Is Hyperlocal Retailing the Future?
The term hyperlocal has been used in retailing for a while, but during the pandemic the concept grew in popularity. With lockdowns in place, consumers looked to their local neighbourhoods for the goods and services they required. While local stores have always had their place, larger retailers are now investing in hyperlocal formats as they see the benefits, they have for both the retailer and consumers.
A recent study by Adyen and Opinium found two thirds of consumers will continue shopping local post pandemic as they enjoy the convenience it offers. The priorities of consumers have been reset and retailers now need to meet their needs at a local level. Global consultants BCG noted “Where consumers value ultra-convenience, retailers must evolve their physical footprint from large stores spread over wide areas to a dense network of smaller stores hyperclose to the point of consumption.”
Increased competition from both e-commerce and physical stores is forcing brands and retailers to look at a more personalised approach to their store formats. By combining data with a localised format, retailers can now offer a more personalised service. Looking at sales data, brands can see which products are popular within the targeted location and create a tailored offering instore. Consumers are bombarded with choice, so by stripping this back and offering great customer service too, retailers can create a highly engaging experience.
H&M Hyperlocal Concept, Berlin.
Luxury turns local
US luxury department store chain Nordstrom has said its future is in smaller local stores that carry little inventory and will instead focus on customer experience. Launching their Nordstrom local concept, the smaller ‘neighbourhood hubs’ don’t hold dedicated inventory. Instead they offer personalised services like personal stylists, click and collect, returns, exchanges, alterations and even allow customers to book nail appointments and grab a coffee.
Their Head of Customer Experience Shea Jensen said “We know there are more and more demands on a customer’s time and we wanted to offer our best services in a convenient location to meet their shopping needs.” Since launch the concept has grown in popularity. The retailer has now launched five Nordstrom Locals across the US.
Nordstrom Local, Newport Beach.
Brands and retailers are also using the localised format to build their community of loyal fans and brand advocates. Lululemon have always had their community at the forefront of their stores, using local fitness experts to offer classes instore from the beginning. Their recent Chicago experiential store has taken this to the next level, with an event space offering classes with local ambassadors and a café or Fuel Space serving local produce. The store has become a hub for the local yoga community to meet and workout together, strengthening Lululemon position with their target market.
Lululemon Fuel Space, Chicago.
IKEA known for its sprawling out of town locations, have announced the launch of 50 small-format stores in more urban areas. Realising that shopping habits are changing; the stores have customised product selections to each area and dedicated staff to enable quick delivery of products. The target market for these stores will be city-dwellers who can now enjoy the convenience of popping instore locally.
IKEA Hammersmith, London.
Consumers are searching for more memorable experiences when they visit stores. By offering tailored solutions, in a convenient location it can excite and delight them. Retailers who have already introduced the localised format are finding that it is winning for them. Hyperlocal stores may well be the way to offer experiential services to consumers going forward.
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