If Apple operated a cinema

IF APPLE OPERATED A CINEMA...

Just what would a cinema designed by Apple look like? How would a multiplex by McDonald’s feel? These questions were tackled in a workshop by Prill Brewin and Patrick von Sychowski at the most recent UNIC Retail seminar.

IT’S A PARLOUR GAME that people in the cinema business like to play: “What would a cinema look like if it was operated by ‘X’”, where X is anyone from Apple to Zara. What underpins this question is always the desire tounderstand what leading retailers are doing right and how cinemas could learn from them. We selected six very different retail brands and studied what made them unique and a success. We then presented these findings to several teams of exhibitors to decide what aspects could help create a better cinema of the future. Here is a summary of that research and the workshop findings.

1 Amazon

THE WORLD’S LARGEST ONLINE RETAILER doesn’t just build loyalty through its Prime subscription, but has moved into physical retail with Whole Foods and the cashier-less Amazon Go. It was even rumoured to be interesting in buying the Landmark chain to go with its Amazon Studios film and TV production. Amazon Warehouse fulfils orders rapidly using a combination of humans and robots, but it recently increased pay to above $15/£10.50 per hour — above minimum wage. At Amazon Go you scan your Amazon app upon entering the store, grab anything off the shelf, which cameras and sensors record. Walk out of the store and payment is automatic; Amazon’s 4-star Store in NY’s Soho district features a ‘random’ selection of goods, with 4-star or higher customer ranking. Exceptions are made for “new,” or “top-selling,” goods regardless of rating, giving a similar experience to Amazon’s website. It features lots of Amazon own-brand goods, with ‘Prime Price’ only available to Prime Members.

Digital price-tags sync with online prices. Amazon [physical!] Bookstores in Seattle and Manhattan have a curated selection of books, based on online reviews. Wholefoods cross-sells Amazon devices (Alexa, etc.), with special deals for Prime members.

THE I-EVERYTHING MAKER has the highest spend-per-square-metre of any retailer in the world and is a by-word for pricey design excellence and quality. But how would its iCinema look? Apple stores generate 28% of Apple’s total $230bn annual sales. Apple Retail is not a channel to market but as “Apple’s largest product”, where “the hardware is the architecture of the store, the software is what happens inside the store.”

“Today At Apple”, a program launched in May 2017, offers interactive classes at stores worldwide. “Our whole concept was: How does the store become more like a town square? …almost a community hub,” said Angela Ahrendts, head of retail at Apple until February this year. No traditional check-out, instead staff double as cashiers and order fulfillment. Store associates are hired for empathy, not sales skills and staff are instructed to “enrich people’s lives by telling [them] something they don’t know.” There is a philosophy, too: a “store” needs to be a storehouse of engaging experiences, ideas and interactions, with a dose of humanity. The customers’ first impression is important, but so is the feeling they have when they leave. So Apple trains on both the hellos and goodbyes to ensure there are good memories and people look forward to returning.

3 Juttu

THE BELGIAN ETHICAL fashion store launched in 2015 and might not (yet) be a global name, but it is popular with Millennials. “All our brands have a story to tell, a ‘Juttu’” (‘story’ or ‘anecdote’ in Finnish).

The stores are designed to do slow shopping in with products shown by style, not brand. Juttu describes the experience of visiting as like ‘flipping through a magazine’. You can also wander over to the food corner, ‘Jummy’, for organic food.

Juttu puts creative designers in the spotlight every season. They have the chance to experiment with their own pop-up space in the store. Juttu fans can devour letters and pixels in JUTTUgram, a genuine newspaper featuring news, styling tips, fun facts, op-eds, interviews with designers, and more. The #ikkoopbelgisch (I Buy Belgian) campaign encourages consumers to discover local brands and show some national pride;

4 Ikea

NO NEED TO SELF-ASSEMBLE your own Löxury recliner, because these days a lot of the ‘Curator of People’s Lifestyles’ focus is on the eating experience and sustainability. Did you know that Ikea is one of the top 10 global food retailers?

The concept is simple: ‘force’ customers to walk along a path past all goods/sections, the idea being small buys (affordability) and long stays. Play areas where parents can leave children help.

Ikea’s Space10 lab in Copenhagen invites a range of people from the worlds of art, design, and technology onto different research projects that result in a range of prototypes, exhibitions, events and workshops. Ideas from the innovation lab include: tomorrow’s meatball, urban farming, recycling/upcycling, office in motion, energy harvesting furniture, air-improving windows.

IKEA replaces a third of its product lines each year. ‘Designing beautiful but expensive products is easy, whereas designing beautiful products that are inexpensive and functional is a huge challenge.’ Constantly cutting the costs of its products is key: sales prices were reduced from 1999 to 2009 by around 2% each year. Average spend is almost the same in every country in which it is present and the best selling lines of products are the same everywhere (viz. Billy bookcase).

CEO Anders Dalvig says that: “customers must be even more integrated in the sales process, doing more themselves while having the perception of an improved service level.” Ikea leverages use of mobile technology to alleviate customer pain points rather than simply creating something “cool”.

In 2006, Ikea’s KPIs showed that the difference between the best and worst performing stores was more than 100% — so their goal is to try to move all stores up to the level of the best 25%;

Ikea invests in wind farms in Scotland (catering for 30% of UK stores’ electricity needs), it sources certified wood from 48 countries, and it launched Ikea Recovery in 2002 to re-use old furniture. By 2020 IKEA will run 100% on renewable electricity. It sold one million vegan hot dogs in two months (USD $0.75 each) — 15% of its meatballs are veggie.

5 Lidl and Aldi

THE GERMAN LOW COST food retailer has taken the UK and US by storm, but it is far more sophisticated than just “pile ‘em high and sell ‘em cheap”.

Lidl scores highly in customer satisfaction in the UK despite its low prices, rivalling Waitrose (luxury) and Iceland (frozen food). The sensory reality of Lidl’s entrance is that bakery, produce and flowers are all within 10 feet of the shopper. At Lidl, there is no thinking about brands, BOGOs (buy-one-get-one[-free]), deals, price comps, coupons, sudden endcap promotions or in-aisle shopper marketing. Instead Lidl shoppers love the combination of low prices, high-quality items and even limited choices, saying they find it easier to shop there than at a typical store.

Lidl uses assortment, merchandising and design to look more like a conventional supermarket than a discounter. Yet on a market basket comparison, Lidl comes up 23% less expensive on private label than even Walmart. Lidl’s premise is that once consumers realised the quality of their fare and unbeatable prices, they would give up old brand loyalties.

WIGIG (when it’s gone it’s gone) stock-keeping principles or ‘revolving’ familiar brands and goods ensures Lidl encourages browsing. It uses a combination of aisles (familiar to everyone), pallets (suggesting bargain prices ‘straight out of a warehouse’), and waist-high displays (like streetmarket displays. Yet it only has 1/10th of the selection of comparable size regular food stores. Lidl keep things moving with intriguing product and display changes supported by a weekly brochure highlighting upcoming seasonal offers based on scarcity (‘get it now or it’s gone’). High rotation on limited shelf space creates the potential to surprise shoppers on every trip. Lidl create a sense of urgency and newness and delight and discovery that keeps shoppers in again and again and again.

Lidl and Aldi are multi-capable retailers who can convey value and relevance to multiple shopper groups. Lidl (and Aldi) overcame barriers to entry in new markets by establishing themselves rapidly in second-tier sites, being ‘good enough’ at the start, and building from the basics.

6 McDonalds

THESE DAYS IT IS an automated kiosk asking customers if they would like fries with that. The restaurant chain that is a byword for fast food and quick service is reinventing the process and the place whereby people come to eat their Big (Vegan) Mac — all from sustainable packaging, of course

Under the terms of a McDonald’s franchise, McDonald’s owns or leases the site and the restaurant building. The franchisee buys the fittings, the equipment and the right to operate the franchise for 20 years. The franchisees are at the heart of the business, too. Much of McDonald’s innovations came from individual franchises responding to customer demands: the Big Mac, Egg McMuffin, Filet-o-Fish, Hot Apple Pie, McFlurry, Drive-thru’s and Playlands. McDonald’s started 2018 by launching its $1, $2, and $3 menu aimed toward its value-conscious customers. Catering to as many people as possible is critical: in December 2017 the company launched its vegan burger in Sweden and Finland after successful trials, to ensure that all its customers have a choice.

McDonald’s is currently revamping its stores to create “Experience Of The Future” restaurants, which will have self-serve kiosks and table service. McDonald’s mobile ordering and payment system continues to expand, and the company uses the data captured via this platform for personalised marketing and customisations.

In 2018 McDonalds launched its New Global Restaurant concept that serves everything from its different franchises all over the world: in Austria, they serve warm curried noodles, in China, a purple taro root pie, in Japan, a golden, panko-crusted Ebi shrimp burger: thus leveraging its global food footprint to create an Instagrammable experience.

McCafe’s major focus is on specialty coffee that introduces a quality drink at a low price point (with a full-time barista pulling espresso shots to order). Central to the concept is de-mystification of the coffee hype of some of the larger coffee chains with viral advert. McDonalds is also working with Starbucks to re-think the disposable paper cup. By 2025, all packaging on customer products will come from “renewable or recycled sources,” or sources certified by environmental organisations. McDonalds will make recycling an option at all locations globally by 2025.

Just like cinemas, McDonalds has a challenge to get Millennials and Gen X:ers to come to its restaurants. Visits to McDonald’s by people between 19 and 21 years old have fallen by 13% in recent years. This is driving the need to offer healthy, ethical food options.

So what can cinemas take from all of these findings? Well, there’s a lot to learn, but the reality is that the ‘Cinema of the Future’ can learn from multiple elements. It could be a cashier-less experience [as per Amazon Go], but with staff thanking you as you leave [à la Apple], with a popular vegan hot dog offering [think Ikea] from a local pop-up vendor [just like Juttu], but only on a short-term basis [like it is in Lidl] as something different will come along next month — although there’s always coffee to go [there’s always McDonalds…].