Digital Transformation Artificial Intelligence Experiential

Young people want more from retail. Can the ‘hyper-experiential’ paradigm step up?

By Rhonda Hiatt, CEO

M&C Saatchi

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The Drum Network article

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May 31, 2024 | 7 min read

​How will technology shape the shopping experience? As part of The Drum’s retail focus week, Rhonda Hiatt of Clear M&C Saatchi, explains why hyper-experiential will be the future of retail.

Escalators and mirror balls in the atrium of a shopping mall

Some 81% of Gen Z still prefer to shop in-store / Viktor Bystrov via Unsplash

Retail is on the brink of a renaissance, which will be characterized by great advancement and economic rebirth. And while the subject of technological innovation still dominates C-suite and elevator conversations, the next big evolution looks set to be a renaissance in hyper-experiential retail.

There was a strong retail presence at the Consumer Electronics Show (CES) earlier this year. Almost all conversations at the US‘s annual Consumer Technology Association trade show revolved around artificial intelligence (AI). Technology is enabling user experience that wouldn’t have been imagined a decade ago. It‘s important to understand tech shouldn't be seen as an end in itself, but rather its value is as a means means to give consumers what they want.

Key themes to emerge at the National Retail Federation’s annual convention, known as the Big Show, this year were that customer interaction in-store is as imperative as the transaction. Also, generation alpha, while not yet capable of earning money, has an immense influence on their parents who do. While these digital natives are technologically adept, they value in-store and physical experiences. Gen Z, the first generation to have had a smartphone their entire lives, feels the same way: according to research, 81% of gen Z prefers to shop in stores. More than half say they do so to disconnect from the digital world.

Our two youngest generations are telling us what they want. But what does this look like in practice? Amazon may have launched its ’Just Walk Out’ technology a mere six years ago, made possible by hyper-advanced ceiling-mounted cameras, shelf sensors, and algorithms. Yet, it is now winding down the technology in some regions. Shoppers said they felt alienated, and that a trip to the grocery store was like stepping into a high-tech vending machine.

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The shifting sands of retail

Retail’s next big opportunity looks set to be hyper-experiential retail, thanks to the confluence of a few big forces. Firstly, technology is enabling innovative and effective experiential retail. Secondly, post-pandemic people still want to be outside spending moments with other people. According to insights from Canvas8 looking into what they call experience hunters, 58% of consumers believe that immersive experiences influence their purchasing. That means six out of ten people place a high value on how retail makes them feel.

Thirdly, there is no longer a clear line between where retail starts and ends. Almost everything is a retail experience now, no matter whether you’re at an airport, a fuel station, or commuting. Retail is everywhere, meaning hundreds of different competition points for retailers. Finally, it seems e-commerce has slipped into a holding pattern. Effective, efficient, and convenient – but not exciting. But consumers want more fun, and they are seeking discovery – the magic of retail past.

This all has very real permutations for brands that built their market presence on legacy retail experiences. They need to innovate quickly to keep up with pioneers who keep raising the bar on experiential shopping. In addition, these brands will be competing directly with startups and direct-to-consumer businesses moving into the realm of retail experience.

From purpose to experience

Defining brand purpose has been of central importance for several years now, which is right because purpose is fundamental. However, purpose doesn’t tell you everything about how a customer will experience a brand. What matters is not just a brand’s voice, not just the words that they use or their personality and identity. But also, how they physically come to life, and how they meet customers at the important moments across the retail journey to create value, intrigue, excitement, attraction, and desire.

These factors are crucial for brands to drive longer-term loyalty in a hyper-competitive landscape. Achieving this understanding starts with dimensionalizing the brand, in other words thinking about how it should look, feel, sound, smell, and taste: this is the cornerstone of an experience vision. Once a brand has done this, it needs to be precise in how to choose the moments to 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 – making a true path to differentiation.

We all know what experiential retail is, and the world is awash with various case studies of highly successful campaigns. Expect these to turn up a notch in order to become truly hyper-experiential. According to Canvas8, quoting Unibail-Rodamco-Westfield, eight in 10 people globally are willing to pay more for elevated shopping experiences. Genuine human connection and personal interactions are going to drive retail growth, innovation, and brand loyalty in the years to come. Brands need a plan to thrive in this renaissance of hyper-experiential retail.

The rules of the past aren’t going to work in the new era of modern retailing where consumers are telling us what they want. We need to listen.

For more deep analysis of the heroes and villains of retail in 2024, head over to our focus week hub.

Digital Transformation Artificial Intelligence Experiential

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