Young people want more from retail. Can the “hyper-experience” paradigm be improved?

Earlier this year, the Consumer Electronics Show (CES) was heavily attended by retailers. Nearly all of the talk at the U.S. Consumer Technology Association’s annual trade show revolved around artificial intelligence (AI). Technology enables users to have experiences that were unimaginable ten years ago. It is important to understand that technology should not be viewed as an end in itself, but rather as a means to provide consumers with what they want.

The key themes that emerged this year at the National Retail Federation’s annual convention, known as the Big Show, were that in-store customer interaction is as necessary as the transaction. Moreover, generation alpha, although not yet capable of earning money, has a huge influence on its parents who do. While these digital natives are tech-savvy, they value in-store and physical experiences. Gen Z, who was the first to own a smartphone throughout their lives, feels the same: according to research, 81% of Gen Z prefers to shop in stores. More than half say they do it to disconnect from the digital world.

Our two youngest generations tell us what they want. But what does it look like in practice? Amazon may have introduced “Just Walk Out” technology just six years ago, which is made possible by extremely advanced ceiling-mounted cameras, shelf sensors and algorithms. However, this technology is now being phased out in some regions. Shoppers said they felt alienated and that visiting a grocery store was like entering a modern vending machine.

The shifting sands of retail

It looks like the next big opportunity for retail will be hyper-experience retail, thanks to the coming together of several big forces. First, technology enables innovative and effective experiential retail. Secondly, post-pandemic people still want to spend time outdoors and spend time with other people. According to Canvas8’s observations regarding the so-called experience hunters, 58% of consumers believe that immersive experiences influence their purchases. This means that six out of ten people attach great importance to how they feel in retail.

Third, there is no longer a clear line between the starting point and the ending point of retail trading. Almost everything is now a shopping experience, whether you’re at the airport, at the gas station, or on your way to work. Retail is everywhere, which means hundreds of different points of competition for retailers. Finally, e-commerce appears to be back on a downward trend. Effective, efficient and convenient – ​​but not exciting. But consumers want more fun and are looking for discovery – the magic of retail’s past.

This all has very real permutations for brands that have built their presence in the market based on existing retail experiences. They must innovate quickly to keep pace with pioneers who continue to raise the bar on experiential shopping. Additionally, these brands will compete directly with startups and direct selling companies entering the realm of retail experiences.

From goal to experience

Defining brand purpose has been crucial for several years, and rightly so because purpose is fundamental. However, the goal does not tell everything about how the customer will experience the brand. What matters is not only the brand’s voice, not only the words it uses, but also its personality and identity. But also how they come to life physically and how they meet customers at important moments in the retail journey to create value, intrigue, excitement, attraction and desire.

These factors are crucial to building long-term brand loyalty in an extremely competitive landscape. Achieving this understanding begins with brand dimensioning, in other words, thinking about how it should look, feel, sound, smell and taste: this is the cornerstone of the experience vision. Once a brand has done this, it must carefully select the moments when it will explode into life for consumers. Much of this precision will come from a deep understanding of consumer insights and experience barriers and how to overcome them. It will also come from creativity, imagination and innovation – creating a real path to differentiation.

We all know what experiential retail is, and the world is flooded with case studies of hugely successful campaigns. Expect them to raise the bar and become truly hyper-experiential. According to Canvas8, citing Unibail-Rodamco-Westfield, eight out of 10 people worldwide are willing to pay more for a better shopping experience. Real human connections and personal interactions will drive retail growth, innovation and brand loyalty in the years to come. Brands need a plan to thrive in the experiential retail renaissance.

The rules of the past will not work in the new era of modern retail, where consumers tell us what they want. We have to listen.

For a deeper analysis of the retail heroes and villains of 2024, visit our website center of the week of recollection.