Retail reality 

From points of sale to points of experience

Experience is perhaps the most improperly used, hollow and catch-all term in the world of retail. Because what actually constitutes experience? Is it a friendly employee who knows you by name and is always there for you? Perhaps it's 'blurring', which has made you able to drink good coffee and eat something in more and more retail outlets? Perhaps it is the fantastic decor and theatre that only physical stores can offer? Is it the opportunity to socialise, or to share your retail experience on social media? Or is it that fantastic online customer journey?

In 2019, theoretically no one needs a physical sales outlet to sell a product. We shop faster and easier via app, web and voice. So why do we still have shops? On the one hand, we are still seeing chains disappearing. On the other hand, the trend is towards brand temples opening on an ever larger scale - especially in large world cities. What is behind this, and what consumer expectations might be at the root of this development?

Three E's: Experience, Efficiency and Expertise

Until a few years ago, efficiency (convenience and speed) was an important reason to visit a store. However, thanks to the rapidly improving service propositions of online players, efficiency is becoming less and less associated with physical players.

Research by ABN AMRO in 2018 shows that currently the strong attributes of physical stores are mainly experience (and trying out) and expertise (knowledge and specialism).

A dominant trend in international shopping streets is the transformation of shops from point of sale to points of experience. In short, these retail concepts are increasingly distanced from the functional shops of yesteryear and are fully committed to experiential retail.

The experience is the product: Return on Experience (RoX)

So much floor area, so many staff, such expensive premises, so many things that make it impossible to achieve your turnover per square metre," is usually what traditional retailers think when they enter a modern brand temple. Take Samsung 837 in New York's Meatpacking District, where you can't even buy products!

A striking buzzword that symbolises the transition that retail is currently going through is 'Return on Experience'.

“Return on Experience (RoX) shows how businesses create value across connected experiences and how that value can be followed and measured down into individual moments themselves.”

(John Cain, Todd Cherkasky and Rick Robinson from SapientNitro)

When US fast-food chain Wendy's started its customer engagement mission in 2010, the objective was to make a switch from the 70 percent of its business it was getting from drive-thru to a bigger share for dine-in traffic. Wendy’s foresaw that digital signage would play a major role in, for example, enhancing premium menu options, steering people away from value menus to increase average check and, very importantly, reducing the customer perception of wait time. The perception of the ordering process is often that it is pressure filled, with lines queuing and a multitude of choices. Digital signage can assist in making choices and makes the waiting time more enjoyable by incorporating music and/or video playlists, TV, etc.

“It's time for a consumer-centred metric: introducing 'return on experience'.

(...) In addition to the traditional return on investment (ROI) metrics used to determine a company’s success, we need to introduce another metric, one with a laser focus on customer experience: return on experience. (...) Delivering a superior experience will be what makes you a winner.”

(PWC Global Consumer Insights Survey 2019)

In short, the most important value for brands and retailers is not so much in the product or service offered, but above all in the experience surrounding them.



PWC has identified six key pillars for the success of your Return on Experience:

  • Fuse customer experience and employee experience
  • Convey shared values
  • Find ‘magic moments’
  • Understand the customer
  • Treat data respectfully
  • Win the trip

Who has cracked the code?
Which brands have actually cracked the RoX and have managed to find the perfect mix of the right employee, the right value set and understanding of their shoppers, and are able to capture this in 'magic moments' that ensure that they actually come out a winner?

Winky Lux: a great example of marketing the experience
Cruelty-free and toxin-free beauty brand Winky Lux has undeniably cracked the code to win (the female part) of Gen Y and Gen Z. How has it managed to create a footprint in the shopping streets of New York - which are flooded with cosmetics brands - that appeals to a whole new generation of shoppers and is 'socially shareable' while still having its business in order?

Winky Lux's physical retail footprint is completely based around 'Instagrammability". “If it didn't happen on Instagram, it didn't happen” is what it says on their website and which is reflected in their Winky Lux Experience store. This features candy-pink rooms full of colourful objects that scream to be photographed, with the visitor at the centre. And all of this has a single goal: to create the perfect Instagram content for the Winky Lux fans. And that has value. This is why Winky Lux asks 10 dollars entrance for their retail experiences. Visitors can then enjoy taking pictures and can also spend the 10 dollar credit on Winky Lux products. This puts the retail experience first and the product is a souvenir of the journey the customer has made.

Is this a uniform solution for everyone?
Is this way of storytelling the key to success for everyone? The answer is certainly not. For the time being, it seems mostly the popular new 'unicorns' like Glossier Inc. and Casper (see their fantastic “The Dreamery”!), well-known retail shakers such as Gentle Monster and Galeria Melissa, and trendsetting giants such as Nike and Apple that are actually showing how the experience in their brand temples generates so much value that the product can be regarded as a souvenir of the experience.

For all other brands and retailers, the message is: try to make your brand and (retail) experience score as best as possible on the E's of Experience and Expertise. Also look closely at the six RoX values and try to make your experience a truly distinctive 'product'. In this way, you can make every purchased product a souvenir of your unique experience.

Do you want to know more about this trend? Then you should contact Erica Twigt,  or +31 (0)252 750275.

Unboxing experience · Kega
Unboxing experience · Kega
11 July, 2016

Make your unboxing experience magic! COLUMN / Rene spaanderman Recently, after ages of searching, comparing, toing and f...

Virtual reality Nespresso · Kega
Virtual reality Nespresso · Kega
8 September, 2016

360-DEGREE VR EXPERIENCE IN BOUTIQUES AND AT PRESS EVENT Nespresso and Kega create a tangible digital experience Nespres...