Retailers and retail real estate developers are scrambling for ways to bring in more foot traffic to avoid becoming one of the 12,000 stores that are predicted to close in 2019. One of the sharpest tools they have is experiential retail, which Development magazine described in the Summer 2016 issue as the types of physical spaces that will thrive and become even more popular in today’s omnichannel retail world.
Experiential retail isn’t just about adding a few new restaurants and a movie theater to a sterile mall and hoping for the best. According to The Mann Group, experiential retail is nothing less than “a new brand of mall, adaptive and energized by smaller, or at least more thoughtful, companies with a well-trained and passionate workforce that’s excited to deliver products they can stand behind.”
In an article on millennials and shopping, Sangeeth Ram with the Capital Projects & Infrastructure Practice at McKinsey & Company suggested that mall owners and retailers need to embrace:
- Retail centers that are also learning zones that incorporate retailers, consumers and entertainment. An example is a sporting goods store that has a fitness studio to try out products.
- Niche retail concepts such as revolving store fronts or space for “glocal” brands (a product or service developed and distributed globally but adjusted for the local market consumer) to generate buzz.
- Reconfigurable space in mall corridors and piazzas to feature the latest pop-up concepts.
Peloton, the indoor bicycle manufacturer, is a $4 billion fitness start-up that is having great success at the mall selling $2,000-plus stationary bicycles and treadmills. Shoppers interested in fitness can stop by a store and meet with dedicated associates to try out the equipment, get a personalized tutorial and learn more about its live studio experience. For an additional $39 a month, people can tune into a raft of programming right from their Peloton equipment and join what the company says is a million other followers for whom Peloton workouts are a way of life.
Footlocker, a retailer of athletically inspired shoes and apparel, successfully uses purposeful design at its “power stores.” Kambiz Hemati, the company’s vice president of global retail design, defines this as being about localization, service and shareability. Footlocker says its power stores are hubs for local sneaker culture, art, music and sports.
L’Occitane, a retailer that sells beauty products and fragrances, opened a Manhattan location in 2018 that has a dedicated social media area that includes a video live feed of the company’s U.S. Instagram account. Shoppers at the store can virtually bicycle through Provence, France, using a stationary bike with a scenic background, or enjoy a virtual reality 360-degree hot air balloon ride through the South of France.
Sephora, the retailer of cosmetics, beauty products, fragrances and tools, has created the “new Sephora experience.” The center of the Sephora in-store experience is its Beauty Hub. It has apps to test products, a table for beauty tutorials and more. There is even a special mirror where customers can delve into their color profile to discover just the right foundation shade with scientific precision.
Many of the new experiential-type trends in retail depend heavily on IoT and the virtual world. A prime example is the Samsung 837, a 56,000-square-foot “pop-up” store in Manhattan where coffee is the only thing that can be purchased. Instead of selling its products, the company offers virtual reality, a lounge area, recording studio, and a dramatic three-story 96-screen display wall.