Even before the pandemic, our digitally saturated world was causing consumers to increasingly seek out physical retail experiences, especially younger consumers. 81% of Gen Z prefer shopping in physical spaces than online because it offers them a chance to discover new products and disconnect from social media. Now, as a result of global lockdowns, this hunger for IRL experiences will be bigger than ever and brands need to be ready to meet this demand.

But there is a catch: the traditional role of brick-and-mortar stores has radically changed, and many retailers have not evolved. Stores are no longer only about transactions. They're places where consumers connect, experience and discover a brand’s story and its products, and then buy, either instore, online or anywhere else they have access to e-commerce. This will continue to be the case for Gen Z post-COVID, as e-commerce habits have solidified. Brands now need to be using physical retail to demonstrate their relevance in consumers’ lives and to express the same shared values as their target audience in order to foster a sense of loyalty.

For example, Nike has used its latest Innovation House flagship in Paris to engage consumers around issues of sustainability. The store operates on renewable energy, incorporated 85,000kg of sustainable materials in its design, and is home to the brand’s innovative shoe recycling initiative. Meanwhile Skate brand Vans created Skate Space 198 in Brooklyn to provide an all-year-round venue for skateboarding, focusing on building communities on a local level, which in turn will boost consumer engagement, and ultimately sales. Similarly, workwear brand Carhartt opened the Carhartt Workshop in its Detroit flagship store, a collaborative community space giving customers ‘access to the tools and landscaping equipment they need to kickstart DIY projects’, as well as a programme of training sessions, and workshops. 

In the luxury sector, Italian jewellery brand Repossi recently redesigned their Monte Carlo flagship store in collaboration with Flavin Judd, son of the celebrated American minimalist artist Donald Judd. The 'understated opulence’ of the space creates a rich and engaging story around art, a minimalist aesthetic, refinement and craftsmanship which reflects the ethos of the brand. This isn’t just a place to buy beautiful jewellery. It’s a place to be transported into the world of the brand and its philosophy. 

Experiential fluidity

These examples only scratch the surface of the shift Gen Z are driving in turning physical retail from a purely transactional zone into an experiential space for discovery, identification and community-engagement. But while physical retail remains critical, it doesn’t mean that digital experiences are any less important. They’re just as crucial. The key word here is fluidity. Gen Z, and the generations following behind them, move fluidly between physical and digital channels and so the experiences brands offer them in the physical realm need to be able to move seamlessly into the virtual, and vice versa, at any given moment.

Two brands that represent the extremes of this ‘phygital’ spectrum are Balenciaga and Bottega Veneta. Balenciaga encapsulated Gen Z values by creating a video game experience to launch its recent collection, as well as a virtual store-space. This was a steadfast commitment to meeting Gen Z on their own turf, the virtual one, in turn igniting loyalty that will draw them to the physical retail to augment their experience.

Meanwhile, Bottega Veneta are taking communications offline, divesting from social media and keeping their product presentations hyper exclusive and in the physical realm, making it essential for consumers to go to the physical store. This post-digital approach appeals to Gen Z’s desire for novel IRL experiences that offer a sense of exclusivity and discovery, even if they later buy the product online. 

The growth of phygital

Although polar opposites, both approaches are highly relevant to Gen Z in how they boldly demonstrate their values and take on the world, and stay true to it, regardless of whether it’s virtual or physical retail. Both approaches also offer a very clear and specific way for consumers to engage with the brand, which can later be built on and augmented through blended, phygital experiences.

In contrast, Burberry’s Shenzhen flagship store pitches it right in the middle and is a go-to case-study in blending the physical and digital experience. Fully powered by WeChat, consumers use an app to book fitting rooms, pre-select clothes, book tables at the in-house café and make appointments with stylists, as well as earn ‘social currency’ that unlocks other experiences. Here, physical and digital are seamlessly united and, again, the primary objective is on optimising the experience and discovery of the brand and its products, rather than focusing purely on completing a transaction.

As we look towards a post-COVID future, brands and retailers need to be ready for maximising the opportunity to welcome consumers back into physical retail spaces. Those who understand, and adapt, to the experiential retail shift Gen Z are leading will be the ones who thrive.  

Header banner: Riley Rose store, Los Angeles; CX and Interior Design: UXUS; Photography: Brett Beyer