McKinsey says that 71% of consumers expect personalized interactions. If that doesn't happen, 76% of shoppers will become frustrated. This shouldn’t come as a surprise because the modern consumer is increasingly demanding, and personalization is the fastest way to meet their expectations.
So, retailers who want to remain relevant and get the increasingly elusive attention of consumers must aim to stand out. Personalization transcends product recommendations; it's now about consistently offering unique experiences.
That's where experiential retail, or "retailtainment," comes in. This term describes any experience a shopper has in-store or online that stretches beyond the traditional transactional relationship, and it's quickly becoming a differentiator for brands.
This article explains the concept, its benefits for brands and shoppers, and the future of experiential retail as we foresee it.
What is experiential retail?
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Experiential retail is a strategy that’s focused on creating memorable and engaging customer experiences rather than just selling products. The idea is to provide a unique, immersive, and interactive shopping environment that encourages consumers to connect with the brand on a deeper level.
For example, the Samsung 837 store in New York City creates an immersive experience for customers by allowing them to try out Samsung's latest products. The store's setting is unlike traditional stores where you find rows of products on shelves waiting to be purchased.
Instead, you encounter interactive displays, virtual reality stations, and an area to try out Samsung's latest gadgets. Visitors can experience a virtual reality roller coaster, create a personalized augmented reality (AR) emoji, and even attend workshops and live events hosted in the store. The aim is to create a memorable experience for visitors, encouraging them to build a deeper connection with the Samsung brand.
NIKE BY YOU is another perfect example of experiential retail, but this time, in digital commerce. With NIKE BY YOU, Nike allows customers to co-create their shoes. As a result, it leverages user-generated content to help customers connect with the brand on a deeper level.
The shift from traditional to experiential retail
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Changing customer expectations and preferences have led to a demand for more personalized and immersive experiences. Consumers are seeking unique and engaging online and offline interactions with brands.
Social media and an online presence have become increasingly critical as customers look to share their experiences and rely on recommendations from their networks. Consequently, it’s important to ensure consistency and authenticity across channels.
Technology is also playing a significant role in shaping experiential retail. AR and virtual reality (VR) can create immersive experiences while artificial intelligence (AI) and data-driven personalization help tailor shopping experiences to individual preferences.
For example, Nike offers VR and AR in its physical stores. Customers can scan items, such as shoes or clothing, to view information or enter a VR experience to see how Nike's products are made.
Brick-and-mortar stores are increasingly evolving to incorporate experiential retail elements. Store designs and layouts are now more focused on creating interactive and engaging environments along with integrating technology to enhance the customer experience.
Experiential retail in eCommerce
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When online shopping became a thing, businesses had to make sure their different websites were easy to find and products were simple to order. However, with brick-and-mortar stores now stepping up and customers becoming more savvy, online stores have had to adapt again.
Adapting experiential retail strategies for online shopping involves:
- Creating virtual showrooms and 3D environments.
- Personalizing customer experiences through artificial AI-powered recommendations.
- Offering interactive content and live shopping events.
- Including credit-type payment options such as Klarna and buy now pay later catalogs.
In May 2016, Alibaba's Taobao Live began a new era in sales. By coupling a live stream broadcast with an online store, the Chinese retailer pioneered a powerful new approach that allows users to shop while watching.
Live commerce quickly became integral to Singles' Day sales campaigns in China. It also proved an effective tool for increasing customer engagement. Taobao Live's Singles' Day presales campaign generated $7.5 billion in total transaction value during the first 30 minutes of 2020.
Experiential eCommerce also benefits from user-generated content because it provides social proof and makes the experience feel more authentic. Strategies include:
- Integrating social media.
- Showcasing product reviews and testimonials.
- Building interactive galleries and communities.
Integrating omnichannel strategies for a seamless shopping experience
Omnichannel strategies aim to create a consistent and seamless shopping experience across channels. This is the case whether a customer engages with a brand in-store, online, or through social media. It ensures that customers can easily transition between various touchpoints while maintaining context and personalized experiences.
The importance of a consistent brand experience across channels
A consistent brand experience helps build trust and loyalty among customers. It ensures they receive the same high-quality service no matter where they interact, reinforcing the brand’s identity and making it more memorable.
For instance, if you have a Shopify and Etsy store, an Etsy Shopify integration will ensure a seamless shopping experience whether customers find your products on Etsy, Shopify, or your social media platforms. A unified omnichannel presence can enhance your brand's image and create a more immersive experience for customers.
Combining physical and digital touchpoints
Integrating physical and digital touchpoints, also called phygital, allows brands to provide customers with a seamless shopping experience no matter which platform they prefer. This approach can help brands reach a wider audience and cater to different customer preferences.
Leveraging data and analytics for personalized experiences
Data and analytics are crucial for understanding customer preferences and behaviors and allowing brands to tailor their offerings and create personalized experiences. Customer loyalty, engagement, and satisfaction can be increased in this way.
Challenges and opportunities in experiential retail
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Balancing customer privacy and personalization
One significant challenge in experiential retail is finding the right balance between providing personalized experiences and respecting customer privacy. To deliver tailored experiences that customers appreciate, brands need to handle customer data responsibly and transparently while also complying with regulations such as GDPR and CCPA.
Adapting to changing consumer behaviors and expectations
Consumer preferences and behaviors constantly evolve and are driven by technological advancements, generational shifts, and economic conditions. Brands must stay agile and adapt to these changes to remain relevant and competitive in the experiential retail landscape.
Staying ahead of technological advancements and innovations
Innovative technologies are continually emerging. While challenging, they offer new opportunities for creating immersive and personalized shopping experiences.
Brands must stay informed about the latest technological advancements and be willing to invest in and adopt new solutions to enhance their experiential retail strategies. One example is using a unified communication system to bridge communications between employees and customers.
Case studies: successful experiential retail examples
Several brands have now successfully implemented experiential retail strategies to enhance their customer experiences. They include:
Apple
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Apple Stores are designed to create immersive, educational, and interactive environments where customers can test out and explore products in a hands-on way. Each store has knowledgeable "geniuses" who provide personalized assistance and technical support to enhance the customer experience.
Apple Stores also host workshops, classes, and live events, turning these retail spaces into a hub for learning, creativity, and community-building. This approach to experiential retail has helped Apple create a loyal customer base and establish itself as a leader in technology and retail innovation.
LUSH
LUSH Cosmetics is another brand that has successfully embraced experiential retail to create a distinctive shopping experience. Its stores engage the senses with bright colors, enticing fragrances, and hands-on product demonstrations. Customers are encouraged to touch, smell, and try out products, making shopping interactive and enjoyable.
The cosmetic brand's employees are also knowledgeable and passionate about its values, such as ethical sourcing, cruelty-free testing, and environmental sustainability. This enables them to educate customers and create a deeper connection between the brand and its audience.
LUSH's experiential retail approach has led to a loyal customer base. It’s also helped create a strong brand identity centered around ethical consumption and sensory experiences.
What does experiential retail mean for the future of shopping?
Experiential retail is revolutionizing the shopping landscape by focusing on engaging, immersive experiences. The future of digital communication will play a vital role in shaping this as technology integration becomes more prevalent in both online and in-store environments.
Advancements in AR, VR, AI, and natural language processing (NLP) will enable more interactive and personalized shopping experiences. Internet of things (IoT) devices and wearable technology will facilitate targeted marketing campaigns. This will ultimately result in increased customer satisfaction, loyalty, and trust.
As the retail industry evolves, businesses must stay agile and adapt to the ever-changing landscape. Embracing digital communication advancements and integrating them into experiential retail strategies will be crucial for brands to remain competitive and provide the immersive experiences consumers demand.
Published May 31, 2023
