12:11 PM, Oct 4, 2018 — Consumer brands are taking a more definitive stance toward experiential retailing — offering shoppers an experience rather than just products to buy — with positive results, Canaccord Genuity analysts Camilo Lyon and Pallav Saini said in a note to clients on Thursday.
In the second installment of their so-called Millennial Market Monitor, or M3, the analysts said the forays into experiential retailing have increased traffic and conversion and have influenced decisions about future retail openings.
Nike’s (NKE) new retail concept called Nike Live, which opened in Los Angeles over the summer, is now serving as a roadmap for new stores in New York City and Shanghai, Canaccord said.
“The Nike Live concept store in LA showcases a geographically relevant merchandise mix coupled with traffic driving initiatives like a vending machine with a free give away, and merchandise pick up lockers,” the analysts said. “The company’s 55,000-square-foot flagship store in New York boasts a Kinect-powered basketball court with adjustable hoops and digital video screens, an enclosed soccer trial area, a treadmill in front of a jumbotron that simulates outdoor runs, and a customization bar.”
Other brands are increasing the allocation of retail physical space to lounges, cafes and ares where customers can socialize or even work using the store’s wireless internet. Starbucks (SBUX) pioneered the socialization concept and WeWork created an entire business on the principle, Canaccord said.
Lululemon (LULU) has a similar space in its New York store in the Flatiron building where customers can use wireless internet or participate in special events. It also has a meditation space in its Fifth Avenue store. The company’s Queen Street store in Toronto has a small gallery where local artists and entrepreneurs can display their wares and have a cup of coffee.
The store on Fifth Avenue has a “mindfulosophy space” that’s equipped with large sofas, headphones and 12 self-guided meditation recordings that offer “patrons a chance to escape, unplug and recharge,” Canaccord siad.
Tiffany (TIF) is targeting millennials using its so-called Style Studio. Its London Covent Garden store has a fragrance vending machine and a personalization bar.
“Customers can create their own monograms (and) designs on screens and see them transferred to jewelry or other items,” the analysts said. “The company is incorporating more special events, rather than just exclusive shopping events. There is a space at the back of the store for client events, exhibitions and parties, and artwork from young artists working with international art fund Outset.”
French beauty brand L’Occitane, Birkenstock and luxury retailer Matchesfashion also have dabbled with experiential retailing, Canaccord said. Macy’s is rolling out virtual reality in its home decor and beauty products in 69 stores across the US that allows consumers to move furniture around in a simulated layout of their own homes.
“The pilot stores where this technology has been tested reported a 60% increase in “basket size,” underscoring the importance of offering an elevated customer experience,” the analysts said. “The company is also extending this technology to beauty products where customers can see how different varieties of makeup might look on them without physically applying it.”
Companies: Nike, Inc.
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