How do you see this experiential retailing trend working its way across retail? Are these strategies somewhat limited to specialized concepts? What are some of the best and worst examples of experiential retailing in the marketplace?
In an age of commoditization, consumers shift their focus from product and service attributes to the experience obtained while using the product or service. The more relevant and memorable the sensory experience, the higher the value, the higher the worth, the higher the price that can be charged. Customers are actively engaged, involved–they have a relationship with the product, the brand, the company. Needs, wants and desires are fulfilled. Bottom line: the experiential is never a commodity. The experiential = differentiation/competitive advantage. A great example of experiential retailing is L.L.Bean. At their flagship store, Bean is developing a family-friendly outdoor adventure attraction with lodging amenities. Visitors will soon be able to hike, bike, golf, cross-country ski, or go kayaking, seal watching or fishing in nearby Cisco Bay. Then they could eat and stay the night on the property. Is this a savvy move? Very much so. Roughly 3 million people walk through the Freeport stores every year, making L.L.Bean Maine’s second-most popular tourism destination behind Acadia National Park. In recent years, Bean has branched out into recreation through its Outdoor Discovery Schools, where customers take lessons for activities like fly-casting or kayaking. These activities are very popular, and Bean has found they generate good customers who buy products. Creating a destination adventure center such as the one being discussed–where people can stay and participate in these and other outdoor activities–takes the formula to a higher level, and would propel Bean from being a store, mail-order retailer and a brand into a full-fledged outdoor experience. Bean is on a fast track to make the project happen: it wants to see the theme park operating within three years. Bean operates seven full-price retail stores and 14 outlets on the East Coast. It plans to open 35 more full-price stores within five years, and future stores also could be linked to outdoor adventure centers in other states. Experiential retailing is a trend with staying power–people increasingly want to combine leisure, travel, learning and family vacation time–and adding retail to the mix is a brilliant gambit. http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13030
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How should advertisers be marketing to baby boomers as they reach old age? What approaches should remain the same or be different from their approaches to past older generations? What missteps do you see advertisers making?
Advertisers are finally realizing that seniors spend money, and that seniors are willing to try new things and products. But now that boomers are becoming seniors, it will become increasingly more difficult to generalize about the senior market. That means producers of goods and services (and retailers) must either market to an ever-broader array of market segments and niches, or attempt mass customization (individualization).
There are many success stories (and failures) in these attempts already. I have analyzed several; too many to discuss here. My general conclusion, as unsatisfactory as it may be, is that “it depends.” It depends on product, market, strategy, reach, communication, etc. But assumptions must be discarded, and I guess that’s the point of this article.
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What about scent?
Fragrance is as much a marketing tool these days as logo and a jingle, reports Forbes magazine in a company profile of ScentAir Technologies. Examples: Sony aerates Sony Style stores with a vanilla-and-mandarin aroma to put shoppers in a spending mood. Doubletree Hotel guests get a whiff of chocolate-chip cookie scent at the front desk. A sugar cookie fragrance is puffed into model homes. Procter & Gamble use smells to attract shoppers to in-store displays.
At the Hard Rock Hotel in
Smell is an incredibly powerful marketing and merchandising tool. According to the Smell and Taste Treatment and Research Foundation, smell has a greater impact on purchasing decisions than all other factors combined. If something smells good, in other words, the product is perceived as good. And there is nothing like the appropriate scent to induce the brain’s neurons to scream, “I want that! Buy that now!”
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How do retailers tie into the music trend?
Today’s leading retailers, from mass merchants and department stores to specialty and lifestyle boutiques, are savvy users of music and musical artists to enhance brands, marketing, sales and profits. Retailers such as JC Penney, Gap, Armani Exchange, Nordstrom, Sears, Target and Wal-Mart are signing musical artists for multi-platform campaigns that include advertising, in-store and online music sales, personal appearances and performances, and the creation of in-store musical environments that enhance the shopping experience (and boost sales of all products).
Wal-Mart launched a national original music performance series, Soundcheck, earlier this year. Participating Soundcheck artists record in-studio exclusive performances and interviews, which are played nationwide in Wal-Mart stores on TV and HDTV screens as well as on the retailer’s web site. The artists’ respective albums receive extra attention in Wal-Mart stores and online, where downloads of tracks sell for 88 cents each. The comparable Nordstrom program is called Silverscreen.
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Is this a blip or a trend?
The department store comeback is a trend with staying power. Dr. Roger recently explained why on Retailwire.com, where he serves as Brain Trust panelist:
■ Savvy department stores have countered consumers’ preference for specialty stores by becoming collections of specialty stores themselves. The fact that these stores-within-stores often have their own buyers, marketing, advertising, and sales and management personnel is what gives them the ability to be closer to the market, and why they are more likely to feature the hot products and items.
■ Savvy department stores either offer distinctive products, provide exceptional service, or compel the loyalty of high-purchase, multi-trip shoppers with customized programs and rewards.
■ Savvy department stores use their web sites and the Internet to drive traffic to their stores. They integrate their in-store and online operations. The majority of shoppers, and the overwhelming majority of younger shoppers, hit the Web before they hit the stores.
■ Savvy department stores have become consumer-centric, not product-centric.
■ Consumers have money to spend (employment and income up, delinquencies down) but spend selectively. They want quality, price, selection, convenience, and service. The department stores that provide these will thrive.
There’s also the fact that the universe of department stores has been thinned by bankruptcies, consolidations and acquisitions. But the ones that survive have done so for a lot of good reasons, and are again become shopping destinations for a new generation of consumers.
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Department stores are in for the holidays
According to research conducted for the National Retail Federation, 62% of consumers say they will be headed to department stores to do at least some of their holiday shopping this year, up from 53% just four years ago. Over the same time period, the percentage of shoppers who plan on doing at least some holiday shopping at discount stores has fallen from 77% to 70%.
Part of the reason for this shift is that department stores are doing a better job of attracting younger shoppers. In recent years, consumers 18-to-25 have gravitated toward specialty stores, but this year 79% plan to visit department stores to find gifts for the holidays. According to a report by the Chicago Tribune, department stores are attractingnn younger shoppers by featuring trendier designer fashions, exclusive merchandise in the apparel and home furnishings segments, and edgier advertising campaigns in youth-friendly media.
JC Penney, for example, has turned around in part because it has found new ways to appeal to younger shoppers. Kohl’s and Federated, the parent of Macy’s, have made similar moves. For September, same store sales open at least one year — a key barometer of a retailer’s health — rose 16% at Kohl’s, 6.2% at Federated and 8.7% at JC Penney, all far ahead of the 3.8% September same-store sales gain nationwide.
Other signs of the department store’s comeback: Forever 21, the fast-growing, trendy off-price chain aimed at young people, plans to open a 30,000-square-foot prototype department store next spring. And department store sales in September increased 8.4%, the largest single month increase in nearly 10 years, according to the International Council of Shopping Centers.
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Lifestyle longevity?
What will the shopping center of the future look like? Developers worry that the lifestyle of today will look antiquated in a few years. Others think that lifestyle centers will only get better and more ubiquitous. After all, the gathering of shopping, eating, working and living in one place used to be called towns and cities. The new mixed-use builder is, in effect, erecting communities from the ground up.
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Can malls make a comeback?
Malls in the classic format aren’t likely to be revived anytime soon. Mall developers are giving in to these new realities, writes Murphy. Chicago-based General Growth Properties unveiled the open-air 980,000 sq. ft. Pinnacle Hills Promenade in Rogers, Ark. last October with just two department store anchors, Dillard’s and JC Penney. “Villages” of big boxes opposite lifestyle tenants and restaurants are all matched with 80,000 sq. ft. of offices atop the stores.
Elsewhere, General Growth, which owns 200 malls, plans to open smaller lifestyle centers in places like
At Simon Property Group, the nation’s largest mall owner based in
A decade ago Simon never considered mixed-use. It’s top of mind now, though. In November, the company opened its 1.2 million sq. ft. Coconut Point in Estero, Fla. The hybrid center includes lifestyle tenants such as J. Crew and Coldwater Creek positioned opposite OfficeMax, Bed Bath & Beyond and other big boxes. Coconut Point also includes 35,000 sq. ft. of offices and 290 condos, the latter developed by Kosene & Kosene Residential LLC, an
Everybody, it seems, is borrowing elements of the lifestyle centers pioneered by Poag & McEwen Lifestyle Centers LLC of Memphis, which built the first modern lifestyle center, Saddle Creek, in
Despite the risks, lenders are jumping on the mixed-use bandwagon. Developers report that banks and other institutions have been willing to finance 95% and even 100% of projects with substantial pre-leasing. They’re even willing to bankroll office and hotel construction, too.
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Is the mall being reinvented?
Mall replacements are evolving so quickly that nobody can agree on exactly what the new model is, or what it ought to be called. Some developers are erecting lifestyle centers with no department store anchors or big boxes of any type. Others have created a variant with discount tenants called omnicenters. Still others add hotels, condominiums and offices, and promote them as mixed-use projects.
The dawning conclusion, writes H. Lee Murphy in National Real Estate Investor: All of the old rules and distinctions are out. Diversity is the new byword. Developers are willing to mix and match practically any kind of tenant in creating shopping environments with an eclectic urban feel. They’ve got grocery stores and movie theaters and high fashion shops all jumbled together.
Call these new venues lifestyle centers or town centers or omnicenters or whatever. The best description may be to just call them hybrids — borrowing ideas and layouts and tenants from every other category of shopping to fuse a unique and unpredictable retail experience.
Retail construction in the
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What are some other lifestyle retailers?
Neil Stern, a retail analyst and senior partner with Chicago-based retail consultancy McMillan/Doolittle, likes the prospects of lifestyle retailers with innovative retail concepts. He has 5 top picks, all of which are multi-channel lifestyle retailers:
Teavana. An Atlanta-based company that is betting that it can be a Starbucks for tea drinkers, Teavana operates more than 50 mall-based tea bars/tea emporiums nationwide. The concept is a hybrid between a tearoom, where customers can order a variety of different teas, and a retail store in the front that sells bagged tea and other merchandise. The stores do not sell food.
MetroPark. Hot Topic founder Orv Madden is the creator behind this California-based retail startup that describes itself as “part club and part street boutique.” MetroPark stores target the 25-to-34-year-old demographic, carrying a variety of trendy apparel and accessories brands such as True Religion, Le Sportsac and Harajuku Lovers. Its stores feature DJs, adding to the club-like atmosphere. Although most of its 24 stores are located on the West Coast, MetroPark has been expanding elsewhere with stores in
Room & Board. Minneapolis-based Room & Board sells stylish contemporary furniture in the mid- to high-end price range, designed to appeal to first-time homebuyers or people moving into city apartments. They have a non-commission sales staff and high levels of overall customer service. Room & Board currently operates 9 retail stores both on the East and
Dream Dinners. This Snohomish, Washington-based company describes its business as “meal assembly.” Started in 2002, it operates more than 215 food preparation franchise locations around the country where customers can put together uncooked meals to take home to freeze or cook later. Customers preview a monthly menu online at dreamdinners.com and then register for a meal assembly session at the store, where they have a choice of scooping together refrigerated or fresh raw ingredients into bags with the appropriate cooking instructions. The cost is about $3.00 a serving. The company logged revenue of more than $10 million last year, and is growing stores about 40% a year.
Blue Mercury. These stores, sited in affluent neighborhoods, are a hybrid between an upscale cosmetic store and a spa. Blue Mercury is developing a niche clientele of customers who may not want to go to a mall to pick up their grooming products. Blue Mercury currently has 17 locations but plans to expand.
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