Talking Shop

As we ease ourselves, blinking into the light, out of almost two years of restrictions, we naturally look to reassess where we are & what we do. Has anything changed? If so, what has changed & how has it changed? One thing that we can be sure of is that the ‘new normal’ won’t be quite the same as the old world across many different sectors. And one area, in particular, is the world of Retail.

A great deal has been written & said on how, why & what might be altered due to the pandemic but as far as retail goes, evolution (if not revolution) was in the air way before Covid entered out lives. But like so many other factors, the pandemic has increased that speed of change.

Retail brands have been slowly moving to incorporate experiential elements in their stores as they recognise the change in consumer behaviour. There has been a desire, for many years now, to explore greater engagement with a brand beyond the purely traditional transactional relationship. Competing for the emotional connection with consumers is key for brands & this is where the pivot, if not wholesale change, to experiential is essential: “The aim is not to necessarily focus on increasing sales, but instead focus on engaging customers, defying their expectations and using in-store events to address consumer needs and boost brand loyalty.” [UK POS Alysha Bennett]

The provision of deeper brand experiences not only will meet the increased consumer demand for a more personalised & engaging experience when shopping – in an ever-more online world, people want a more visceral experience when out & about. Experiential Retail meets that challenge – but what actually is it?

Experiential Retail is best defined, broadly, as a way of engaging customers via interactivity & immersion that can be shared ‘in the moment’ or digitally thus improving the total in-store experience for shoppers. The purpose is to put the customer at the centre by offering a major uplift of experience within bricks-and-mortar stores from that found online.

A headline figure of over 17,000 UK retail closures in 2021 [Industry in Focus, PwC] makes for grim reading. The story in the US is similar with major brands such as Macy’s & Best Buy rationalizing their physical retail estate. This is not all the result of Covid-19 but the empty high streets during the pandemic dealt another blow for retailers on top of years of declining footfall. It really is a case of ‘adapt or die’: “COVID-19 pandemic…forcing the closure of physical stores. To remain relevant, retailers should set a North Star to guide their aspirations for customer experience, with specific goals: transform store operations…reimagine the physical network” [McKinsey & Co, 2020].

And recent indicators show that a reimagined retail environment really does work with reports in some areas of store openings beginning to outpace closures as Kate Shea, Senior Editor at Event Marker says: “Much of this revival can be attributed to experiential retail tactics. Along with the shift towards experiential retail have come changes in how shoppers want to be engaged in person.”

With post-pandemic customers all over the world likely to be seeking greater physical & emotional engagement after social isolation – 451 Research has found almost 50% of consumers plan to “immediately” start shopping at retail stores once restrictions are lifted – retail winners will be those who offer the best opportunity to meet these demands. Brands that translate their values & product offering into an experience that joins-up digital & physical (or ‘phygital’ as it has been described) are likely to build more loyal followers: “If you are in a crowded market, immersive shopping experiences can help your brand stand out from your competitors. By using creative practices early, you can carve out a USP for your business and stay one step ahead of the competition.” [UK POS Alysha Bennett]. Indeed, it has been found [Boston Consulting Group 2018] that brands willing to offer personalised experiences help increase revenue by two to three times faster than those that do not.

Examples abound of how retailers are experimenting with Experiential Retail from early adopters Nike (Nike Rise) & Vans (House of Vans) to brands afar apart as Marvel & Zara. The phrase ‘bricks & mortar’ doesn’t have to be materially literal; Marvel’s Avengers S.T.A.T.I.O.N is a mobile store experience that has travelled the globe. Real movie props providing selfie moments allied with interactive displays deliver an in-person experience that attracts & excites fans. Another term has been newly minted to describe these marquee retail events: ‘retailtainment’. The blend of providing the opportunity to buy whilst being entertained isn’t completely new – but it is the fresh way in which it is being achieved that is new.

Take Farfetch’s ‘Augmented Retail Solution’ in London where there are connected clothing racks, touch-screen- enhanced mirrors & sign-in stations. This ‘Intelligent Personalization’ means the RFID-enabled racks are linked to accessible purchase histories & wish-lists to provide sales assistants with greater insight to help their customers – while smart mirrors allow different clothes sizes or alternative products to be requested & the ability to pay from the dressing room. This all goes to ensure the customer ‘phygital’ journey is utterly seamless.

More straightforward – yet still helpful & engaging – solutions can be found with Zara’s recent initiative ‘Store Mode’. Using the brand’s app when in-store, shoppers can reserve fitting rooms which are then accessible via QR codes or scanning & purchasing items themselves using the ‘Pay&Go’ app function.

And keeping the young entertained hasn’t been forgotten by Toys R Us. Interactive ‘Activation Centers’ zone children by age, interest & category allowing them to explore worlds while their parents shop. LEGO have similarly developed their ‘Brick Lab’, an experience bringing the surrounding built environment to life with animations, lighting & sound. The space is transformed into a world where participants can meet favourite characters while building their own designs which can then be scanned to form part of the lab itself. Given the demographic of their main audience & the very nature of their product, LEGO have been early to develop their in-store experiences that aim to immerse their customers in a personalized journey that gets them super connected to the product & brand. Their example is the essence of experiential retail.

Perhaps these last two examples are apposite when considering Experiential Retail. New generations are native to certain technologies & expect a particular level of experience. According to UK POS, 52% of millennial spending will be experience-related purchases &, more generally, 59% of consumers expect more than half of all retail space by 2025 will be devoted to experience (as opposed to product-only) with 75% believing it should happen by 2027 [Sahar Nazir, Retail Gazette 2020]. More importantly, the same survey found an enormous 81% of respondents said they would pay more for experience.

So, we should conclude that Experiential Retail is the future. With growth in online sales reaching ever-greater record figures, brick-&-mortar retail simply has to react. The above shows how it can be done & how, if it’s done well, it can work. The important thing is to remember that brands & their products rarely live entirely online or only in the physical space. The secret to creating experiences that matter to customers is being able to make both the online & physical journey as one experience. This continuous connection is the way to the future. And the future is here.

Have you begun planning how your retail format might look? How will your retail offer evolve in order to maximise the new ways customers now expect? If either of these questions resonate, with our experiential expertise & interior design experience then we can help.

Should you want any advice or to discuss how to evolve your retail environment, do not hesitate to get in touch via [email protected]