The Rise of Experiential Retail Presents Brand New Opportunities
Utku Tansel LLB, MBA
Utku Tansel Insight
In an era where price is often the deciding factor, a return to retail experiences is more welcome than ever.
COVID-19 and confinement measures have accentuated many consumers’ cravings for experiences and entertainment. Yet, many consumers have continued to buy online even after lockdowns have ended, as a matter of convenience or potential cost-savings. And while, in 2020, much of the demand for online shopping was circumstantial given closures and the immediacy of disruption, it has now increasingly become a matter of choice.
Consequently, retailers need to extend their offerings and act as a venue, not just a shop. Stores need to avoid ‘showrooming’ through initiatives like redeemable in-store credits and in-store exclusives to lure consumers back through exciting, stimulating, and fun in-store experiences.
Hamleys and LEGO continue to build on the retailtainment model
A fantastic example of the “retailtainment” model is Hamleys’ new immersive concept at Westfield London, which opened at the end of November 2022 ahead of the crucial holiday season. Supported by its entertainment team and toy demonstrators, the in-store concept features an indoor slide (suitable for both children and adults), a Hans & Gretel dessert boutique, a Nerf target practice area, and a Playmobil play area. The retail space also enables shoppers to interact with the Hamleys Bear as well as with special guests from the film and television universe.
In addition to contributing to its expansion programme, the multinational toy retailer’s focus on experiential retail also allows it to command high prices.
According to its latest financial statement, Hamleys’ total global revenue—which includes the sales of goods as well as franchise income—stood at £5.214 million (US$6.36 million) in 2021, down from £5.523 million (US$6.73 million) in 2020. In the U.K., its London flagship store on Regent Street was forced to close during lockdowns. It is clear the company is fighting back with further investments in brand new and unique store experiences.
Hamleys’ latest retail space followed LEGO’s expansion of its Leicester Square London flagship store in August 2022, which became the world’s biggest LEGO Store. The location boasts a Personalisation Studio, new LEGO builds reflecting British culture (i.e. Harry Potter and James Bond’s Aston Martin), and hands-on LEGO experiences such as Tree of Discovery and an Interactive Storytelling Zone.
These retailtainment offerings help differentiate the stores from competitors, making their outlets a destination in their own right.
The future of retail requires an understanding of the new consumer
Consumers expect in-store experiences to carry additional functions like entertainment and social interactions.
Indeed, more than a fifth (21%) of U.S. consumers say that they favour in-store experiences that make them feel like they are part of a community (In-store Experiential Retailing, US, 2021), while almost half (48%) of Chinese consumers always try a product offline before they purchase (Omnichannel Retailing, China, 2021). In the U.K., 60% of consumers say they miss going shopping as part of a day out (COVID-19 – Retail and E-commerce: A Year On – UK, 2021).
Consumers still value the advantages of shopping in-store, including the ability to try products in person and to be helped by customer service associates. This trend is not about countering online sales—it’s about turning shops into enjoyable experiences that promote purchases both in-store and online. Those experiences will extend the time people spend in stores as well as the frequency of their visits.
The road ahead
Experiences will always have a role to play in consumers’ lifestyles. That doesn’t mean, however, that what an experience looks like won’t evolve.
As experiences become more accessible through technology, consumers will become more selective in how they spend their time. A shopping day out will continue to be a leisure activity for consumers, but it will increasingly be a choice rather than a necessity.
However, it is important to note that, in the backdrop of the current cost-of-living crisis, if consumers rein their discretionary spending further, retailers who charge premiums for their products may see their sales decline in the short term. They may also need to adopt new pricing strategies to increase sales and compete with online retailers like Amazon.
Moving forward, standing out will be more important than ever to succeed. So, retailers are also strongly recommended to collaborate with other brands to create a buzz and make experiences stronger, more worthwhile, and unique. Hamleys’ immersive Playmobil and Nerf stations in its new store are excellent examples of how this could be achieved.
Utku Tansel has 18 years of success in driving global thought leadership, projects, and content management, delivering strategic business intelligence and insight to major international companies. Throughout his career, he has led many global research programs across a wide range of diverse and dynamic industries including Toys & Games, Licensed Consumer Products, Consumer Electronics, Apparel & Footwear, Homewares & Home Furnishings, and Personal Accessories & Eyewear. With solid market research background, Utku regularly writes for leading industry publications focusing on the most recent trends and developments. A sought-after speaker, he also presented at world-renowned industry events including Licensing International Mind Mix Executive Conference, PlayCon, Hong Kong Toys & Games Fair, World Congress of Play, and Walmart Global Toy Summit, highlighting key findings from the latest global research studies. www.linkedin.com/in/utku-tansel-llb-mba-98231636