Reinventing Retail in Seattle

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Last December, when Starbucks opened its extravagant roastery and tasting room on Capitol Hill, complete with two roasters and a towering copper silo that one writer described as a “shrine to craft maximalism,” the coffee giant may have signaled an important new trend.

Nordstrom’s flagship store in downtown Seattle is now in the process of completing a substantial makeover inspired by the Galeries Lafayette in Paris, with a goal of making the store an “international destination.” Outdoor outfitter C.C. Filson Co., which got its start with the Yukon Gold Rush more than 100 years ago, has transformed its old Star Manufacturing Co. building in Seattle’s SoDo neighborhood into a showcase for its rugged, high-end brand.

Even as online sales continues to snatch a growing share of total consumer spending, retailers are rediscovering the potential of brick-and-mortar stores to attach to the shopping experience a “wow” factor that websites simply can’t match, even with same-day delivery.

While major international cities like Paris, New York and Shanghai have long attracted flashy flagship stores, such elaborate paeans to a consumer brand have been rare in Seattle. Aside from the 1996 opening of the REI flagship store, with its glass-enclosed climbing tower and outdoor bike paths, the idea of tourist retail never took off here.

The willingness of retailers to invest in destination stores — the Starbucks Roastery is rumored to have cost $20 million — is not only a recognition among retailers that they must upgrade the consumer experience if they are to compete with online retailers. It is also a sign of the value of Seattle’s emerging position as a global city that annually attracts nearly 20 million visitors who spend billions of dollars here.

If it spreads, the trend toward prominent flagship stores could help strengthen local brands while attracting more tourists in search of new things to do in Seattle. One of the more surprising announcements on this score was Filson’s decision earlier this year to vastly expand its flagship presence in Seattle. The former retail operation on Fourth Avenue South has been moved to Filson’s headquarters building on First Avenue South, which already features large windows looking onto a ground-floor manufacturing space where it makes 40 styles and sizes of distinctive bags and luggage.

The remodel features 6,000 square feet of retail space on the second floor, above the manufacturing operation, where visitors will get to try on the company’s high-end jackets, shirts, watches and other rugged gear in a space 33 percent bigger than the former location.

A wood column that will take center stage in the store is being carved by Northwest wood sculptor Aleph Geddis. “We see this as the retail take on the farm-to-table movement,” says Gray Madden, Filson’s president. “The goal is to give our customers a sense of history, show them what our products look like, feel like. While we have robust wholesale partners and an immersive website, we believe [hands-on] retail is how we best engage our consumers.”

Maria Royer, principal with Real Retail, a Seattle boutique real estate services firm focused on specialty retail, says consumers are looking for shopping experiences with a “wow factor.” A distinctive flagship store, she adds, gives a retailer that opportunity.

“These stores provide a unique way to show off products and interact with customers who want to be entertained by the in-store experience,” she explains. “Nike, Apple and Starbucks are all doing it because they’ve learned they win higher brand awareness and higher sales velocity from the store environment. The spaces don’t have to be big, just very interesting.”

Then again, going big can accomplish a lot if done correctly. Customer traffic is exceeding projections at Starbucks’ 18,000-square-foot Reserve Roastery and Tasting Room, barely a mile from downtown Seattle at 1124 Pike St. on lower Capitol Hill. The roastery attracts coffee aficionados, to be sure, but also hordes of tourists who pile off buses to enjoy the coffee roasting, processing, brewing and tasting experience. May Zhang who owns Seattle May Travel, a Renton-based tour company, says the thousands of Chinese her firm guides through the region are always frustrated by the crowds at the Starbucks at Pike Place Market and is thinking of putting the Roastery on her tour itinerary.

Starbucks executives have said the goal of the Roastery was to show the theater of coffee making, from when the green beans arrive and are loaded into the roaster to the presentation of perfectly brewed flights of tasters at the coffee bar. The drama helps bring the tourists while the designer furniture, the relaxing atmosphere, the great coffee and an adjacent Tom Douglas restaurant keep the locals coming back. Tripadvisor.com has given the roastery a five-star rating.

Nordstrom, meanwhile, is well into a massive multiyear remodel of its 10-story downtown Seattle flagship store. “Creating more of a destination experience makes a lot of sense,” Jamie Nordstrom, Nordstrom’s president of stores, told reporters this past summer. The goal of the project, the biggest in company history is “creating an experience customers cannot find in Bellevue Square or Southcenter,” Nordstrom asserts.

The Seattle store remodel is to be completed next year and will be replicated at stores in Chicago and San Francisco.

One of the more effective purveyors of “wow” is the Capitol Hill men’s fashion boutique, Likelihood. Co-owner Aaron DelGuzzo says that to compete with the likes of Zappos and Nordstrom, “You have to be special. You have to offer something different.” That means showcasing special collections, including imports from Stockholm, in a store where the shoes are like sculptures on a “stadium” display and where almost every key feature — from the lamps to the cash wrap counter —re built by local craftsmen. The hexagonal light fixture, for example, were created by Seattle metal sculptor Troy Pillow.

“I took inspiration from stores all over the world,” says DelGuzzo. “I wanted something unique. There’s a trend toward shopping in local boutiques. Using artists from the community supports that.”

Industry experts say this personalized and experiential retail trend represents a recognition that retailers have to be much more compelling to compete with the ease of shopping online. Analysts at Traf-Sys, a retail research firm in Pittsburgh, Pennsylvania, say consumers are not going to brick and mortar stores for the prices or the selection; there are better options online.

“They’re coming for the experience,” a Traf-Sys report notes. “Changes in the culture have resulted in a shift in consumer expectations. Consumers don’t need to make the trip to a retail store. Retailers have to make them want to.”

The good news, Traf-sys argues, is that more than 80 percent of shoppers will pay up to 25 percent more for a better in-store customer experience. Without that exceptional experience, they may not return.

Real estate consultant Royer sees retailers working hard to reinvent the in-store shopping experience. “We went through a reset with the recession where retailers learned to deal with competition, learned a lot of lessons about inventory management and customer service,” Royer says. “Now the bar is being raised and reinvented using this idea of experiential retailing.”

Filson’s creative director, Alex Carleton, says his company’s headquarters and new flagship store will serve as a platform for the 118-year-old brand. “Everything about this space — the lighting, the sound, the displays, the hangers, the washrooms and sitting areas — will define and describe who we are,” he points out. “Our goal is to make sure we are as distinctive as possible and that we bring the same level of quality and integrity that we have in our products to this space.”

Filson expects to use the same elements in brick-and-mortar stores already operating in London, Minneapolis, New York City, Portland and San Francisco. 
Filson likes its flagship location just blocks from Safeco Field and Seattle’s Pioneer Square neighborhood. The area, once part of Seattle’s old industrial core, is gradually being transformed by new development. Similarly, Starbucks’ Roastery preserves the exterior of a nearly century-old building that once housed an auto dealership in a rapidly changing neighborhood.

“For Filson, it is all about our history, the quality of our American-made products, our fabrics and leathers,” Madden says. “It’s really important for consumers to touch and feel. We can build a relationship with people through our retail stores.”

And at Starbucks, Liz Muller, vice president of concept design, says, “Each [Roastery] visit will bring new discoveries while setting the standard for what customers can expect for the future of retail.”

And at Nordstrom, Jamie Nordstrom says, “We realize we should have higher ambitions. Seattle is a different city than it was 20 years ago.”
Indeed, for an industry beaten up by recession, tepid consumer spending and intense competition from online retailers, the new flagship concept seems to point the way forward with a formula at once basic but also disruptive in today’s hurry-up world: distinctive locations, authentic experiences and superior customer service.   

Let’s Get Physical
Retailers small and big find antidotes to the impersonal online experience.
Not all stores need to be dramatic. For Oiselle (pronounced wah-ZELL), it’s simply about having a physical presence.

The Seattle company’s minimalist, 630-square-foot store opened in July at University Village as a place to display its broad line of athletic clothes for women and give customers a sense of the brand and what it stands for. 

“We’ve had great success selling wholesale as well as through retail partners and online,” says CEO Sally Bergesen says. “Our annual revenue tops $10 million. But others can’t communicate the brand as you would when you own the shop from top to bottom.”

The new store allows Oiselle to have “real-time” conversations with customers, she says, and also tweak products and the store model. More Oiselle stores are anticipated, ideally in distinctive, high-traffic locations that might 
attract tourists.

“Bigger brands have gotten away from an authentic product,” says Bergesen of Oiselle’s running-apparel business, which began in 2007. “We have a brand that’s local to Seattle, different from what people might find elsewhere. University Village, with its mix of major players and smaller brands, is a great neighborhood for us.”

Even Amazon, the purported killer of bookstores, has opened — wait for it — an actual bookstore. The Amazon store in Seattle’s University Village, called Amazon Books, debuted in November, giving customers a chance to try out the company’s various electronic products and Amazon the opportunity “to integrate the benefits of offline and online book shopping.”

The fact that the ecommerce leviathan has entered into brick-and-mortar retail is a bit of a “wow” moment in the industry. Microsoft, meanwhile, has built more than 1,000 stores that have thus far been relatively simple and pragmatic. But it tried for the “wow” factor with its recently opened flagship store on Fifth Avenue in New York City. The company calls it “an experiential space … to further engage with our customers and partners in new and innovative ways.” 

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