Urban sociologist Ray
Oldenburg, in his 1989 book The Great Good Place, identifies the need of
human beings for informal public gathering places to relax and socialize. His
thesis is that most of us have three places in our lives that defines us; our
home, our work, and a “third place” where we can meet other people and unwind.
We are shaped and defined by our third place, whether it’s a pub, a local store,
or what has become the world’s most popular third place, Starbucks.
In his 1997 memoir
Pour Your Heart into It, Starbucks CEO Howard Schultz wrote that Starbucks
did not set out to become a third place. Most of their early stores were small
takeout locations with little or no seating. But as the chain expanded,
management soon realized that Starbucks was becoming a place for people to meet
with friends, have small business meetings, or strike up conversations with
other regulars. It had become a third place.
Shultz and his executive
team leveraged this phenomenon by building bigger stores, adding more seating,
and installing fireplaces and overstuffed chairs. They added music with in-store
sound systems and, sometimes, live performances. Music even evolved into an
entire new business for them. The term “third place” has become so identified
with Starbucks that many people believe Howard Schultz termed the phrase.
Today retailers and
other businesses strive to create their own third place. Many, like Barnes &
Noble and Border’s Books, have been quite successful. Others businesses have
mistakenly believed that if they add a coffee bar to the store they will have an
instant third place. It doesn’t work that way.
Locations that become
third places have some elements in commons. They are either free or relatively
inexpensive. They either serve or allow ready access to drinks and food. They
are easy to get to. They are places where a number of people regularly go on a
daily basis. They are places that feel welcoming and inviting because you know
that when you go there you are likely to see old friends or meet new ones. They
are places that impart a sense of community, whether you choose to participate
in that community or not.
I question why a
retailer would believe he/she can create a third place. Clearly Starbucks has
become the dominant third place in today’s society. Why not leverage that fact
and create a destination that smaller sub-groups will seek out and make a
gathering place; a place where people will come when they are looking for a
different experience than they find at their third place. Why not create a place
where like-minded people with similar interests can come together to share
experiences, gain knowledge, meet old and new friends, and spend money on this
common interest? Such a place can become a “fourth place.”
Many people consider the
internet to be a fourth place. It can be, but many people have multiple online
fourth places. Retailers will discover that a physical fourth place will create
a stronger sense of community and build up more loyalty from their customers
than a virtual place is able to do.
What is a fourth place?
It is a gathering place inside a store for customers who share a common interest
in the products and services the retailer sells. This differs from the third
place as a third place is a general gathering of the community as a whole. The
fourth place is targeted to a specific community or group. Customers come to the
fourth place to socialize, learn, and share experiences. The fourth place can
offer structured programs and activities or not. It can be a formal or informal
space. It can be an organized community or kept informal, at the discretion of
the retailer.
Prime examples of a
fourth place are the Apple stores. Apple owners aren’t just users, they’re Apple
fanatics and Apple stores have become their fourth place. They gather both
formally and informally inside the store. Informally, they regularly visit the
store to engage with the products, the staff, and each other. If you spend just
a few minutes in an Apple store you immediately feel the sense of community.
People from all walks of life interact, many of them people who would never
imagine relating outside the store. You’ll see a young man with spike hair and
tattoos talking with a housewife and an insurance salesman, all sharing their
passion for, and knowledge of, Apple products.
Apple customers also
gather formally in the store for workshops presented by Apple on iPods, iTunes
and Macs. Apple even offers a summer camp for customers between the ages of
eight and twelve.
One might ask which
comes first, the brand or the fourth place. With their passionate customer base,
Apple stores are a natural fourth place. The Apple stores are spacious and
designed to allow customers to interact with the product and their fellow
customers. The fourth place experience for Apple customers would have been much
different – or perhaps nonexistent - if Apple had designed and built a typical
crowded and cramped consumer electronics store.
Can retailers or brands
without the fanatical following of Apple create and benefit from a fourth place?
Yes, absolutely. For companies with a well known brand, a fourth place can build
a stronger connection between the brand and the customer, creating a multitude
of brand advocates in the marketplace. Retailers without a strong brand can use
a fourth place to build the brand itself as well as develop a loyal base of
customer and advocates.
Why don’t more retailers
develop fourth places? Most mistakenly believe that they are in the business of
selling products when they are really in the business of developing customers to
whom they can sell products and services. True, mass merchant and internet
retailers are only in the business of selling products, but they have the high
volume and low-cost infrastructure to support that approach. Competing against
them is retail suicide for most specialty retailers.
Specialty retailers must develop business strategies that focus on creating,
engaging, and maintaining customers. By offering their customers a
differentiated shopping experiences, targeted and unique products, and a fourth
place, these retailers can compete against their larger commodity competitors.
The
Fourth Place Approach
A fourth place is as
much an approach to retailing as it is a physical space within the store. There
are four guiding principles to developing a fourth place.
a) Fourth place
retailers sell products and services to enhance the lives of their customers.
The store facilitates that enhancement.
b) Creating engaging
and memorable experiences between customers and employees creates loyal
long-term customer advocates.
c) The retail store is
a venue for developing and maintaining relationships with customers and
creating a community of like minded individuals.
d) Customers reward
retailers who value and respect them.
Creating The Fourth
Place
To create a fourth place
strategy a retailer may choose to do the following:
1. Create a natural
physical gathering place. The size and configuration depends upon a stores
physical layout as well as what product and services are offered. A toy store
that specializes in board games and/or puzzles might have tables and chairs. A
fashion retailer might have comfortable seats placed together in a living
room-like setting. Others might choose a counter with seating with a spot behind
it for the employee to engage and interact with the customer. Enhance the fourth
place with drinks and snacks as appropriate.
Many retailers are
reluctant to dedicate the necessary square footage for fourth place seating
because it means taking space away from merchandise. First, all stores should
offer some type of seating area for the tired or physically challenged customer.
Second, the fourth place when done well can generate more revenue per square
foot than if the same area was merchandised.
2. Determine how
organized the fourth place community will be. Will it be an informal gathering
area or will you offer a more structured program? Will it be an extension of a
customer loyalty program? If it is structured, will those within the community
receive additional benefits or opportunities not available to others?
3. What will be the
strategy to maximize the space and community? Will you present classes or
workshops? Will there be a tactic to engage those in the community on each
visit? An opportunity many retailers miss is to only offer scheduled classes and
workshops rather than deliver short and impromptu events that many more
customers can attend.
These types of events give you an opportunity to educate and engage the customer
without requiring them to make a commitment they may not be ready to make.
Offering mini-classes and workshops helps create the fourth place community and
turns your store into a unique destination.
4. Determine how
involved your staff will be in engaging the fourth place community. A more
engaging strategy does require an additional staff investment but this
connection between staff and customer is a true point of differentiation between
a specialty retailer and a mass merchant.
Using the Apple store as
an example, the Apple retail staff actively engages the customers both formally
and informally. Besides the workshops, the staff also interacts with the
customer at the Genius Bar. The Genius Bar, one of my favorite elements of the
Apple store, offers hands-on, real-time solutions to Apple-related technical
problems by the most qualified staff member. This strategy, which other
retailers can replicate, positions the staff as experts and the store as the
location for a customer’s questions and needs. It presents the staff as an
informal expert resource and a connection between the customer and the brand,
creating the fourth place experience in itself.
At this point you may be
questioning how a fourth place differs from a store that offers a pleasant
shopping experience. Actually, they are close relatives. For a store to be a
successful fourth place it must be an enjoyable shopping experience. Why would
anyone want to spend time in the store if it isn’t a pleasant environment?
The difference is that
retailers who create a fourth place leverage that memorable shopping experience
and give their customers even more reasons to return to the store to spend more
time and more money.
Howard Schultz writes in
Pour Your Heart into It, “The best ideas are those that create a new
mind-set or sense a need before others do, and it takes an astute investor (or
entrepreneur) to recognize an idea that not only is ahead of its time but also
has long-term prospects.”
While a fourth place
approach is not new or ahead of its time, it is a mindset than has long-term and
profitable prospects.
About the author:
Doug Fleener is founder of the Dynamic Experiences Group. He is a veteran
retailer with more than 25 years of hands-on retail experience with world-class
retailers including Bose Corporation and The Sharper Image. He has also owned
and operated his own specialty stores. His new book, The Profitable Retailer:
56 surprisingly simple and effective lessons to boost your sales and profits
published by Acanthus Publishing.
Doug is now president and
managing partner of Dynamic Experiences Group LLC, a Lexington based retail
consulting firm dedicated to helping retailers create unique customer
experiences that results in higher sales and profits. Learn more at
www.dynamicexperiencesgroup.com or call Doug at 866-535-6331.
Fleener also shares his
knowledge of experience based retailing in a series of custom key notes and
workshops designed for stores, businesses, corporations, non-profits, and trade
associations of all sizes. His casual style and quick wit make him not just a
crowd pleaser but also an incredible motivator, encouraging people to take
action and deliver extraordinary experiences to customers and employees alike.
Learn more at
www.dougfleener.com.
