Earlier this year, Kantar Research projected that, by 2020, consumers will be spending $2 on services for every $1 they spend on “stuff.” It’s certainly not a new trend, but it may even be accelerating. One thing is for sure: it’s squeezing brick-and-mortar businesses like never before.
The shorthand for this formula: experiences > products. More recently, that dynamic has been cited to explain everything from Black Friday shopping trends to Millennial spending habits. Consumers are saying – with their wallets – that the process of using, buying, and even just browsing for something is driving decision-making as much as the product itself.
Retailers should take heed. Meeting and exceeding consumer expectations about “experience” means the difference between customers showing up once a month, or just once. Between buying something and showing their friends, or not even bothering.
But there’s another reason: creating the “right” consumer experience is a challenge that’s entirely unique for every enterprise. Virtually every business model is facing rapid pressure to evolve. In retail, the two main marketplaces – physical stores and online commerce – are converging into a new, uncharted, unified shopping experience. Take Amazon’s grocery store concept, for example. But those two channels, for now, are still distinct.
Here’s what we do know: physical stores can’t just sell a product any more. The experience must come first.
With the steady rise of online shopping, the onus is on brick-and-mortar stores to play to their own strength: namely, service. After all, most in-store products are available online for a comparable or lower price. So when the customer walks out of the store, what are they going to remember? Regardless of whether they made a purchase or not, do they take away something from the experience that communicates what makes you different?
For all its gains in market share, online retail includes its own set of challenges. How to craft systems that give consumers choice and control (skipping the lines, delivery options). How to build relationships with consumers through automated systems. How to shape policies that give users peace of mind (flexible returns, customer care).
In our focus groups and surveys for major retailers, participants regularly hold a sharply different set of expectations even for competitors within the same industry. Their demands are based on current perceptions and personal history, but they acknowledge that technology is constantly shifting each.
That makes for an exciting time to be in business. We often think of the digital space as the vanguard of commercial innovation, and rightfully so. But our research regularly confirms that if a company tailors its approach to consumer needs, there are myriad opportunities to reach new and current audiences, on just about every channel, especially in the store.
It all starts with listening to their priorities, and their perceptions about you – not just the “stuff” on your shelves, but whether they can count on you to deliver the personalized experience they want.