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BizReport : Ecommerce : November 02, 2021

How to create an experiential retail setting

The most innovative retailers are turning to experiences to build and deepen relationships with their customers. Experts call this "experiential retail" - and it can range from high volume live in-store events (like Lululemon's free yoga classes) to personalized shopping services to fully immersive store experiences (like DICK'S House of Sport) and everything in between. Here's what merchants need to know to create a strong experiential setting.

by Kristina Knight

Kristina: Over the past 18 months the 'experience' has become a huge buzzword in e-commerce circles - what is 'experiential retail?

Jonathan Yaffe, co-founder and CEO, AnyRoad: While commoditized retail chains are dying every week, the most category-defining retailers in the world are all becoming experiential brands. That's why Calvin McDonald, CEO of Lululemon, has called Lululemon an experience company rather than an apparel company. That's why Jean-Andre Rougeot, CEO of Sephora, has alluded to the future of Sephora being reliant on services and appointments.

The concept of experiential retail was already taking off before 2020, but the pandemic accelerated momentum as the past year and a half of lockdown surfaced what truly matters: people crave human connection and experiences that stimulate emotion.

Kristina: How important is this marketing aspect for merchants currently?

Jonathan: Very important. In fact, their future depends on it. The world is shifting from a "things" economy to an "experience economy," and only the retail brands that embrace this idea will survive. We are living in an era in which 72% of millennials prefer to spend their money on experiences versus things, after all.

More and more retailers are realizing that the combination of physical location and consumer experience is what ultimately establishes brand loyalty. Brands like Bloomingdale's, DICK'S Sporting Goods, Lululemon and Sephora have all made major moves in experiential retail this year and many more will follow suit if they want to stay competitive.

The pandemic also challenged any retailer that over-expanded their physical footprint in previous years to right the ship and ensure remaining stores were properly tailored to target markets. Many retailers are shrinking their footprints and reevaluating strategies around product mix and customer experiences. Take Bloomingdales as just one example - the retailer recently unveiled its Bloomies concept, which is a smaller scale, highly curated store focused on experiences and services.

Kristina: Are merchants and brands on the right track with their experience strategies?

Jonathan: Yes. AnyRoad customers have already seen an average of 20% lift to in-store traffic after launching experiential programs, in addition to significant improvements to brand loyalty and net-promoter-scores (NPS). Our data shows that customers tend to linger in stores up to 15% longer and ultimately spend more per visit too. Experiential retail programs will only become more transformative as retailers continue to get smarter and more data-driven with their approach.

Kristina: What role does data play in the digital experience?

Jonathan: The huge benefit to most experiential retail initiatives - whether they are digital, hybrid or in-person - is that they deanonymize shoppers and enable a more personalized experience. Retailers can use those identifying characteristics (which are all opt-in) to develop first-party data profiles that can help improve experience over time and inform other parts of marketing. Solutions like AnyRoad allow retailers to connect their booking systems to POS, CRM and loyalty data to understand the actual bottom-line impact of their experiential offerings - like how they drove loyalty, how they increased brand perception and how much revenue they drove.

As the world opens back up, there's no shortage of opportunity to marry the online and offline worlds - and that includes experiential strategy. As an example, AnyRoad customer Michaels Stores pivoted their in-store art classes to online programming in March 2020, which strengthened loyalty with existing customers and expanded their reach to new audiences. Now, Michaels is positioned to capitalize on that loyalty and drive more foot traffic at brick-and-mortar locations after investing in digital experiences during the pandemic.

Kristina: What about in-store -- how can merchants better utilize customer data in brick-and-mortar spaces?

Jonathan: Digital experiences, and e-commerce in general, are often more associated with data-driven strategies than traditional retail - but the rise of experiential has opened new doors for retailers to capture more data about brick-and-mortar shoppers. For example, personal styling appointments, classes and educational content, or other in-store services all help uncover valuable data and insights that can be used to tailor future experiences, increase average spend per visit, increase the lifetime value of shoppers, and so much more.

The bottom line is that powerful experiences can change consumer behavior and, in order to drive that behavioral change, retailers need to understand the impact experiences have on things like loyalty, customer LTV, and preference, and then take actions to increase lifetime value. Data is what makes it all possible.

Tags: AnyRoad, ecommerce, ecommerce tips, ecommerce trends, experiential ecommerce, experiential retail experience tips, mobile commerce, retail trends, social commerce

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