“Third Place” and Retail: Why it Works

Think of your favorite coffee shop. It’s a place you go to relax and unwind after a stressful day of work or a place where you go to meet friends or family. It’s a space that isn’t your office or your home – it’s an essential third place where you and others can gather and interact. Made popular by Howard Schultz through his vision for Starbucks, the third place has transformed the retail sector and has propelled it from a trend to a necessity. Here’s a closer look at why the “third place” concept works in retail and why it’s necessary.


How Retail is Being Challenged by Ecommerce

According to Statista, by 2021 there will be over 230 million people shopping online. Ecommerce has drawn consumers away from brick-and-mortar stores and towards online shopping. In particular, ecommerce is challenging brick-and-mortar retail in the three following ways:

  • Merchandise limitations – although big box retailers carry an extensive amount of product, generally brick-and-mortar stores carry less inventory due to high storage costs. This limits what a consumer can purchase in store in comparison to the endless online inventory.
  • Shopper surveillance – When you browse online, there is an electronic trail of the products you have viewed and purchased. Online stores can use this information to better understand their customers and make more-informed merchandising and restocking decisions.  
  • Overhead – Brick-and-mortar stores have overhead just because they exist. Rent is charged by the square foot and the price can be very steep depending on location. With selling merchandise online, there is less risk because retailers aren’t subject to the financial risks of a long-term lease.


Rising Trends in Retail Storefront Designs

Now that retailers are competing with e-commerce, they need to design experiences that go beyond those offered at traditional retail stores. The experiences within these retail stores must be shaped to build community and connect the consumer to the brand or product. This is partially what helped coworking become so popular.


The Third Place Movement in Retail

There has been a recent movement within brick-and-mortar retailers to think outside of the box and establish the third place concept within their stores. Employing a “third place” has helped to bring consumers into the physical store, which serves to encourage potential customers to engage with the product, establishing loyalty to the brand and securing more purchases.

In the luxury retail sector in particular, with major fashion brands expanding globally, stores are now attempting to reach a wider audience by becoming tourist destinations. An increasing amount of stores now offer cultural experiences, entertainment, and products at a variety of different price points. The amenities featured by some stores include art exhibits, spas, bars, and plenty of space to relax and mingle. For example, Tommy Bahama now has a restaurant and bar concept attachment in some of its retail stores. Additionally, both Sony and Samsung are establishing their own “Experience” space in Best Buy locations around the country. These spaces are designed to not only attract those looking to shop, but attract those who are looking for a go-to hangout spot away from home.

In the era of online-shopping and and the home-to-work pipeline, the third place in retail-spaces can be the perfect solution for both consumers and brick-and-mortar retailers.


Contact us today to learn more about how Inreal can help you to visualize and create the ideal “third place” in your retail property.