LONDON — British high-street retailers are shifting their focus — and their budgets — to the experience economy and banking on in-store events to engage today’s consumer.
According to research set to be released today by Barclaycard, the global payment division of Barclays Bank, consumer spending on entertainment has increased by 10.5 percent so far this year and, not surprisingly, retailers want to capitalize on the trend.
The ones that have already been investing in creating a variety of experiences on the shop floor are seeing their annual turnover increase by an average of 14 percent. According to Barclaycard, those retailers are planning to double their investment in the next two years.
To accommodate the new investment, they are reducing their costs in more traditional areas that had previously been given priority: Budgets dedicated to revamping a store’s layout will decrease by 51 percent, according to the bank, while costs going toward increasing the amount or variety of stock on offer will be reduced by 41 percent, and web design budgets will go down by 33 percent.
That trend is also prevalent among some of the big retail brands, such as Burberry and Zara, which have begun to put the brakes on brick-and-mortar store openings as they focus increasingly on digital sales.
“With the growth of online shopping, retailers have to provide an incentive for shoppers to visit their stores,” said George Allardice, head of strategy at Barclaycard payment solutions. “Shoppers no longer see the high street as just somewhere to make a purchase, but rather a social place to spend a considerable amount of time. It is about creating an event which brings the brand image to life.”
The shift in gears is a response to changing consumer behavior and an effort to tap the digitally savvy and increasingly demanding Generation Z, who are the main drivers of the new experience economy.
Beyond just making purchases, younger consumers view the high street as a destination to spend time frequenting, so the entertainment available in-store directly affects how much they are going to be spending, the report said.
Shoppers aged 18 to 24 are looking for events such as in-store celebrity meet-and-greets, fitness classes or educational initiatives. One in six Gen Z shoppers also said an after-hours, in-store event would determine which retailer they choose to shop in.
That’s one reason why Browns, which has just opened its first Nomad shop concept in East London, has a dedicated meditation and alternative therapies space, and why Topshop is mounting a big “Stranger Things” series of screenings and themed Eighties-style shop fit ahead of the Netflix TV’s season two debut later this week.
Sheena Sauvaire, global marketing and communications director at Topshop, said the worlds of entertainment, culture, fashion and tech are all colliding and that the Netflix tie-up made sense for the retailer’s young customer.
Even though the demand for experiential events in retail is largely driven by a younger generation of consumers, Allardice pointed out that retailers addressing older consumers can still benefit by investing in experiences. “It’s a case of finding the right event for your target audience, which could be as simple as organizing a sample sale,” he added.
As a result of shifting consumer behavior, the British high street has been in flux for the past few years, with retailers such as Jaeger, Austin Reed and BHS — which failed to update their images and keep customers engaged — all forced into administration.
By contrast, new e-commerce companies such as Missguided have succeeded in creating brick-and-mortar stores where they are hoping customers will want to spend time — and money.
Nitin Passi, the fast-fashion retailer’s founder and chief executive officer, said opening physical spaces is a branding exercise for the company, as much as it is a sales generator.
His shops were created with selfie booths, posters with inspirational quotes, flamingo sculptures and a giant pink truck to lure social media-savvy shoppers. Jourdan Dunn, one of the brand’s collaborators, has made in-store appearances to launch the ath-leisure capsule she designs for the retailer.
“We need to get the brand across. It’s not just about selling as much as possible. When I created our store, I wanted to make it into the most Instagrammable store ever,” Passi told WWD, following the opening of the first Missguided store at Westfield Stratford, earlier this year. “I think we may have gone a bit too far with the space; I could fit 20 extra rails where the monster truck is, but we are going to have it travel to each new store we open.”
The company opened a second outpost at Bluewater shopping center, in Kent.
Other companies highlighted by Barclaycard’s research including Nike, whose new store concept allows customers to experience the new technology behind its HyperAdapt 1.0, by participating in activities such as treadmill runs or basketball practice. Topshop, meanwhile, experimented with virtual reality this summer, as well as a series of pop-ups.
“Topshop unveiled a new experience for its consumers who were able to race down a giant looping water slide in immersive 360. The Oxford Street flagship store also hosted a number of summer-themed pop-ups, such as soft-serve ice cream vendor Milk Train. Splash-goers could document their in-store experience through a branded Snapchat lens furthering the reach of their potential customer base,” Allardice said. “Both in-store experiences gained a lot of attention and proved the endless limits of the high street store.”
Evans Cycles, which sells cycling equipment on the U.K. high street, has been building a community by hosting organized bike ride events that start and finish at its stores, with participants being given a voucher at the end of the ride.
“Over half of participants spend the voucher there and then — with a healthy average spend — showing the power that events like these have to bring people into our shops,” said James Backhouse, marketing director at Evans Cycles.
“The events are also helping us to attract new audiences and build loyalty amongst our customers: Nearly a third of attendees hadn’t been on an organized ride before, while 96 percent say they would attend another event with us. In fact, the pilot has been so successful that we’re planning to double the number of stores hosting events next year.”