In the film ‘You’ve Got Mail’, Kathleen Kelly (Meg Ryan) runs a children’s bookshop in Manhattan. Joe Fox (Tom Hanks) opens his Fox Books superstore just around the corner.

It’s the mid 1990’s and the internet is fresh. The characters meet in an on-line chat room and fall in love, whilst unknowingly battling each other in real life. It’s a beautifully written film (thanks Nora and Delia Ephron).

Fox Books was modelled on Borders, the book superstore. Borders created a new type of space for the time.  There was a lot of stock. You could read any book or magazine there, while drinking coffee. There wasn’t much pressure to buy. It worked well for a few years. Borders stores popped up in cities all over the world.

But neither Borders, nor the fictional Fox Books, really understood the implications of the internet. In 2011 Borders declared bankruptcy in the US and held a fire sale to sell everything from its shops, just as Kathleen Kelly had been forced to do in the film.

Kathleen Kelly fell victim to the book superstore with its discounts, range and coffee.

Borders fell victim to Amazon with its discounts, range, algorithms, ease of purchase and delivery.

For many years bookstores have been in decline. Those that continue have embraced on-line sales or cater to a smaller, discerning market.

So it’s surprising to discover that Amazon, the ‘destroyer’ of the traditional bookstore, has established its own ‘bricks and mortar’ store in Seattle.

We’re in a topsy-turvy era. Our assumptions about how the ‘digital economy’ will play out may be wrong.

The Apple Store

The great example of a company moving into ‘bricks and mortar’ retail is, of course, Apple.

In 2001, Apple launched its first branded store in the US. In 2004, the flagship London store opened on Regent Street. Then, as now, retail stores were struggling in the face of on-line competition. Apple’s board was skeptical.

Yet the model has proved to be ridiculously successful. Apple’s Regent Street store is the most successful shop in London, if measured by turnover per square foot. According to Fortune, Apple is the most profitable retail store in the world.

Apple transformed the retail experience. Stores are designed like an art gallery. There’s a buzzy feel.  People can touch, feel and play with the products.  Some stores are so relaxed that a rap artist could make repeated visits to record an album. In another store a person wrote a book.

Groups gather for Apple’s free training and workshops.   The Genius Bar helps to troubleshoot problems.

In some ways Apple Stores evoke the spirit of Borders without the cappuccinos.

This could ring alarm bells. Might its model also be disrupted?

Apple Stores as community centres

In September, 2015 Fortune profiled Angela Ahrendts, Senior VP for Retail and On-Line, who joined Apple in 2014 having been CEO of Burberry.

Both she and Tim Cook were vague on specifics but confirmed that future plans for the stores involved far greater connection with the community.

……Apple has always intended for each of [the stores] to be a community center; now Cook and Ahrendts want them to be the community center……. “In my mind,” Ahrendts says, store leaders “are the mayors of their community.”….

What might Apple Stores as the community centre mean for its operating model? Both Cook and Ahrendt mention coding lessons for women and minorities (as the US refers to diverse cultural groups). This may be laudable but it seems too small an aim.

According to Wikipedia newer stores offer ‘The Studio’ where you can meet with a ‘creative’ to help with your film project,  music composition or to organise your photo album.

It’s hard to find evidence beyond Wikipedia that ‘The Studio’ exists. Perhaps the reference is out of date. Or you may have one in your local store.

If we start to join the dots around Apple’s new product categories, there is a lot of potential. As we now know, Apple is creating platforms for the home, the car and most significantly, for health.

Surely Apple will want you to touch, feel and experience the potential of these platforms?

Perhaps the Genius Bar will include medical experts or home designers. Workshops could include quantifying your health or using health apps in emergency situations.

Perhaps the potential is so out there, it’s still hard to imagine.

What if Apple stores became hubs for education, connection and creativity? Could this start to approach a ‘community centre’ for the 21st century?

Is the city now key?

As cities continue to grow, there’s huge interest in cities as places that spark innovation and experimentation. Some companies and foundations have ‘pivoted’ toward the city as preferred areas of focus (such as IBM and Rockefeller). Other have been created to focus on cities (Bloomberg Philanthropies ).

Cities offer huge scope for finding new forms of value, through tackling pressing human problems and fuelling new desires.

Companies such as Cisco see the city as the central platform for the Internet of Things (IOT).  Cisco estimates IOT as a $19 trillion opportunity over the next ten years.

For some companies the city could be a new frontier for growth.  It can help create new forms of value through combining ‘big data’, networks, sensors and talent intelligently in physical locations.

Perhaps the future will be a return to the past – but with a 21st century twist. Perhaps we’ll see a shift of activity beyond on-line connectivity, to the high-street.

Tesla- the shop with no stock

Like Apple, Tesla stores are positioned as ‘galleries’. The car on display is the ‘art installation’. For Tesla their ‘shopfront’, in high traffic shopping centres, is ‘an educational showroom where no cars are sold’.

Tesla stores may signal an era where brands prefer you to buy on-line. There is no need for stock. Drones can provide quick delivery.  Losing the constant back and forth of delivery trucks reduces wear and tear on city infrastructure.

In this era the shopfront becomes a relationship builder for the brand rather than a place for commercial transaction. It’s a place for people to connect.

Orchestrating Innovation

If companies don’t use stores to sell products, but to connect and to innovate with their customers, could ‘virtual’ companies like Facebook or even LinkedIn benefit from physical centres in cities?

One of the tenets of innovation is that place matters. People like to be around other people. That’s why cities exist and why some cities thrive while other decline.  Cities compete for people.

Companies need to explore new territory if they are to grow.

The idea of Facebook or Alphabet creating a physical, customer oriented  presence in the city, seems unlikely.

But what if our ideas of how the digital economy will play out are wrong?

Could the city be new territory to conquer?

Imagine if Alphabet (or Google) turned their ‘collaborative workplace’ design aesthetic into fun, creative centres in cities. It already does this in a few centres. Could this disrupt universities? Power start-up cultures? Access and mobilise talent? Lead to tangible and intangible innovation?

Alphabet (Google) already has a presence in city innovation through its Sidewalk Labs. It’s still a small operation but with a potentially large ambition.

Imagine LinkedIn creating its own innovation hub and co-working spaces. In the creative era freelancers are growing, major companies are declining. LinkedIn could be a super networker – applying its data cleverly to help people connect in real places around real challenges.

It could orchestrate innovation.

Facebook’s huge reach could supercharge social hubs. Occulus could design virtual reality centres for innovation.  Instagram could exhibit its ‘rock star’ level contributors and curate major events.

So what is Amazon doing?

So reports that Amazon Books is just a regular bookstore, albeit showcasing stock with high reader ratings, seems strangely disconcerting.

Reviews of the store are lukewarm.

The move to bricks and mortar selling is less surprising than the seeming lack of innovation around the look, feel and offer of the bookstore.

Little seems to be made of the vast amount of information they have to work with.  That is apart from the stock representing books rated at 4.8 and above by readers.

Surely there’s a bigger idea at play than just creating a network of Amazon Books stores across the world?

Apple Stores demonstrate that shops and the retail experience is not dead. It just needs to be reinvented.

Is Amazon just creating a bookstore?

What might creative people value?

In ‘You’ve Got Mail’, after Kathleen Kelly’s business is destroyed she turns to writing a children’s book, finally having the time to indulge her own creativity.

Of course she does this, as writers have always done, in isolation.

But if she was in our era, not the 1990s, shouldn’t there be far more support and inspiration available for her in her city?

What if Amazon Books offered her access to expert advice, a hand picked book group or specialist knowledge of the market?

Or Apple’s ‘creativity concierge’ helped her turn her book idea into a film project. She could have been inspired by her local Facebook centre. Or been guided in her networking through her local LinkedIn hub.

In any instance, her success as a writer may have helped her support Joe Fox when Fox Books finally went under. Then he too may have started to develop his creative potential.

Is Amazon Books a throwback to the past? Or might it be a first step into the future?

I would welcome your thoughts and ideas

 

 

 

 

 

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