Who said retail was dead? Reports of its demise have been greatly exaggerated. Data from the United States shows that retail footfall increased almost every month in the year to May 2024 compared to the previous 12 months. And the industry has refocused on the enduring value of stores as pillars of brand identity, source of inspiration, convenience and competitive pricing for customers.

The “halo” effect of the store is crucial to this upswing. Stores offer an unprecedented opportunity to legitimize the brand and build trust in the local community. One example is Birkenstock, which just opened its first dedicated store in Paris ahead of the Olympics. The space is designed not only for retail, but also as an “experience area” for community events and activities. And the brand has more such stores planned in the coming years as part of its planned expansion across Europe.

This willingness to rethink store concepts and shopping experiences is at the heart of modern retail strategies. For example, look at H&M’s new store in New York, which offers the brand’s first “pre-loved” experience with second-hand assortments. Likewise, H&M’s new concept store in Seoul features a range of digital innovations such as immersive 360-degree fitting rooms.

Reinventing the department store

Of course, it hasn’t always been smooth sailing. Department stores have faced challenges in recent years, but many are proving they can still attract customers by rethinking their value propositions.

Today’s most successful department stores have recognized that they need to offer their customers compelling reasons to visit. This could be the tactile experience of touching and feeling the products, a sense of exclusivity and personalization through “VIP-style” experiences, or the opportunity to draw on the expertise of in-store employees.

They also know that it is important to offer a balanced mix of established brands, up-and-coming labels and own brands at attractive prices. That is why they are increasingly offering start-up brands the opportunity to sell their products via in-store pop-up stores or digital marketplaces.

For example, Macy’s marketplace has allowed customers to shop from third-party sellers since 2022, while Nordstrom launched a similar service earlier this year. And Babies R Us plans to reopen a number of stores across the United States, many of them in Kohl’s department stores.

Redesign of the shopping center

We often hear that shopping malls are struggling too. And while huge out-of-town mall concepts are falling out of favour, a new generation of more locally connected mixed-use spaces have proven that shopping malls too can be successfully reinvented for a new era.

Look at Hudson Yards in New York. While this strikingly designed mixed-use space initially struggled to attract customers, especially during the pandemic, it has since transformed into a thriving retail, tourism and community hub. The key to its revival has been a flexible mix of luxury and affordable offerings, as well as a regularly refreshed range of amenities such as hair salons, cobblers, wine shops and day spas. As a result, Hudson Yards has become a key place for everyday shopping and socializing with locals.

Another example is Battersea Park in the UK. This mixed-use redevelopment of an iconic London landmark has tapped into its local catchment area and become a bustling shopping destination, thanks in part to its creative offering, which includes curated markets, M&S Food, sports and activities, and innovative experiences with brands such as Under Armour.

Riding the AI ​​wave in retail

One of the most powerful ways for stores to reinvent themselves is through the intelligent integration of new technologies. And there is hardly a better example than artificial intelligence, which offers potential applications across the entire retail value chain.

In fact, according to a recent Accenture report, up to 50% of all retail work hours could be transformed by the latest AI models in areas such as inventory management, demand forecasting and supply chain optimization – not to mention more effective personalization for customers. Not surprisingly, 93% of industry leaders plan to increase their investments over the next three to five years.

Real-world examples are becoming more common. Walmart, for example, uses AI-powered solutions to help customers find the best products tailored to very specific individual needs, such as “the best bread for peanut butter and jelly.” The company also now has an AI-powered My Assistant app for employees that helps simplify documentation, monitor competitor prices, and optimize inventory management.

And what about Carrefour? This leading French retailer now has an AI chatbot called Hopla that helps customers choose products based on their budget and dietary preferences, and suggests meal ideas and waste-reducing options. Carrefour also uses AI to create thousands of online product descriptions and streamline procurement tasks such as tender creation and bid analysis.

A bright future lies ahead

The big picture? Retail is strong and healthy. But it needs to be reinvented for a new generation of shoppers. That’s why leading brands are thinking creatively about store concepts, leveraging the latest retail technology and embracing localization.

This is evident everywhere, from the Kith store in Malibu adapting its streetwear range to the beach lifestyle, to the opening of more small stores at Whole Foods, to the way Wayfair’s new store in Chicago incorporates QR codes for seamless shopping.

By leveraging the best of the traditional store and incorporating innovative technologies and community connections, retailers can ensure that stores – and customers – have a bright future ahead.