The numbers can be sobering when it comes to the state of traditional malls and retailers. J.C. Penney closed more than 140 locations in 2017 and both Nine West and Claire’s filed for bankruptcy in the first quarter of 2018. Credit Suisse predicts that nearly 25 percent of malls will close over the next five years as customers shift even further toward online shopping.
The good news is this seismic shift in the way people shop is forcing businesses to innovate and experiment like never before. The word buzzing around malls and stores is “experience,” a wide-ranging concept that is reshaping the future of retail.
But what does “experience” really mean?
For some, it means simply adding an attraction like a wax museum or a Go Kart track. If malls and stores are to thrive in the 21st century, however, they need to go further and reimagine themselves by designing and programming for the habits, expectations and lifestyle of a new generation of consumers used to digital and dynamic experiences. Millennials, the largest and most powerful consumer group, especially value meaningful experiences over physical goods.
Selling experiences, not just objects
The best of these experiences offer a bridge between the digital and physical worlds, an idea Chicago’s 900 North Michigan Shops kept in mind when undergoing a recent multiphase transformation. The Magnificent Mile destination now sports a 190-foot-long digital art installation that spans the ceiling of the seven-level shopping center. Visible from all floors, the installation mimics a giant skylight that connects the complex’s interior to an exterior sky, and the expansive LED display features content that creates the illusion of rustling trees or birds flocking. The mall smartly understood that the business of selling objects had to expand to include the business of creating experiences, and the installation offers something unique to the space that is impossible to re-create online.
Thanks to rapid advancements in technology, the ability to create one-of-a-kind experiences like the one at 900 North Michigan Shops is within reach for more retailers and mall developers, and more affordable than ever. The Westfield Garden State Plaza Mall in New Jersey was able to transform one of its public spaces into the newest hangout with the ESC Game Theater, a first-of-its-kind gaming theater, where up to 30 people can play simultaneously. With a movie theater-sized screen, surround-sound speakers, and lights that illuminate the winning player or team, the theater naturally drew people in, especially young shoppers, and encouraged repeat visits.
To highlight its special line of products made for mountain climbing and hiking, Adidas is using virtual reality to put fans into the shoes of professional climbers tackling one of the biggest peaks in the world. This smart use of VR technology enabled Adidas to give its customers the opportunity to do something they might never have considered doing in real life, as well as provide a genuine sense of thrill, fun, and accomplishment, things not traditionally expected from a visit to the store or mall.
An important added bonus for all three of these experiences: they are shareable and Instagram-friendly, which is essential to building buzz and attracting more customers through digital word of mouth.
Experiences that drive better customer insight and more R.O.I.
Not all experiences need to be high-tech showstoppers, but every in-store experience should leverage technology so retailers can learn more about their customers. Finding the nuances within vast amounts of data can make for a more unexpected and fun, yet practical and personalized, shopping experience. And the more unique and on-brand the experience the more insightful and useful the customer data will be. That’s because rich experiences give retailers the opportunity to have a deeper conversation with customers so that interactions do not just begin and end with a purchase.
New technologies like RFID tags and AI are making it possible to gather and leverage customer insights to create a seamless experience between in-store and online shopping. Rebecca Minkoff told CNBC in 2017 that sales are up more than 200 percent since the brand transformed its Manhattan flagship into a “connected store of the future” where RFID tags collect data about what customers are bringing into the fitting room and what products they are browsing.
Equipping sales associates with customer data like this means that they can provide better and more personalized service on the go and even extend it beyond the walls of the brick-and-mortar store. Later this year, Nordstrom in-store sales associates will be able to share style tips and recommendations with customers via a new mobile app. On the flip side, providing shoppers with access to the data and information they need in the palm of their hand can vastly improve the in-store shopping experience.
H&M has been pilot testing its “scan and buy” app feature, which allows customers to scan an item they can’t find in the right size or color and then easily order it online instead. By providing customers with the data and tools that were traditionally only in the hands of employees, retailers can directly drive sales. The next evolution of big data is allowing your customers to use it with you.
Now Or Never
This year will be a telling one for stores and malls. Retailers will have to get real about what “experience” strategies are worth long-term investment, and which ones are just short-term fixes. By focusing on creating meaningful experiences that lead to richer relationships with customers — both online and off — retailers will transform “experience” from a buzzword into a best practice for driving sales and profits.
Emily Webster is senior designer and technologist at experience design studio ESI Design.