Retailers need to offer a more multifunctional, “experience-based” environment in order to inspire, win and retain the loyalty of customers, according to a new report
by Retail Economics and global law firm Squire Patton Boggs
The Retail Experience Economy identifies four key factors determining a customer’s shopping experience: (1) Environment, (2) Education, (3) Escapism and (4) Entertainment and finds that 24% of 2,000 respondents said they would willingly pay more for the same product if it meant they would receive a meaningful experience when purchasing it.
43% of shoppers said that they are likely to spend more money in the future with a retailer who offered a meaningful shopping experience in-store.
Entertainment ranked the highest for younger consumers: 35% of respondents aged between 18-24 years old, compared with just 13% for the 65+ age group
Environment was the most important element of a meaningful shopping experience, selected by almost half (46%) of 35-44 year olds. Almost two thirds of consumers are more inclined to shop at destinations that house cafes, restaurants and bars as they place a multipurpose environment with social meeting points as a high priority
Richard Lim, Chief Executive, Retail Economics, explains: "UK retail is undergoing significant structural change. A behavioural revolution is taking place through a transformational shift in what people value most — experiences. Evolutionary processes have guided economic value from commodities, to goods, to services and in this new paradigm, experiences are taking prominence over products. The genesis of an emerging era of retail is rearing its head – The Retail Experience Economy.
"Retailers must engineer seamless experiences that envelope the consumer in beautiful retail environments that entertain, provide escapism and relevant education.
"Research conducted by Retail Economics and Squire Patton Boggs found that almost a quarter of consumers said they would willingly pay more for the same product if it meant they would receive a meaningful experience when purchasing it. Furthermore, 43% of shoppers said that they are likely to spend more money in the future with a retailer who offered a meaningful shopping experience in-store.
"Retailers’ abilities to predict, analyse and adapt to forthcoming waves of these behavioural shifts will stand as the differentiating factor from their competitors."
Matthew Lewis, head of the Retail Industry Group at Squire Patton Boggs, adds: "As the Experience Economy evolves, retailers must embrace consumers’ demands for the shopping experience to become more integrated and focused on their lifestyles. We have seen recent reports that US retail sales have risen but stores are closing and it is clear this is a global issue and retailers need to make a significant adjustment to stay ahead of the curve. From a digital perspective, retailers will have access to unprecedented sets of data as they strive to create an entirely unique customer experience and the introduction of the EU’s General Data Protection Regulation in a year’s time will have significant implications for multichannel retailers. Retailers will also need to focus on how to ensure their employees are aligned to the Retail Experience Economy to deliver the best possible customer journey.
"Technology will continue to drive retail progress and shape the way in which consumers interact with retailers in the future, with the Internet of Things, 3D printing and artificial intelligence promising to deliver a new wave of innovation that will change the retail experience. The challenge for retailers is to predict and harness these technological developments to differentiate their offering and deliver a seamless shopping experience to future generations of consumers."