How Samsung is planning its store strategy

Samsung is breaking out of Best Buy and opening its first permanent retail stores this Wednesday inside malls: The Americana at Brand in Los Angeles; Roosevelt Field on Long Island in Garden City, New York; and The Galleria in Houston.

YH Eom, president and CEO of Samsung Electronics America, said the company wants to build stores around a tech “playground” concept, where customers can chat with employees and try out smartphones, tablets, wearables, televisions and connected devices, with an emphasis on showing off applications of the technology through gaming and 4K VR activations. The store openings coincide with the launch of the Galaxy S10 smartphone.

Samsung has tested physical retail in the lead-up to the permanent store openings. Its store model has over the past couple of years included pop-ups called “Galaxy Studios” in Dallas, Los Angeles, Chicago, Washington, D.C., and Las Vegas; and it has rolled out store-within-stores at 1,400 Best Buy locations. In 2016, it opened Samsung 837, a brand marketing play in New York that didn’t sell products but offered interactive experiences, a gallery and an event space. The mall stores will keep the branding element of 837 with VR and tech displays, but unlike 837, customers will be able to buy products, chat with customer associates and get repairs done.

“[The new stores] keep the community hub, but it’s more of a scalable model. Samsung 837 is not a scalable model — that’s more about ‘larger than life’ experiences,” said Gabriela Baiter, founder of experiential retail incubator The Whereabout Studio. “They should have this revolving sense of discovery that’s completely missing from the Apple stores,” noting that while Apple stores are emphasizing product functionality, Samsung wants to take that further by helping them imagine use cases through in-store displays and interactions.

She added that Apple has been known for a practical “purist approach” to retail with the experience centered around efficiently delivering products and services. As customers become accustomed to experiential concepts in other retail stores, the Apple Store model is now starting to look a little dated.

But in rolling out VR and gaming displays, Samsung also runs the risk of relying on gimmicks.

“They have to blend theatrics with good user experience and functionality,” said Derek Fridman, chief design officer at Huge. “It’s more than just an Instagram moment; customers have to connect with a brand in a much deeper way.”

As a result, experiential, tech-focused stores are tools that should help brands connect with many audiences, including those customers who would have never considered buying the products, loyal customers drawn to emerging technologies, and those who are most concerned about utility. In developing experiential concepts, however, Samsung has to be attuned to evolving customer expectations around experience. Fridman said the “permanent” experience centers should retain the flexibility of a pop-up so the brand can break and rebuild exhibits quickly.

“You want to look at the store as a blank canvas to tell a narrative, from everything from fixtures to the technology to the hardware and logistics,” he said. “You don’t want to ‘hard code’ the space.”

As well, there’s the question of ROI and measurement. According to Baiter, being able to collect user feedback data to evolve product experiences should be a crucial goal. But expecting customers to convert after a one-off experiential activation is far from realistic.

“The practical application of VR and AR is to create value — if you don’t create value, it’s just a novelty,” said Brendan Witcher, principal analyst at Forrester. “We just don’t have time anymore to sit around and do novel things — the distinction between novel and sustainable is critical.”

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