The Rebirth of Experiential Retail
COVID-19 has shut down the experience economy, but experiential retail will rise again following a digital rebirth
Experiential retail was having a moment in the late 2010’s. Brick-and-mortar retailers were challenged to compete with the efficiency and convenience of ecommerce platforms, and more and more stores decided to double down on improving their in-store experience and hoped to draw in customers via add-on services. Nordstrom added hair and nail salons to some of their stores while Macy’s acquired and integrated the Story concept shop to provide narrative-driven retail experiences. In January, 68% of retailers surveyed said they were making investments into experiential retail for 2020.
Then COVID-19 hit and forced all the non-essential stores to close. Some of them will never reopen, as U.S. retailers are on track to close as many as 25,000 stores this year as the pandemic upends shopping habits, per Wall Street Journal. The ones lucky enough to reopen are understandably scaling back on the in-store experiences that they used to offer out of public health and hygiene concerns, which could result in a less engaging shopping experience and further tip the scale towards ecommerce’s favor. Even if retailers want to restart experiential retail, lingering hesitation around physical contact and sanitation among shoppers will likely persist until a vaccine is made widely available.
Still, our desire for unique, shared experiences won’t evaporate, and neither will experiential retail. As necessity is the mother of invention, experiential retail is being forced to evolve and adapt to the new reality. Zoom-based experiences went mainstream overnight, and many late adopters are finally giving online shopping a try. Meanwhile, retailers are also starting to experiment with new setups to bring back in-person experiential retail in a safe and responsible manner.
The Digital Rebirth of Experiential Retail
In the short term, most experiential retail experiences will move online out of necessity to accommodate health safety concerns. The accelerated development of online experiences and ecommerce will merge to re-birth experiential retail online, giving brands a great venue to build brand equity and drive sales directly.
Beyond retail, this pandemic has forced many experience-driven industries like travel and out-of-home entertainment to reinvent themselves online. Whether it’s the series of virtual travel experiences curated by Atlas Obscura or Expedia, or the next-level virtual concerts in Fortnite that drew nearly 28 million viewers, online experiences demonstrate the viability of recreating offline experiences online and provide retailers with a proof-of-concept to follow. Before long, brands like Lululemon, Sur La Table, and Apple all started offering online versions of their in-store events, respectively.
On the other side, shoppable content has been flourishing online, particularly on social media, thus allowing retailers to easily connect online experiences directly to sales channels. Facebook and Instagram recently added shopping tags to allow retailers to turn their posts into lead generation. TikTok is reportedly testing a “shop now” button for top influencers, which could open up another channel for retailers to push shoppable content. Even Google is working on a new shoppable video platform called Shoploop to seize the accelerated rise of content-driven ecommerce.
Moreover, live content has gotten a significant boost during the lockdown period, and because live allows for the kind of real-time interactivity that transforms passive content consumption into active participation, live video on social platforms has also become a popular channel for forward-thinking retailers to conduct virtual experiences and engage with shoppers.
In the long run, moving experiential retail online will also help retailers to better scale experiences and reach a bigger audience. In-store experiences inherently carry a capacity limit, but online experiences break down the geographic barrier and democratize the access to all shoppers. Swedish payment app Klarna launched a digital pop-up experience that gives consumers a chance to get sought-after items from brands including Sonos, Adidas, Mejuri, and Fender for free, but they’ll only have 48 hours to do so by using Klarna. Marrying interactive live experiences with social commerce as a discovery and retargeting channel, retailers would be able to merge these two trends and create shoppable virtual experiences.
Specifically, brands and retailers should consider experimenting with the following tactics to create successful and interesting online retail experiences:
Lean into interactivity: Real-time interactivity is what separates online content from experiences, and it’s one element that adds the personal touch that is crucial to successfully translate offline retail experiences online. For example, D2C furniture retailer Burrow quickly pivoted their in-store experiences online, with a team of interior designers available for remote design consultations, along with a weekly Instagram Live series, to keep shoppers engaged.
Make it easily shareable: Part of what makes shopping a fun activity is to share it with family and friends. Online shopping has long lacked that social element, but with upcoming features from the likes of Snapchat and Amazon, co-shopping experiences are definitely on the horizon. For now, retailers should strive to make their online sessions easily shareable so as to enable your best customers to become brand ambassadors.
Explore virtual venues and digital goods: Video games, especially MMO games, are being repurposed into virtual event venues, redefining how live experiences could be executed online and offering new places for retailers to bring their retail experiences to life. For example, Net-A-Porter created avatar clothing skins in Animal Crossing, where players can purchase the virtual clothing in the game to dress their avatars. On top of that, players are able to buy the real version of the clothing on T-mall. Taking it one step further, Reference Festival, a Berlin-based fashion organization, created a virtual fashion show in the game, consisting of Animal Crossing avatars dressed up in current season looks inspired by Loewe, Prada, and GmbH.
Reinventing Offline Experiential Retail with Technology
While experiential retail continues to pivot online, brick and mortar stores will have a longer transition period to work out how to revamp their in-store experiences by redefining “experiential,” and rethinking the role of in-store technology in facilitating those experiences.
It goes without saying that, when stores reopen, retailers should focus on building trust and reassuring shoppers that proper cleaning and sanitization protocols are in place to ease lingering concerns over public hygiene. This means using technology for more practical purposes such as monitoring in-store traffic and minimizing touching shared surfaces. Instead of a touchscreen, retailers need to consider integrating QR codes or other proximity technologies into their digital signage and allow shoppers to offload some of the touchscreen interaction off onto their own mobile devices. The upcoming App Clip feature in iOS 14 could be helpful in this regard.
Many traditional in-store experiences such as sampling and try-ons in fitting rooms will also have to be reimagined. Individualized sample packets and at-home try-ons could help, which some cosmetic brands are already implementing. Testers have been removed at major beauty retailers including Ulta and Sephora as stores reopen, and at some retailers, single-use, sanitary samples will likely replace communal products. In addition, virtual fitting rooms and smart mirrors will enable contactless try-on to create a safer in-store experience.
After addressing these pressing practical needs, retailers that have the bandwidth can start to strategize a long-term approach to reinventing offline experiences. The broader experiential economy will take some time to recover, and so will experiential retail in an offline environment. Out of necessity, both in terms of social distancing and business objectives, in-store experiences will likely evolve to become high-touch, low-volume, and, for some, intentionally exclusive, with a strong digital aspect.
For example, RH, the luxury furniture retailer formerly known as Restoration Hardware, is planning to double down on investments in real estate and travel experiences in order to build out a set of high-end, furnished apartment rentals and showrooms to showcase their product collections to prospective buyers. This is no doubt a rather risky move, but if RH were to successfully pull it off, they would stand to benefit from the high profit margin that the luxury market offers.
The in-store experience has to be fun and helpful enough to warrant the risk and troubles of showing up in person. Personalization is a good way to make offline experiences unique and worthwhile for shoppers. For example, fashion boutique Nava is currently offering virtual one-one-one shopping appointments over video chat as well as private in-store shopping by appointment to recreate the concierge shopping experience.
AR and visual search technologies will also enable shoppers to interact with virtual objects and participate in offline experiences at safe distances from each other. With the development of group AR experiences especially, in-store retail could be recreated by anchoring a shared AR experience to a particular store location and allow people to participate via their mobile devices while being six feet apart.
The Need for Omnichannel Experiences
While eventually the in-store side of experiential retail will be able to restart again along with the rest of the experience economy, the fact that a good portion of the experiential economy is moving online means that offline experiences no longer exist in its own silo. As various technologies get integrated into the offline store experience, in-store experiential initiatives will also need to start connecting with the digital side.
As the customer journey becomes increasingly fluid, brands will need to accelerate building out their omnichannel retail infrastructure that connects their physical retail experiences with the digital (and vice versa) to deliver a fun, consistent retail experience across channels. When experiential retail goes online, it inevitably becomes content to be consumed and, with the right technology, that shoppers will be able to participate in. While Retail-as-entertainment is not a new idea, in this new era, retailers will have to lean into interactive content to bridge the gap between in-store experiences and the online ones.
The future of experiential retail is exciting and dynamic as retailers experiment with emerging technologies and platforms to bring the fun back into shopping and provide added value to customers. The Lab is closely monitoring the coming disruptions and charting the developments in this space. If you wish to start a conversation around the key trends shaping the future of retail, and discuss how your brand can leverage these opportunities, please reach out to our Group Director Josh Mallalieu at josh@ipglab.com.
