Why retailers are investing in experiential stores

18.11.16

From wine bars and ‘do-it-yourself’ restaurants to yoga sessions, book groups and nail and hair salons, retailers are increasingly turning to experiential retail as they battle for footfall. This Retail Week article provides an insight into how Oasis, Ikea and other brands are leading the way with in-store engagement.

Over the past 12 months, there has been an explosion of shops placing entertainment at the centre of their offering.

Ranging from fashion retailer Oasis’s Tottenham Court Road flagship, complete with a café bar and salon, and Ikea’s Shoreditch pop-up shop, café and restaurant through to book groups at Foyles’ new Chelmsford store and complimentary in-store yoga sessions at sportswear specialist Lululemon, retailers are moving far beyond the in-store promotions and marketing seen in recent years.

“Experiential retail is bigger and bolder, and a strategy in its own right. It is something we will see more of in 2017 and beyond, especially with the advancement of new technologies, such as augmented and virtual reality. In an ever-more competitive and challenging retail landscape, retailers are vying for consumer attention and experiential retail is a great way to achieve this.” Sarah Johns, Verdict Retail.

Need for engagement

According to Andrew Phipps, head of retail research at property agents CBRE, research due out this autumn shows that millenials place a far greater emphasis on being engaged in-store than they do on customer service.

“They don’t want assistants asking ‘Hello, can I help you?’ What they want is elements in-store to engage them while they are there.”

This is why retailers who are not trying to engage shoppers in this way will struggle, says Sue Benson, managing director of retail and brand consultancy The Market Creative.

However, she admits that it is not always easy to prove the business case for making changes to the store portfolio – whether big or small.

‘Stores can no longer serve a purely transactional function, but that can be hard to justify at a commercial or board level, she explains.

“Depending on what a retailer is offering, it could mean developing a new commercial or business model, or a new platform. You aren’t likely to get the same return experiential space, therefore it’s hard to justify a business case for it.”

For this reason, she believes that fashion retailer Oasis made a smart decision by bringing in partners to run both the café bar, Saucer & Spritz, and the Pin & Polish salon in the Tottenham Court Road store – the first of its kind in the Oasis portfolio.

“That means Oasis can focus on what it does well – selling fashion,” Benson adds. “The partnership approach has all the benefits of developing that customer relationship without the need to invest in a new way of business.”

Community Hubs

While for the most part chief operating officer at Oasis, Hash Ladha, says the café bar and salon attract customers who ‘love Oasis and our quirky brand values”, he says it is also attracting new customers who come in to work or meet friends.

Bringing people together, in this case food, was the insight driving furniture retailer Ikea’s launch of The Dining Club, which ran from September 10-25 in Shoreditch this year. The pop-up featured a DIY restaurant where guests could work alongside chefs, a café, kitchen showrooms and a homeware store, as well as space for cooking workshops. 

“The beauty of doing this kind of campaign is that you aren’t tapping into one profile, but everyone is interacting with the experience. We are just trying to create different and new experiences to inspire people,” Jordan Esquinas, Ikea food business leader. 

The full article is available at Retail Week