When you ask an architect to envision the Store of the Future, their mind races with the opportunities of the clean sheet of paper, unlimited budgets and unlimited resources! The reality of the store of the future is altogether different.

The Great Recession has left us with smaller budgets, dwindling resources and consumers who shop less. And according to the 2007 Economic Census, there were 1,122,703 retail establishments in the United States and a total of 14.2 billion square feet of retail spaces. With such an abundance of existing shopping space, the question to solve is: How will the existing retail environment of today be transformed into the Store of the Future, enticing the shopper and energizing the store personnel to provide a greater return on investment for the retailer?

Building Information Modeling (BIM) offers an exciting platform for renovating retail space, when it is appropriately used by design, construction and executive teams. Building models are constructed from digital representations of parts and components used in construction, complete with quantities and physical properties of the materials used.

These information-rich models allow simulation of things like heating or cooling loads, or physical weight loads. They allow an owner to tap into a robust database of information for use in identifying maintenance needs or merchandising opportunities over the life cycle of a building. In the future, BIM will drive a shift in construction towards premanufacturing or panelization of building components, reducing construction time and waste to provide tighter and more accurate bids.

It’s a great time to be a consumer. We have more choices than ever and we wake up each morning to even more. Something tells me that the future, either near or far, will be no different. Endless choice, however, has become the Achilles’ heel of brick and motor retail.

Imagine if Amazon.com had a physical store carrying everything they had online. They would need a skyscraper to contain the stock, and they’d have to add a new floor every week or so, just to keep up. Some stores seem like they’ve actually tried this, and it hasn’t been working out so well. Border’s recent woes are a sign that their stores are just too big. They try to balance a merchandise mix that has the drawing power of new and urgent, yet satisfies a book-lover’s fondness for browsing and the rewarding sense of, “Hmmm, this looks interesting.”

But what percentage of that browsing space is effectively selling? I would wager the turn on some titles must be once a year, perhaps some less than that. Similarly, on a recent trip to Blockbuster I saw plenty of dusty niche titles that might never be rented again, if they ever had been. All taking up shelf space that wasn’t being productive. The store of the future has to change size and I think it has to be smaller.

A bit of a paradox, expanding choice and shrinking space to merchandise it.

The Store of the Future is there when my wife suggests one fine day (in a sweet and casual tone) that we should “update the floor tile in the bathroom.” It is there as I begin to visualize how the new bathroom will look. It is there when I have to pick out paint, fixtures, cabinets, countertops, shower doors and oh yeah, tile. More importantly, it is there long before I have to decide where to shop for these products for my now full-scale bathroom renovation.

The Store of the Future is a convergence of technology and possibility that materializes exactly when you need it.

Today we live in a world of consumer co-creation. Retailers can’t wait till the shopper hits the store to see what’s available. It is now all about being there at the moment the consumer realizes a need, and shepherding them along an adaptive path to the store, all while keeping the wolves from luring the them off into the forest of competing brands. Today, more than ever, retailers need to find creative ways to keep shoppers—even their brand loyalists—engaged all the way through the transactional process. That is the power and the risk of digital touchpoints in retailing.

If retailers are willing and able, they can invest in effective digitally-based methods for reaching further into the shopper’s path to purchase, closer to that decision point of “should I or shouldn’t I?” and influence the decision to buy. Keep in mind, however, that it’s the brand strategy behind the digital touchpoints that will drive more transactional traffic—not the digital tools themselves.

There’s a LOT of talk under our roof here at Interbrand about the digital aspects of retail branding. Many brands are busy developing or executing digital strategies, some a little further along than others. If you don’t have a strategy for how digital serves your brand, you need to start. Because it isn’t a fad and it isn’t going to go away anytime soon. A recent experience illuminated a key differentiator in experience between the digital and the tangible: the mess.

A recent trip to a common mall brand illustrates why many of your customers would rather go online than come into the store. My shopping trip yielded a table of jeans that looked like someone had slept in the middle of them. Sizes everywhere. This wash here, that wash there. Little if any organization around style and fit, the two things I need to select a purchase. Not simple. Definitely not clean. A complete and absolute mess. The product, not necessarily inexpensive, certainly wasn’t being treated well and in a manner which would actually help me buy it. If anything, it was a huge turnoff and the haphazard display made it frustrating to shop. (You don’t want your store looking like my kid’s bedroom. It isn’t pretty.) It may not have been the company’s intent to drive people out of the store to their website, but that was the outcome.

When I log onto a retail site, the cheerful models peer back at me and give me a bit of the vibe of what to expect from the brand. If I need a size, no problem, I click to see if they have what I need in stock. A simple, clean, no-mess experience. Product looks great on or off a model. No stock, no problem, I know quickly and can move on. This isn’t to say that the digital realm is mess-proof. Certainly, all web experiences are not created equal and some end up being hard to use.

Even while a company may be lax tidying up after the chaos we shoppers leave in our wake, the tangible world still has its advantages. Try as they might, online experience can’t let me feel something.

The idea that you can put all your eggs into one digital basket and expect explosive growth is a myth. That kind of thinking was debunked back in the dotcom days when companies were stung by “vaporware”—hardware or software that promised unrealizable results and of course required a great big financial commitment.

Today we know better. Or do we? I’ve noted more than a few companies compelled to chase technological fads for fear of being left behind. In the rush to catch up, they invest in what seems like “the next big thing” on very little proof of the business case for it. The end result is often wasted budgets, dark screens and agitated customers.

Incrementalism, on the other hand, is a wiser way to spend the company’s hard-earned money and has a much better chance of keeping the customer from abandoning the path to purchase that drives them to your store. The incremental approach is a method of working towards your digital goal using many small—often less planned—changes instead of a few extensively planned jumps.

It requires a sound guiding strategy, one that can be implemented across all your channels in phases, and then tested. Incrementalism gets you there faster because it requires less planning, but you’ve then got to test the daylights out your digital improvements to see where additional changes can yield even better results.

Every year the winter holiday decorations seem to appear even earlier than the year before. The Christmas trees at the mall, the lights on people’s homes, the holiday banners on city streets—all arrive before we’ve had a chance to eat our Halloween candy.

Retailers recognize our growing desire to get a jump on the buying (or at least the researching) of holiday gift lists, as well as the wish to stay at home on a comfy couch and browse online—versus fighting the crowds and lining up in the cold to get one of a limited number of door buster deals. In response, they offered online deals prior to Black Friday.

It paid off. Online spending increased 33% on Thanksgiving Day this year, and the average online spend over the course of the following weekend saw a 16% spike. And with these deals available, along with the added convenience of product reviews, price comparisons, larger inventories, and in many cases free shipping, it’s no wonder more and more shoppers are choosing the ease of online shopping. The so-called Cyber Monday is actually a Cyber Season.

While I am certainly one of those early online shoppers hoping to find a deal before I’m forced to wade through the masses at my local mall, I am a little dismayed by the ever-earlier beginning of holiday season. Maybe the urge is less acquisitive and more wishful than it appears

Using digital media in retail really isn’t a new concept, the idea has been around for years. Recently though, “going digital” has gotten a lot easier, cheaper and more meaningful to both companies and customers. It’s easy to caught up in the new digital revolution and want to implement this “cool factor” into your brands retail experience in every possible way, however, be smart about it.

The next time you’re in Best Buy, stand in front of the TV department and look at all those screens. Hard to focus, isn’t it. Now imagine those same screens each playing different content and messages simultaneously. My brain shuts down just thinking about that! The point here is that when it comes to integrating digital signage or interactivity into your retail experience, don’t overdo it.

The focus is always about your brand, not how digital you are.
The best way to approach any digital integration in retail is as an enhancing element, not a distracting one. Consumers are already bombarded with messages from different angles. You can inadvertantly add too much digital content and end up with “noise” when you are merely trying to help with a purchase decision.

The central question here is: how much digital is too much? While digital is appropriate for many aspects of the shopping journey, there are moments when it isn’t. Also, and to my earlier point, too much digital content can become very overwhelming and even detract from the real focus of the experience (your brand, services and products).

Confession time: I find myself fascinated by the recent trend of social shopping websites, in particular Gilt Groupe, an “invitation only” online retailer that offers daily sales on limited quantities of high end fashion items at deeply discounted prices.

When the clock strikes noon, shoppers can put an item in their carts (if they are lucky enough to get it before selling out—a common occurrence by 12:05PM). Once in the cart, the item is reserved for 10 minutes. If the item is not purchased within that time frame, it goes back into the general market to be snatched up by a more determined buyer.

There is no time for “do I really need this?” contemplation—the goal first and foremost is to get the item in the cart, hoping that the 10 minute hold time is enough to make an informed decision. Gilt even encourages multiple transactions by waiving the shipping charge for additional items purchased within the hour.

I have gotten caught up in the hype. I’d like to think that knowing what levers a retailer is pulling to get me to buy (scarcity, immediacy, peer pressure, etc.) makes me savvier and therefore less inclined to make an impulse purchase. But in this case evidence has not borne that out.

While our annual 2010 State of the Retail Industry report delineates the challenge for retail brought about by consumer behavior changes in reaction to the great recession and the rapid adaption of mobile technology—many of those challenges will take several years to address. To find seven things that retailers can do right now, we asked our experts.

Scott Jeffrey, Chief Creative Officer

Push for differentiation. There is no time to rest on your laurels. Realize that innovation isn’t a stage, it’s an ingrained brand behavior. In fact, stop thinking of innovation as a “next step” all together–”step” as in a phase of something that stops and starts, or merely cycles through.

My ideal retail brand would be one that never completes a store design prototype. The “never done” mentality is always asking, “What else? What else can we do to make it better?” That type of thinking requires courage. Belief in the importance of change. Granted, not every one of your new ideas will be a game changer, but once you entertain doubt and back off, you pretty much lose momentum. Particularly now, when the customer expectations are so far ahead of what most retailers are delivering in terms of the brand experience.

The minute you rest on your laurels and let your brand and your stores get outdated, you have a really big, hardest-to-do maneuver on your hands: a turnaround. If you have a fleet of any size, you’re in danger of being too big and too rigid to manage a turnaround. But if you’re a constant seeker, a brand that remains loose and nimble, the maneuvers are much smaller and easier to manage. Your creative adjustments and transitions will be happening all the time. Knock down any silos in your way and get to that mindset as soon as you can.

Bill Chidley, Senior Vice President, Shopper Sciences

Consumers’ rapid adoption of the smartphone means it’s time to start thinking about connecting and communicating through that little screen. To make the most of the opportunity to drive demand, mobile optimization should be a top priority for your brand. It’s all about being in the game. Don’t try to justify mobile initiatives with ROI. Move forward with a reasonable hypothesis and prepare to learn and adapt.

Don Rethman, Senior Vice President, Architecture

Consider doing a site survey. Do your shoppers expect to share their shopping experience instantly? Do you plan to make fast calls to action in the store? Your building needs a wireless-based backbone to support that, with wireless connectivity that allows for transitions. This goes even beyond the creation of mobile hot-spots. Buildings must have a distributed, robust and flexible IT infrastructure which will allow technical access to all spaces. It helps if you’re working with architects who are aware there is such a thing as a path to purchase so they can help create a store that increases productivity and doesn’t skimp on the brand experience.

Amanda Yates, Vice President, Strategy & Analytics

It’s vital to map the “customer journey” to understand where best to make the wireless investments, as well as other investments that help your brand drive choice. Mapping will provide the insights that will help you gain advantage and protect sales by offering shoppers what they want in the modes they desire. Not every retailer will need a full-blown program, but each must understand the needs of its customers, what information and access they are looking for and where or how they want to access it. Once these insights are known, the appropriate level of investment and how to spend it will become much clearer.

Dave Nixon, Executive Director, Digital Strategy

The multi-channel ideal is a seamless transition from the physical shopping experience to the virtual experience through every digital touchpoint–one that’s painless for the shopper and profitable for the retailer. However, for most retailers that’s not the first thing you can do. There will be silos to take down, brand strategy work and brand engagement initiatives to adopt before that nirvana is reachable. I’d like to elucidate further on what Bill says (above)—“Get in the game.”

Companies that spend too much time planning their next technology steps will find themselves playing catch up to those that are already moving. One of the main benefits of digital is the ability to deploy it quickly and then modify or adapt the solution depending on the performance metrics for success. In that respect, adopting new digital platforms into your channel strategy is less expensive and presents less risk than physical channels. The time is now to leverage digital technologies for increasing revenue, efficiency and customer loyalty.

Kris Medford, Ph.D., Director of Shopper Sciences

Get to know your shoppers again. Segmentation that is a few years old is downright archaic so make sure your insights are recent and actionable. Who are your shoppers—both those in your store today and those you want in the future? What’s important to them from a digital perspective, and how can you use digital help to make your brand be more relevant to their lifestyle?

Justin Wartell, Senior Consultant, Brand Strategy

The physical store needs to evolve from its position as the “jewel in the crown” to a “tool in the arsenal.” For retailers, the most important thing that can be done right now is to (re)examine the relationship between the physical brand experience and all of the other expressions of the brand. Brand experiences are inter-connected organisms that create an overall customer feeling about the brand. By understanding the role that retail plays in the context of the other touchpoints that are, or can be, deployed, retailers can drive loyalty, reputation, efficiency and value across their organizations.

Digital business continues to grow as clients seek expertise in creating an ideal shopper journey online as well as offline

They say that having no presence on mobile devices in 2010 is like not having a website circa 1999. So true! The digital age is in hyper-drive. 3G access continues to increase, and 4G is already here! Some stats say that up to 99 percent of the population will have some sort of data capability on their mobile phones by 2011.

So what does this mean for retailers? It means the need for a whole new view to their digital strategies. When a shopper can enter a store, scan a barcode, see that the same product is cheaper at a nearby competitor and click a link for directions to take them straight there, the game has suddenly been changed, so to speak. There is an ever-expanding catalog of apps out there to enable this type of shopping behavior (in the store, in the car or on the run), and manufacturers like Apple are training customers via commercials and advertisements about how to use all these apps to simplify their lives.

It might be easy to dismiss this trend given the relatively small percentage of people with iPhones or Droids today, but now is the time to start investigating and investing in individual strategies.

Once. Twice. Yes, starting very soon, Apple will have done it for a third time: changed the way we buy and listen to music. Apple acquired digital music startup Lala in December and shut the site down in May, leading tech pundits to speculate on the coming of “an iTunes in the cloud,” once the streaming music service is incorporated into Apple’s business model.

Although Apple won’t comment on its plans, as a loyal Lala.com user and Apple fan, I’m fully expecting to enjoy a cloud-based iTunes experience in the near future, and I think it’s great that Apple continues to advance their retail strategy and break paradigms of the industry by sourcing great ideas, making them profitable and bringing them to a larger audience.

Okay, I admit, I’m a technology laggard, but for the sake of “being in the know,” I have embraced the iPhone and downloaded those apps that I was told were “must haves.” So far The Weather Channel, Facebook, and Mah Jong have proven the most engaging. But here is one I’ve tried that I was told would revolutionize my grocery shopping…

GroceryGadget. In theory, this should be a great one. Create your shopping list, take photos of preferred brands (so when Dad shops he knows what to buy), tick off your items as you shop, and the list recreates itself in the order products are shopped for next time. Total winner right? Not so much.

Imagine pushing your cart down a crowded grocery aisle, baby in seat, purse hanging off shoulder (or shoved in baby’s lap), iPhone in purse (because let’s be real—holding a slippery, expensive piece of electronics while pushing a heavy cart whose wheels are probably not working properly just isn’t realistic), and scanning shelves.

So with much fanfare, and at least as much controversy, Apple’s iPad has been released to the masses. Okay, I admit it, I ran out and bought one the day the 3G model was available and I also admit that I’m a bit smitten with it. I have no doubt that it will change my behavior in much the same way my iPhone did. But as much as the general public was anticipating the launch, I wonder if retail wasn’t equally as excited about it as part of the digital retail experience of the future.

From what I’ve seen so far, I can use it as a creative tool (no more losing my pen cap thanks to the sketch app). And I’ll be more efficient with my time away from home. I can imagine that, put to the right use, a device like this has the ability to bring a different set of efficiencies to retail.

Maybe the iPad and the inevitable wave of competitors will have the ability to transform my experience at checkout. Maybe checking in at a hotel will be easier.

Retailers looking for great examples of wirelessly connecting with their shoppers have three great brands to look to: American Eagle Outfitters, Netflix and Amazon.com. The continue to differentiate their shopping experiences with intimacy, responsiveness and relevance.

Even with millions of items for sale, Amazon connects intimately with customers, from its one-click ordering to its ability to become more relevant with each visit. The result is a “barrier to exit” that other brands envy.

American Eagle excels at aggressively integrating multi-channel marketing tactics into both its traditional and digital campaigns. It connects at all the right touchpoints, which goes a long way towards achieving brand loyalty. This year, AE included a mobile filed in its loyalty program, and used mobile as a point of entry into sweepstakes as well as an alerts program. Calls to action were posted on social networking sites, such as Facebook and Twitter in the form of banner ads, status updates and tweets.

Should retail brands be concerned about their brand strategy or should they simply concentrate on sales per square foot? Are we on the verge of a new spirit of innovation in retail to serve “pent-up” demand? How can the virtual environment of digital retail create communities outside the four walls of the store?