When is a store not a store – the next stage of the retail customer experience

The Luxury Institute issued a press release last week saying that our client Burberry has been found by independent research to be offering the best customer experience of any luxury retailer by some margin. The survey found; “The top three factors that shoppers consider before recommending a brand are merchandise, service and store atmosphere. Two standouts across several criteria are British fashion house Burberry and French luxury outfit Louis Vuitton, with 77% of shoppers saying they would recommend Burberry to family and close friends, and 74% saying the same about Louis Vuitton.”

It is no accident that Burberry has also outperformed its competitors in terms of sales over the past year or two. Christopher Bailey, Buberry’s Chief Designer has created some wonderful ranges but the brand has realised that creating an in-store experience is the best way of showcasing them. There is a revolution quietly taking place in retailing.

The new face of retail banking

Umpqua is a fast growing bank in the US with a tremendous reputation for service. But Umpqua really isn’t a bank at all-it’s a store.

It looks like a fashion store with its bold images and layouts that invite you in.

It feels like a store because its people are mostly hired from retail and understand what it means to provide service than simply process transactions.

It acts like a store because it provides goods and services so that you can pop-in and go-line and do some shopping while you have a coffee. In fact Ray Davis, the bank’s President, told me that most customers who visit are not there to bank at all.

Umpqua came from an insight that Ray had 15 years ago when he realised that banking should be much more like retailing. In the aftermath of the banking crisis I predict that a lot of UK banks will be waking up and smelling the coffee too and realising that they will not survive long unless they start learning from their high-street retail neighbours.

Umpqua Bank – redefining the retail banking experience

You can’t say exactly when stores offering experiences started. But, when buying a donut became a multi-sensory experience was a significant step along the way. Andy Milligan and I wrote about Krispy Kreme a few years back now in our 2002 book Uncommon Practice – People who deliver a great brand experience. We highlighted how the company had changed the retailing of a donut into…something else. In their flagship stores customers watch the product being made through panes of glass, the aroma is wafted out to them to heighten the experience and so on.
From selling product to selling an experience
What we were describing was one stage in the evolution of retail, as shops – or stores for our US readers – have begun learning how to sell a complete experience, not just a product.

The smartest exponents in recent years of what CK Prahalad and others call ‘co-creation’ and what Alvin Tofler original referred to as ‘prosumerism’ – where consumers want to be involved increasingly in the production experience, and the barrier between producer and customer blurs - are the people behind the Build A Bear workshops.

You can buy a toy bear anywhere for maybe $10-$25. (There is a collector’s market where limited editions sell for hundreds of dollars but that’s a different market entirely from the kids’ bear market). But, when a child and its parent walk into a Build A Bear Workshop (it’s not really a store) they may spend an hour assembling their own bear, including choosing its heart, and spend anything upwards of $100 – $ 200 for the privilege of having done the work themselves.

Is this retail? Not as we know it or knew it.

Here come the big guns
I’m writing about this now because the big guns are getting in on the act. Apple, whom we’ve blogged about recently, have made their stores pretty cool places to hang out by creating the Genius Bar – where you can find out how to make your Apple stuff work better by chatting to resident Apple geeks. Apple now have 283 stores worldwide with an incredible 50million visitors annually; they have recently announced an ambitious store opening programme in China. Is Apple a manufacturer or retailer?

Microsoft is considering going the same route by making its stores ‘experiential’. After all, is there anything duller or more stressful at the moment than going into a branded computer store and trying to find what gadget you actually want?

IBM is developing a retail innovation centre at Hursley in the UK where IBM and selected partners bring to life smarter retail solutions. This includes a multi-channel CEM demonstration based on a combination of Smith+Co methodology, Cincom’s Synchrony software and IBM products. The new facility will illustrate how retailers can operationalise a CEM+ strategy to enable a better sales experience at every touchpoint, resulting in higher customer retention, value, loyalty and advocacy.

Imitation is the sincerest form

Best Buy will shortly enter the UK market with their award winning consumer electronic stores complete with the full Geek Squad technical support service to help you ensure that when you walk out with your new purchase it adds value to your life rather than stress. The Geek Squad have already appeared in the UK as part of the Carphone Warehouse offering. The only people who will be worried are PC World and Curry’s executives, who have cobbled together a copycat service called The Tech Guys to try and steal some of the Geek Squad’s thunder.

But, the real big guns are Disney. And their plan to turn their 340 retail outlets into ‘Imagination Parks’ is what sparked off this blog post, as that is really bold; and my conviction is that, increasingly ,to stand out in any market, you need to be the one taking the bold step.

The cost is thought to be about $1 million per store over five years and would involve Disney making its stores more like its theme parks – rather than what they have been for so long, mere merchandising outlets. Disney’s always been great at brand extension – its live action stage musicals based on its movies – The Lion King, Beauty and The Beast, for example – have become massive money-spinners. But, until now, it’s largely ignored the potential for extending those experiences into its stores. Now, the plans include in-store kiosks where customers can experience virtually, and then buy, Disney cruise line and Disney World park packages and other crossovers.

A tour of the model store that is being piloted is described in a blog post here (http://forums.wdwmagic.com/showthread.php?t=546601 ) . It’s the latest news to emerge since the original plans were announced in October 09 http://industry.bnet.com/media/10004615/disney-store-redux-retailers-must-use-their-imagination/

It’s time for retailers to follow suit. There are outdoor clothing stores that have built climbing walls into the store so customers can test their climbing boots before buying, and drench showers that mimic tropical downpours so customers can test their rainwear before buying. Porsche has an innovative ‘experience centre’ at Silverstone where you can put the product through its paces before you buy. http://www.porsche.com/silverstone/en/centre/

For retail, it’s time to be bold. What about for you and your sector – What are you doing to engage your customers with the product and reinvent your customer experience?