How Experiential Retail Gives Stores an Edge
Retail Shops Create Experiences to Attract More Customers
It's no secret retail has taken a hit over the last decade. Thousands of retail stores have closed since 2010 as competition from e-commerce shops, bankruptcies, and the lingering effects of the financial meltdown impact the retail landscape.
While challenges are present, retail is by no means dead. Instead, brands are finding that in order to attract and retain customers, they need to place greater emphasis on increasing customer loyalty. For many, that means embracing "experiential retail."
According to analytics firm Buxton's 2019 Retail and Restaurant Real Estate Outlook, experiential retail delivers an enhanced customer experience that goes beyond traditional shopping and allows consumers to engage and interact with a brand in different—often more impactful—ways.
"The companies that engage their customers and understand how they want or need their products or services will be the winners," explains Buxton Senior Vice President Stephen Polanski.
Carlos Castelán, co-founder and managing director of the Minneapolis-based Navio Group, agrees. "By incorporating unique, innovative experiences, traditional retailers can better compete in the crowded, digital marketplace," says Castelán, whose business consulting firm specializes in retail and consumer goods.
For retailers, this shift is about more than simply grabbing increased foot traffic. It's also being driven by consumers who focus on convenience, want to shop locally, and have the desire to delve into experiences that will leave a positive emotional impact.
While it's a heavy lift for many retailers to combine all these new needs into one footprint, there are brands that are leading the way when it comes to delivering these experiences for their customers.
Technology Provides Convenience
Many consumers continue to demand access and convenience: Postmates to deliver food, Uber to grab a ride, Amazon—for anything.
"Successful retailers regularly evaluate how to remove friction points in the shopping experience," Castelán explains. He cites Amazon Go and Home Depot as examples.
These retailers are helping customers speed up their brick-and-mortar shopping trips by leaning on technology. With a few taps or clicks, they can avoid waiting in line and get exactly what they want, when they want it. Consumers see this in the form of self-checkout, curbside pickup and cashier-less stores.
Consumers Care About Buying Local
Locality is another factor that increasingly matters. Consumers want unique products, services, and experiences in their neighborhood. They also want products and experiences they aren't seeing elsewhere.
One example of a retail brand that's combining local love and technology is Nike. In 2018, the global footwear and apparel retailer opened its first Nike Live concept shop in Los Angeles, called Nike by Melrose. It's a hyperlocal and tech-infused hub that's crafted around the preferences of local Nike+ members, people who use the app for running tracking and training.
The store has L.A.-themed designs, a lounge space, and local style experts who understand the needs of the market's customers. On the tech side, convenience comes into play again—store customers can use SMS text to pre-schedule pick-ups and return items curbside.
Memorable Moments Matter
Consumers want to enjoy experiences like shopping and use them to create memories.
For consumers, spending a few hours in a store at a special event helps create an added sense of loyalty and enjoyment. Plus, stores can enjoy the word-of-mouth and social media attention that can come with it.
Some retailers are creating destination stores that cater to the demand for consumer experiences. Castelán cites Lululemon's new Chicago store as an example. It boasts two floors of retail shopping for both men and women, multiple studios for group fitness classes, a meditation room, and even a restaurant.
"The goal is to make Lululemon a destination for more than just shopping, but also a way to engage with the community and create a great experience along the way," says Castelán.
While retail may continue to see growth slow in the future, how retailers respond to the shift in the ways consumers prefer to shop will matter. The brands that focus on retail experiences are likely to make strides when it comes to capturing the hearts—and wallets—of their customers.