Retail in an age of experience
On a regular basis, we see headlines and news pieces about store closures heralding the “death of retail,” right alongside those celebrating a “never-ending boom” in e-commerce. Such inflammatory stories are great clickbait but fail to tell the whole story. The future of retail isn’t about physical battling digital; it’s much more nuanced.
E-commerce continues to consume a higher proportion of our total retail spend, but that trend is slowing(while 10,168 U.S. stores closed in 2017, 14,248 opened). Three-quarters (67% ) of e-commerce brands open stores, and 60% of Generation Z prefer to shop in-store. Digital is disrupting the retail industry, yes. But it’s our expectations that are transforming it.
We now expect in-store shopping to be as good as online. It should be easy to find and compare products, to pay efficiently, to get personalised promotions, to earn loyalty points, to get same-day delivery. And then, if we’ve bothered to visit a store — we expect it to do something more than just transact. In this landscape, there’s no room for mediocre retail. Successful retailers today must sell products brilliantly, but they must also stage meaningful and memorable experiences.
It’s easy to assume the answer means copying Amazon. But it doesn’t. The future is positive and diverse in retail. Imaginative, experience-led retailers are recognising this and adopting a variety of different shapes to disrupt and differentiate in a rapidly-changing industry. We’ve spent some time observing some of the movers and shakers in the industry, and we’ve noticed seven shapes emerge:
1. Shrinking the thinking
If Amazon is pioneering one shape, it’s this. Initiatives like Amazon Go are stripping the shopping experience right down to its minimum: go in, pick up what you want, leave. This shape is ruthless in its hunt for moments of waste or frustration. Once found, it responds by designing thoughtful, bold and innovative solutions that remove any sense of friction or hurdles between you and a happy purchase.
Another example? Fashion retailer Rebecca Minkoff uses a dazzling range of emerging technology to enhance shoppers’ experiences. Customers choose clothes on a screen, which will then be sent to their fitting room, where their mirror transforms into an RFID-embedded screen that can suggest styling options and request other sizes from associates.
2. Personal curator
Personalised nutrition providers VITL sum this one up nicely: “Stop buying things made for everyone. Start buying things made for you.” They survey customers to learn their lifestyle and wellbeing preferences — and even take DNA samples — to tailor vitamin plans just for them. Similarly, Epigencare and SkinGenie provide a similarly customised service for skincare needs.
This shape is all about filtering the paralysing choices we all face, and it relies heavily on data — i.e. what you know about your customers is more valuable than the products you’ll sell them. A word of warning, though: beware of curating consumers’ preferences into an echo chamber of their own tastes. Filtering is also about occasionally nudging our eyes open a little wider.
3. Indulgent dwell
In our fast-moving world, there’s room and reward for experiences that invite us to slow down. Dish & DU/ER doesn’t just sell jeans. Their customers can see the jeans being produced, and they can test their durability and feel on an in-store climbing frame and bikes. That’s an experience that requires an unavoidable investment of time. And the experience is the better for it.
To pull off this shape, find out what fascinates customers about your product and build slower learning experiences around your brand promise. Create experiences that invite us to indulge a little more in the process of selecting the products we want.
Senses. Emotion. Storytelling. These are qualities often lost in a one-click purchase. Tapping into people’s senses to tell astonishing stories can make them want to participate more actively in your brand and make for killer retail experiences. Olympus, for example, designed a colourful, multi-textured playground where people could discover new perspectives through the lens of a camera.
This kind of experience brings an element of showbiz to retail, provoking emotional responses through the human senses and giving people a memorable experience that positively colours their relationship with the brand. Ultimately, great theater can even create new revenue opportunities for the most entertaining experiences.
5. Me & we
Some retailers are learning to use their fan community to create compelling shopping experiences — in Lego’s case, they’re doing it by inviting customers to submit designs and vote on product ideas. Nike has gamified shoemaking by running a contest for its Nike Air product range, and by organising treasure hunts for exclusive trainer designs.
Such community-oriented experiences can establish a powerful sense of belonging around your brand. And the bonus? There’s a genius in the crowd — nurture it, and you could have a big win on your hands.
6. The decoy
Would it surprise you that Amazon probably loses money on its Prime subscriptions? The real money is in the ecosystem of services it’s built to provide customers with seamless shopping experiences. With each new feature, Prime becomes more valuable to customers, making them more likely to renew — and the more “sticky” Prime becomes, the more people are likely to buy through Amazon.
The longer someone’s been a Prime member, the more they spend: in the first year, 41% spend over $800 per year — after four years, that percentage rises to 68%. Prime is the paid-for fuel that almost guarantees the business will grow every year.
A successful decoy is running an adjacent business to the traditional one, and using it to improve the first. This dual-tracking can be not only great for the experience, but seemingly good for business too.
7. The challenger
Challengers are the guys who try to take giant leaps forward in the retail experience and boldly invent a new paradigm in doing so. For instance, there’s Alibaba and Ford, who have created a vending machine that dispenses cars for test-drives, and Moby Mart in Shanghai that quite literally brings the store to your door.
For challengers, it’s about designing an experience so disruptive, so get-outta-here crazy that it just might work. It’s about aiming to be not just better than your competition, but 10 times better. It’s a risk, but the payback is as much from the headlines and unique experience insights you garner, as from new business you’re igniting.
Retail isn’t dead. Far from it. It’s just changing shape. The businesses that will thrive in our evolving retail landscape will be those who purposefully and thoughtfully rewire themselves around one or more of these new shapes. They’ll think less about distribution and logistics, and more about empathy and anthropology. They’ll know that simply offering access to products at competitive prices is no longer enough. Success in the future will come to those who shift their focus to solving customers’ problems, to demonstrating thoughtfulness, and to creating memories to treasure.
In support of this shift, by measuring and tracing experience statistically, Fjord’s Love Index has proven that good experience pays too: shoppers who have a better experience spend 31% more.
Retailers of today need to do traditional retail brilliantly and expect little reward for it. Same-day delivery, no-quibble returns, data-powered operations and stores that are just as good as digital — these are all just hygiene. The reward now comes from the experience. Find your brand promise and lead with purpose. Pick the shape that fits you best and excel in it. Study your customers and design a memorable experience they’ll fall in love with.
This article originally appeared in Internet Retailer, July 5, 2018.