The History And Future Of Experiential Retail

Steve Slough,
Managing Director - Tag Retail Systems

Boutique shop floor showing Mobile to fixed POS versatility

Experiential Retail - Making it about the experience

Experiential retail has existed for a long time as a niche approach to boutique and premium retail. Drawing it into the mainstream may well provide an effective response to recent challenges facing the sphere. Based on the concept of providing unique and valuable experiences to the customer besides those inherent in shopping. .

Retailers would do well to embrace this powerful idea at scale. To explain why, this article will take a different perspective on the challenges of high street retail over the last 25 years.

A tale of two Seattle companies

In 1998, Amazon began buying up book distributors throughout the UK and Germany in anticipation of launching a European venture. Meanwhile, CEO Jeff Bezos emailed 1000 randomly selected Amazon customers asking what they might buy online besides books, CDs and films. The answers he got back, ranging from electronics and toys to windscreen wiper blades, would give birth to his idea of the ‘Everything Store’. This would in turn begin an ecommerce revolution infamous in the history of retail.

This is the popular story of the start of bricks and mortar retail’s tough period. However, there was a more positive story beginning in a stranger place at the same time.

Coffee shop culture or something else?

As Bezos contemplated his new venture, a stylish American coffee shop opened its doors in the UK for the first time between a cocktail bar and a high-end restaurant in Chelsea. Starbucks’ white mermaid on a green background would become the rallying banner for the invasion of ‘coffee-shop culture’.

As retail unit closures peaked above 15,000 per year in the decades since, the number of coffee shops jumped by 400% to above 25,000 (Source). Commentators pointed at the importation of America’s coffee shop obsession. It would take a third innovator from the Western U.S. to harness the real cause of the coffee-shop explosion for retail.

The value of experience

In 2004, Apple opened a beautiful Regent Street ‘location’ that looked completely unlike any shop in Britain. There were no traditional shop assistants, no shelves and very few products to speak of. It looked like a museum, and it was designed to be a ‘town square’. The aim was to create a meeting place where like-minded individuals could come together, talk, and enjoy Apple.

The focus was on the experience of the product and the culture that went with it, not on sales. There were meeting tables, trades, and an intentional library-like atmosphere. Apple encouraged browsers to enjoy the products and the location. Colleagues were trained primarily to be experts in the technology and in customer support, not the sale. These were all intentional ways of adding to the customer experience with little direct benefit to the sale itself, a hallmark of experiential retail.

Experiential retail for the masses

In doing this, Apple was the first large, modern retailer to recognise the mass-market value of experiential retail.

They had looked on as their northern neighbours Starbucks had conquered the world, and they had asked themselves what the coffee shops were offering. Beyond selling coffee, what was their sales proposition? The answer to that question was the experience of meeting up with friends in an attractive place to pass the time. The whole experience was branded and unique, from the coffee itself, to the furniture to the visuals and beyond. Apple saw that this experience could be given value and delivered for a profit just as easily in the retail sector as in hospitality.

What kind of value?

Of course, Apple have the benefit of selling the most valuable branded product in history … or perhaps they have the most valuable product in history in part because of their experiential stores. What is known is that experiential selling has helped the likes of tailors, department stores and other niche and premium retailers to sell their goods for centuries.

The difference is that these historic experiential examples originated as collateral to the product in a limited market. Apple developed an experience purely to add non-financial value, rather than out of a level of necessity. It’s clear that iPhones would still sell without the town square approach. Beyond this, they developed a way to deliver it at scale.

Amazon can never undercut your experience

In the 2020s, the examples have come a poetic full circle. Waterstones and Costa have partnered to let people experience books with a coffee in pleasant surroundings before buying. Taking one step further, Marvel’s travelling Avengers S.T.A.T.I.O.N exhibit immerses the film franchise’s fans in the lore of the world they love. The aim is to build allegiance with (and sales of) the brand and material behind the movies. No sales website can ever compete with either of these experiences.

Halt, enter, absorb, and enjoy

Nor can anyone online compete with the experience of ‘Plant and Paint’, the shop that opened recently in nearby Hull. Lucy on Facebook called this shop, “My favourite stop on Humber St. By stop I mean halt, enter, absorb and enjoy.”

With or without knowing it, Lucy has captured the essence of experiential retail. This is what every bricks and mortar retailer should be inspiring in customers to fend off online competition. More and more are doing it, and over the next decade or so, this trend is going to amplify to alter our town centres beyond recognition.

If you’re wondering how to make the change in your store, keep an eye on this site for follow-ups to this article.