The Evolution of On-Campus Retail
How universities and retailers can better serve the student consumer
by Frank White
The on-campus retail game is changing. In our last blog post,“The Collegiate Consumer: Millennials Take Over,” we outlined the impact of Generation Y on the traditional College Store. College students today are older (less than half are 18-21), with more disposable income (four times more than their parents had), and more retail savvy. This situation presents just as many challenges as opportunities to the institutions of higher learning and retail brands serving them. What are the implications for retailers and institutions of higher learning?
Downsizing , refocusing, and rebranding.
Downsizing. It’s not a bad word. No one failed. Students’ consumer habits have simply evolved. Partially because Gen Y is the most technology-savvy generation of consumers. Online sales hit 7% of total U.S. retail sales in 2010, and Forrester Research predicts that number will reach 8% by 2014. The Gen Y college student is leading the online retail charge, fueled by their need for immediacy and personal brand connection.
As a result of declining in-store sales, retailers are downsizing to gain more productivity per square foot. If you Google “smaller stores”, you will see numerous examples of store footprint reduction from every retail sector, including Best Buy, Old Navy, Target, and Walmart. While college stores have traditionally been tight on space, new shopping alternatives and digital media channels are now leaving many with too much space and consequently too much overhead. One major University Store, for example, consolidated from three levels to two and leased out the liberated space.
Borders, while closing hundreds of stores, is planning to open additional Borders Express pop-up stores of around 2,500 sq. ft. in the old locations. This is real cherry picking. The 2,500-sq.ft. format is the approximate size of the original B. Dalton and other small bookstores that have been successful in neighborhood locations, strip malls, and more recently in airports.
The college store must reposition itself to take advantage of these changes. The first step will be to trade larger, secondary location space for smaller, high-traffic locations. This can be a win-win for both parties, in the right situation. Smaller stores will have lower operating costs, but with higher design & operational standards. This is an excellent opportunity to invest in creating a a more engaging store environment for the Gen Y consumer.
Brands on Campus
Major retailers are creating new forms of merchandise distribution, ranging from Best Buy’s consumer electronic vending machines, to smaller retail concepts such as Walmart’s 3,500 square foot “On-Campus” storefront, which recently opened on the University of Arkansas’ Fayetteville. These new concepts are mainstreaming the idea of on-campus branded retail, and offering academic institutions new profit centers and ways to competitively serve their students.
Consider that the largest collegiate class in history began coursework in 2009. And according to Alloy Media + Marketing, this class is shelling out an unprecedented $361 in discretionary spending every month, primarily on eating out, automotive products (for men), apparel (for women), personal care products, and entertainment/electronics.
Using the University of Arkansas’ 17,000 undergraduate students as an example, this means that Walmart On Campus has positioned itself to gain a significant share of the student body’s $6.1 million monthly discretionary wallet. The fact that food, grocery, and dine-out enjoys the highest piece of the discretionary spending pie means that there is a significant opportunity for restaurant brands to set up shop on-campus as well.
The Pop-up Solution?
Since the term “pop-up shop” was coined by trendwatching.com in 2004, this experiential retailing concept has become increasingly popular. Known retail entities and emerging retail concepts, such as Pursuit, a pop-up men’s suit retailer founded by a recent grad student, are turning their eye toward the collegiate consumer, and fulfilling consumer needs that have previously gone unsatisfied. Pursuit, for instance, saw an opportunity to provide graduating students and intern candidates with professional attire. They feel the current alternatives for outfitting students are “either pricey and pretentious, or boring and outdated”. Pursuit pops-up on campus temporarily, and uses Facebook & Twitter as its primary marketing channels. This is how Len Riggio began Barnes & Noble – A young guy with an idea.
Creating a space tailored to the pop-up retail concept would allow College Stores to flexibly serve their customers based on seasonal needs. If strategically scheduled, this flex space can have great benefits to the operation and help the store adapt to current and future opportunities.
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Davis Wince, Ltd. has worked extensively in higher education and retail design. We are uniquely able to provide solutions that help academic institutions better serve their students, and connect retailers with the collegiate market. Contact Frank White at fwhite@daviswince.com with questions or to discuss partnership opportunities.
