Retailers are increasingly investing in experiential stores, providing shoppers with unforgettable experiences to encourage them to keep on visiting the high street.
From wine bars and ‘do-it-yourself’ restaurants to yoga sessions, book groups and nail and hair salons, retailers are increasingly turning to experiential retail as they battle for footfall.
Over the past 12 months, there has been an explosion of shops placing entertainment at the centre of their offering.
Experiential retail is bigger and bolder, and a strategy in its own right. It is something we will see more of in 2017 and beyond, especially with the advancement of new technologies, such as augmented and virtual reality
Sarah Johns, Verdict Retail
Ranging from fashion retailer Oasis’s Tottenham Court Road flagship, complete with a cafe bar and salon, and Ikea’s Shoreditch pop-up shop, cafe and restaurant through to book groups at Foyles’ new Chelmsford store and complimentary in-store yoga sessions at sportswear specialist Lululemon, retailers are moving far beyond the in-store promotions and marketing seen in recent years.
“Experiential retail is bigger and bolder, and a strategy in its own right,” says Sarah Johns, associate analyst at Verdict Retail.
“It is something we will see more of in 2017 and beyond, especially with the advancement of new technologies, such as augmented and virtual reality. In an ever-more competitive and challenging retail landscape, retailers are vying for consumer attention and experiential retail is a great way to achieve this.”
Need for engagement
According to Andrew Phipps, head of retail research at property agents CBRE, research due out this autumn shows that millennials place a far greater emphasis on being engaged in-store than they do on customer service.
They don’t want assistants asking ‘Hello, can I help you?’ What they do want is elements in store to engage them while they are there
Andrew Phipps, CBRE
“They don’t want assistants asking ‘Hello, can I help you?’ as their view is that they have done their research and know what they want,” Phipps explains, “What they do want is elements in store to engage them while they are there.”
This is why retailers who are not trying to engage shoppers in this way will struggle, says Sue Benson, managing director of retail and brand consultancy The Market Creative.
However, she admits that it is not always easy to prove the business case for making changes to the store portfolio – whether big or small.
“Stores can no longer serve a purely transactional function, but that can be hard to justify at a commercial or board level,” she explains.
“Depending on what a retailer is offering, it could mean developing a new commercial or business model, or a new platform. You aren’t likely to get the same return on experiential space, therefore it’s hard to justify a business case for it.”
For this reason, she believes that fashion retailer Oasis made a smart decision by bringing in partners to run both the cafe bar, Saucer & Spritz, and the Pin & Polish salon in the Tottenham Court Road store – the first of its kind in the Oasis portfolio.
“That means Oasis can focus on what it does well – selling fashion,” Benson adds. “The partnership approach has all the benefits of developing that customer relationship without the need to invest in a new way of business.”
Hash Ladha, chief operating officer at Oasis, admits that the retailer has made a “prominent move” towards experiential.
He adds: “As a brand, we are always looking for new ways to enhance the customer’s journey, both online and in store, and this is a really positive first step towards transforming her experience.
“We know she expects more from her time spent on the high street and we absolutely have to respond to her needs, presenting valuable and exciting propositions to her. The ultimate aim is to put one or both propositions into existing stores, as well as into our new stores.”
While for the most part Ladha says the cafe bar and salon attract customers who “love Oasis and our quirky brand values”, he says it is also attracting new customers who come in to work or meet friends.
At the same time, he adds that the store is becoming a hub for the area.
“With lots of exciting new retailers popping up close by and some big agencies located in the area, there’s a real sense of community emerging already,” says Ladha.
Lifestyle retailer White Stuff has also trialled a range of different initiatives in its stores, such as libraries, book groups and Swap Shops.
Julian Baker, White Stuff marketing director, says it is “focused on creating meaningful and memorable relationships with customers”.
“Overall, we strive to be at the heart of the community and pride ourselves in getting involved, whether we are hosting weekly workshops or running local book clubs.”
Bringing people together, in this case around food, was the insight driving furniture retailer Ikea’s launch of The Dining Club, which ran from September 10 to 25 in Shoreditch this year. The pop-up featured a DIY restaurant where guests could work alongside chefs, a cafe, kitchen showrooms and a homeware store, as well as space for cooking workshops.
“Our Life at Home report showed us people were spending less time cooking and eating together,” says Jordi Esquinas, Ikea food business leader. “It has become functional. We wanted to create a nice experience around food to share with friends and family.”
While Ikea has dabbled in this kind of experiential work before with its Breakfast in Bed Café, which ran for two days last year, also in Shoreditch, it is the first time the retailer had launched something of this scale.
“It combined many elements, but you could feel it was Ikea in the way we showed the ranges and kitchens to inspire,” Esquinas adds.
He says the profile of visitors varied between weekends and weekdays, when local workers dominated the cafe.
The beauty of doing this kind of campaign is that you aren’t tapping into one profile, but everyone is interacting with the experience. We are just trying to create different and new experiences to inspire people
Jordi Esquinas, Ikea
“The beauty of doing this kind of campaign is that you aren’t tapping into one profile, but everyone is interacting with the experience. We are just trying to create different and new experiences to inspire people.”
“What we have discovered is that wine is one of two or three areas around the store where people will dwell and it offers a different experience to the cafe or bakery,” Wysome adds.
For Waitrose, the extension into wine bars has been more organic, developing over several years as the supermarket looked to broaden the appeal of its wine area.
“We didn’t start off saying we need a wine bar,” explains Anthony Wysome, head of store development at the supermarket chain.
“The intention was to leverage the skills of our wine specialists, and it started off by adding a table in the area that acted as their base. It indicated our intention, but it was neither Arthur or Martha, so we thought we would try a wine bar.”
There are now seven bars, including King’s Cross and Canary Wharf in London, Chester and Basingstoke, across Waitrose’s 350-strong store network. As well as offering wine, the bars have a food menu based on the retailer’s delicatessen and bakery offer.
What we have discovered is that wine is one of two or three areas around the store where people will dwell and it offers a different experience to the cafe or bakery
Anthony Wysome, Waitrose
Adding a sense of warmth to the bars has been the challenge, he says, admitting that supermarkets do not have a track record for good design.
“Granary Square has been a gift on that front but Worcester is a classic new-build large white box,” Wysome says. “The first couple we opened were good wine bars for a supermarket, but now we are evolving something that is more credible and stands on its own legs.”
Once again, building a sense of community around the brand is a key part of the strategy. “Community is critical to Waitrose, but anything that allows people to sit down over food and drink is hopefully an enhancing element and I hope that it is helping that community,” says Wysome.
Experiential retail is also gaining ground across Europe and demonstrates a growing trend to connect with consumers across all channels.
CBRE’s Phipps points to key examples, such as Berlin’s Bonanza Roastery Café, which has a 3,200 sq ft flagship featuring a cafe with a coffee-paired menu; the Beefbar Butcher Shop in Monaco, where shoppers can select meat to buy or eat in the restaurant, and Copenhagen’s Crime Passionnel, a perfumery that offers private shopping experiences, including opening in the middle of the night.
Experiential retail does not have to mean a huge investment by retailers, but it does have to be something more memorable than the everyday shopping experience, says Verdict’s Sarah Johns. “It is not just confined to store and it is not just a fad – it’s a new way of connecting with customers, offering something unique and rewarding customer loyalty.”