Modern consumers love experiences. They love them so much that many prefer to spend their money on them over material things.
Indeed, a much-referenced study by Harris Group found that 72% of consumers in their 20s and 30s would rather open their wallets for a good life experience over a new product.
So where does this leave retailers?
Howard Shultz, the chairman of coffee chain Starbucks, told investors that any retailer who is “going to win in this new environment must become an experiential destination.”
Stores are no longer places where retailers can expect to simply sell their products. They are now part of a much larger customer experience, a physical representation of a brand where consumers are given fun things to do, rather than purely buy.
Brands like Nike and Casper are getting into the experience game. In the Nike House of Innovation in New York, US, customers can check out the biggest selection of new season footwear styles, book personal styling sessions and create personalized products. And mattress firm Casper allows customers to road-test its beds by booking “nap sessions” inside its New York concept The Dreamery.
So how do these experiences measure up? How can you quantify the true value of your stores when you aren’t expecting to sell products in them the way you used to before? When you have a seamless online and offline shopping experience, how do you know which areas are performing well and which require improvement?
Retail Systems Research says that retailers must get away from focusing on sales as the only way of tracking store success. If you stick to using old measures for new processes, it just won’t work.
Rather than focusing purely on sales figures, and profits and losses, here are some other key factors you should consider when measuring your retail business performance in this new experience world:
How many customers know about your brand? What are you doing to encourage them to engage with you, remember you, and spend their money with you? Rather than focusing solely on year-on-year sales, consider how you’re raising brand awareness. Many retailers today are taking a digital-first approach to marketing, using e-mails, pay-per-click and social media. But stores will continue to play a key role in boosting brand presence, giving consumers an opportunity to physically connect with you and experience something memorable. They are also a great way to attract new customers. In the last year, UK craft retailer Hobbycraft attracted 100,000 people into its stores through experiential marketing in the form of workshops and personalized gift sessions.
Data is the new currency. Consumers want to engage and shop with retailers that use data to personalize their experiences, make the shopping process more convenient, and give them relevant information which enhances their journey. How are you capturing customer data and using it to your advantage? “Brick-and-mortar businesses will put more operational data to work managing their physical locations as a way to improve the customer experience and reduce costs,” Forbes predicts.
Crowds are usually a good sign of success. The more potential customers you interact with, the greater chance you stand of getting them to spend their money with you. Focus on driving more customers to your brand, regardless of channel, and sales will likely follow. Get them to invest in your brand, and give them reasons to enjoy engaging with you.
This one is critical. Even if you have loads of people engaging with your brand, you still need those interactions to equate to sales. You need to give consumers reasons to shop with you, and you need to make the entire experience as easy and pain-free as possible. Take advantage of every opportunity by ensuring you give them great customer service across all of your channels, shopping options they want, such as click and collect, and being in the locations where your customers want you to be.
How much do you know about your customers? When customers choose to buy from your brand, how much money are they spending? Have you missed out on opportunities by not having certain products in stock, or failing to recommend items which would complement something already in their basket? Make sure you’re making the most of every opportunity from each transaction. This requires a completely joined-up strategy, which connects information across all your channels. Just because a customer doesn’t buy something in store, it doesn’t mean the interaction with a sales associate wasn’t valuable. They may go home and order from you online instead. Give your customers good reasons to shop with you and reward them for their loyalty with targeted promotions and offers.
Today, retailers need to be able to interrogate information which goes far beyond store transactions. “It’s about serving customers,” Retail Systems Research said. “Measuring comp sales completely ignores all that other value. In a world where the transaction can pretty much happen anywhere, stores need to be able to deliver a heck of a lot more than just transactions – and measurements should reflect that.”
As our chief marketing officer, Eloise Freygang, wrote in an article for Business Reporter, “Retailers using yesterday’s tools and technologies won’t be able to deliver today’s great customer experiences.”
If you want to succeed in retail, you must be prepared to think big. You need to be able to turn every potential engagement opportunity into an experience which will captivate your customers, encourage them to spend with you, and keep them coming back.
But without the right technology supporting you, you will struggle to do this. Too many retailers have to contend with complex IT systems, poorly integrated web experiences, limited social capabilities, and applications which aren’t built for today’s mobile devices.
Forbes reported that the answer lies in thinking beyond physical and digital stores as separate entities and employing an entirely new operating system for reaching and inspiring consumers to shop.
What retailers need, according to Forbes, is “a system that gives consumers a new means of inspiration, selection, immediate gratification, physical sensation and convenience, and that ultimately renders the distinction of digital vs physical irrelevant.”
We call this unified commerce, and we believe this is the future of retail. One platform which brings together all your channels, connects them in real time, and shows a complete view of your entire operation, and every instance your customers interact with your business.
Contact our team of experts to discover how our unified commerce retail platform can help you transform your business and create exciting new experiences which capture your customers’ attention, and their wallet share.