What: Zara and H&M are increasingly looking like department stores.

Why is this important: Customers are growing accustomed to a certain type of store, which forces department stores to rethink their own value proposition.

Fashion retailers are revamping their physical stores to enhance customer experience, drawing inspiration from Apple's successful store design. As e-commerce grows, brands like H&M and Zara have closed many outlets to cut costs. The remaining stores are being transformed into larger, more inviting spaces offering additional services such as beauty salons, repair stations, and coffee shops. These stores are becoming destinations in their own right, focusing on customer engagement and experiences rather than just sales.

H&M's redesigned store on London's Regent Street exemplifies this trend. It features a large TV screen, a beauty bar, and a rental section for high-end clothing. These changes have led to an increase in the average duration of customer visits. The focus is on creating a brand affinity, with many customers later purchasing online.

Similarly, Zara, under its parent company Inditex, has reduced its store count but increased the size and quality of remaining outlets. New Zara stores are designed to be more spacious and incorporate high-tech features like automatic return points and self-checkout areas, along with a mobile app for inventory checks.

Macy’s and Best Buy, however, are adopting a different strategy by opening smaller stores in convenient locations.

Despite reducing their overall number of stores, both H&M and Inditex are investing heavily in store modernization. H&M, for instance, has increased its capital spending by 43% for 2023 to modernize stores. These redesigned stores not only offer traditional shopping but also feature unique elements like secondhand areas, Lego sculptures, and event spaces for exclusive brand events.

Uniqlo, another major player, is also focusing on destination stores in Western markets. Its Covent Garden store in London is a notable example, featuring a Japanese tea shop, a rooftop balcony, and a repair station, making it more than just a shopping location.

Overall, the transformation of these fashion retail stores into engaging, experience-centric spaces reflects a strategic shift in the retail industry, focusing on creating memorable in-store experiences that complement online shopping.

Zara and H&M are adding beauty salons and new digital features