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Time is not the friend of traditional fast-moving consumer packaged goods retailers. Category by category, share point by share point, sales of consumer products continue to migrate to digital alternatives or services such as click-and-collect and auto replenishment that actually keep shoppers out of the store. No wonder mass market retail executives are looking for new tools that expand their value proposition from item and price to include experiential stories to attract and retain shoppers.
In a previous article we suggested successful retailers see experiential storytelling strategies as an operational cornerstone for organizing their future success. Testing our theory, we asked 100 retail executives from organizations with sales over $2 billion a few targeted questions.
Eighty-eight percent of the retail executives we surveyed said they saw differentiated experiences as being as important as products to their future success. Consumers agree. A June 2017 GPShopper report found 86% of shoppers reported liking “experience stores” but were relatively indifferent about their current in-store experiences — an indication stores are failing to connect with customers.
How Will Physical Stores Evolve?
We are headed toward two consumer states: seamless replenishment of basics and experiences that make connections across interesting products. This requires a new role for physical stores. Retailers need to learn how to drive sales by creating compelling stories to attract consumers to their stores, and then design and execute interactive experiences to reinforce those stories and engage shoppers. That process includes accepting customers as co-creators of experiences and learning how to tie in-store experiences to their digital lives.
Of course, this raises some further questions.
What will retailers do with their existing real estate? Can they use the existing stores and square footage as “stages” to tell experiential stories? And what are the organizational implications of shifting from a product-focused approach to an experience-driven model? Let’s see what the experts said.
A staggering 98% of executives we contacted confirm that experiential stories need three elements: cross-category collaboration, the ability to provide a differentiated experience, and a coordinated marketing message. Eighty-three percent of executives believe the traditional category-centric merchandising model impedes their ability to deliver experiential stories. More critically, only 28% of them strongly agree that their current merchandising organizations have the strategic or analytical skills needed to execute the experiential story strategy.
How Do Retailers Design Experiences?
So, how can retailers develop the skills needed to build excitement and the allure of the store as a whole in a world where shoppers “do” instead of just “buy”? Future success requires building the skills foundation you will need tomorrow, today. That means hiring different kinds of employees to fill skill gaps; breaking down silos across marketing, merchandising, and stores; and ensuring tools that focus on connecting with customers.
This is a huge cultural leap requiring a mindset shift from a category-centric, need-state-based product focus to a focus on incorporating multiple products and services into differentiated in-store experiences. Remember the shopper is the final arbiter of what is, or is not, a great experience because, in the end, each of us uniquely perceives and processes narrative input — creating the final “experience.”
To start, build cross-functional teams targeting specific customer personas, or psychographic profiles. Learn what those personas need and launch small tests, starting with bringing a few stories to life in part of the store and expanding across departments as you learn what does and doesn’t work. This may require augmenting your current assortment with special products and partner services that can be wrapped around products. So how does that look in practice? Consider this report from the future.
A Glimpse Into the Future
It’s a hot August day in 2027 and Jill Johnson, chief experience officer for Everyday Grocers, wants to be anywhere but at her desk. But that’s not going to happen, especially in light of Big Online Co.’s announcement that it had reached a deal in principle for the acquisition of Allmart. But Jill wasn’t worried. Her team had long ago moved away from emphasizing logistics to focusing on creating in-store experiential stories for the chain’s largely middle-class shoppers. Their latest effort, Around the World in Eighty Cheeses, spoke to the customers’ desire to travel and the constraints on their travel budgets. By augmenting Everyday’s standard inventory with cheeses and other products from Australia, New Zealand, Poland, Belarus and Lithuania, her team had boosted weekly store visits by 22% and overall store sales by 34%. Of course, the idea was to carry the experience throughout the store, so teams of chefs and shoppers had been vying in a series of international cooking competitions for weeks. The story was executed across the store with displays of beers from the cheese-producing nations and wine tastings and pairings, all supervised and approved by customer “judges.” Customers were invited to post travel photos on Everyday’s InstantTalk site and to actively participate on the chain’s online community dedicated to international food and travel.
So, that’s our mini-example of how an experiential story could be executed in-store. What’s yours?
Randy Burt and Eric Gervet are partners in the consumer and retail practice of A.T. Kearney, a global strategy and management consulting firm. Charisse Jacques is a principal in the firm’s consumer and retail practice. They can be reached at Randy.Burt@atkearney.com, Eric.Gervet@atkearney.com and Charisse.Jacques@atkearney.com. The authors would like to thank Ben Jakes, Ashley Rinere and Marieke Witjes, consultants at A.T. Kearney, for their contributions.
