The flagship store of the future will be nothing like the industry has seen before

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The flagship store of the future will be nothing like the industry has seen before

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Business Insider/Jessica Tyler

Nike's new flagship store in New York.

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  • The flagship store as we know it is changing.
  • Experts say that large flagship stores that do not offer exciting and engaging experiences are no longer effective marketing tools for brands.
  • Here's how the flagship store will likely change in the future.

In today's shopping environment, no store is safe, not even a flagship.

These stores, which are typically large-format and located in expensive areas of cities, have in some cases become costly burdens for retailers who have failed to innovate.

In a recent earnings call, Gap Inc. CEO Art Peck said that the company would be closing hundreds of its stores this year, including flagship locations. It kicked off this effort at the end of 2018, closing its former New York flagship on Fifth Avenue.

Read more: Old Navy is one of the most successful stores in retail right now - but Gap's struggles are raining on its parade

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"Many brands no longer find that having hundreds of thousands of square feet, in high-rent districts, is the best impression they can give customers of their brand," Maya Mikhailov, chief marketing officer and cofounder of GPShopper, told Business Insider. "Today online and mobile shopping is so much more accessible, consumers easily have the majority of brand products available at the tap of a screen."

Because of this, we are seeing major changes in how some retailers are approaching their flagships. Legacy brands such as Nike, Lululemon, and Nordstrom are taking note of their digital competitors who are entering the brick-and-mortar space to create more innovative and engaging flagship stores.

Here's how we can expect to see flagship stores changing in the future:

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Smaller formats

Smaller formats

Large square footage is no longer a prerequisite for a flagship and because of this, we are seeing a push toward smaller spaces that can be just as impactful, Mikhailov said.

Digitally native brands such as Allbirds, Glossier, and Casper are leading the way here and opening smaller locations that "exude their brand's essence every time a consumer steps through the door," she said.

Read more:Glossier, the wildly popular startup that's raised $86 million in its mission to revolutionize makeup and skin-care, just opened its first flagship store. Here's what it's like to shop there.

Less inventory

Less inventory

A flagship store that is simply a larger version of its standard store — but with more inventory — doesn't cut it anymore. Customers are increasingly favoring a more curated shopping experience.

Brands such as Bonobos and Everlane have created demand for this "less is more" shopping experience with their so-called guideshop stores that stock a limited amount of inventory.

Legacy brands are taking notice of this. In a recent interview with Business Insider, H&M's US president Martino Pessina said the company is well aware of the downsides of overdoing it on inventory.

"If you treat it just like a normal store but bigger, it becomes really overwhelming," he said. "We need to find ways to fill the stores creatively and not just with garments."

Read more: H&M's US president reveals the retailer's plan for the future — and it includes a lot less discounting

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Places to immerse yourself in the brand's personality

Places to immerse yourself in the brand's personality

The purpose of a flagship store has traditionally been to promote the brand image and tell a story, and this hasn't changed.

"Flagship stores bring a brand's true personality to life," Jaime Bettencourt, SVP of business development at Mood Media, told Business Insider. "They not only reach and connect with their customers at the moment they are shopping, but they also have a halo effect on the entire brand."

Brands such as Glossier and Lively are finding innovative ways to tell their brand's story and educate the customers about the product. Lively, for example, offers customers the chance to attend events and talks in the store.

"It's bringing marketing and retailing together," CEO Michelle Cordeiro Grant told Business Insider during a recent interview. The company wants shoppers to come in, experience the product, and spread the word on social media.

Read more: A company that's taking on Victoria's Secret with $35 bras just opened its first store. Here's what it's like to shop there.

In-store services

In-store services

Many retailers are offering extra in-store services to give customers more reasons to visit the store. These also help to build a brand's image.

Last year, Nordstrom opened its new men's-only flagship store in New York. This micro-department store offers in-house tailoring and shoe-shining services, and it has a restaurant and bar.

Read more: Nordstrom just opened its first store just for men — here's what it's like to shop there

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An omnichannel experience

An omnichannel experience

Flagship stores should showcase the retailer's most advanced technological services, combining all aspects of the in-store and online shopping experience, experts say.

"Nike is doing an amazing job of this," Mikhailov said. The brand's new flagship store encourages customers to engage with the brand by offering enhanced services and store experiences if they use the app.

"This is the future of relevant flagship spaces," she said.

Read more: Take a look around Nike's enormous new flagship store in New York City, complete with the world's largest for-sale collection of Nike shoes

Constantly changing

Constantly changing

Digitally native retailers, which have more leeway to test and trial new store concepts, are reminding us that stores need to continue to evolve to stay relevant.

"There used to be this idea that a retailer would spend thousands of dollars on a flagship store and then it is done forever. Today you're going to see a lot of continuous iteration cycles," Casper's cofounder and chief operating officer, Neil Parikh, told Business Insider last year at the opening of its first store in New York.

Read more:Wildly popular mattress-in-a-box startup Casper is opening 200 stores across America. Here's what it's like to shop there.

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