Today’s consumers are no longer solely shopping out of necessity or utility, and the accessibility that technology has brought means that convenience is also much less of a deciding factor than it was in the past. With the entire world now at our fingertips and a seemingly infinite number of choices, how can retailers in today’s world –– both brick-and-mortar and ecommerce –– set themselves apart from the competition?
As the economy bounces back from the effects of the coronavirus pandemic, it is becoming clear that shoppers are now turning to retail for joy, comfort, validation, stress relief –– e.g. they are seeking entertainment.
By tapping into this and providing experiential shopping experiences, retailers have the ability to not only survive, but thrive in this post-pandemic world. Leveraging experiences to customers rather than products will be the main way to remain competitive in the future, whether in a physical space or in the ecommerce world.
What is experiential retail?
Chances are at this point you’ve heard the term “experiential retail” before. The term has been floating since before the pandemic, but just as consumer habits are changing and evolving with increasing rapidity, so too is our understanding of what exactly experiential retail is. Originally, experiential shopping was defined as an in-store experience that goes beyond simple shopping to provide customers with something deeper. It was seen as a way to combat the convenience of online shopping, creating a reason for customers to walk in the door rather than going online to make their purchase.
However, as time has passed it has become clear that experiential retail is beneficial for more than brick-and-mortar companies alone. Increasingly, online brands have sought to create experiences for their customers as well, whether that be through physical spaces that allow them to connect with their customer in person or utilizing technologies such as artificial intelligence or augmented reality to build experiences on their platform. Differing from traditional retail, experiential retail creates an immersive and shareable experience, prioritizes customer engagement over sales, stimulates the senses, all while addressing consumer needs.
Experiential retail in the brick-and-mortar space
As stated before, experiential retail in the brick-and-mortar space is a necessary counterbalance to the fact that widespread availability of e-commerce means shopping in a physical store is no longer a necessity. Last year alone more than 3,800 physical stores across the country closed, including some physical retail spaces for major brands like Macy’s and Best Buy. These once brick-and-mortar powerhouses seem to be getting edged out by ecommerce, but there are some traditional retail companies that have begun to offer innovative in-store experiences tailored to specific regions, stores and individuals.
On the most basic level, a brick-and-mortar store’s core asset is its ability to provide sensory experiences, and many companies that began in ecommerce have since recognized that while a physical space may no longer be the ideal for garnering sales, it can still be useful in creating brand awareness and generating customer engagement. Pop-up spaces that create immersive experiences give customers a reason to visit because they can leave with more than just products; they leave with memories.
Experiential retail online
It may seem that it is just brick-and-mortar stores who need to fight to garner consumers’ attention, but in the increasingly saturated world of ecommerce, experiential retail can make all the difference between competitors. Although originating in the brick-and-mortar space, information technologies such as artificial intelligence, augmented reality and 5G have allowed the online space to begin offering their own form of experiential retail. Additionally, social media has created a built-in pathway to facilitating the growth of a brand while engaging customers on a deeper level. The more “Instagrammable” a piece of content is, the more likely customers are to share or post what they see.
When it comes to experiential shopping, Augmented reality (AR) may be the final frontier in bridging the gap between brick-and-mortar and ecommerce –– which doesn’t bode well for the more traditional model. Through immersive technologies such as AR, customers can “try before they buy,” negating the in-store advantage of a sensory experience. Virtual reality can now even support the ability for retailers to create virtual showrooms where customers can explore products on a deeper level, or enable virtual landscapes where a customer can explore all the features and capabilities of a product first-hand.
Shopatainment in China
Elsewhere outside of the United States, experiential shopping has already been taken to even greater heights. In Asia, a livestream ecommerce industry akin to professional movie production has exploded onto the scene within the past few years. With the technological abilities of 5G, video streaming capabilities have made them an even more powerful selling tool than the images of Instagram, and in China selling via video commerce has quickly evolved into professional grade programming. Scripted selling sessions hosted by sellers who have become celebrities in their own right mean the pinnacle of experiential shopping, and the industry is already seeing revenues of $137 billion a year.
Connie Chan of Andreessen Horowitz coined this concept “shopatainment,” and in a way it marks the pinnacle of experiential retail. Video commerce allows for authenticity and relatability in ways unachievable in other forms of experiential shopping, creating the sense of an emotional connection that has become pivotal to consumers when deciding who they will buy from.
Taking experiential retail to the next level
So what does the future hold for experiential retail? One can probably get a good idea by looking to droppTV. A shoppable streaming platform, droppTV has taken traditional retail and video models and fused them together, using artificial intelligence, machine learning and computer vision algorithms to recognize products in video content and tag them in real time. Founded by chief executive officer Gurps Rai, the platform’s goal is to keep viewers engaged and prevent them from feeling “sold to,” thereby creating a truly immersive experience. The company’s first consumer rollout phase has been dedicated to music videos, allowing consumers to purchase items within a video in a single click without pausing or disrupting their view. According to chief financial officer, Christopher Kelly, “fashion influences every touchpoint of our lives, and droppTV makes entertainment synonymous with shopping…For consumers, the power to purchase while being entertained is game-changing.”
Investors seem to agree with the game-changing nature of droppTV and experiential retail. Thanks in part to the work of Kelly and Rai, it is reported the company has raised around $15 million in its series A funding round and is launching an $80 million series B round in 2021. While music videos have been a natural first step into experiential retail, the applications for a seamless shopping experience are endless.
Consumers are no longer simply shopping when they look to retail. They are seeking a company that can provide authentic experiences that make them feel connected to the brand. Whether that be in-store or online, the future of retail will certainly see the lines of entertainment and shopping become increasingly blurred.