Is experiential still the future of retail?

When I think of national holidays, retail sales and discounts come to mind before I can even recall the reason we’re celebrating with a day off from work. I know Memorial Day weekend is the best time of the year to buy a new mattress and that it honors the military, but that’s only because I saw Top Gun Maverick on Saturday.

Historically, three-day weekends are prime time for retailers because many traditional business professionals have a day off, while stores remain open. With that extra day, consumers can invest their time and energy (not to mention their cash) in major purchases — like mattresses, furniture and appliances — that require IRL testing and comparison shopping. But does this still require an in-person experience? Can shopping be done entirely online with the help of customer ratings and reviews, technology and luck?

You might think so, especially with online retailers creating their own unique shopping holidays. Prime Day, an annual shopping event created by Amazon, is basically Black Friday in July. The event began in July 2015 to coincide with Amazon’s birthday celebration; it originally ran for one day of deals but increased to two days by 2019.

Then there’s Singles Day — a Chinese holiday founded by Chinese university students in the 1990s as a kind of “anti-Valentine’s Day.” The holiday is celebrated on November 11th (with 11/11 symbolizing single living) as a day for singles to self-indulge. Translation? A 24-hour shopping bonanza, with shops and restaurants offering steep discounts. The tech and e-commerce giant Alibaba started to offer Singles Day discounts in 2009, and other shopping websites soon followed suit.

With the ease of shopping online, in-store traffic has been on the decline, never mind the overwhelming effect the pandemic had on brick and mortar retail, where products are simply harder to keep in stock. Retailers have been challenged to provide a lot more than wide aisles and free samples to get us all off of the couch and back IRL. Shoppers now expect experience stores, direct-to-consumer pop-ups and hyper-customization. What’s the incentive to walk into a store when you can order anything and everything from your smartphone?

How do in-store experiences attract consumers?

Take Nordstrom, for example. Before Covid hit the scene, the brand opened a retail flagship store in New York City with seven levels of interactive shopping experiences, complete with restaurants, spas, a personal styling lounge and Instagrammable opportunities for content creators. This concept fueled a lot of retailers. And, in fact, 68% said they would invest in experiential in 2020 (pre-pandemic, of coure).

As we emerge from the pandemic, modern consumers still expect the immersive, interactive and technology-enhanced shopping experiences retailers were just beginning to explore. The most successful in-store experiences are engaging, informative, and interactive. Another example, Target, has made major investments toward its in-store experiences and reported year-over-year increases including a 9.7% rise in-store sales through its:

• Disney collaborations
• Lego collaborations
• Starbucks partnerships

Here’s what we expect from our retail experiences going forward:

1) Personalization (duh, always)

Rather than just going into a shop to browse and get advice from the sales staff, consumers want an in-store experience rich with details. Directly addressing each shopper’s unique needs will attract new customers and encourage loyalty among existing ones. But what fuels personalization?

• Customer data from IRL observation and analysis: How often do they frequent a store? Do they only buy full-price items or wait for sales and coupons? What kinds of items do they purchase?
• Customer data from online shopping history and surveys
• Regional sales and offerings
• Departmental sales and offerings

One study reported that 60% of consumers are more likely to become repeat buyers after a personalized shopping experience with a retailer. We definitely expect that percentage to rise dramatically in the next couple of years, making this one of the retail experience trends with real staying power.

2) Sensory immersion

Tell stories through flawless and surprising visual merchandising. Stores should showcase not only products, but also the brand’s level of innovation and consideration for its customers’ expectations. Make sure visual merchandising complies with health and safety regulations, but also put the same messaging and products online.

London’s House of Vans, near Waterloo Station, houses a gallery, a VansLab artist incubator, a cinema, cafés, bars and even a skatepark; opportunities for live events abound. It is the largest permanent venture by Vans globally and the first European edition of the House of Vans, following the first in Brooklyn NY back in 2010. There’s also a “gifting suite” where visiting musicians, artists and other influencers are presented with Vans clothing and footwear.

Via House of Vans, the company talks to its customers directly, immersing them in their brand, without a primary focus on making a sale. What’s more, it reaches its customers directly, “in the wild,” gaining insight into their lives when they’re not shopping.

3) Virtual experiences to match IRL

As customers get more comfortable buying products through social media, they also access a whole new way to interact through those platforms. More than one in three retailers plan to invest in livestream shopping in 2022, while 30% will also implement virtual reality (VR) shopping. Livestreaming can be as simple as using an iPad to show customers what’s available in store through a virtual shopping appointment, or by using Instagram Stories to showcase new stock.

Virtual reality is another strategy retailers are using to help customers experience products before adding them to their carts. VR tech can be an effective way to improve the overall try-before-you-buy experience, especially for Gen-Z and Millennial consumers. To invest in the right digital innovations, start small to grow incrementally later. VR can also teach shoppers about the items they’re buying.

Nike uses AR and VR in their physical stores. Customers can scan shoes or clothing to view information, or they enter a VR world to experience the different steps in Nike’s supply chain to “experience” how and where items are being made. Additionally, Toms, the shoes and apparel company, installed VR in hundreds of their stores where customers the ability to transport themselves to Peru. Toms donates $1 of every $3 they make to those who work within their supply chain.

Additionally, half of consumers expect to have the option to buy online and pick up in store. (Some retail insiders call this BOPUS.) Contactless payments, self-checkout kiosks and mobile checkouts are becoming increasingly mainstream, too. Not only did these create valuable frictionless shopping journeys in response to Covid restrictions, but they also enabled innovative retailers to gather precious data insights.

Then, of course, there’s DTC. But who hasn’t been burned after buying something from a highly-curated, aesthetically pleasing Instagram account, just to be disappointed when it arrives. So we now welcome IRL experiences to match virtual.

Three years ago, Instagram launched its @shop account to highlight (and/or make money off of) small businesses on the app. Fast forward to May 2022, when the company opened its first retail pop-up store in NYC to showcase some of the most popular @shop offerings. The physical store — plus Instagram-owner Meta’s huge ecommerce push — was designed to build better association between in-app posts and physical products, while also highlighting creators. (And also making a bit of $$ off them by offering marketing muscle to smaller businesses who don’t have those resources.)

The pandemic’s experiential retail legacy is still taking shape. But in the short term, it feels safe to say that consumers just want to feel valued. Our energy is depleted from the Covid of it all, so a trip to the store needs to provide more value in less time. We want to leave an IRL shopping experience having found what we needed — with some surprises along the way.

Join us in XP Land. A community for experiential creatives and experience-makers, brand leaders and IP-owners, space stewards and venue visionaries — all of those in the business of epic gatherings and live, immersive storytelling.