The future of retail experience

by Warren Richmond | CEO Situ Live

Jan 7, 2021

The so-called “death of the high street” is well publicised but while some traditional retailers are struggling, the sector’s seismic change could bring about a renaissance where hands-on experiences transform shopping trips.

The explosion of online shopping and shifting shopping habits forced retailers to innovate to meet evolving customer expectations, and those that do not are being left behind. For some retailers, the dramatic impact of the pandemic was lethal, leading to a wave of high-profile store closures around the world. 

If 2020 taught us anything, it’s the value of human connection and social experiences. We may have found ways to achieve more from home than ever before, but does that necessarily mean we always want to?

In fact, non-food retail sales increased by 1.5 percent in Europe in July 2020, compared to a year earlier. They credited this to people’s desire to return to shopping centres and districts following extensive national lockdowns. 

Physical shops can flourish by delivering inspirational experiences and exceptional customer service, by listening to what customers want and empowering them to shop where, when and how they want. Below we’ll take a look at the nine trends that are kickstarting a new retail revolution.


Combatting COVID-19

The events which unfolded in 2020 illustrated just how suddenly consumer needs and preferences can change, forcing many retailers to adapt and modernise their business operations to remain competitive.

Many of these new trends and attitudes show no sign of slowing, none more so than online shopping with an estimated 160 percent increase in post-pandemic online sales from previously sceptical consumers.

COVID-19 has also undoubtedly altered the physical retail technology strategies and investments, with 90 percent of retail industry bosses saying technology needs to be used more effectively and 53 percent intending to invest in frictionless solutions for a seamless physical-digital experience.

Expect to see the accelerated rollout of more convenient ways to pay, from contactless to mobile payments, self-service checkouts and invisible ‘walk out’ transactions as used in the pioneering Amazon Go convenience stores.

Shops will need to streamline their supply chain and become smarter about what they stock and how they fulfil orders, driven by demand for items customers prefer to buy in-person or would rather be delivered.

There is an opportunity for businesses to be bold and consider new innovative approaches to retailing. As shoppers become more digitally-savvy, retailers will take the opportunity to integrate more digital solutions to provide immersive experiences. Digital-savvy shoppers will see QR codes – used widely with the NHS COVID-19 app – become more prevalent. 


The rise of the experience economy

Humans crave new experiences, engagement and meaning. We enjoy sampling new restaurants, travelling to different countries and visiting the latest shopping destinations. Our brains are attracted to novelty, but a societal shift from “materialism” to “experientialism” means it’s no longer enough to spend money on something shiny – we want experiences.

Millennials especially are expected to spend 3.8 percent more on lifestyle activities (versus a 3.5 percent average) and 5.0 percent on holidays (versus 4.4 percent).

Providing outstanding customer experience begins by defying expectations. Progressive retailers will need to shift their focus to providing novel, unforgettable experiences.

From investing in captivating store designs to utilising the latest augmented reality and VR technology, retail brands that deliver immersive, personalised shopping experiences can boost revenue up to three times faster than those that don’t.

It is not just in-store experiences which need to be seamless, digital retail platforms also need to provide a tailored, frictionless experience. Every touchpoint influences the customer journey, and so will need to be carefully curated by businesses.

It is often said that you never get a second chance to make a first impression – after all, 67 percent of British shoppers won’t return following a bad experience in store or online.

Meanwhile, entrepreneur Andrew Thomas estimates it takes 40 positive reviews to offset a single negative comment, and with social media and review sites giving customers a louder voice than ever before, exceptional customer experience is critical.

Experiential retail theatres

When consumers make the effort to travel to physical stores, they want to be immersed as soon as they walk through the doors. At its core, the retail experience needs to entertain and offer customers means to improve their life.

Instead of staring at inanimate objects, showing people how products work and why they suit their lifestyle makes them instantly more desirable. Buying convenience products in a few clicks is fine, but the future of destination shopping requires a sense of discovery.

Retail theatres can persuade shoppers to ditch their digital devices and embrace the escapism of an entertaining and meaningful in-store experience, and one that better advertises a brand’s identity, because the space has been designed with its ethos at heart.

This blending together of retail and entertainment, often referred to as ‘retailtainment’, uses sound, ambiance, emotion and activity to get customers interested in merchandise and in the mood to buy.

Engaging the senses with creative designs, textures, and narratives is impactful. Products themselves can be triggers, a tactic Lush has utilised for a long time, encouraging customers to touch and smell its toiletries.

Counterintuitively, the primary focus of experiential spaces is not sales, but customer engagement. Putting the customer first by prioritising the experience drives loyalty, powers word-of-mouth promotion and user-generated content.

Some established D2C brands including Dyson, Glossier and Huawei have had significant success with dedicated experiential stores, enabling them to create unique on-brand experiences and own the consumer relationship from the get-go. Yet this is a big investment and a big risk for brands, requiring long-term commitment.

For a flexible approach to experiential retail, multi-brand stores such as Situ Live, provide low-risk access to shopping destinations, where products are brought to life through interactive store design and storytelling, forging everlasting relationships with customers.


Personalised experiences

Traditionally, retailers have competed over price and product capabilities, but really it is customer experience which can set a business apart. To win and retain buyers it is more important than ever for businesses to provide a differentiated retail experience.

Satisfied customers contribute an estimated 14 times more revenue than a somewhat dissatisfied customer.

Bespoke loyalty schemes that gather data on individual shopping behaviours can secure long-term brand allegiance by revealing invaluable trends and insights that help stores provide tempting, targeted recommendations and offers.

Advanced analytics software and personalisation engines effortlessly deliver tailored content and personalised experiences, yet with websites that don’t personalise their content frustrating 74 percent of consumers, why risk ruffling feathers?

Expect online recommendation engines to become increasingly advanced, able to provide hyper-personalised suggestions at scale with impressive accuracy. To compete, physical retail stores will need to collect and dissect data on shopping and purchase behaviour to deliver enhanced in-store experiences.

People power

Digesting the data effectively can deliver customisable in-store experiences, and one advantage physical shops have over online-only platforms is the desire for human interaction – so passionate and knowledgeable sales associates have a key role to play. 

Over half of British shoppers are likely to buy something if staff are friendly and approachable, while a significant 79 percent said a personalised service was an important factor when choosing where to shop.

To prevent overcrowding during the pandemic, a few shops introduced a booking system enabling customers to reserve exclusive time slots, which provided them with more personal levels of assistance. It is likely that the shoppers who took advantage of this service will be reluctant to return to normal service in a post-COVID world.


The power of storytelling

Engaging customers online is becoming harder and more costly, due to a competitive digital retail landscape and shrinking attention spans.

Our brains are becoming trained and rewarded to be distracted. For a brand, the only defence is to get and hold of customers’ attention by fascinating them,” says Sally Hogshead, author of ‘Fascinate: How to Make Your Brand Impossible to Resist’.

The future of retail will see an increase in creative storytelling with brands placing customers as the protagonist in the narrative. By hooking the listener with a tale that resonates with them, it grabs their attention and humanises the brand.

Cold, hard facts come across as just that. Stories soften the approach, they cuddle customers, conveying how a product can fit into their life. The more a story resonates, the more it creates a lasting impression, and a sense of belonging – and who doesn’t want that?

Add in visual storytelling, with graphics making messaging 42 percent more memorable, it increasingly becomes a necessity as retailers compete for a customer’s attention.

It’s no secret that a captivating brand story can transform shoppers into followers, but should they then tell friends and family it could eclipse all other forms of advertising by 92 percent.

Furthmermore, once a person is feels emotionally connected to a specific brand or retailer, they are much more likely to stay loyal to that company and are not easily swayed by competitors – even at a lower price point.

Omni channel retail experiences

The pandemic saw an unprecedented demand for digital services as people were unable to leave their homes, forcing brands to rapidly upscale and improve their digital operations. They had to be flexible, from adding more delivery options to setting up ecommerce platforms.

During lockdown businesses were willing to meet their customers wherever they wanted to buy, and this is a retail trend that will not be going anywhere anytime soon, as 76 percent of British shoppers expect businesses to maintain this level of flexibility.

Soon retail won’t be separated into offline and online, instead an increasing number of brands will deliver hybridised retail experiences. In fact, only 7 percent of consumers are online-only shoppers and 20 percent store-only.

Traditional retailers ramping up online offerings might have been the obvious trend of 2020, but we’ve also seen online stores move to open physical locations – most notably cashier-less Amazon Go stores.

Consumers often research products online before stepping foot in a store, they also use their devices to compare product reviews and prices afterwards. Unquestionably more purchases will happen online – that includes social network shopping, with over half of millennials likely to buy in this way – but physical stores have a larger role to play as influencers.

Finding products in-store, but later buying online is known as ‘showrooming’. More than two thirds of us did it before the pandemic, with a quarter of us making online purchases from a brick-and-mortar store. Conclusion? In modern retail, it’s best having both.


Embracing the right technology

The increased integration of technology in retail is inevitable, with artificial intelligence (AI), the Internet of Things (IoT), social media, robotics and extended reality (XR) – encompassing augmented reality (AR), virtual reality (VR) and mixed reality (MR) – all playing its part.

Digital integration in brick-and-mortar establishments is exciting and AR in particular has the potential to innovate in-store and out-of-store experiences, enabling shoppers to browse, interact with and read information about products virtually.

AR campaigns will increasingly be used to gamify shopping experiences and highlight products that may previously have been overlooked. XR can also elevate online experiences, with AR already being used to engage consumers with ‘try-before-you-buy’ digital 3D visualisation experiences.

The idea here is to reduce return rates and shopping cart abandonment. For instance, Sephora solidified itself as the leading global beauty retailer by creating a virtual make-up app allowing people to try different looks using facial recognition technology.

With around a third of us already experimenting with AR while shopping, and 90 percent admitting the technology is “fun”, it’s already establishing itself, but brands should be wary of choosing technology for the sake of it and ask whether it truly adds value for the customer.

The reality is most consumers want the basics done well. Like quick and reliable Wi-Fi, mobile device tools, and integrations that help them understand, choose, and share. Brands should only consider embracing the radically different if there’s a demand for it.

Bold, innovative brick-and-mortar retailers have an opportunity to take a radical approach by embracing and blending utility and novelty. Combining the basics, done well, with the excitement of inventive technology can foster customer interaction, engagement, and human connection.

Bringing products to life

Endless rows of boxes are boring for consumers. To truly imagine what a product would look like in their lives, it needs to be bought to life in-store with meaningful explanation and demonstration. This simply isn’t happening in most retail environments and it’s selling shoppers short, especially when it comes to consumer technology and appliances.

By carefully curating the shopfloor so that complementary products and services are placed next to each other, enabling shoppers to easily source items which are designed to integrate and connect with each other. For retailers, it provides a valuable opportunity to increase sales and offer more value to the shopper.

A shopping showroom enables consumers to view products in action and in context, allowing them to visualise how the pieces may work within their own homes. It is designed to be aspirational and to boost consumer confidence. Ultimately, enabling brands to build trust, improve the customer experience and increase sales. 


Looking forward in 2021

Although the pandemic put pay to some underperforming stores and forced large swathes of the public to spend online, Situ Live are leading a fightback with hybrid digital-physical destinations of discovery that digital-only solutions can’t match.

The first Situ Live venue will be launching in early 2021 at Westfield London, and the team are looking for innovative lifestyle brands across one of six areas: Nutrition Kitchen, Mobile Working, On the Move, Fitness and Wellbeing, Home Entertainment and Connected Home.

If you'd like to experience the future of retail first-hand, please contact us on: hello@situlive.com and we'll show you how we can best deliver for your brand.