Experiential retail has been one of the hot retail trends for a few years now. But it’s often used in a vague way. So it’s time to add some structure and form to “experiential retail”. In this episode, Oliver Banks breaks down into 4 key types of experiential retail and gives you 2 important questions to get started.
Why is experiential retail popular?
Physical stores have turned to so called “experiential retail” as a way of attracting customers back in store following the rise of online shopping. It aims to give a customer a reason to visit rather than just click that ever so simple add to basket button. Retailers often hope for:
- Increasing footfall.
- Building awareness.
- Increasing dwell times in store.
- Higher conversion rates or attachment rates.
- More upsells.
- Higher ATV (Average Transaction Value), items per basket or essentially more sales.
However, the term experiential retail, can often be misunderstood or used in a vague way. Nice decor or a fancy fit out is not experiential retail. Neat merchandising is not, in itself, experiential retail.
So in today’s episode, I hope to add some structure to how you think about adding experiential retail to your operation.
Defining experiential retail types based on outcome for the customer
To add some structure to what can be a vague topic, I’ve identified 4 different types of experiential retail.
The first important thing to consider is “what is the point” from a customer’s perspective. If you can’t define this, your desired experience will flop or, at best, will attract the wrong audience.
Experiential retail type 1: try it out
The first type of experiential retail is the opportunity for a customer to try things out. Examples of this include:
- Trying music instruments out in a music store.
- Trying vacuuming different types of dirt in the Dyson store,
- Cooking demos in a grocery store, like in Tesco stores and others.
- Trying on running shoes then taking them for a spin on a treadmill, like in Nike stores.
- Using the products at a Lush store, in particular, enlightening the senses.
That final example, Lush, is a great example here. By using the products, you get to experience the feel, the touch, the smells, even sometimes the sounds. All of this can be very hard to do when restricted by excessive packaging or the screen portal of an online store.
Experiential retail type 2: learn something
Customers value learning new skills or information. This can be a great opportunity to demonstrate your products whilst teaching new skills.
For example, Apple run tutorials in their stores. I’ve observed one of their photography tutorials where you can learn how to use their iPhone camera. I mean properly use it – to take some very fancy shots by adjusting settings – but it’s not just about their hardware. In fact, more importantly, they are teaching you skills like how to compose a shot and how to use lighting effectively.
Other examples are showing behind the scenes or explaining product heritage or quality. For example:
- Chef’s tables in a restaurant – showing you the passion that goes into making your dinner.
- Vagabond Wines – showing you the process and different stages of making wine.
- Starbucks Roastery – demonstrating how the beans are treated before they end up in your coffee cup.
Customers feel like they have enriched their life and have something to take away to share or use later.
Take a look at this customer who had a great experience on a chef’s table and shared via Twitter:
The most fantastic meal I’ve ever had! Fab chef’s table and 7 course taster menu at @boxebristol! Highly recommend for any occasion, for us, a eonderful way to celebrate 💍💍anniversary! #lovefood #shouldbemichelinstarred pic.twitter.com/1CV6Boz8gK
— Joanna M Pawlowska (@MayahJoannaP) February 16, 2019
See a quick video below to get a flavour of the Starbucks Roastery in New York (no pun intended!). This was also one of the trends in the recent podcast looking at the top retail trends in 2019.
Experiential retail type 3: exclusive opportunities
“Money can’t buy” type opportunities are great for creating a buzz. Particularly if they are a limited time offer. Examples include:
- In store events, like music concerts.
- Celebrity appearances, such as book author signings, star appearances.
- Pop up stores, like Amazon’s fashion pop up in Q4 in London.
- Brand showcases, like Samsung’s 837 store in New York. or like IKEA’s new small format stores.
Music concerts give people a reason to come and they are by their nature, a time limited offer. Here is an example of the buzz created by a small retail store.
Well done to EVERYONE involved with #RSD2018 RecordStoreDay2018 @vinyl_rev – all the stores that took part Duke St – you were #awesome. The crowds who bought #vinyl or enjoyed the #live #music in the sunshine. A terrific family carnival atmosphere. Are you in the crowd? pic.twitter.com/NShPo0qRq6
— Scene Sussex 📸 (@scenesussex) April 21, 2018
Meanwhile, at the other end of the scale, these are examples of what you can find in Samsung’s 837 store in New York.
Experiential retail type 4: being part of something bigger
This type of experiential retail offers customers the chance to feel close to the brand. They become connected, almost feeling like they are so loyal that they own a bit of the brand. This breeds loyalty and in turn, advocacy.
Examples of this include:
- Classes and clubs, such as Nike’s sport clubs. But also book reading clubs too.
- Competitions, like gaming competitions or “Man vs Food” style eating challenges.
- Customer driven communities. Comic Con do this brilliantly with their fans dressing up.
Microsoft stores run “Fortnite Fridays” which is an excellent example of bringing people together to share a passion. There is relevancy to their product and customers get to meet and engage with other customers on a regular basis. Friendships will be formed and loyalty to Microsoft will increase as a result.
Comic Con build insane levels of brand loyalty and brings customers together to enjoy their shared passion.
— KATU News (@KATUNews) February 24, 2019
Never underestimate this final “experiential retail type”
However, you should never discount the importance of offering a simple, friction-less retail shopping trip. You should absolutely focus on the basics which will fulfil customer’s primary aim of coming to your stores. Obvious things like good availability, clear and fair pricing, or not having to queue should still be a primary focus for your store. Without these basics in place, you risk losing customers much faster than you can acquire them!
Big idea: building experiences for your online audience too
Soon, I forecast that we’ll start seeing more and more “experiential retail” coming to online audiences. Tools like Facebook Live or other streaming options will enable more to take part. Technology solutions like VR will also help enable a more vivid experience too.
In turn, experiential retail becomes more accessible and more convenient. Plus, it makes the investment more scaleable and cost effective for the business.
So, is this the beginning of the omni-experience* as experiential retail begins to merge into other channels too? * I’ll let you decide if “omni-experience” is the right name! 🙂
It’s not all plain sailing though and there can be experiential retail fails too. Here are a few examples to check out.
Key questions to ask as you develop your retail experience proposition
As mentioned earlier, you must ask “what is the point” from your customer’s viewpoint.
It’s also important to consider what is the purpose from the business’ perspective. Withouth this, you’ll struggle to win commitment from the board and other key stakeholders. Plus, you’ll struggle to understand how you can prove if the initiative has been successful.
From there, you can determine what is the right fit from the 4 different types of experience shared. In turn, you must decide how your operating model will be set up to deliver this in a sustainable and repeatable way.
Then, it’s a question of planning effectively. Finally, of course, you need to successfully execute the operating model that you’ve defined.
The bottom line – experiential retail is an intentional, operational decision.
Experiential retail is about making shopping more exciting than just shopping. It’s not just about the here and now though. It’s about doing or learning something to share, or to enrich your life or to create a memory.
In this article, I’ve outlined 4 different types of experiential retail:
- Try it out – live demos and an opportunity to get hands on with the product.
- Learn something – giving customers new skills and engaging them with interesting and useful information.
- Exclusive opportunities – “money can’t buy” chances, possible in a time limited way too.
- Being part of something bigger – increasing loyalty and advocacy by building a community among your customers.
However, You must and very clearly define what is the point for your customers. You must define the purpose for your business – this will be critical to justify investments and measure the success of the overall initiative.