The internet has already disrupted pretty much everything; it’s hard to see what more there is to disrupt. It has meant more competition in consumer sectors, which is forcing brands to look at what they’ve already got and how to make it all work harder. For consumer brands, one of their biggest assets is space. Retail space, leisure space, digital space. Now, they are increasingly focusing on improving it and their customers’ experiences, ultimately to keep them coming back.
I was recently at a private event we hosted with Duncan Hoy, Tesco’s MD of large format stores. Around the table were people from other brands like Samsung, Fortnum & Mason, Moët Hennessey, Costa Coffee, Jaguar Land Rover and Grosvenor Casinos. Their common link? All are dealing with today’s competitive environment and all see their space – physical and digital – as a way of differentiating. Tesco used to be able to guarantee more sales revenue just by opening a new store. That’s not the case now. Those that have stuck with their physical environments know they need to make the most of them.
So why is space so important to brands? It’s because of our psychology. We humans are suckers for nice surroundings. It affects our mood in such a way that it can be the difference in a good or a bad experience, in a recommendation or none.
The psychology of our environments
There is a restaurant in Switzerland with a set menu, where every table is bare except for a plastic cow toy. Guests must arrive at 7 o’clock, but even when everyone is seated, no waiters come with any food or drink. Nothing happens until somebody gets curious and picks up one of the cow toys, which emits a very loud moo. Everybody always laughs. People start to chatter and make jokes. The atmosphere becomes lively and jovial… and that’s when the food is brought out. The restaurant’s chef has two Michelin stars.
This is what experimental psychologist Charles Spence calls gastrophysics. The idea top chefs have taken advantage of for decades – your environment can make food and drink taste better. Has anyone in history had their best-ever meal in a hospital, or flying in an economy seat? I doubt it. Of course, that’s more than just about space, but gastrophysics says that the exact same meal eaten in more pleasant surroundings would be more enjoyable. Spence has another name for this – the Provencal Rosé Paradox. Why does a wine that tastes fantastic on your beach holiday in the Med, that you have been gushing over to all your friends at home, become embarrassingly average a few months later when you open the bottle you brought back? Your environment improves your mood, your mood improves your experience and the memories of that experience you brag about to your friends.
Just as environment plays with people’s taste buds, so it affects our experience with a brand. A weary traveller saved from the noise and bustle of an airport terminal by the sound-proofed doors of an airline lounge is likely to feel at least a little grateful to the company providing that experience.
Traditional retailers are already reimagining their physical spaces. Take Reformation, a clothing store in the US where most of the space is devoted to luxury fitting rooms. No unflattering fluorescent lighting, no claustrophobia-inducing stalls, and no rifling through clothing racks to find your size. You simply choose an outfit and the staff will deliver it to your room. If it doesn’t fit, you can tap an iPad on the wall and get another size. The experience is optimised using both digital and physical space.
And non-traditional e-tailers are more and more stepping out of their digital spaces – see the waves Amazon is making with its Go stores. But it’s not a new idea; e-commerce has often moved into bricks-and-mortar in order to foster more emotional connections with their customers. The Cambridge Satchel Company was very successful online, but its owner Julie Deane still felt it necessary to open 4 shops, so that “if you walk into one of the stores you’ll be hit by the colours and the smell of the leather.”
Using the user to design for the user
I’m writing this as if brands don’t know that space is important to experience. As heard at the roundtable, they certainly do, but ideas are a lot harder to put into reality, and each brand has its own challenges specific to them. From our experience, when the challenge you are trying to solve touches the customer, that’s the person you need to talk to.
Did you know that people go jogging on cruise liners? When P&O Cruises were trying to understand how customers enjoyed the deck-space on their ships, they noticed the more active passengers naturally ran in a loop, from their cabins all the way around – speeding past port-side, starboard-side, bow and stern – but only on ships where a loop was possible. On some ships, swimming pools or other cruise paraphernalia got in the way – so joggers had to do shuttle runs back and forth on one side of the ship, concentrating traffic in smaller areas.
P&O went on to build the Britannia. One of the most successful ever launches of a British cruise ship, winning Best New Ocean Ship soon after it launched. The way it was designed? By listening to the customer – and not just about jogging. It cost them £500m to build; they weren’t going to take that kind of risk without making certain that the spaces that form the ship were going to be enjoyed by the very people they were building it for.
As is the case with many brands, one of Tesco’s challenges is that its internal departments sometimes inadvertently dictate its customers’ experience. There is a department for meat, for fish, for fruit and veg, for clothes etc. and they are all competing with each other for floor space. It might be easy to forget the customer’s experience of the store in the debate about shelf space. Through some objective interpretation of sales data, clothing might be put in front of fresh fruit and veg, an arrangement that isn’t a great use of space and not great for the customer’s experience.
Customers are the only ones who see the store as a whole; they make the journey from entrance to exit, through all the aisles. By talking to them, Tesco could add the human element to its store layout.
Multiple challenges need multiple angles
Even though building new space is no longer the answer for many brands, adapting space can be expensive – it costs Tesco millions just to move a fridge from one section to another – but it doesn’t have to be when you bring in outside voices. An architect called Alistair Parvin, who started a foundation that promotes open-source architectural design, tells a story/parable about a school that needed to solve their ‘space problem’:
“The corridors are far too small. They get congested between classes. There’s bullying. We can’t control it,” the school board member said. “We need you to design a new building for us. We know it will cost around £20 million, but we’ve accepted that.” One of the architects across the table paused, mulled over the school’s problem for a moment, and said: “How about this? Don’t build anything. Get rid of the school bell. Replace it with smaller ones that go off at different times in different parts of the school, and ease the traffic.”
Instead of millions, the school only had to pay hundreds, because of the input of an expert who thinks about the user. Now add that to the voice of the user, and you have a powerful combo.
At the roundtable, I heard one of the attendees mention that, for established brands, moving into the future is a challenge. Many have tried and failed to rejuvenate their spaces for a younger generation, only to lose previously loyal customers. How do you reach both? In 2002, Jaeger, a global fashion brand that had 116 stores, abruptly retargeted its clothing line at much younger women, baffling its core, older customers. The chain lost millions, and its parent had to sell it off at the end of the year.
Sometimes, the solution is to create new space. Hakkasan, the global group of Asian-fusion restaurants, wanted to be able to scale the business by reaching a younger audience. Hakkasan’s Michelin starred brand was already mature; established. They didn’t need to rejuvenate for their happy customers, who were already comfortable in the current space. So, in order to create a sub brand that felt true to Hakkasan, they co-created the new proposition. They spoke to the people who work in their space (chefs, waiters) to learn what Hakkasan means to them, and then to the people who eat in them (customers) to learn what keeps them coming back. Together they co-created a new brand, Ling Ling – easily exportable, easily scalable to new locations like Mykonos and Marrakesh, Oslo and Las Vegas where the scene is young and lively. The new customers had their space, the older kept theirs. And never the twain shall meet… except if they want to.
Many brands approach the idea of co-creation with scepticism. Customers aren’t experts. What do they know? By having both customers and internal experts in the room tackling a challenge, however, those risky points in the design and development process where brands imagine how a customer might use a product, service or space no longer require guesswork. The customer’s input de-risks the venture. Tesco’s Duncan Hoy admitted himself that he wasn’t convinced customers would have realistic ideas, but after his first co-creation workshop, he told us “I’m surprised at how consistent and creative the customers were. And grounded.”