It looks like you're visiting the GB site. Please choose another country or region to see content specific to your location.


The future of retail is experiential

  • Knowledge
The future of retail is experiential

Earlier this month, Louis Vuitton opened a cafe and restaurant connected to their Maison in Osaka and became the newest luxury brand to take on the latest retail reinvention: the experiential model. Both new spaces are beautiful testaments to Louis Vuitton’s impeccable standards, and are bound to become a destination for anyone in Osaka, whether they’re in the market for a monogrammed handbag or not. And that, of course, is the point.

Since 2017, almost 10,000 retail locations in the US have closed, with further predictions that one in four US malls could be out of business by 2022. It doesn’t look much better for the UK, either. Although online shopping only accounts for 17 percent of purchases, Amazon was in the top five most-visited retailers, and their sales accounted for £4 of every £100 spent last year. Online sales in the UK overall have risen by 324% in the past ten years. It’s clear that the typical bricks-and-mortar model has to change to compete with digital innovation, and the answer could be adding experiences to the mix.

Unlike the typical retail model that is focussed on sales, the experiential model aims to drive traffic into the shop and extend the customer’s dwell time in the space. Even if it doesn’t result in physical sales, it can still be a win. According to a study from the Wharton School of Business in collaboration with Harvard Business School and Idea Farm Ventures, customers who spend time browsing showrooms tend to buy more expensive items. But, that deeper interaction with a space also has a negative effect. Those customers who spend more time interacting with a brand in that one visit are less likely to return.

All that said, an experiential model has the ability to streamline logistics, with distribution centres organised to ship directly to consumers rather than stocked in a shop. That lack of stock also allows shop assistants to spend more time helping customers rather than unpacking boxes and displaying items. There is also a lot of cash tied up in stocking products.

Several luxury brands are catching on to this idea, and opening up experience-based locations that carry zero stock. Canada Goose, for example, opened a shop in Toronto where customers can try on the brand’s jackets in a simulated snow storm. Customers can buy a coat in the shop, but ordering is done via an iPad and it’s shipped right to that customer’s home because there is no actual stock for sale in the shop. Matchesfashion has 5 Carlos Place, where customers can request specific items and then try them on in a boutique-style space. Designer Osman Yousefzada’s House of Osman is a shop inside a gallery, with 3,000 square feet of pieces from his favourite artists and rare booksellers. Each of these brands have found a way to create a memorable experience for their customers where they are immersed in that brand.

As people demand more sustainability from the retailers they interact with, experiential retail can be a good way to respond. According to Westfield’s How We Shop: The Next Decade report, when experiences are built into a retailer’s sustainability strategy and used to highlight that strategy, it can lift that retailers reputation and keep people coming back. While experiential retail currently has the capacity to replace a retailer’s role as the middle point in sales between a warehouse and the consumer, there is so much more to come. Westfield’s report predicts that shoppers will come to want more locally-focussed experiences, shops that are combined with production spaces, and retail spaces that help consumers connect with each other and the natural world.

Along with that, retailers in the UK will need to consider the fact that the country’s built environment accounts for 30% of its carbon footprint. Heating, cooling, lighting and powering a space has a significant impact, and diversifying a shop with things that use even more energy can increase that negative impact. The Crown Estate owns and manages Regent Street, and they have pledged to ensure a BREEAM rating of “very good” as well as WELL certification for every new development. They are also aiming to reduce water water consumption by 40% for all of their buildings. Again, it’s important for retailers to consider the impact of implementing any kind of experience within a current model, both for their own carbon footprint as well as how shoppers will perceive that impact.

As with any new venture, experiential retail needs to be implemented thoughtfully and done very well. It’s not enough to have a showy display or lots of technology peppered through a shop. It has to present something new, and offer a new, more sustainable way for customers to get to know a brand. It’s about combining experiences with services, finding a balance between subtlety and intent, and taking risks without the fear of failure.

Liked this article? Sign-up to our newsletter for more.

Written by - Tara MacInnis

Related articles

Become a positive luxury brand

Whether you are a brand, supplier or retailer, you are just one step away from beginning your journey to earn the Butterfly Mark. Start the process today or contact us for a preliminary chat. We would love to hear from you.

Start your journey