Engaged customers who spend more time in stores tend to spend more too. Chloe Rigby reveals the ways retailers are creating experiences.
Retailers are taking a fresh look at how they can offer their customers more via their stores. From in-store events to in-store services, traders that give their customers a reason to come into the store rather than simply shop online are seeing a real and positive effect on their overall businesses.
Halfords [IRDX RHAL], for example, showed in recent half-year results that its focus on in-store services was paying off. Some 2m in-store fitting and repair jobs, such as replacing windscreen wipers or fitting new registration plates, took place in its store during the six months to 9 November. Service-related retail revenues grew by 19.3% compared to the same time last year. This is part of an overall strategy to bring shoppers into store and it seems to be working: 85% of Halfords.com orders were collected in the store during the half, while online sales grew by 10.8% in total and overall retail revenues grew by 1.9% to £511m.
In the group’s half-year statement, Halfords chief financial officer and interim chief executive Jonny Mason reflected on the boost given by such services at a time that the wider retail environment is proving challenging. “We have delivered more improvements for customers in this first half,” he said, “with new services for motorists and cyclists provided by trained, friendly, expert colleagues and new ranges of great products. It is pleasing to report positive sales growth for this period, despite the poorer summer weather and the uncertainty in the UK economy.”
Elite retailer John Lewis [IRDX RJLW], meanwhile, has put the emphasis on in-store experiences in its new Oxford store. A fifth of floorspace at the store is dedicated to services and experiences, rather than purely products. Those services range from eye tests and nail bars to car seat fitting advice and technology training. These are coordinated centrally through a central experience desk, run by a brand experience manager, where staff offer a hotel-style concierge service to help customers plan their day, book them into a workshop, match them with a style or home design adviser, or find them a table in the rooftop restaurant. Staff have been specially trained in voice and body language skills by the Oxford Playhouse and there are further parallels with the luxury hotel experience in the tours of the store that staff now offer.
At the time of the launch, Paula Nickolds, managing director of John Lewis, said: “As part of our plans to differentiate the John Lewis brand and to reinvest in the department store for the 21st century, our shops continue to be a place where customers come and experience our brand – the physical manifestation of what we stand for. More than a route to selling things, our Oxford shop is a place that aims to inspire and delight our customers and is entirely focused on customer experience.”
The role of events
Gaming retailer Game Digital [IRDX RGME] has focused keenly on the in-store experience, opening its first Belong in-store gaming arenas. Access to the arenas is exclusive to Game reward card holders, who use them to test the latest games and gaming technology, from the Xbox One X to virtual reality, as well as to play against others. In its latest financial results, for the half-year to 28 January, chief executive Martyn Gibbs said the retailer would accelerate its investment in the live in-store gaming arena following “encouraging results” shown by the first seven. By the time of writing, Game had 18 Belong arenas, which are also now available for private hire, from birthday parties to corporate events.
Recent Barclaycard [IRDX RBRC] research suggests that staging events in stores has a very real effect on income. It says that they answer customers’ desires for more engaging high street experiences and that people who attend them spend more. It questioned 2,002 shoppers and found a marked enthusiasm for in-store events among younger shoppers. In the 18 to 24-year-old range, 15% say that in-store events after hours would encourage them to choose one retailer over another. At the same time, its analysis found that UK retailers who stage in-store events and experiences have seen their annual turnover increase by, on average, 14% this year. Barclaycard has seen consumer spending on entertainment grow by 10.5% during the year, compared to last year.
Barclaycard questioned 251 senior retail decision-makers in September 2017 and found that more than a third (36%) of retailers now host in-store events such as classes, courses and exclusive sales previews, and that 19% plan to start doing so in the next three years.
“Retailers who take advantage of the opportunities in the experience economy can really reap the rewards,” said George Allardice, head of strategy at Barclaycard Payment Solutions. “Our research has found that shoppers increasingly want to stay in stores for longer, rather than head home with their purchases.”