Through this article, we would walk through the case of Starbucks and demonstrate that a synergistic space use strategy enhances the brand experience and draws in partner and investors. To achieve space use synergies, a brand must employee holistic approach that takes into consideration the needs of the target market, promotes and emphasizes customer journey and experience, drive the effective use of technologies in each of the spaces and most importantly have at its core a believe in people, culture and communities. For more article on how a space use strategy head on to: Basic Concept article.
The rise of the Space Shifters
Space shifting is the act in which a person’s mind switches from one spatial context to another. A person’s mind will normally be operating within the context of the surrounding physical space. However, we sometimes 'drift away' and operate in a different spatial context - for example when we are daydreaming of our next holiday destination. Rich mobile technology and information accessibility is one of the primary space shifting enablers. It is also one of the source of our shorter attention span. Retailers fight hard for an increased attention span as it usually translates into improved attachment between the offered products/services and customer. The attachment would eventually translate into improved sales. Hence, retailers would find ways to keep their customer focused on the offerings and prevent mind drifting. This lead the retail industry to spend a tremendous amount of resources in creating retail experience capable of maintaining attention span.
Starbucks targets Transit Space
But not all retailers see it as a problem. Some retail businesses sees this as a business prospect. Cafe’s is one of it. Cafe’s have the least problem with people drifting away while sipping their cup of perfect brews. Consider Starbucks and their concept of 3rd home. The successful coffee chain offer us an interesting case study into the use of Space Shifting as a key driver.
As a coffee chain, Starbucks provides patrons transitional experience, e.g. a space between office and home; a space for socializing or professional discussion; or a space to revitalize the creative juice. Instead of discouraging mind drifting, a coffee chain like Starbucks is a place to celebrate it. You may argue that, any coffee shop qualifies for that matter. But Starbucks competes more successfully by aggressively negotiating prime real-estate location as it is long proven that a good location acts as a natural magnet. We also know by now that Starbucks not only operates in good locations but it also tends to overdo it by having more than one Starbuck cafes within the same street or neighbourhood. For the purpose of this article, such strategy is not only seen as a way to manage over crowded cafes but also to create more contact points for any potential customers.
A Clear Target Market
Having a prime real estate alone is not enough. Its very important that retailers such as Starbucks develop a strong understanding of target markets and it's evolving needs. Perhaps the following quotes from Starbucks demonstrates well this understanding. Bill Sleeth, VP of Design at Starbucks in an article with http://www.fastcodesign.com said: "Sometimes when you look at the 'my Starbucks' and the 'that Starbucks,' you’ll see there’s really something different between them," Sleeth says. "The my just feels more comfortable. It feels more natural.” Starbucks clearly transit oriented retail position has to be accompanied with something closer to the customer heart in order for it to really matter to the local community.
The Complete Customer Experience
Now that the retail space and target market is clear, Starbucks needs an executable action plans to capture that market. With the target market in mind, the other space selection can take place. It is crucial that the selected operating spaces be closely aligned and relates to the values that Starbucks is attempting to represent. Each of the selected target operating space is assigned an objective and connect customers who transits from one space to another. This connection ties up any loose end that ultimately leads to a consistent overall brand experience. The Starbucks customer journey in each of the Starbucks operating spaces can be revealed when mapped into the following matrix:
The matrix mainly shows the attribute of each deployed asset in the individual spaces. Effectiveness of brand experience delivery (i.e. actual execution) matters more. It is bad for the brand if user gets an inconsistent Starbucks experience during a corporate event (e.g. rude and unknowledgeable baristas, not environmentally friendly practice, etc.)
Starbucks retail space is not product centric as most would have thought. It’s strategy and approach is not around the coffee itself, it is centered around patron and customer experience, hence, the retail space is at the very heart of the retail strategy.
The retail space is used to engage, inspire and enhance its patrons experience. Each store is created out of a vast selection of design theme and materials. Starbucks gives its designers a selection of both local and global design elements. By recognizing the importance of local elements, they are giving each individual store the needed character and differentiation. The aim is no less than achieving the goal of making every customer visit a “My Starbucks moment”. Ultimately it creates stores that blends in well with the surrounding community.
The retail space strategy for Starbucks can be broken into the following components:
The Retail Space Experience
The Starbucks approach shows that it is important that retailers look at the evolving needs of customer. However, it wasn’t that long ago when Starbucks only have 4 retail design themes to choose which led to unnecessary design constraints. This in turn compromised customers retail experience with the Starbucks brand. As Starbucks expanded, its in-store experience felt mundane and repetitive. It offered little in terms of transitionary experience and worst felt, uninspiring when a customer move from one Starbucks store to another. This changed when Howard Schultz returned to Starbucks.
"We believe a coffeehouse should be a welcoming, inviting and familiar place for people to connect, so we design our stores to reflect the unique character of the neighborhoods they serve. We are also interested in the way design can connect us all to sustainable building practices and provoke thoughtful questions and engagement with the built environment. In addition to reducing energy and water consumption, we incorporate reused and recycled materials wherever possible and often use locally inspired design details and materials in our stores." Starbucks designer references what is known as The Catalogue to create a globally consistent coffee shop design whilst at the same time allow experimentation by designers with local elements to induce the sense that it My Starbucks.
The mobile app program seems to be positioned as its retail companion app. It delivers a set of customer engagement and management capabilities such as customer loyalty and reward management, value representation system, value exchange system, targeted marketing platform, communication channel, etc. On the other side of the coin, the mobile app that started off as a digital value holding system is now slowly being molded into a Starbucks-centric brand experience. Since mobile tech is primarily part of a FMS (follow-me-system)
Whilst the mobile app seems to have a more refined strategy and approach, the same could not be said of the web portal. The existing Starbuck cyberspace approach does not have any specific orientation in that it does not appear to be oriented to drive traffics to the retail store. In fact, the site looked a little cluttered and lacks a clear
Starbucks strong hold on the market through its sharp focus on customer experience management relies a lot on an integrated approach. Yet, there is much room for improvement. Particularly in the mobile space. with and also how R.3.M.A.G.I.C.S can be combined to position Starbucks in the other spaces (e.g. private, commercial and public space).
In the end, maintaining a strong focus on the key market segment and by continuously validating the relevance of its market positioning strategy,
It is then worthwhile for retailers to run an assessment on how well is the customer experienced aligned to the brand messaging through its various channels.
The framework concepts presented herein references he downstream version of StAF model. It encompasses the space in which people buys/enteprise sells and the space in which people uses or consumes a product. This framework provides a unified approach in understanding the relationship between producer/seller and buyers.
The Concept of Space
There are 5-main types of spaces:
In the highly connected and informed world, we seem to mind shift between spaces. We can read, organize or even participate in social events online while we are working; we read and respond to email and meeting invites while we are at home; we monitor the movement of our little children out of safety concerns regardless of our , etc .
Concept of Sub-spaces
Spaces (physical or logical) are often subdivided into functional spaces - e.g. living room, bedroom, bathroom, etc. These functional spaces are called sub-spaces. Webpages are divided into contact page, product page, corporate page, etc.
Concept of Levels within Spaces or Subspaces
A level-1 space provides the platform needed for level-2 subspace to exist. Each subspace can be further subdivided into smaller spaces or will be the platform for "systems" to be hosted.
Types of Space
There are generally 4 main types of 'physical' space (see diagram below). While a person can be in one physical space at a time, the mind may operate in a logical space separate from the physical space. For instance, you might be in a retail mall staring at an attractive product. Your mind could be wandering off into a personal space where you imagined yourself using the product. The logical space creates relevance between the physical world and the mind.
The Concept of Systems
While space gives us a concept of people interacting with the environment, the concept of system provides the bridge between human and their environment. Humans have long adapted and mastered the skill of tool making. These very tool now forms the basis of the productivity systems that supports our living needs. With R3MAGICS, the tools that we have forged is again evolving and enabling a highly automated lifestyle.
In its origin, our system of intelligence and knowledge is no more than paper and pencils. That has its limitation in adapting to the situation-specific needs.
A system is a construct of 3 essential ingredient:
As we shift between spaces, we need the productivity system to follow us into the different spaces. In retail hospitality, some of the systems were supplied to shoppers in the form of Customer Engagement Systems. These were in the form of comfort, caring, entertainment, record, etc. mostly considered as basic to human needs.
For instance, Apple IOS new wifi calling feature can be viewed to appeal to the financial management system of a customer as it allows a users to utilize wifi (usually at no charge) to make voice calls.
Another example is the increasing popularity of mobile payment solution at retail checkouts. This approach appeals to the customer by improving the following personal system experience:
There are systems that take care of people. There are also system that takes care of system or the environment. Hence:
Types of System
3 Tiers within each System
We derive a universal tiering approach in order to classify the type of personal system by borrowing the 3-tier concept from building architecture design. In building architecture, the three tiers are:
We expand on this tiering concept to center around the person itself:
AIS systems must at least have some decision capabilities for it to perform intervention work. In the face of R3MAGICS, AIS system are now bundled with intelligence over the cloud.
An Asset (i.e. product) in the Context of System
As mentioned in the Concept of System section, an asset (from an ownership viewpoint) or product (from a seller viewpoint) is a key functionality provider within a system. A product can be classified based on its state of readiness (to use):
A sofa as a product asset can participate in multiple systemic roles. Within a given space, it can be part of:
Concept of Space Shifting
Prior to the internet and mobile communication technologies, we are mostly passive consumer of services. We are not able reach out to our personal productivity system when we are outside our personal or home space. This however has changed in the advent of the internet and mobile technologies. With consumer bringing along their own devices wherever they go, it is now possible for them to reach out to these personalized systems remotely. This lead to the ability to constantly switch between spaces - e.g. between personal productivity and professional productivity. This creates a phenomenon called space shifting.
Customer gets engaged actively with their own personal system. Business have to pursue a social route to continue to keep customers engaged.
Concept of Systemic Shift
Systemic shift occurs when the systems itself moves to a different tier. A passive system will become an active system by adding a systemic product that is capable of environmental or occupancy detection, decision making and response system.
NOTE: This article references the concept presented in an earlier blog post: The Basic Concept
We use the concept developed in the earlier part of this blog page to determine how 2 retailers within the same industry positions PSS (product, system and space) differently in order to distinguish themselves and relate to its target market audience.
IKEA's Retail Approach
Ikea maintains its low-cost quality furniture leadership by tightly integrating and optimizing its entire value chain. In Ikea, products are designed according to its 5 key dimensions (cost, quality, form, function & sustainability). It is usually constructed as modular systems - except for standalone furniture piece. The retail space then takes the product and applies it to spaces that simulates target market real life space use situation. With its target customers mainly being budget conscious and younger family startups, Ikea take the generational challenge to the tasks - e.g. space driven constraint, sustainability, quality products, time starved family, etc. It is then obvious that the retail focus of Ikea has to be around comfort and limited space use. It extends this concept by offering add-on functional products (i.e. wall shelves, storage hooks) that allow customer to continuously improve space use. Ikea's retail operation successfully wraps the space around disparate products to showcase effective space use - thereby creating a sense of relevance and shortens the retail purchase decision.
Minotti's Retail Approach
Minotti has a very different retail approach compared to Ikea. According to Renato Minotti, their designers considers how people live and work around a sofa. More than just a place to sit, the sofa can be a productive setting. The armrest can replace the side table and the back hold a reading lamp. Minotti explained, "With its technology, you can either lift the arms and the back. It (sectional sofas) can even host 20 people here and you can have a party. You can combine it many ways to fit in the room. You can put your feet up or use it as a side table. " Minotti creates collections (e.g. a table, sofa, armchair or carpet) where by the fabric and other elements speak the same design language. This intensely product-as-system focused approach meant that the entire space is warped around the product. With the target luxury segments, Minotti is driven to push the single product value proposition p to the roof - hence, a product driven retail space approach. The space itself is meant too accentuate Minotti's furniture piece, thereby making the retail strategy a product-centric strategy.
Ikea's Retail Space display approach compared to Minotti's
Ikea's Probable Target Customer Systems Decision Path
Ikea's customer will likely be concerned with space or affordable furniture piece or a combination of both. Their visit to Ikea's showroom will set them on a space organization exploration path. In which they will discover how to create comfort and a sense of organization - despite ever diminishing space, using Ikea's products and systems.
Minotti's Probable Target Customer Systems Decision Path
Minotti's customer is most likely aesthetic driven (the premium and classy look and feel). With its retail space designed to amplify the value perception of its product, a customer would very likely leave the showroom feeling inspired. An emotionally charged customer will likely keep this positive sensation and ensure that the design of their room space is in sync or conforms to the needs of its product piece or vice versa. Financials are usually not the major concern of Minotti's client base.
Other Space Use Strategy
Gillian Drakefort, Ikea Country Retail Manager, UK have noted that the online business in UK now makes up 10% of overall sales. The retail sales have had 5% increase in visitors over the past year. She claims that the cyberspace approach by Ikea has created complimentary outcomes in its retail operations. Ikea (depending on region) allows online purchase. Ikea have recently strengthened its cyberspace dominance by allowing customer to use the mobile app as a tool for augmenting furniture pieces in their desired room in real time.
For Minotti, everything it does is about amplifying the brand experience to its customer. It does not sell products online and would prefer a more controlled physical retail experience. In recent years, it has experimented with digital medias such as online catalogue over the more premium experience offered in Apple's Ipads. Its digital expansion is carefully curated as not to erode the brand value and dilute its retail store experience. The other interesting cyberspace approach by Minotti is how it approaches the System of Intelligence needs of its high-end clients. For this, they actually allow designers and architects to download and use its CAD models - true to its target market client needs. In the public or commercial space, it even host or co-host private launch events. The events are usually for target groups such as actors, architects, art collectors, fashionistas, business leaders, etc.
Space Shifting Customers
Retailers needs ensure that their target clients are not in the mode of space shifting whilst visiting any of the space that they are operating in. To do so, the retail formats needs to have the systemic feature and format that attracts and keeps them engaged.
Minotti & Ikea Challenges with R.3.M.A.G.I.C.S
IoT allows the passive and structural assets to become active assets. However, this activation requires careful planning and brand alignment. Since Ikea stands for "affordable contemporary design household goods", Ikea should focus on using the R.3.M.A.G.I.C.S to:
Using a combination of StAF and R3MAGICS, this blog post provides architecture analysis of the trend and major players in the retail market. R.3.M.A.G.I.C.S is short for Robotics, 3D Printing, Mobility, Analytics, Gamification, IoT, Cloud and Social platform. It encapsulates the key elements that will change the social-economic fabric in the coming years. StAF is short for Strategy-driven Architecture Framework.