The retail sector hasn’t exactly entered the decade on a high.
News that sales decreased by 0.1% last year has left retailers feeling rather gloomy about their prospects, and criticism is being levelled at the industry’s slow response to shifting consumer preferences.
Consumers are hungry for experiences, not things. They want to feel fulfilled by their purchases, and simply buying and owning stuff is not cutting it any more. The science behind it is simple – regardless of economic uncertainty, we can find happiness and status in experiences. Especially those that align with our values and interests.
“The science behind it is simple – regardless of economic uncertainty, we can find happiness and status in experiences”
And issues relating to fast fashion and throwaway gifts aren’t always taking priority for businesses. We’re living in the era of the eco-conscious consumer, yet retailers are struggling to keep pace with heightening consumer demand for more sustainable products.
A fall in discretionary spending, prompted by rising shop prices and low wage growth, is also negatively affecting retailers’ bottom lines. Shoppers have less disposable income than ever to spend in store and the economic impact is being felt on high streets up and down the country.
But the experiences sector is thriving. At Virgin Experience Days, our sales growth for December was up by over 50%, while traditional gift retailers struggled.
Stuff, not things
People appear to be shifting their spending in earnest. As well as being driven by environmental factors, the value of making, educating and bonding with friends and family is increasing in our busy lives.
There are learnings here for the retail sector, especially as we seek to revive Britain’s ailing high street and appeal to a broader range of consumers.
Our high streets have become too fixated on transactions. High streets have traditionally been at the heart of our communities, but today they’re a place to shop and not much else.
As more people reject physical products in favour of doing stuff, retailers should rethink their offerings and consider how they integrate the so-called ‘Mars bar approach’ – the belief that we must build retail centres that aren’t just places to buy stuff, but also areas where you can ’work, rest and play’.
The ’rest and play’ part suggests the experience economy will start to play more of a role, and we think a lot can be gained from increased collaboration between retailers and experience providers, particularly when it comes to supporting businesses in the local economy.
We note that some more future-facing retailers are already attempting to reframe the shopping experience by integrating different activities. John Lewis’ so-called ‘experience playground’ in Southampton, for example, bids to reimagine the shopping journey and boost sales via in-store events and demonstrations.
Sephora has pioneered the experience retail model. The retailer allows customers to ‘play’ with products in store and offers beauty services and classes to their customers, as well as an interactive face chart that helps you find customised products and application methods.
It’s been proven that different kinds of experiences and activities like those can drive footfall to stores. If retailers are daring enough to adapt their business models and provide spaces that accommodate experience-based activities, they will thrive again.
“Anything that smacks of gimmick will fall flat in the eyes of the consumers”
But it does require a level of bravery and the admission that the current set-up no longer works.
Retailers should also be careful to only offer experiences that are authentic, valuable and relevant to the brand. Anything that smacks of gimmick will fall flat in the eyes of the consumers.
The experience economy is a strategic opportunity to not only move beyond physical products, but to build closer, more meaningful relationships with customers. And achieving that bond will arguably result in repeat visits to stores and town centres, increasing brand loyalty.
Embracing the virtues of the experience economy would be a significant change in tack for retailers. The scale and magnitude of the project isn’t one to be downplayed, but the disparity in sales performance between tangible goods and experiences this Christmas suggests that the sector could have a lifeline, if it is willing to innovate and diversify its offer.