The Rise Of The Digital First Store

What's So Great About Digital First Stores?

If you've been to a newly renovated McDonald's in the last few years, you've probably noticed the “kiosks” for customers to order at. While the traditional counter experience is still available in these restaurants, it seems like Mcdonald's - and a list of other retailers - seem to be heading toward these technology-empowered stores.

More commonly known as “Digital First Stores” these types of locations are usually in cities due to their convenience, but can also be found in more suburban areas because they function well for curbside pickup and delivery options. Fast food and casual restaurants are both getting in on this new trend - just look to Panera's new digital-first store as well as Starbucks' pick-up-only counters. But this isn't just for food! The retail-tech giant Best Buy is also trying out this format with a new 5,000-square foot location that will provide a new type of experience for customers, along with more services through the Geek Squad, from appliance repair to car installations. Best Buy is just beginning to test its pilot store, but it's an exciting new addition to the community and could shake up the industry once more.

These new types of stores have more to offer than it may seem. Convenience is by far the most important factor in site selection nowadays. Customers don't want to have to drive all across their city in hopes of finding a store in stock. Online shoppers know they can get the best price online, or at least search for it quickly. A smaller store with better access to higher populations also provides the opportunity for stores to cover their own “last mile”. Some retailers offer better deals for online purchases when they're picked up in-store. Best Buy's new Digital First store offers better convenience and experience for these types of customers who want the best deal possible.

What are some benefits for retailers?

Site selection is a huge deal in this industry, but never more than now. Looking at Best Buy's locations in Charlotte, we can see some commonalities. Almost all their stores are in areas where the median income is $75,000 or more, with a few stores closer to the $45,000 to $60,000 range. Each Best Buy location is also fairly far away from each other, which helps reduce cannibalization but can also be inconvenient for people who need to find a store with their desired item in stock. Both the Outlet and Digital First stores are centralized in “Uptown” Charlotte, compared to the other Best Buy locations, which are spread out closer to the more suburban surrounding areas. But what's so special about Charlotte? Best Buy has chosen the city as its testing market for two of its newest - and most experimental - retail store locations, so there has to be something interesting about this market.

Charlotte is the largest city in North Carolina, with a population of 873,570 people. The population has been growing pretty significantly, especially from the 2010 census to the 2020 census. The median household income has also grown drastically in that time frame, from about $50,000 in 2010 to well over $70,000 in 2020. It's also interesting to see that about a third of the population is in the ideal 20-49 age range for Best Buy, and about a quarter of the entire population holds an Associate degree or higher. These demographic indicators are huge for a test market, and the amount of growth over the last decade means more people - and retailers - will start recognizing that soon too.

Commercial real estate has its highs and lows. It doesn't matter if you've been in this industry for thirty years like Sites USA has, or just a short time like me, you'll know that well. Digital First stores may be a trend that comes and goes, but we tend to think it's just the beginning of a new age for all of us in this field. Digital First translates well for retailers like food and tech, but what about drug and grocery stores or department stores? While we wait for this industry to catch up, Sites USA will be here to see it all. •

Last Modified Sep 9, 2022