Out of the Box Retail In a Box

With 6,407 people per km², Hong Kong has the 3^rd highest population density in the world. For them, space is always an issue, even when it comes to retail. Though there are many large shopping malls located across the country, retail stores can also be found in shopping complexes filled with little boutiques the size of an Ivey study room. When retail space is so limited, much of the strategic science of retail is thrown out the window; rather the focus is on the optimization of space.

In the recent year, there has been a growing popularization of a unique retail format known as “display case stores.” Inside, these small stores house display cases stacked from floor to ceiling, covering each of the walls. Each of these display cases are individually rented out to those who want to put goods up for sale. The idea is to optimize the space and fill it with as much product as possible. Consumers can enter the boutique and browse all of the different display cases for items available for sale. This type of retail format has attracted many young entrepreneurs because the cost of renting a display case is low and any overhead or management expenses are minimal. Store owners or hired sales clerks manage the transactions for all of the display cases, eliminating the cost for renters to pay wages for their own employees.

However, the “display case store” format seems to follow some faux-pas of retail, yet have still achieved great success. For example, the problems Sears face today are partly because consumers don’t understand what the retailer stands for. There appears to be no focus or no specific positioning in who they are targeting nor what their specialty or competitive advantage is. Similarly, these “display case stores” have no positioning or specialty. They can sell anything to everything depending on what the renters decide to place in their box. Therefore, there may be a display case selling Hello Kitty collectibles next to one that sells cell phone accessories. Sometimes, even within one case, you will see differing products. However, this variety also makes up their RVP of selection, which creates the attraction for consumers. Customers are attracted by the broad selection of items available despite the incoherence. It creates the feeling of anticipation for customers, not knowing what you will get or what you will find. Each display case is different; each “display case store” is different.

There is also no particular organization in the store layout. Store management cannot strategize by placing certain attraction-grabbing items at the front and necessities at the back in order to draw a customer throughout the store. Strategic layout planning is almost impossible because each vendor is able to choose which display case they want and what products to place inside of the box.

Despite the incoherence and the lack of strategic store layouts, consumers are still flooding into “display case stores” and more are opening up. The question is whether not following these rules of retail will be sustainable or is it a trend that will go away once the novelty wears off.

Link: Display Case Store Popular in Hangzhou