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Friday
Dec282012

The Art & Science of Shopping: Some Thoughts on Monetizing the Experience Economy

The Waitrose Cookery School attracts customers by offering a wide range of cooking classes. Photo credit: Gensler

Most animals are equipped with a sixth sense, a Darwinian instinct that smells fear or weakness in its opponent. Shoppers have the same instinct: They can smell a retailer’s desperation a mile away from the mall.

In thinking about the recent efforts of retailers to “Internet-proof” their in-store experience, and to sell experiences in addition to products, it seems to me that a certain amount of investment is required on the part of the retailer (incentives, in-store opportunities to play with the merchandise, or benefit from the presence of strategic partners that enhance the retailer’s product offerings) to precipitate a reciprocal response in the customers (to make purchases). Unfortunately, it appears some retailers are still a bit reticent to put much skin in the game.

I think there is a delicate balance in the dance between the gift-with-purchase and the mail-in rebate. While both are afforded at the expense of the manufacturer, the result nonetheless is quite telling. The former allows the manufacturer to make the first gesture, inspiring good will with the customer. The benefit is immediate and tangible. The latter requires the customer to take a later action to reap the benefit, and wait for that benefit to materialize.

Customers like things immediate, simple and direct (like coupons, but let’s not go there). And they like consistency. If a retailer offers a free in-store experience or service, but then they start charging for it, the customer feels betrayed. There’s no getting around that. If the same retailer starts a new service offering, but associates a charge with it, the customer most likely will agree to pay the charge as long as the service brings value and meets a perceived need.

That said, assuming that the service loops in with some other aspect of the retailer’s business (i.e. its product offering), there should be some credit/incentive/rebate involved to instill good will on the part of the customer to validate the investment. However, retailers beware: If the in-store experience directly relates to the performance of a product, the customer should not pay for the cost of that experience. I would offer that retailers should work those financial arrangements out with the manufacturer to finance the success of their product. Don’t make the customer pay a sort of “tax” on that product to ensure it meets their needs.

Kathleen Jordan
Kathleen Jordan is a principal in Gensler’s New York office, and a leader of our retail practice with over 24 years of experience across the United States and internationally. Kathleen has led a broad range of retail design projects as both an outside consultant and as an in-house designer. She has led projects from merchandising and design development all the way through construction documentation and administration, and many of her projects have earned national and international design awards. Contact her at kathleen_jordan@gensler.com.

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