Can Brick and Mortar Stores Survive by Selling Experiences?

For 14 years, Philip Chong’s building cycled through a series of shops.

No single retailer could afford the 12,000 square foot historical landmark building’s rent. After the fashion store Necessary Objects closed, Chong had to try something different.

For most brick and mortar retailers, “something different” means shuttering the windows and closing the doors. According to a Credit Suisse report, 8,600 retail stores will close across the country in 2017. That’s 30 percent more than in 2008, the worst year on record.

But despite the grim numbers, there’s evidence that retail isn’t dead—it’s just evolving.

“People want spaces where they can touch, see and smell what they’re about to buy, as well as discover things you just can’t find online,” Canal Street Market Creative Director Dasha Faires says. “Brick and mortar spaces have to evolve beyond the transactional shipping experience and into places with soul, where people come together to connect.”

New York City real estate developers are turning large retail spaces into mixed use marketplaces. The long-standing Chelsea Market has been followed by Gotham West in midtown, Gansevoort Market in Meatpacking, Smorgasburg in Williamsburg and now Chong’s Canal Street Market in SoHo.

Faires drew on her fashion industry experience in re-thinking the shopping experience. She describes the tightly curated commercial space as “experiential retail” that’s “meant to intrigue customers and cultivate a sense of discovery.”

Traditionally, cities and suburbs zone large swathes of real estate for retailers. They believe large department stores will make cities more attractive to working and middle-class residents. But that formula isn’t working. The creative class doesn’t want to spend their Saturday afternoons walking around a mall. They want variety. They seek settings where they can choose between relaxing with coffee, perusing artisanal items or listening to live music.

Featuring 24 artisanal vendors, a specialty food hall, free wi-fi and a rotating artist’s residency, Canal Street Market embodies the new way to shop. The marketplace opened in December of 2016 and was followed in May 2017 by the food hall. Already, Canal Street Market is a destination for hip millennials of the Instagram set, where the experience-hungry can snap novelties like pour over miso, unique pottery and bonsai trees. Located in the heart of Chinatown, many of the vendors reflect the neighborhood’s Asian roots, adding a layer cultural texture to the environment.

In five short months, Faires’ small team mapped out a floor plan, settled on a minimalist aesthetic with feng shui influences and began to pitch to vendors.

“Selling vendors on something that didn’t exist yet was the hardest part,” Faires says, but when the space opened in December, other retailers soon came knocking. “Now we can be picky—for every 10 applicants, only one generally fits our aesthetic.”

The space is still a work in progress. As they iron out operational issues, they found new ways to shape the overall experience. In the back of the space, West Elm sponsors a Passerbuys Lounge, where shoppers are invited to take a load off, charge their phones and connect to wifi. It wasn’t conceived as a co-working space, but Faires sees both vendors and shoppers alike using the space to take calls, host meetings and get work done.

“Now, we’re looking at other ways we can fulfill this need – including bringing in an artist like Joyce Ha, who designs lounge chairs that are actually workspaces,” she says.

Faires wants to offer a 360-degree experience where everything aligns with the Canal Street Market ecosystem. It’s the kind of experience that’s impossible for e-commerce.

“You know, I love Amazon. I’m a mom and being able to order just about anything from my phone is a huge relief,” she says. “E-commerce clearly isn’t going anywhere, but I think there will be a strong movement in the opposite direction.”