by Roberto Simi | CTO Situ Live
Aug 24, 2020
When a question is posed in a headline like this, there’s a good chance the answer lies somewhere in the middle.
Brands have long been aware of the lack of opportunities to bring their products to life in the traditional retail space. And over the last few years, industry commentators have routinely advocated a more experiential approach to plug the gap.
On the surface it’s a wise investment - pre-lockdown predictions suggested the experience economy would be worth $12 billion by the end of 2023. But simply throwing money at the problem is not enough.
As retailers cling to an outdated commercial model, much of the so-called experiential technology presented to consumers has little value. They are novelties and marketing stunts. If brands want to create excitement and loyalty, these experiences need to have tangible benefits.
The pandemic has changed the outlook for brands and retailers alike, and the long-term effects on the industry are difficult to predict. In the immediate aftermath, many had to divert their investment in technology to solutions that improve safety and logistics.
Now, as we look towards a new future of retail, there is growing recognition that experiences which engage and influence the path-to-purchase are key.
The old approach won’t work. An outdated model built around margin makes it too difficult to dedicate square footage to experiential activity. And in a sales-driven environment, authentic conversations with savvy consumers are virtually impossible (we cover this challenge and more in our report Retail: The Quantum Shift).
Where tech has been introduced, it’s often influenced by the many Rs of spatial computing - VR, AR, MR, XR etc.
But these are usually bells and whistles, glossing over the wider problems. True success will come when the tech is driven by what consumers want and need.
A McKinsey report noted that nearly every change retailers make depends on technology solutions. But there is a disconnect between what shoppers want and what retailers think they need, so these solutions “often fall short of expectations”.
The reality is that many consumers simply want to see the basics done well. Amenities that enable convenience and social presence, like quick reliable WiFi, mobile tools, and integrations that help them understand, choose and share.
Beyond this, Retail Futurologist Howard Saunders suggests, customers are likely to be sceptical about immature and experimental technology until they see those tangible benefits.
“Retailers may enthuse and embrace technology as a means of reviving sales, but unless customers can see the benefits personally, it could be a wasted investment,” he says.
So how do brands avoid the experimental, while providing the experiential?
They need to take a more holistic approach. Start with the people - both shoppers and instore advisors - and engage them. Understand and respond to their needs.
Then, using this genuine insight, bring experiences into the day-to-day shopping environment.
It requires a radical rethinking of what ‘experiential retail’ really means. A search for experiential marketing will return many examples of stunning initiatives and activities, but these are often driven by talented agencies with one eye on an awards ceremony.
Gesture controlled games, personalised gift making, virtual reality tours of factories. These can impress, even excite, but if the brand’s product is not central to the experience, they ultimately fall short of building an affinity with the brand.
True experiential retail takes a new approach, embracing what it is that sets physical retail apart from online: Human connection.
As Doug Stephens, author of Reengineering Retail: The Future of Selling in a Post-Digital World, has said: “Experiences in retail are no longer just the icing on the cake. Experiences ARE the cake.”
Innovative technology can help create memorable moments, build brand awareness and strengthen relationships with loyal customers.
But it can’t be the starting point.
Opportunities to interact and converse with real, knowledgeable people are the table stakes for any shopping experience. Then come flawless and consistent technology basics, which help create a frictionless environment and encourage confident purchase decisions.
When the first two are in place and done well, that’s when the activities and installations can be more about novelty than utility, adding to the memorable moment.
As shoppers emerge from the upheaval of 2020, expectations have been reset. Health and safety concerns will be prevalent, and technology will have to respond to and support those.
There is also a craving to return to real-life experiences.
Bold, innovative brands have an opportunity to take a radically different approach by embracing and blending utility and novelty. Combining the basics, done well, with the excitement that fosters engagement and human connection.
When it comes to the quantum shift in retail, it’s not about how bleeding edge the technology is, it’s how and when it is used that makes the difference.
“The future is coming at us fast,” says Howard Saunders. “But it’s worth remembering we’ll still be human when it arrives.”
Technology is at the heart of the experiential retail destination Situ Live will launch in 2021. Our Westfield venue will showcase lifestyle products and services like never before, and we’re looking for innovative brands to join us.
Get in touch to discover more and enjoy an exclusive preview of our radical new concept and business model.