Inside McKinsey's innovative in-store retail experience in the US

15 November 2019 Consultancy.asia

Global management consultancy McKinsey & Company recently opened a physical retail shop in the US, stocked with the latest in in-store shopping innovations.  

China’s annual online shopping frenzy – Singles’ Day on the 11th of November – this year notched more than $38 billion in retail sales in just a single day, which was in fact below expectations according to Alibaba founder Jack Ma – apparently due to some pesky warm weather and the event falling on a school night; “We hope that in the future the country will give everyone a half-day off,” Ma said in the wash-up.

Now into its eleventh year, Singles Day continues to grow at a staggering rate, more than doubling its $17.8 billion take from just three years ago, which was more than double the figure from two years prior. Taken alone, this single annual event might be enough to conclude that the days of bricks n’ mortar retail are numbered – and that’s before taking into account that online spending already accounts for around 15 percent of retail in the biggest emerging markets.

But the world’s leading management consultancy doesn’t think so – going so far as to open its own off-line store. In September, McKinsey & Company teamed up with Mall of America (the largest retail and entertainment center in North America, located in Bloomington, Minnesota) and a number of brands to launch Modern Retail Collective – a fully-operating shopping space showcasing the latest in new and emerging retail innovations.

“Stores are not going away,” declares McKinsey partner Praveen Adhi, who leads the consultancy’s retail operations business in the Americas – and, notably, formerly headed the advanced analytics activities for the practice. “But they have to evolve. There is a tremendous opportunity at the intersection of technology and analytics to transform the in-store experience for the customer, while making a step change improvement in profitability.”

Doubling as an innovation test-bed of sorts, the Collective shop provides retailers a space to see and measure how customers interact with in-store technological innovations; an arrangement serving both brands and consumers, the latter who according to McKinsey’s research still desire a tangible shopping experience. Now, the consultancy has opened the doors a little wider, with the firm’s McKinsey Blog taking readers on a brief guided tour.

“Direct-to consumer-brands are increasingly choosing to create physical environments to drive awareness and sales,” states McKinsey partner Tiffany Burns, head of its retail-stores work in North America. “The beauty of the Collective is that it offers retailers the ability to experiment with little risk or disruption to their own stores and operations. It’s a flexible environment, where they can work with new technology and learn what resonates with customers.”

A new crop of brands will be featured in the Collective every four months together with fresh use cases, with the store presently looking into product discovery and how technology can help in-store customers discover new products and access the same level of information they would online, effectively blending the best of both worlds. “We’re prioritising topics that retailers say are most top of mind for them,” says senior McKinsey partner Jennifer Schmidt.

One example is through interactive mobile hot-spots, which don’t require the download of an app. Customers can simply wave their phones near a product of interest and additional product information will appear on their screen. “Nothing takes the place of physically touching and walking out with a product,” concludes McKinsey’s Gerry Hough. “And that’s why we made a very purposeful decision to offer a mix of physically purchasable products along with additional digital options.”