Why the return to retail is all about experience

This article first appeared on License Global.

Our Creative Strategy Director, Nick Blenkarne, talks to License Global about consumers’ changing needs and the opportunities of merging digital and physical retail.

How do you see a change happening in the way we shop and what shoppers will want from visiting destination stores post-pandemic?

A recent report by IBM estimated that the pandemic accelerated the shift to digital shopping by five years. The continual growth of e-commerce and convenience of online shopping, combined with the current market turmoil has left many retailers reporting slumps in footfall. Barclaycard data showed a 115 percent increase in online grocery spend in February compared to the same month last year. Amazon recently reported that shoppers have received on average an extra two deliveries per month since March 2020, up to seven parcels compared to five.

But while the prevailing volume of sales is certainly shifting in the direction of online, we’re noticing that consumers want more than just convenience and efficiency alone. Digital may be able to offer much more seamless shopping experiences with the ease of one click to purchase from anywhere and everywhere, but this robotic-like process also strips the emotion out of the retail-therapy experience. Whilst having a strong online presence is crucial, with smooth e-commerce and delivery to back it up, there are some things that can only be offered by a physical experience.

Westfield identifies 2025 as the year when retailers will allocate more square footage to experience than product. And in a year where most people have spent the vast majority of their time behind a screen, stores and brand experiences that can offer sources of inspiration and entertainment will be welcomed. As humans, we are programmed to seek out tactile experiences that stimulate the senses, and the novelty of being able to trial products in person may take some time to wear off.

But as much as shoppers want to be inspired and entertained, they also don’t want a return of the worse sides of pre-pandemic high street retail, like long queues and highly congested spaces. Shoppers will now expect the same level of hyper-personalization and efficient flow in-store that they get online. Ultimately, it will be brands that consider how both physical and digital work together will win out.

What are the core reasons for that change?

Consumers shop for the purpose of obtaining the desired product, but it is also a social occasion, a stress-reliever, a time to amble and be inspired, and yes, perhaps make a purchase along the way. The importance of finding a balance between digital and physical is vital as each feeds into the other.

Most people are now perfectly comfortable ordering items online where they might previously have not, with delivery and tracking becoming much more effective in answering some of those historic barriers. But physical shopping now needs to become one of entertainment, where products can be sampled, played with and demonstrated in more visceral ways in store. And, when your store doesn’t need to be about fulfilling sales, it can be liberated to do much more.

French footwear brand Veja’s recently launched store/lab in Bordeaux is a great example of this. The co-working, events and retail complex showcases near-to-launch prototypes, sneakers with minimal defects and footwear from previous collections, while a shoemaker’s workshop facilitates cleaning, repairs and recycling.

What new concepts, experiences and technologies can completely change the game for consumer experiences?

Consumers are spending more time in virtual worlds, with established platforms like Roblox and Fortnite constantly expanding what is possible, as well as emerging decentralized communities like Decentraland and Sandbox. As these worlds become more sophisticated, brands are increasingly seeing the value of building bespoke consumer experiences into them. Gucci’s Garden Experience in Roblox is a recent example of this, where unique products could be personalized onto avatars, with bags being sold for more in the digital experience than they go for in the physical world. The rise of NFTs has also transformed the possibilities of brands to create unique, ownable products that can exist in the digital world. As the metaverse expands, the same consumer psychology that exists in the real world will continue to proliferate into our online selves too, forward-thinking brands are already taking advantage of this.

How does social and interactive technology like AI play into a potential hybrid or ‘phygital’ shopping experience?

With exciting advances in XR (extended reality) tech, the possibilities of blended retail experiences are growing. Burberry’s Shenzhen flagship – launched in 2020 with Chinese tech giant Tencent (owner of messaging and e-commerce app WeChat) – epitomizes phygi-social connectivity. Attributed an avatar on joining, fans can then use the Burberry WeChat mini-program like a digital concierge service. They can book in-store stylist appointments, café tables, ask to try on products, contact sales assistants and adjust their fitting room’s lighting and music. Incentivizing engagement, in-store actions are rewarded on WeChat (the appearance of a fawn avatar confirms it) with ‘social currency’ that unlocks custom content. For instance, new characters/outfits for each user’s avatar and exclusive dishes on the café menu.

What consumer behaviour trends do you see happening in the future and how will that impact retail and experiences?

The growth of online has forced retailers to reassess the true value and role of their stores. Over the past year, experience-based retailers struggled with a lack of footfall and opportunity to engage consumers. We believe experience remains essential to the future of the store – but it needs to be more thoughtful. The cost pressures remain and investments in experience need to ensure that they make sense from a brand perspective, add value to consumers and deliver a commercial return. It cannot just be experience for experience’s sake.