Retail’snewplayground:wherephysicalmeetsdigital

6.3.24
Applied
Date Published (6.3.24)
Read Time 0 Min
Outside market in a parking lot

Physical stores are back, baby—and this time they’re personal

  • Applied
Retail’s new playground: where physical meets digital
(6.3.24)

From amateur runners analyzing their gait to tweens comparing colors of blush, physical stores are back in the game.

It’s not that e-commerce growth is faltering. As consumers embrace one-tap shopping, online purchases will keep right on growing. But physical stores offer both brands and consumers something that digital channels can’t replicate: hands-on communal experiences, ripe for insights and innovation.

And when you blend the physical with the digital? Then you’ve got something really special.

As brands seek to draw in the public, in-store experiences are pushing beyond transactional spaces. Less “store.” More “connected, immersive experience.” A space to explore, learn, test products—and have some fun.

The rise of experiential retail

Ever wind down in a Lululemon pop-up yoga class? Or scale the rock wall at REI?

These experiences offer consumers something beyond a trendy crop top that’s already duped to death on Amazon. They bring consumers into the brand’s space, encouraging interactions with products and employees (read: brand ambassadors) while creating a sense of community. They create a sensory experience that the internet just can’t, well, touch.

Just ask these leaders in experiential retail:

  • The ultimate experience brand, Nike, is upping the ante again with digitally connected stores in Seoul, London, and Miami. The Rise concept features a new, in-store digital storytelling platform that “visualizes local sport, city, and athlete data to create one-of-a-kind content within the store.
  • You can’t even buy a Peloton at Peloton. They have no inventory. Instead, they use their 300-square-foot microstores as a brand entry point and educational experience. After testing a Peloton bike or tread, you can have one shipped right to your front door.
  • Sephora, one of the most successful makeup retailers in the world, offers personal recs from pros while also giving consumers the “test me!” experience they crave. Their combo of digital and physical ways to explore products makes splurging irresistible.

Competing beyond convenience

Convenience, price, and two-day shipping are no longer compelling differentiators.

Instead, it’s time to focus on how your brand’s specific expertise and story can captivate audiences. How can you think outside the box to personalize experiences, leverage technology, and collab with consumers?

With a thoughtful blend of digital and in-store media, you can tell your story to bolster brand loyalty and trust. Trusted brands outperform their competitors by up to 400%. Plus, customers who trust a brand are 88% more likely to buy again.

Dicks, known for community sports development and kid’s programs, now has several House of Sport concept stores that go well beyond selling mitts and cleats. A “place to connect and play,” House of Sport helps consumers reach the top of their game via demos, spaces to run, and connected technology. Consumers could order a new football from Amazon in two seconds. Dick’s is betting that football enthusiasts would rather compare different spirals first.

IRL habits: the OG source of data

When you see customers interact with a product, it can unlock insights you wouldn’t get with an online transaction. Why did they pick it up—or put it down? What are they asking sales reps over and over?

Market research, foot traffic, customer behavior, buying patterns, and product issues can all help you innovate and optimize products, not to mention flesh out your consumer profiles and audience segments.

Take Fabletics, which uses its physical locations for market research and merchandise testing. A while back, they learned that size XS and XXS leggings weren’t converting well despite strong in-store try-ons. After analysis, they discovered that the item’s design was flawed and affected the fit. Fixing the fit helped them increase their XS and XXS legging conversions to 85%.

And then there’s Ulta, who used data to redesign their in-store experience. Originally, they separated budget and prestige brands. Then consumer data showed users preferred to shop by category, not price point. They completely redesigned floor layouts, contributing to 18% revenue growth.

Get in loser, we’re driving digital innovation

While yoga classes and aesthetic decor get consumers into your store, blending the physical with the digital gives you a whole new level of personalization.Apps, e-commerce platforms, marketing tools, and AI can work with in-person stores to create next-level convenient shopping experiences.

  • When visiting certain Nike stores, users can scan a mannequin’s QR code to see products that make up a fit, plus where to find them online and off.
  • Don’t have a size L in stock in-store? Fabletics will automatically add the correct size to your online cart.
  • Need a specific fill valve? Home Depot’s app guides you to the exact aisle and bin in your local store.

Beyond the coolness factor, these digital connections offer immense value. They just need the right platforms and system integrations.On a final note: as you start integrating your online and offline experiences, let customer experience lead the way. It’s not about optimizing numbers alone. It’s about creating compelling experiences that elevate what your consumers love and how they want to shop.

Photography: Michael Baca

Behind the Byline: Asher Wren

Asher leads the growth practice at DEPT®. He’s a strategic partner to DEPT® clients from first phone call through final delivery, bringing together the right teams and solutions to solve challenges and drive results. Asher lives in Brooklyn with his girlfriend Salina and his dog Clifford.


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