Is ‘experiential retail’ taking a new form?

Discussion
Source: West Elm Hotels
Mar 28, 2017
Laura Heller

There are few buzzwords more buzzier today than “experiential retail.” Everyone from apparel merchants to supermarkets are being told to embrace this trend. But what does experiential retail mean?

As it turns out, it means something entirely different to different retailers.

West Elm is taking the notion to an extreme, with plans to open a group of hotels that will create a hospitality experience for the Williams Sonoma-owned home furnishings brand. There are five locations already announced — Charlotte, Detroit, Indianapolis, Minneapolis and Savannah. The first, in Detroit, is on track for a late 2018 opening date.

The locations strategically target Millennials by way of location in the downtowns of emerging or re-emerging cities. Each location will host events in addition to overnight guests. The goal is to be highly localized and create something for locals and visiting guests alike, according to Peter Fowler, West Elm VP of hospitality and workspace. The furnishing will, of course, be available for purchase, as well.

West Elm hotels are not just a new experience, but a new channel of retail. The plan is to open very few new stores and focus on hospitality instead.

“The Millennial mindset shapes what we do as a brand, but hospitality has a much broader reach,” Fowler told Shoptalk attendees last week in Las Vegas. “In two years, 50 percent of all business travelers will be in the Millennial demographic.”

Millennial spending may be shifting to experiences in large numbers, but the Internet of Things (IoT) is taking a bit longer to make a financial imprint. Still, Target is looking to IoT to help create unique experiences in stores. “IoT is going to be a thing, the question is when, not if it’s going to happen,” said Gene Han, VP of consumer IoT and head of Target’s San Francisco innovation office.

Open House debuted in mid-2015 and looks a lot different today — less futuristic with more vignettes to showcase how IoT looks and works in the home. Shoppers can touch, play and experience the product. The space is also hosting events for the local tech community.

“This is where physical retail should thrive,” Han told Shoptalk attendees.

West Elm’s program is a partnership with hospitality management team DDK. Target is working with brands to create a compelling IoT experience.

DISCUSSION QUESTIONS: How do you define experiential retail? Do you see value in retailers such as Target and West Elm investing in new formats or channels to create better customer experiences? 

Braintrust
"It’s easy to talk 'experience,' hard to deliver unless you know what experience customers are looking for."
"Just because “experiential” sits near the top of the buzzword bingo chart does not make it a bad concept, but perhaps a bit annoying."
"“Experience” doesn’t have to equate with “gimmick.”"

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23 Comments on "Is ‘experiential retail’ taking a new form?"

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Bob Phibbs
BrainTrust

Seriously? A group of hotels targeting Millennials who are notoriously thrifty?

How about having someone actually greet a customer in your stores? Or getting to know them as a person instead of using a showroom like a museum? Retail is being brilliant on the basics — your own four walls — before you believe your own PR on something like this and believe it will sufficiently move the needle.

Jasmine Glasheen
BrainTrust

Haha well said, Bob. Being overtly sold to is a stressful experience and not one many Millennials would choose over the comfort of an Airbnb. Of course, if hotel events are free or they get a can’t-miss musician Millennials will attend, but this hotel chain won’t prove a worthwhile investment for Williams-Sonoma.

Jeff Miller
BrainTrust

Bob: you nailed it! Was going to write the same thing. How about “experimenting” with providing top notch and dedicated service and greeting people with a smile? All retailers, brick and mortar and digital, always seems to want to chase a new toy — snapchat before even having your store listed in Google Business, new experiences before real staff training and engagement. To win long term (and it is easier said than done) for brick and mortar will be via people — doing the basics and beyond of customer service every day.

Phil Masiello
BrainTrust

At this point, any store-based retailer needs to invest in new formats to create a better customer experience.

We are in the midst of a retail apocalypse with hundreds of stores closing in 2017. Entire chains are shutting down their physical locations. Store closings from mall anchors Macy’s, Sears and J.C. Penney will have a domino effect on the smaller stores in the malls.

Every retailer needs to ask themselves; why would a customer shop with me? What problem do I solve for the consumer? What can you buy from my stores that you cannot find online for less? What is it I can say about my stores that my competitor cannot?

All consumers, not just Millennials, want a better store experience. Those who can provide it will survive, those that cannot will fall by the wayside.

Ken Lonyai
BrainTrust

“Everything in life is an experience” — that’s my mantra. Retail is no exception. But “experiential retail” is the newest buzzword trend (displacing showrooming) because it sounds cool and is vague enough that it’s easy to claim as a merchant’s goal. Therein lies the problem.

It’s easy to talk “experience,” hard to deliver unless you know what experience customers are looking for.

So things as subtle as a hiccup-free e-commerce checkout, accurate real-time inventory information, pricing accuracy, knowledgeable staff, fast checkout lines, hassle-free returns, personable/immediate phone support, attentive management and about 10,000 other small factors cumulatively all contribute to delightful experiences. Sometimes it is enabling customers to experience products before buying in simulated scenarios and sometimes some WOW factor (retail as theater) is experience as well, but if the little details aren’t right, all the high-touch moments won’t prevail enough to matter to shoppers.

Ian Percy
BrainTrust

Following our usual MO we’ll turn “experiential retail” into a thing and make it useless. The mistake is that we are pretending to make this an experience for the consumer when, in truth, it’s an experience for the seller. Increasing the advertising assault on consumers is not a welcome “experience.”

And for goodness’ sake, who on earth after a six-hour flight in a middle seat with a three hour layover at DFW and a 20 minute wait for a taxi finally collapses into the hotel room and exclaims: “Oh look, it’s Williams-Sonoma home furnishings. What a wonderful experience!”

Lyle Bunn (Ph.D. Hon)
BrainTrust

Activating the senses to evoke emotions and memorable interactions has been the deliverable that has made physical retail successful. As approaches such as fashion shows, celebrity appearances and workshops have provided this in analogue, more replicate-able, sustainable and lower-cost digitally-enabled approaches are proving very effective for branding, merchandising and generating buzz. They are becoming the new cost-efficient normal. Experiences are personal and each person responds to games, exhibits, interaction and customer engagement differently. Digital can customize each interaction, and since we all want to take a piece of an on-location experience with us, mobile should naturally be integrated into the digital experience.

Dave Wendland
BrainTrust

Experiential retail to the extreme. Perhaps West Elm and Target are the two latest examples of presenting retail merchandise and engaging with shoppers differently. To that end, the experience must make sense … and drive dollars and cents. What is experiential retail? To me it is passionate, genuine engagement and shopper involvement. This is in stark contrast to retailers that simply offer a place for shoppers to walk aisles and passively select items from shelves.

To West Elm’s credit, they are definitely thinking outside the traditional box. That’s a good thing. And I like the personalization/localization piece of the puzzle — especially around events, etc. However, will the return on investment in this new hotel venture pay off for them? Will Millennials flock to these new hotels and, as a result, buy more West Elm furnishings? I’m not saying it won’t necessarily work, however I believe it’s a reach.

As for Target and their new experiential prototype store, it’s designed to create a mood or a feeling. That may also work for them. Of course, supporting their new approach needs to extend beyond their four walls with consistency.

Liz Crawford
BrainTrust

Experiential retail? It’s about creating a compelling physical destination for shoppers. This could be a Costco-type treasure hunt, a sensual delight like the Whole Foods produce section or an invitation to play with color as at a MAC Cosmetics counter.

Sure, staging the whole scene is immersive, but is it compelling? Connected to brand? And importantly, will this experience reflect well on the brand? I could imagine a scenario where a consumer might feel that the furnishings remind them of staying in a hotel and therefore deselect them.

Cathy Hotka
BrainTrust

“Experience” doesn’t have to equate with “gimmick.” The store experience in Publix is outstanding because of unusually good SKU depth and employees who go out of their way to make customers happy. Throw in a few tasting stations and you’ve got a recipe for true customer loyalty.

Ricardo Belmar
BrainTrust

Experiential retail as a concept is great, but it doesn’t replace key fundamentals — having merchandise shoppers want, delivering great customer service (Bob nailed that one!) and understanding what problem you are solving for your customer. That last one transcends retail and applies to almost every industry in both the B2C and B2B worlds.

I think the hotel idea is a great concept, but I don’t think we’ve heard what the price point will be. If you’re targeting Millennials for hospitality price will be just as important.

I don’t believe retailers need to turn their stores into a museum, but they do need to provide something more than just a product on a shelf — that’s something online can do better for most product categories. Does anyone remember when we used to say people wouldn’t buy apparel online because it wasn’t the right experience? Look at Amazon and Macy’s now! “Experiential” isn’t always what we think it is — just as it was true in retail 100 years ago, you have to know your customer’s needs and deliver accordingly!

Lee Kent
BrainTrust

I totally agree that retail needs to focus on delivering wonderful experiences but not all experiences are over the top. Just wander into a PIRCH store today and you’ll likely find your self still there two hours later. Sipping on a free latte and chatting with their friendly staff. Oh and dreaming about a life style you could have with that spa tub.

What they have built at PIRCH, for example, is a culture. Their employees know that 90 percent of the people who walk into their store today are not going to buy anything, so guess what? They don’t try to sell. They talk about lifestyle and help you dream. Is there value there? Just take a look at their sales per square foot. It speaks volumes.

But that’s just my 2 cents.

Lee Peterson
BrainTrust

Experience is a new way of saying something as old as Egypt. And its definition can come in the ancient form of call and response: “do you know the ____ brand? tell me what they’re like and what it was like dealing with them.” It’s just that now the answer to the ancient question is much more complex than the open markets in Egypt were back in the day. MUCH more!

The customer journey, in its latest form, is happening 24-7. And what you experience along that journey is what the “e-” buzz is all about. Even when you’re just THINKING about said brand. Journey = tactics — who, how, where, when. Experience = emotions — love, hate, indifference (and the reasons behind them). It’s a tough time to be a retailer, especially if you were raised/trained in the days of the Pharaohs.

Adrian Weidmann
BrainTrust

While it’s true that Millennials value experiences over owning stuff, it seems foolish to think that creating an “experiential moment” will lead to a purchase. The store experience should be about selling stuff and as such should be designed to ensure a seamless and valued journey before, during and after the store visit. The store should make that journey easy, direct, educational and inspirational. Creating a museum of stuff will only drive shoppers to move their journey online. This is the ultimate example of showrooming. If that’s the objective, then maybe this approach will prove successful.

Patricia Vekich Waldron
BrainTrust

If “experiential” means somewhere I actually want to go, then I’m all for it! Unique products, great service, pleasant surroundings …

Tom Redd
Guest

I am with Bob — seriously! My Millennial kids just bought their first house and are big on refinishing furniture rather than wasting money on over-marketed brands(as they call them — both are with large ad agencies). I think West Elm is targeting the re-hipped younger Baby Boomers or the 50-year-olds that still consider themselves very cool (common in Minnesota).

Mohamed Amer
BrainTrust

Just because “experiential” sits near the top of the buzzword bingo chart does not make it a bad concept, but perhaps a bit annoying.

Experiential for me is about changing the organizational mindset from selling products to one that engages and connects with customers to co-create their own shopping and ownership experience. They do this by truly starting the journey from the customer’s perspective and not in the merchant’s office. It continues by leveraging technology and data to help deliver personalized experiences with a good dose of empowered store associates that are able to make decisions and can simplify the complex for the customer. It also extends well beyond the immediate purchase to actual ownership and the inevitable subsequent and related purchases.

The value add comes in turning the moments of interactions into a personalized, differentiated and memorable experience in which the consumers can come to feel that they are owners and co-creators. It’s the opposite of mass retail, but armed with the right mindset and technologies, experiential retail can scale and differentiate.

Brian Kelly
Guest
2 months 30 days ago
Retail is changing because consumer behavior is changing. That change seems to have some folks confused. When women were recognized as running the home, retail changed then, too. Not all of it, and some businesses faded. Experience in retail is the “selling model,” the blend of people/service, place, product, price and promo/coms. That experience begins with pretail or at the top of the funnel, the moment when she recognizes a need, continues through a retail transaction and ends in postail when she evaluates whether her shopping goal was satisfactorily completed. All the touchpoints along the journey are the experience. It begins outside the channel of transaction and really never ends as satisfaction leads to another engagement. The behavior resembles a mobius strip, and a funnel makes it easy to discuss/track. In this, the store/site/call center are among the tactics or points of engagement. We all know about different shopper modalities/mindsets which vary based upon the shopping goal. Across the range of shopping missions, the criteria of success of the transaction also varies. So tactical attributes need to vary. The store is among the multiple touch points. The in-store experience needs to surprise and delight the shopper. Recognition of and understanding… Read more »
Scott Magids
BrainTrust
2 months 30 days ago

Even though “experiential retail” is something of a new buzzword, the concept itself is nothing new. Retail has always been less about selling things in stores, and more about creating a useful, positive or otherwise memorable experience to keep customers coming back. With more stores facing closings, it’s important for them to invest in new ways to enhance the customer experience, keeping in mind that such experiences don’t have to be sophisticated or expensive. The most important part of experiential retail is understanding what it is that connects the customer to the retailer, and then acting on that to customize experiences that will resonate with the customers’ biggest motivators.

Elizabeth Meaney
Guest
2 months 30 days ago

I think brick-and-mortar stores do need to move in this direction, considering all the studies showing that Millennials value experiences more than material goods as compared to past generations. Perhaps because experiences such as travel can be shared via social media and become a status symbol in that way? Stores need to evolve into informative, entertaining social centers where we climb an indoor rock wall (AND buy climbing gear), take language classes (AND buy luggage/travel gadgets), learn to cook new cuisines and taste wines and coffees (AND buy groceries). I’m not sure how effective a hotel will ultimately be in selling a furniture style/lifestyle, although the Restoration Hardware restaurant in Chicago is gorgeous and fun to explore! (I’ve still never bought anything from them a year later, however….)

Vahe Katros
BrainTrust

Here’s a possibility: Millennials and the rest are more cautious about buying stuff.

Maybe it’s because of their debts, or their future prospects, or fears of disenfranchisement by AI-robots … but it could be that a large enough segment of an important market may want to experience what they buy before they buy it, especially expensive “stuff” that they’ll own for a while.

Smart and thrifty might be overtaking gilded gold as a destination identity. Perhaps retailing to a customer in the post-consumer-culture-world, requires new thinking … in this category. So, let’s not forget our roots as retailers: go stay at the hotel and learn.

Everything does not begin and end with stores. Things are changing. Don’t be the victim of Einstein’s observation that: “Problems cannot be solved with the same mind set that created them.” We are living in a world where “I don’t know” is the new “I know.”

PS: I bought an expensive mattress made by McCroskey after a stay in a hotel with the mattress (they’ll book you in a hotel that sells their mattress BTW.)

gordon arnold
Guest

Thinking outside the box, as in mom & pop, multi location, and big, always takes us places we know nothing about. The stories we read and hear about are very rarely the jackpot winners. This is simply because we all want to strike it rich without ever working for success. There is even a market for how-to books and learning schools to make us able to successfully win when thinking outside the box. I guess it is not enough to engage the market with what we have using the proven methods and technologies of this century.

Jonathan Price
Guest

Investment in innovative projects and a proactive attitude towards meeting the ever changing demands of today’s customer is to be applauded. As others have noted, this shouldn’t be at the expense of the fundamentals of good retail.

It is worth mentioning that it is usually the moving parts of the retail operation’s function that are impacted or in many cases required to deliver and implement the vast majority of these projects that retailers are investing in, including shifts in the in-store shopping experience, which can be difficult to replicate consistently across a portfolio. In many cases it will be the store operations and communication function and its effectiveness that will help determine whether change is implemented successfully or not.

wpDiscuz
Braintrust
"It’s easy to talk 'experience,' hard to deliver unless you know what experience customers are looking for."
"Just because “experiential” sits near the top of the buzzword bingo chart does not make it a bad concept, but perhaps a bit annoying."
"“Experience” doesn’t have to equate with “gimmick.”"

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