Experiential Retail

Brick-and-mortar stores are looking beyond the transactional process of purchasing products to offer experiences – such as hands-on training, more convenient and well-designed technology integration, entertainment, or the simple opportunity to hang out – that build brand loyalty and increase profits.

How It’s Developing

While much blame for retail’s demise has been placed on Amazon and the move toward online shopping, there have also been concerns that retail square footage has grown too fast (with reactionary build cycles’ lingering effects). At the same time, there has been a general change in consumer tastes and a generational realignment in the way consumers spend their discretionary dollars; consumers now seek more than just a standard place to shop and are motivated by conveniences and experiences that create a feeling of well-designed delight. [1]

According to a 2017 report from Bain & Company and Farfetch, today’s shoppers have a “millennial state of mind” characterized by uneasiness around purchases, driving digital interaction with peers ahead of or during the purchasing of a product; urgency to have products quickly when they want them; and a desire for uniqueness, leading consumers to expect brands to align with their personal values. [2] While these characteristics make it seem like the future of retail and exchange exists online, Bain & Company’s research reveals that consumers continue to value physical places and physical stores will continue to account for around 75% of transactions. [3]

Apple has been one of the leaders in transforming brick-and-mortar retail. Apple stores generate over $5,000 in sales per square foot, see over one million visitors per day worldwide and can increase sales 10% for all other retailers in the same mall. [4] Apple’s stores distinguished themselves by dedicating a large part of the store to letting people try out and learn about products as well as ask questions at the Genius Bar; the emphasis was on customers learning more about the product and the solutions it could provide before emphasizing the point of sale for the product. [5] While Apple initially introduced the Apple Store, since 2016 it has followed a path to rebrand its retail locations from shopping destinations to community gathering places, initially removing “store” to just refer to locations as Apple and the neighborhood or community in which they are located ("Apple Union Square," "Apple Fifth Avenue," and "Apple World Trade Center"). [6] In 2017, Angela Ahrendts, Senior Vice President of Retail at Apple, announced that future locations would be thought of as "town squares," focusing on developing community by hosting concerts, leading workshops, offering meeting rooms, teaching everything from photography to music production, and providing spaces to hang out. [7]

Other technology companies, including Microsoft and Samsung, are following Apple’s lead, focusing on a “hands-on” retail approach by encouraging customers to touch and try devices that are not tethered to tables; play with devices and games; or set up their own devices and work. [8]

Retailers of clothing, makeup, or other more traditional goods have begun to invest in fewer physical locations and make a more seamless shopping experience as customers become more comfortable with a hybrid online and in-person shopping experience. Physical store operations improve point-of-sale capabilities, enhance digital displays, offer convenient pick-up-at-store and return-to-store services, and provide personalization and location-aware messaging. [9] This “augmented retail” model blends the digital and physical to create an integrated shopping experience. [10]

Beauty-brand Sephora has explored small-format stores through its Sephora Studios (2,000 square feet vs. a chain-wide average of 5,000 square feet) that put the company’s latest digital thinking on display to pursue a “teach, inspire, play” approach. Digital welcome screens with menus greet visitors, iPhones allow mobile point-of-sales purchases, and employees help customers customize beauty recommendations and email digital makeup guides to mobile devices. [11] Sephora’s transformation has been led by the understanding that makeup is now easier to buy (online and in competing stores) and that knowledge about makeup has also become more available (bloggers, YouTubers, and Instagram influencers now hold as much influence as store clerks). [12] Bringing the physical and digital together provides Sephora with a best way to compete; there is a Sephora mobile app that utilizes augmented reality, a Color IQ facial scanning technology, and digital workstations that let customers learn new makeup application techniques. [13]

In another digital and physical approach, Toys’R’Us proposed an augmented reality experience to reinvigorate its stores following their bankruptcy filing. The AR experience would help make the stores a more interactive destination for shoppers who might otherwise choose to shop online. [14]

Still other stores are focusing more on the experience without as much emphasis on technology. Disney Stores are piloting concept that features movie-theater-size screens that can live stream parades from Disneyland in California and Walt Disney World in Florida directly into stores, with staff putting out mats for shoppers to sit on and enjoy concessions like popcorn and cotton candy; the screen could also be used to stream other events like red carpet arrivals for Disney movie premieres. [15]

Retail flagships and department stores are following a strategy to become more like showroom gathering spaces, where customers see products and consult with sales people before fulfilling their purchase online or via an app. [16] Nordstrom’s new concept, Nordstrom Local, provides just 3,000 square feet of retail space built around dressing rooms and a common space where customers can hang out; drink a glass of wine, beer, or espresso; talk to the personal stylists; and book on-site manicures, alterations, and tailoring. [17]

Shopping malls are also exploring changes to align with consumers’ interests. In the United Kingdom, The WestGate Oxford shopping center promotes itself as a retail and leisure destination focused on providing “services and experiences” where shoppers can even plan an itinerary for their day at the “experience desk.” [18] Even as some physical stores see a decline in sales, new malls are adopting a museum-like quality, with designs by celebrity architects, high end restaurants, landscaped courtyards and outdoor spaces, glass walls that let shoppers look in, and experiential anchor spaces like gyms and dine-in movie theaters. [19]

In the United States, mall owners are transforming their spaces to include more experience activities like restaurants, bars, mini-golf, and rock-climbing gyms that can stand alongside the retailers that survive this period. While these new tenants pay higher rents than struggling flagship stores like Macy’s and Sears, they also create greater maintenance and build-out costs, which could create long-term financial strains in communities. [20]

Why It Matters

Especially as major retailers like Apple and Nordstrom rebrand their spaces as “town squares” or emphasize their roles as “gathering spaces,” it will be important for the public to understand what truly public spaces are. While stores have always served as gathering spaces – with cafes and gardens and other features – it was understood that those features were provided as a way of bringing customers to the store to purchase goods. [21] The goals of building community, creating a civic commons, or providing spaces for dialogue will likely always be secondary to the financial interests of these companies. Libraries and other cultural institutions may increasingly need to emphasize the value of their space as true community space and its distinction from communal space in retail.

At the same time, consumers will likely carry over expectations from one space to another. As the quality of experiences, design, and technology integration increases in retail stores and malls, users will expect the same convenience and delight to appear in other spaces like libraries.

As stores and malls work to attract visitors by investing in experiences, libraries and other cultural institutions may also be compelled to better create and promote programs and experiences. Museums have always aimed to engage their visitors and increasingly integrate technology to create interactive and game-based elements through augmented reality and digital displays that create more immersive experiences. [22] The Sydney Opera House has pursued a similar enhancement, focusing on opening up experiences that had not previously been available, hosting its first-ever mass sleepover during a 2016 performance and telecast of composer Max Richter's eight-hour piece Sleep and submitting a new development proposal that includes a clause to open six locations in the opera house to slumber parties for a limited number of guests five times a year. [23]

Even as cultural institutions introduce exciting innovations, there may still be concern that over-programming with experiences moves institutions to become more like theme parks than cultural or educational institutions and that these experiences limit individuals’ sense of independent discovery and curiosity. [24]

As libraries embrace a role as community hub, they may develop programs and experiences that are responsive to specific community information needs. Health and wellness have become key issues in communities across the country, with many libraries affering activities like fitness boot camps, yoga and tai chi classes, movement and music classes for youth, nutrition education, and weight management programs. [25] While these programs address individual needs, they also provide an unexpected shared experience that helps bring communities together.

As stores turn more experiential, the nature of retail workers’ jobs will likely change as well. Best Buy has transformed sales people into electronics consultants, helping customers select and customize products to their homes, and Wal-Mart has piloted programs to make sales people personal shoppers, fulfilling online orders. [26] These new roles could result in fewer retail jobs overall, fewer entry-level positions in retail (think especially about the importance of these jobs for young people or new entrants into employment), and possibly the need for people to enhance their skills for new roles. In the face of these changes, members of the public may turn to libraries to help them learn new skills or prepare for job in other industries.

Notes and Resources

[1] "U.S. stores are too big, boring and expensive," Barry Ritholtz, Bloomberg, March 24, 2017, available from https://www.bloomberg.com/view/articles/2017-03-24/u-s-stores-are-too-bi....

[2] "Imagining the retail store of the future," Elizabeth Paton, New York Times, April 13, 2017, available from https://www.nytimes.com/2017/04/12/fashion/store-of-the-future.html.

[3] "Imagining the retail store of the future," Elizabeth Paton, New York Times, April 13, 2017, available from https://www.nytimes.com/2017/04/12/fashion/store-of-the-future.html.

[4] "U.S. stores are too big, boring and expensive," Barry Ritholtz, Bloomberg, March 24, 2017, available from https://www.bloomberg.com/view/articles/2017-03-24/u-s-stores-are-too-bi....

[5] "How the Apple store took over the world," Ana Swanson, Washington Post, July 21, 2015, available from https://www.washingtonpost.com/news/wonk/wp/2015/07/21/the-unlikely-succ....

[6] “The Apple Store is now simply 'Apple,' company says," Patrick Kulp, Mashable, August 20, 2016, available from https://mashable.com/2016/08/20/apple-not-apple-store/#xlWLIK00IOqf.

[7] "Apple calling its stores ‘town squares’ is a pretentious farce," James Vincent, The Verge, September 12, 2017, available from https://www.theverge.com/2017/9/12/16296460/apple-self-love-iphonex-ipho....

[8] "Your first look at Microsoft’s massive new flagship store," Margaret Rhodes, Wired, October 25, 2015, available from https://www.wired.com/2015/10/microsofts-hands-on-flagship-store-opens-o....

[9] "How retailers will survive in the Amazon era," Alex Berg, Fast Company, March 15, 2016, available from https://www.fastcodesign.com/3057833/how-retailers-will-survive-in-the-a....

[10] "Imagining the retail store of the future," Elizabeth Paton, New York Times, April 13, 2017, available from https://www.nytimes.com/2017/04/12/fashion/store-of-the-future.html.

and

"Sephora opens experiential retail flagship in Boston," Sheila Shayon, BrandChannel, July 20, 2017, available from http://brandchannel.com/2017/07/21/sephora-studio-072117/.

[11] "How Sephora is thriving amid a retail crisis," Laura M. Holson, New York Times, October 29, 2017, available from https://www.nytimes.com/2017/05/11/fashion/sephora-beauty-retail-technol....

[12] "How Sephora is thriving amid a retail crisis," Laura M. Holson, New York Times, October 29, 2017, available from https://www.nytimes.com/2017/05/11/fashion/sephora-beauty-retail-technol....

[13] "How Sephora is thriving amid a retail crisis," Laura M. Holson, New York Times, October 29, 2017, available from https://www.nytimes.com/2017/05/11/fashion/sephora-beauty-retail-technol....

[14] "Toys R Us has a plan to save itself and it's unreal," Charisse Jones, USA Today, October 2, 2017, available from https://www.usatoday.com/story/money/2017/10/02/toys-r-us-has-plan-save-....

[15] "Disney reimagines its stores to be more like a vacation," Brooks Barnes, New York Times, November 17, 2017, available from https://www.nytimes.com/2017/09/26/business/media/disney-stores.html.

[16] "Why retail flagships are running aground," Adrianne Pasquarelli, Advertising Age, June 27, 2017, available from http://adage.com/article/cmo-strategy/retail-flagship-stores-running-agr....

[17] "Nordstrom concept store doesn’t stock actual clothing but it does offer booze," Mary Beth Quirk, Consumerist, September 11, 2017, available from https://consumerist.com/2017/09/11/nordstrom-concept-store-doesnt-stock-....

[18] "How showbiz is turning department stores into theatres of dreams," Zoe Wood, The Guardian, October 27, 2017, available from https://www.theguardian.com/business/2017/oct/27/retail-theatre-departme....

[19] "Malls and the future of American retail," Alexandra Lange, Curbed, February 15, 2018, available from https://www.curbed.com/2018/2/15/17014230/malls-califonia-america-renzo-piano-victor-gruen.

[20] "Shopping mall owners pay up to stay relevant in the Amazon era," Sarah Mulholland, Bloomberg, July 5, 2017, available from https://www.bloomberg.com/news/articles/2017-07-05/shopping-mall-owners-....

[21] "The great thing about Apple christening their stores 'town squares,’" Alexis C. Madrigal, The Atlantic, September 13, 2017, available from https://www.theatlantic.com/technology/archive/2017/09/the-great-thing-a....

[22] "How games are changing the museum experience," Becky Ferreira, Motherboard, May 1, 2016, available from https://motherboard.vice.com/en_us/article/yp3wwj/how-games-are-changing....

[23] "The Sydney Opera House will host slumber parties for grownups," Danica Lo, CondeNast Traveler, September 8, 2016, available from https://www.cntraveler.com/story/the-sydney-opera-house-will-host-slumbe....

[24] "Keeping kids frenetically entertained is ruining our museums," Brian Switek, Aeon, October 7, 2018, available from https://aeon.co/ideas/keeping-kids-frenetically-entertained-is-ruining-o....

[25] “Libraries now offering books and workouts,” Jessica Mulholland, Governing, March 2011, available from http://www.governing.com/topics/health-human-services/Libraries-Now-Offe....

[26] "Retail workers' jobs are transforming as shoppers' habits change," Los Angeles Times, January 8, 2018, available from http://www.latimes.com/business/la-fi-retail-jobs-20180105-story.html.