Hollywood legend, William Goldman, famously said “Nobody knows anything”. He was talking about the film industry but he could have been commenting on the future of the high street. There are as many strident and influential voices claiming that the high street is dying or dead, as there are those convinced of the polar opposite. None of us know the future of the high street, however much we think we do, in just the same way as the Hollywood film industry can’t predict which movie will be a hit.
Personally, I see multiple futures for our multiple high streets, not a single direction of travel. Plus, I’m an advocate for thriving, welcoming, creative, multi-faceted and inclusive high streets (I’ve laid my cards on the table).
One key actor in the high street is retail. Indeed, for some, retail is the high street. Whilst many elements of the retail landscape can’t be gauged with confidence, for example if the existing wholesale model will be commercially viable for retailers in the near future or if a new economic model between brands and retailers will form, there are some aspects that are certain. This article focuses on one of those certainties: that physical and digital retail experiences will become further entwined, making the future bright for those prepared to take a rigorous and context-centric approach to retail experience design.
The retail landscape continues to be complex, evolving and exciting – full of opportunity.
Global ecommerce is growing at a staggering rate, causing disruption across the retail landscape and prompting a wealth of commentators to single out ecommerce for the decline and closure of many high street businesses. This simple narrative is unhelpful and we must acknowledge that the significant challenges faced by many of our high street retailers are caused by a range of factors, such as high business rates and long-term rental contracts.
We must also touch upon the many benefits that physical retail environments provide on a human level. People are inherently social creatures who need to be together; shopping is a social activity that satiates the human desire for visceral and emotional shared experiences. When we are out and about in the high street, all of our senses are stimulated, we are physically active and involved in our shared communal spaces. Physical retail environments enable surprise and the discovery of new products, in a way that online algorithmic echo chambers and retargeted advertising do not. For all these reasons and many, many more, it is unlikely the high street is going to ‘die’ any time soon. In the words of retail industry stalwart Mark Robinson, who chairs the UK government’s High Streets Task Force and co-founded retail investment company Ellandi:
“The high street is not dead, it’s evolving, the things that are dying probably deserve to die.”
What we are seeing right now is incredible innovation by retailers who are embracing digital technologies and harnessing opportunities in the retail experience economy, so as to evolve their businesses as the trading environment shifts. These technologies are key to reimagining our future retail experiences and, in our race to net zero, they are also key to reimagining how people shop sustainably.
What do we mean by experience economy?
Joseph Pine first coined the phrase ‘experience economy’ back in 1998.
Pine says of the experience economy: “Robust, cohesive, personal, dramatic, and transformative experiences all serve to get customers to spend time with you.” Time is the currency of experiences and customers are less willing to spend time, attention and money on mere goods and services, says Pine, and people value experiences that engage them in personal and memorable ways much more.
Even though this was published more than 20 years ago, it still underpins much of what we mean by the experience economy in 2022, and will probably still hold true in another 20 years.
With this in mind, let’s now look at examples from around the world to explore how digital technologies are being used to enhance a consumer’s experience of being in a physical retail environment.
The future of retail
Whilst we “know nothing”, we can reasonably imagine that the future of retail in our high streets and shopping centres will bear little resemblance to today’s experiences. We are reengineering spaces and retail experiences as hybrid – an enmeshing of physical and digital, which is what unites the examples below:
Virtual try-on experiences
This trend has become increasingly popular during the Covid-19 pandemic, with the virtual fitting room market expected to more than double from $3m in 2019 to $6.5m by 2025. H&M recently launched virtual fitting room features in a number of its German stores. A 3D scanner allows customers to create a free virtual avatar, set with their exact body measurements, so they can try on clothes virtually. The feature can also be used from home and outside of store hours.
Retail robots are allowing retailers to connect with shoppers in physical retail environments in ways we have not seen before. Not only are they proving to be a handy tool to bring shoppers in-store, they can even recommend products and remember customer preferences. As artificial intelligence continues to advance, robots of all shapes, sizes and sophistication will increasingly transform the customer journey and retail experience.
IKEA’s virtual reality showrooms
IKEA’s virtual reality (VR) showrooms are a great example of building a physical pop-up store that is connected by digital systems. The retailer’s interactive showrooms use VR to offer a 3D product experience and allow consumers to visualise designs with a VR headset. This particular pop-up, which ran for two weeks in Canada in 2016, allowed customers to add goods to their VR cart by tapping a sensor on the shelf too.
Spatial computing is being tipped as the ‘next big thing’ beyond VR and augmented reality (AR), further enabling the seamless convergence of physical and digital worlds. It has shown great potential for the retail sector due to its ability to create interactive shopping experiences and immersive location-based experiences. H&M is an early adopter of the technology and has been using it to place digital objects into physical store environments.
Digital kiosks are increasingly blurring the lines between bricks and mortar spaces and online retail, mirroring the speed and convenience of ecommerce in the physical store environment – faster payments, shorter queue times etc. They are already being used for biometric payments in China, which shows their potential to make the customer experience even more seamless in Western markets over the coming years.
The global gamification market is set to grow by 25.1% over the next five years to $38.4m, with retail holding the largest share of the market. While gamification in ecommerce is not new, it is increasingly being used in physical retail environments as a way to engage consumers, increase footfall and boost sales.
Brands like Coca Cola and Nescafe have used mobile games at physical points-of-purchase to make the purchasing experience more engaging, while Mall of America and Lancome and Alibaba have used AR-style scavenger hunts to encourage consumers to interact with an augmented experience on their smartphones as they walk through stores, offering a chance to win a prize upon completion.
Advancements in technology are allowing retailers to transform their physical environments into memorable experiences more than ever. Lego recently launched a new ‘retailtainment’ concept in New York, which has been designed to create an immersive world of Lego by blending unique digital and physical experiences.
Sook repurposes empty shops using a modular digital fit out, enabling pop-up shops, events and other temporary users to all share a professionally presented high street space on an hourly or daily basis. On Friday and Saturday a space may host a clothes shop, on Monday mornings, a community hub, and Wednesday evening a music venue.
Nike’s Rise retail concept in China, meanwhile, uses data-driven features to create interactive experiences for customers, including real-time running stats from local communities and an RFID-powered table where shoppers can compare shoes before they make a purchase.
And on a slightly smaller scale, but a great example of using immersive technology in a meaningful way, footwear brand TOMS’s Virtual Giving Trip’ allows customers to experience what it’s like to give TOMS’s Giving Shoes to children in Peru via a VR headset in-store.
The augmentation of physical places with location-specific digital services, products or experiences to create more meaningful destinations for all.
Digital placemaking is perfectly positioned to play a key role in the future of retail experiences. Developed by Calvium, The Lost Palace, for example, shows how technology can be used to change the experience of a place, or to enable a place to be experienced in new ways, through use of creative technologies like haptic technologies and Augmented Reality.
Our Place Experience Platform adds to that by allowing place managers to augment a place with digital content and constantly change and update experiences to keep them fresh – giving visitors a much deeper connection to the place they’re in. The platform allows retailers to extend their brand beyond the walls of their premises and enables them to design a richer retail experience.
Finding the balance
Fundamentally, we need to stop thinking about physical and digital retail experiences as being different. Instead we need to think on creating a blend of both; the experience economy will be a context-centric blend of physical and digital – one that focuses on the best possible customer experience.
The experience economy will be a context-centric blend of physical and digital.
This means that retailers have to really get to grips with developing a rigorous understanding of the customer’s journeys with its brand. Once they have a detailed map and understand the context of the whole experience, retailers are then in the position to decide on the combination of technologies, resources and delivery methods that will best serve the customers at any point in time. With well researched information, and a good sense of the people/place/product/tech environment, decisions and investment will be much easier.
Finding that critical balance between physical and digital begins with finding the art and the science, the skill and the care, of good experience design. Needless to say, that means taking an inclusive and human-centred approach.
The increasingly competitive retail landscape, where you can buy from any type of online media, is why good hybrid experience design is key to maintaining retail relevance. Physical experiences must be as seamless and frictionless as being able to make purchases via a Facebook ad, in-game purchases, scanning a QR code – where every element enables a purchase.
Retailers must also find the balance between their commercial targets and supporting people to shop responsibly – hopefully both will become aligned. Digital technologies have a pivotal role to play here because they can help people to make purchasing decisions – whether by displaying the carbon footprint of a product, material composition of the items in terms of recycled rating, or more information on the entire supply chain.
Technology can be used to encourage more sustainable behaviours too. Boots recently launched an in-store digital recycling scheme which rewards customers with Advantage points when they bring back empty beauty, health and wellness products.
Augmented reality scavenger hunts, robots with remarkable memories, incredible advancements in spatial computing…it is clear that our high streets have the potential to succeed. Retailers can only benefit by innovating and embracing the experiential opportunities that digital technologies bring to our latest retail era.
Calvium sees the massive opportunities that digitally-enabled retail experiences bring to consumers; enabling them to encounter the world around them in ways that delight and encourage them to return.
Contact Calvium today to find out how we can work together to create digital solutions that unlock the power of the experience economy.