What is the future of retail experience?
The term 'experiential shopping' or ‘retailtainment’ may be relatively new, but the concept has been around for a while.
We've all walked into an Abercrombie & Fitch at some point wondering why topless men in skinny jeans were handing out perfume samples. And yet, we always went back for more, and purchasing that moose covered shirt never felt as satisfying if you ordered it online. Why?
Because shopping is so much more than the act of buying. As consumers, we need a relationship with the brands we buy from — a retail experience.
Shopping has been transformed thanks to ecommerce, new ways to pay, and an increasingly competitive market. So bearing that in mind, how are stores securing their place in the future of retail?
Creating in-house retail experiences
A few years ago, when you entered a high street store like Topshop, that’s all you were doing. Now, when you pay a visit to Topshop on Oxford Street, you’re walking into a nightclub, a hair salon, a cafe, a nail art studio, a piercing bar, and a clothing shop. Equipped with everything their customers could ever need, they've transformed their store into a one-stop shop.
Since almost everything's available online within a few days or hours, physical stores look a bit different. When discussing the future of the shopping experience, Starbucks chairman Howard Shultz points out that retailers who are “going to win in this new environment must become an experiential destination. Your product and services, for the most part, cannot be available online and cannot be available on Amazon.”
Following his statement, The New York Times reported that Starbucks had closed its online store to focus on in-person experiences and planned to launch over 1,000 premium, spin-off stores called “Starbucks Reserve” that would focus on a more tailored, high-end approach.
Bringing tech into the equation
The BBC recently profiled brand strategy consultant Steven Dennis, who claims that thinking of retail “as either online or physical spaces misses the point.”
He envisions a future where “shopping will need to be an amalgamation of both online shopping and physical stores, where customers move seamlessly between the two. Personalised interaction with customers such as intuitive apps and immersive experiences will be fundamental to success.”
Though offline retail currently accounts for 93% of sales, it is predicted to fall to 80% by 2025 and Farfetch founder José Neves caught onto this, quickly finding a way to merge the two.
Farfetch rolled out ‘the retail store of the future’ in 2017. The London-based shop took their ecommerce platform offline by using touch-screen-enhanced mirrors, sign-in stations, and connected clothing racks.
Customers had access to their purchase history, wish list, and account information on screens located in the store, giving sales assistants clues to their individual tastes. The dressing rooms also had smart-mirrors where clients could request new products and sizes to try on.
Every purchase made was then added to their order history, which led to more accurate product recommendations in the future — a win-win for the brand and the consumer.
McDonald’s also found that Evoke-powered touch screens added value to their business and the retail experience. According to their CEO Steve Easterbrook, they found that “when people dwell more, they select more. So there’s a little bit of an average check boost” and customers spend roughly 6% more. The screens also drastically reduce queuing time and provide an all-round smoother experience.
Beyond the screen
Experiential shopping is more than just adding layers and layers of tech to your store, as Vans discovered when they created of ‘House of Vans’ in New York and London. The free venues create a space for like-minded skaters and BMX riders to come together.
Complete with a skate park, regular workshops, and events, the locations are the perfect PR for Vans, and they create a sense of community among customers. That sense of community gives Vans a cult-like following from their target demographic, which is something you can't replicate online.
Warby Parker stays true to its premise while catering to its customers' expectations. In 2010, they started offering glasses-wearers affordable, stylish frames to try before they buy at home. Sounds simple enough, but they are now valued at over $1 billion, so clearly the switch worked.
They've opened up multiple locations across North America, each offering customers a different experience and letting customers try out frames even though the glasses are still sent via post. This creates a retail experience while still retaining Warby Parker's roots.
The good news about retailtainment is you don’t need to break the bank to join the party. Even something as simple as letting customers try on makeup can do the trick.
At brands like Mac and Charlotte Tilbury, if you book to have your makeup done in-store, you’ll have your makeup applied by a professional, and the cost of the makeover will all go towards products in their shop. The result? A “free” makeover and a newly loyal customer.
How payments can make all the difference
According to a study conducted by Visa, British people spend an average of 6.92 minutes a week queuing, and Londoners spend around 10. This may not seem like much, but it adds up to 18 hours a year, and 89% of UK residents claim to have left a shop at one point or another because of the queue.
Shop owners miss out on approximately 10% of customers due to long queues, and 26% of customers who walk away from a long queue will “discontinue their purchase journey completely.”
One guaranteed way to cut down on queuing? Faster, more affordable payment solutions. According to an ACI Worldwide report, customers are looking for the following when it comes to in-store payment:
A seamless omnichannel experience
Payment methods that are easy to understand and use
A secure transaction environment
Shopify found that queues cost the UK retail economy £3.4 billion a year, and over 70% of surveyed customers agreed that paying for products in stores was their “biggest pain point.” So why aren’t we doing anything about it?
by using portable, affordable payment devices, you can turn every member of your staff into a checkout station. The end of queueing is possible, and the data clearly shows how much customers hate queues.
Sure, we could use Amazon Go as an example, but it doesn’t need to be that complicated. Apple has pretty much perfected the payment process.
All of their staff are on the floor, ready to help you make a purchase decision. And once you've decided what product you want, you can pay for it on the sales rep's iPad.
Apple has also made it possible to pay for their products using your iPhone to scan the barcode of the product you want to buy in-store. That means there's never a queue.
But it isn’t just the big guys like Apple who can get rid of the lines; small businesses can too, and we’ve seen this from our SumUp merchants. Mobile POS solutions like our SumUp Air or SumUp 3G cut down queue time dramatically, sometimes getting rid of lines altogether.
Our customers know more, but so do we
We’re living in an age where everything can be found online, including reviews. According to a survey conducted by Podium, 93% of shoppers admit to making purchasing decisions based on online reviews, and 60% of us look at online reviews at least once a week.
What’s interesting is that at least 2 out of 3 of us are willing to pay 15% more for a product or service if the reviews are higher and a quality experience is assured. This is further proof of the significance of customer experiences.
Sara Kleinberg, Head of Ads Research and Insights at Google, writes about how consumers also expect more from retailers in terms of what they deliver:
“Mobile searches for “open” + “now” + “near me” have grown by over 200% in the last two years (for example, “stores open near me right now” and “pharmacy open near me right now”). But “right now” isn’t just about a purchase. It applies to finding information right before the sale and customer service afterwards.”
So consumers are interested in the quality and the availability of products, but are brands communicating well? Apparently not.
60% of consumers “expect brands to provide consumers with information they need when they need it, less than half of them feel that brands are delivering.”
A surefire way to improve online reviews and the overall shopping experience is to communicate with customers. 88% of people prefer brands who keep them in the loop, so let your customers know when their order will arrive, keep your stock list up to date, and have a strong online presence.
Customers have more information than ever to use when deciding where to shop, but businesses have just as much. Access to new data points and demographic insights means shop owners can stock exactly what their customers want at the prices that they want.
“While product merchandising was once an art, today it is just as much a science. To better reach these empowered shoppers with the right products at the right price, retailers must put insights, not just the product, at the heart of every activity and objective. That means using data to power product merchandising decisions through smarter product assortment and demand-driven sales strategies.” – John McAteer, VP of Sales, Retail, and Technology at Google
Finally, one thing to keep in mind as retail evolves is sustainability. The environmental impact of producing goods has always been a concern, but it's a much hotter topic now.
The fashion company Lyst reported a 47% rise in consumers actively seeking out sustainable and ethical fashion with search terms like “organic cotton” and “vegan leather.”
The Guardian uncovered that roughly 1 out of 8 Brits are now either vegan or vegetarian, and 21% of the country claim to be ‘flexitarian’, opting for a minimal meat diet. It's clear that ethical consumerism is important to the public, as 73% of them claim they would change their shopping habits to reduce their environmental impact.
Sure, sustainable products are often more expensive to produce than simpler alternatives, but over 41% of the public say they would be happy to pay more for a product that was produced ethically and contains natural ingredients.
And, companies and fashion brands alike are now starting to release transparent reports on their carbon footprints. Take the H&M sustainability report for example, where the retail company highlights their quest to be eco-friendly by sharing things like, “today, 57% of the material used by H&M group is recycled or sustainably sourced.”
The government's recent ban on straws in the UK was a small but effective push to reduce environmental impact. It prevented the production of over 8.5 billion plastic straws a year. While this is a baby-step, it shows the effect of taking sustainability into consideration and how people are getting on board. The retail experience keeps evolving, and shop owners will have to keep and eye on trends and stay connected to their customers' needs if they want to succeed in these new retail environments. The good news is, everything you need to make this happen is out there. For more advice on how to keep your business in the limelight, visit the SumUp blog or take a look at what we offer merchants here.