Why Brands Like Nordstrom are Investing in Experiences
More and more people favour experiences over material positions. So much so that the experience economy is expected to reach $8 trillion by 2030. One of the reasons the experience economy is growing so quickly is because people tend to feel happier over time about an experience they have had such as a water rafting trip than a purchase of a new sofa. According to Dr. Thomas Gilovich professor at Cornell University who has studied the link between money and happiness there is a fairly simple reason for why people favour experiences: “our experiences are a bigger part of ourselves than our material goods.” “You can really like your material stuff. You can even think that part of your identity is connected to those things, but nonetheless they remain separate from you. In contrast, your experiences really are part of you. We are the sum total of our experiences.”
Mall operators in the US sensing this trend have significantly increased the number of experiences they offer. For example, the amount of retail developments that have gyms or boutique fitness offerings such as cycling or yoga increased from 6,218 in 2008 to 14,044 2018. A large part of this change is an effort to recoup vacant space from anchor tenants such as Sears as well as other retailers whose businesses are no longer viable. But the other part of the transition is due to a broader trend that mall operators are trying to capitalize on in the hopes of stemming the decline in foot traffic.
Retail is not the only sector trying to cash in on the experience economy. For example, in 2016, Airbnb launched Airbnb Experiences with 500 experiences which provided customers with the opportunity to take day trips, classes and conduct other activities. The initiative was a way for the company to drive additional growth. Now there are more than 30,000 Airbnb experiences available to customers around the world. Last year Airbnb CEO Brian Chesky said that Airbnb Experiences were growing ten times as fast as Airbnb’s core rental business.
The experience economy is here to stay. If you haven’t incorporated experiences into your business model it is not too late to start. Here are three examples of how retailers are using experiences to drive traffic and provide a better customer experience that you can consider incorporating today.
1. To provide customers with the experience of what it is like to wear their products in the environments they were created for, Canada Goose began installing cold rooms in some of its stores. These small rooms are set to -25 degrees Celsius (-13 Fahrenheit). The rooms are even equipped with a windchill button. Customers pick out a coat and then a sales associate accompanies the customer into the cold room to test out the jacket. Speaking about the cold rooms, Dani Reiss, Canada Goose’s President and CEO said: “we’ve found that the Cold Room is very exciting to customers right now, but we think it will continue to have value long after the novelty factor has worn off.” “It means customers can explore buying a coat in the summer months, when it’s hot outside.” While this is a concept that not every retailer can implement it demonstrates how a little creativity can translate into an in-store experience that is not only memorable but functional as well.
2. DSW began testing locating nail salons in two of its stores located in Ohio back in 2017. One of the goals of offering this service in-store was to attract a millennial shopper. Approximately 25% of DSW’s client base are millennials while 50% of the customers that use the retailer’s nail salons are millennials. Based on successful results of the test DSW is planning to roll out nail salons in 5 of its shoe stores located in Austin, Washington, D.C. and Dublin, Ohio, this year. The hope is to eventually have nail salons in more than 250 DSW shoe stores. Customers using the nail salons located in DSW stores can get a manicure or a pedicure and certain locations will also provide waxing services and a place where customers can have a glass of wine as well as other beverages. Speaking about the initiative, DSW Chief Executive Officer Roger Rawlins said: “you’ve got to develop differentiated experiences to ultimately retain and attract customers.” Rawlins is focusing on experiences that “cannot be duplicated in just a digital environment.” He has also said that opening nail salons is “part of a much larger strategy of differentiating the experiences and the product for the DSW brand that separates us from the rest of the pack.” “Everyone else is out there competing on price; we want to compete on experiences.”
3. In September 2017 Nordstrom launched a new store concept called Nordstrom Local. Nordstrom Local stores are small. They are only 3,000 sq. ft and they do not carry dedicated inventory. The stores are focused on service and providing a great experience. Some of the services offered at Nordstrom Local stores include personal stylists, free of charge, manicures, pickup for eCommerce orders (including curbside pickup), returns, alterations, gift wrapping and complimentary refreshments.
There are currently three Nordstrom Local stores all of which are located in LA. Two new Nordstrom stores are planned to open in NYC later this year. Speaking about Nordstrom Local, Shea Jensen, Nordstrom’s Senior Vice President of Customer Experience, said: “we know our local market strategy is driving outsized market share gains in LA.”
Sources
https://press.airbnb.com/airbnb-experiences-update/
https://www.cbsnews.com/news/airbnb-experiences-provide-boost-for-platform/
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