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Interpreting Media Markt’s Digital Store

On November 18th 2015, Media Markt announced its opening of the sector’s “most technological store” in Getafe (Madrid) — a 2,400 square-metre shop where around 5,000 products could be found with electronic labels showing prices matching those on its website.  They said it had white, lower-level furniture, and that training courses would be provided. And it would offer a product-pickup Stop&Go service, a kind of drive-through service.

Despite Madrid’s being its flagship store, it failed to cause any rivers of ink to flow. It was an incremental evolution.

240 days later, the situation is radically different. On Saturday 16th July 2016, Media Markt opened its “Digital Store” in Barcelona’s city centre, at a site previously occupied by “Casa Danone”.  This store is going to create an impact not only in the sector, but also in the way electronic products are purchased.

What we can found

Walking along Avenida Diagonal — on the water side — we see a shop front that looks very different to any of the chain’s other stores, with signs that are not easy to read due to their position on the glass window.

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On the left-hand side, in the shop window, the movement of a restless robot can be seen attracting the looks of the passers-by. It is a great example of what a shop-window should be: a real ad, instead of a product-warehouse-shop-window.

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Its entrance is already special: no products can be seen, just a digital screen and people who greet you as you walk in.

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Afterwards, you see a number of zones (called “worlds” or “universes”) corresponding to conventional product categories: Image & Sound, Household appliances, IT, Telephones, and Fun & Photo.

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In each of these zones, no products are on display, but a full-sized digital wall (d-wall), where moving e-people invite you to touch the screen.

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On each d-wall there is an embedded “screen” showing you what is available on the mediamarkt.es website. In actual fact, its contents are the same as the website’s.

That is a wise and cheap way of creating a new pilot store, supported by economies of scope.

There, visitors can search for the product they are interested in, just as they would online.

It is very important to note the large number of staff offering to help visitors choose a product.

There are also zones with uncommon product categories, such as the phone protective-cover customisation, produced on the spot.

Every retail solution is built by three components (products, services and activities), with the second being the important one here. Specifically, business services such as financing, post-sale installation, phone contracts, digital photography printing from a variety of media, etc. become key services.

Once you have chosen your product, payment can be made at interactive kiosks — even with PayPal — and in less than two minutes you can pick up your product from a warehouse desk, with one single queue, where your turn will be announced. Previous purchases made online can also be picked up from here.

Essentially, this store is based on an old retail format that had been struggling to survive: the “catalogue showroom”, the leader of its type being Argos, in the UK. This British chain’s paper catalogues have already been replaced by interactive screens. In the new Media Markt store, such screens have got larger, more theatrical, to become d-walls.

Ultimately, it offers some non-commercial services that are very attractive to its visitors.

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The training and events area, next to a wall with an interactive projection where children can add their own drawings, which, once scanned, become part of the projected picture story.

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And finally, an area for experiencing virtual reality, as attractive as it is incipient, commercially speaking.

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Whether at this store or online — which is, in fact, the same — the purchased products can be collected from an uninterrupted 24-hour service, and handed out by the robot in the shop window.

Here, again, we observe that functionality (logistics) is combined with surprise and playfulness.

The store, from a management perspective

If we compare some of Media Markt’s various retail formulas, we can observe:

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The best 3 things about this store – from a management perspective

1
Its playful component, plus the use of the surprise effect starting at the shop façade with its robot, and continuing with its customising of accessories, its virtual reality area, etc.

2
The determination shown by this pilot store. It is a good example of how R&D should be done in retailing, testing to the maximum — focusing on a core idea — without overly worrying about mistakes, or about the investment in the pilot store. If approached with the “hand-brake” on, its conclusions would not help to learn, improve or rule out.

This store is proof of the clear support provided by Ferran Reverter, Spanish CEO, and the Managing Board, because they have had to make some hugely important decisions:

  • Removing most physical products from the store.
  • Having understood that you can no longer think in terms of online or offline shopping, but OnOff shopping. A large majority of customers visit the website before going to the physical store, or they do so once they are in it. As such, they have understood that the debate between a bricks-and-mortar store and the Internet cannot be resolved with incremental patches, but with a new business model.
  • Accepting that a new business model must be validated: a very different Profit & Loss Account, as well as an investment need very different to that of conventional stores.

3

Motivated and friendly staff who show their pride of belonging, aware that they are co-protagonists of an innovation.

The 2 things that could be improved upon by this store – from a management perspective

Both relate to the convenience (process) part of the shopping experience.

  • Firstly, given that the d-wall contents are the same as online, why would someone choose to travel to the store to use Media Markt’s website standing up, instead of sitting down on their own sofa? The answer is: because its salespeople’s help is very superior to online personal help; i.e., a chat.
  • Secondly, the way of filtering the products until finding the one that best suits the customer. Here, this process is done by focusing on the product’s features rather than on the customer’s. What happens when you do not know what the number of spins per minute on a washing machine means? That such variable is no longer a good filtering criterion.
Its positive side: this lack of customer-centricity is an endemic problem also suffered by most competitors.

Let’s not forget: Buying consists of ruling items out.

As a way of conclusion

Not many new things can be found in this retail concept but, as a whole, its meaning is different to that of existing stores within the sector. For example, a digital interactive wall had already been presented at Berlin’s World Retail Congress, in September 2011:

This is how I visualise the ideal way of using this store:

  • Try choosing your product sitting on your sofa, where you will be able to complement the information with that on other websites. Once you have made your product shortlist, go to the Digital Store, where you will find exceptional, super-motivated, smiling staff to help you choose the product. You may be able to leave “wearing it”, or a robot may hand it to you on Sunday, on your way to (or after) an evening out.

Media Markt, which had not been quick to react to digitisation, is now not only up-to-date but it is leaping ahead. Paradoxically, it is doing so by using the old showroom-catalogue format, a website-shop with the possibility of being the worst of both worlds. However, by adding 3 ingredients (surprise-playfulness, great staff, and very well-thought-out services) it has created the catalogue showroom 2.0, a new omnichannel benchmark.

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Lluís Martínez-Ribes, june 2016.
Photos by the same author.
More info: http://specials.mediamarkt.es/digital-store

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