes us human. In short, consumers are happy to buy for convenience online but what motivates them to leave their homes are brands that offer genuine, irreplaceable and connective experiences. 

For more proof on the legitimacy of the “authenticity renaissance,” there is an interesting, hidden indicator, and it can be found not in retail but rather in song. Well over thirty years ago compact discs completely changed how we listen to music. They were easy to produce and distribute, they were relatively indestructible and gave us all our first taste of digital sound, which was clean and bright. It took the music-consuming world almost a generation to realize what was absent from digital music: warmth and connection. Between 2010 and 2020, CD sales continued to decrease by 85 percent while LP sales increased by almost 600 percent. 

There are numerous reasons as to why this happened but many afficionados assert that vinyl records (into which the original recording is literally etched) possess a superior if not more “authentic” sound. They have body and real personality and connect the listener directly to the artist. Although streamed music is by an exceedingly wide margin still the most readily consumed form of for-sale music today, the resurgence of LPs cannot be denied, making them the first recording format to return to dominance from near-extinction in the history of recorded music.⁶

So there it is again. Authenticity finds itself at the core of consumer behavior. Despite all of the trappings of the digital age, it is the most essential of human characteristics that seemingly carries the day. In the context of a retail concept, authenticity can mean that a brand understands what it is and what it is not, and which is self-aware enough to comprehend how to connect with core customers who appreciate what it stands for and what it values. Whether it is Allbirds with its shoe donations to healthcare workers, Warby Parker and its “Buy a Pair, Give a Pair” program, or even a gesture as simple as REI closing all stores on Black Friday to encourage customers to “get outdoors,” this new family of brands offers high quality products, transparency, customer centricity, humility and does not pretend that their brand is for everyone. They are in effect, “human” and that is why consumers appreciate them. 

While the script remains to be written as to the future of retail at large, it seems like a fair bet that the long play for brick-and-mortar retail will be selling quality goods wrapped in a meaningful experience and simply “keeping it real.”

— Matt Silvers, vice president of Project Management Advisors, Inc.

This piece originally appeared in the November 2022 issue of Shopping Center Business magazine.