The Future of Retail Experiences
Back to Experience channel

The Future of Retail Experiences – How to Drive Brand Loyalty

The traditional approach to retail is failing the high street. The problem is not that people have become lazier and defaulted to online shopping; it’s that brands have become complacent about making shopping in real life, “IRL” a worthwhile experience. Here we look at what is driving these changes in the retail landscape and how brands need to evolve to stay agile and relevant.

By Frances Hulme

The Future of Retail

It has proved challenging for the High Street recently with lacklustre sales and footfall in brick and mortar stores at a six-year lowThe convenience of online shopping has seen a huge increase in e-commerce transactions. E-commerce revenue in UK is expected to grow to 91.2 billion pounds in 2023; having achieved £65.7 billion in 2017. The rise of big retail events like Black Friday, Alibaba’s Singles’ Day and the upcoming Prime Day, are changing the way consumers purchase. Brands need to understand these shifts to offer more seamless and personalised shopping experiences.

Sign up to the MCI Experience Channel!


The experience economy which took hold a few years ago saw the trend towards spending money on DOING things rather than BUYING things – as we like to call it experiences over things. The traditional approach to retail is failing the high street. Mega sales promotions, aggressive advertising and rewards programs may get people through the door to a point, but these short-term strategies don’t build the types of emotional connections that drive long-term profits and loyalty.

The problem is not that people have become lazier and defaulted to online shopping; it’s that brands have become complacent about making shopping in real life, “IRL” a worthwhile experience. More and more start-up brands are recognising that stores provide a direct platform to their customer base and are a huge asset. They have the power to deepen the customer’s relationship with a brand, to cultivate those strong emotional connections – ultimately increasing their lifetime value. It’s no longer about the price point but the emotive experience that will drive brand loyalty and retail spend.

Brands need to have the most compelling and relevant content and products as well as optimised and personalised shopping experiences now if they are to benefit. Here we look at what is driving these changes in the retail landscape and how brands need to evolve to stay agile and relevant:

 

Online and Offline Retail Experiences

Jack Ma, the founder of Alibaba, coined the phrase “new retail” to depict the increasingly blurring boundaries between the online and offline shopping world. Technological innovations are allowing us to see a synthesis of the digital and the physical with the adoption of Augmented Reality (AR) and Artificial Intelligence (AI). Certain brands are embracing interactive technology to provide consumers with more memorable, customised shopping experiences.

In 2020, Generation Z are set to account for 40% of all consumers and will influence nearly $4 billion in discretionary spend. Brands need to understand how to reach this influential audience and build brand advocacy now to benefit from this upward trend.


Blending in-store and online shopping experiences will be key to the survival of brick-and-mortar retail. In a recent study by Criteo, 
80% of Gen Zers said they looked forward to shopping in stores when they had time, but 75% do most of their shopping online out of convenience. Most Gen Zers prefer having the option to touch and feel products before purchasing and to use their smartphones while in-store. They also enjoy unique product displays and ways to test out products in stores. 

Beauty brands are leading adopters in terms of AR-apps that enhance the shopping experience. Through combining augmented reality and computer vision, customers are able to try on makeup virtually at home or in-store, and share through their social media channels, all while simultaneously collecting behavioural data for brands. For example, Estée Lauder-owned Smashbox partnered with Modiface [now acquired by L’Oréal] to use customer eye tracking insights to heat map the areas on a screen receiving more attention by users. This helps Smashbox understand which features are the most interesting and iterate on its website to make the beauty shopping experience more relevant for consumers.

Interactive experiential pop-ups and ‘smart stores’ with virtual greeters and facial recognition payment options will provide shoppers with the personalisation and customisation that they seek.

Creating a new retail experience

It costs more today to reach your online target audience, than it has ever before. As more and more businesses are popping up online each day, you can guarantee advertising costs on Google, Facebook, Instagram and Twitter are going to continue to increase. That’s not to say cut all social activity, like Lush did earlier this year. It is creating that omnichannel experience that combines the online and live seamlessly. Shifting from transactional selling to emotive experiential shopping.

 James Wallman, a trend forecaster and the author of Stuffocation: Living More with Less, in which he charts the move from possessions to experience.  “If you think about the 20th century, the big dominant value system was materialism, the belief that if we had more stuff we’d be happier,” says “The big change to what I call experientialism is more about finding happiness and status in experiences instead.” Studies also suggest the anticipation of an experience has a crucial, additional value. In a 2014 paper called Waiting for Merlot, psychologists Amit Kumar, Thomas Gilovich and Matthew Killingsworth showed how consumers derive value from anticipation, and that value tends to be greater for experiential than for material purchases. That feeling lingers longer, too, tied up as it with memory.

Audiences are actively seeking memorable, authentic and shareable brand experiences around products. Having a consistent brand narrative that offers an experience at every touchpoint will cut through the noise, heighten engagement, increase brand advocacy and drive results. In a Gallup report, consumers with strong emotional connections with retailers will visit their stores 32% more often and spend 46% more money than customers without emotional bonds.

 

Personalisation from Big Data and AI-based recommendations

From recent research, 64% of consumers report that they feel like retailers don’t really know them. This is why many retailers have increasingly started to leverage AI to personalise the shopping experience. AI is able to learn through user behaviour and its algorithms get better over time – the rise of the AI stylist in the fashion industry is going to be huge – UK e-commerce startup Thread, which tailors recommendations based on a user’s behaviour and allows direct purchasing, has received Series B funding from H&M.

But AI doesn’t end with product recommendations. AI is being implemented across the entire shopping journey, particularly with chatbots to support shoppers. The likes of Alibaba and Amazon will have incredible data and buyer insights that will help brands create new products, as well as trends that will feed into their strategies. Timely and personalised product recommendations during these “FOMO” shopping events and experiences will be a key way that brands can demonstrate that they understand their customers’ needs and preferences. Find out how AR and VR can be utilised to enhance brand storytelling and brand experiences.

Maximising “Micro-moments”

 Think with Google started talking about the different types of touchpoints that consumers experience (on average) 150 times a day, as “micro-moments”. Audiences will often turn to their mobiles during these shopping micro-moments.

With the augmented ease of payment through mobile by users scanning their fingerprints and faces on their mobile devices, ‘in-the-moment’ purchases are ever on the increase.

It is critical for retail brands to have a solid mobile-friendly offering, and to ensure that their apps provide that seamless shopping experience that users seek and come to expect.

The retail moments that matter – the micro moments you need to factor into your brand narrative and the customer journey

Shopping micro-moments often start when people have a need or desire to purchase a product and they begin thinking of ideas. This leads to research and eventually purchase. These moments tend to fall into one of three categories:

  • I-need-some-ideas moments happen when people have general awareness of the product category they’re interested in, such as living room furniture, but they haven’t yet narrowed down their choices to an exact product.
  • Which-one’s-best moments—a.k.a. consideration moments—happen when people turn to their phones in short bursts of activity to compare prices, brands and specs, and read product reviews from trusted sources.
  • I-want-to-buy-it moments happen when the research is done and it’s decision time. People make a choice about which brand or retailer to buy from, and whether to buy online or in-store.

How can brands maximise the opportunity from these micro-moments? Behavioural analysis, timely and personalised recommendations, through emotional storytelling  and the immediacy of direct product brand experiences. The more relevant and authentic your brand offering is the more brand advocates will spend and engage with your brand even when presented with available alternatives.

Shoppable Social Media as a significant driver for retail

As more shoppers turn to their phones to shop, we expect to see more of that happening through social media feeds. Multiple social platforms are raising their game to maximise advertising revenue from retail brands, but some channels are gaining the traction over others. It’s expected that Instagram will grow 3x faster than the growth of overall social traffic, which translates to a 51% year-over-year increase in traffic to retail sites. Meanwhile, Facebook will see traffic referrals to retail sites shrink by seven percent as Instagram begins to own more traffic share.

Alongside referral traffic to retail sites, Instagram is working on a standalone e-commerce app called ‘IG Shopping’ which will allow its 1 billion monthly user base  to browse collections and make in-app purchases. Instagram will be leveraging its 25+ million business accounts to take on e-commerce competitor Shopify.

Last year Snapchat launched a new Discover channel called ‘Shop and Cop, which highlights app-exclusive e-commerce deals from chosen brands and enables on-platform purchasing of those items, so you can snap up the deals without leaving the app. The ephemeral usage of the app may prove challenging for brands to establish lead conversions from the platform.

The future….

Brand experiences will provide a key way to engage with target audiences through online and live experiences. Audiences expectations and values are changing; they want meaningful experiences over things. This provides brands huge scope to create compelling ‘onlive’ experiences whether as part of a product launch, pop-up, online or in-store experience. Authentic brand narratives will also build crucial emotional connections with consumer audiences – lasting brand affinity is based on personal feelings and emotive engagement and not on logical, short-term price point relationships.

This is the era of ‘New Retail’ where brands must focus on fulfilling the personalised needs of each consumer through emotive transformative brand experiences. Start your brand experience journey now and find out how we can help you engage with your audiences more meaningfully.

1. Blurring of online and offline

Audiences are seeking hybrid experiences that blur the boundaries of online and off-line – they still want to test products, engage with brands directly and for their experiences to be personalised. 

2. Creating a new retail experience

Consumers want brands to engage with them authentically, and they want to be active participants in their shopping experiences. Shopping is no longer transactional; it needs to be an emotive experience.

3. Personalisation from Big Data and AI-based recommendations

Technology like AI and AR can create more personalised customer journeys through targeted product recommendations as well as digital interactive product sampling either in-store or online. Behavioural analysis and tailoring of retail experiences will establish stronger brand affinity.

4. Micro-moments

Anticipating these retail micro-moments and conveying an authentic brand narrative, that addresses each touchpoint, will build a more emotive relationship with your audience. The more emotionally invested your customers are, the more they will choose and spend on your products and experiences over available alternatives.

5. Social Media as a significant driver for retail

Choosing the best referral channels like Instagram will bring significant growth for retail brands. Social media is evolving into e-commerce platforms and increasing ‘mobile-only’ and ‘in-the-moment’ shopping behaviours.

Contact - Create your brand experience