The retail business is lucrative in the United States, and the present retail sales are approximately $426.85 billion. The experiential design has enabled companies to grow in their revenues and customer base. For example, the experiential design of Ulta Beauty retail stores has increased its reward program by 28% to an active membership of 21.7 million customers, and Comcast experienced a 7.9% growth in its revenue after opening an experiential store in Chicago in the year 2015.
REASON FOR EXPERIENTIAL DESIGNS
Retailers prefer experiential designs because they help in attracting the attention of customers in a challenging and more competitive retail environment. The millennials place great emphasis on in-store engagement rather than customer service from retail assistants, and the experiential design enables such engagement. They also attract a wide profile of customers as some can work while others meet friends within the same environment.
Shoppers seek experiential designs because they are time-saving and offer more personalized experience. Customers have limited time to shop, and the experiential retail designs offer speedier transactions. They also provide an emotionally engaging experience for the consumers rather than a product-centric approach.
MEASURABLE BENEFITS OF EXPERIENTIAL DESIGNS
The benefit of experiential design is rarely directly measurable as companies that are adopting the design do not release revenue impact for a particular shop or store and only report the general revenue growth year-on-year. However, the companies we have selected are regarded by analysts as companies that have seen a significant boost to their revenue due to experiential designs and some of these companies are opening up other experiential stores, showing that the previous ones opened were successful. I have provided general revenue growth numbers as well as quotes from the company's spokesperson showing that the experiential design adoption has been successful.
SIMON PROPERTY GROUP
Simon Property Group has developed an experiential design store at Roosevelt Field Mall on Long Island. The experiential design is a way that enables Simon Property Group to maintain the relevance of its upscale malls. It provides an innovative way for consumers to leave their homes and visit the retail businesses. It is a store designed to bring established and emerging brands and products into the mall. It has "a changing lineup of companies participating, including some previously online-only brands making a first jump into brick-and-mortar." The concept involves giving each brand or product its own branding. Brands are able to use "custom-designed modular fixtures, and digital media walls. Simon calls the concept a turnkey micro retail model and it will provide staffing for brands that can't provide their own."
According to Zachary Beloff, Simon's national director of business development, the "concept is a design-centric, experience driven, and completely transitional place to discover new product and technology in a brick and mortar space."
Simon has taken the mall model a step further. Instead of just of renting out physical space, it is going a step further by doing some of the work for retailers and ensuring that each retailer in its space delivers an experiential and emotionally engaging experience to its customers.
Although the exact revenue growth due to its experiential stores are unavailable, the company has since experienced an increase of about 25% in sales in a time when other mall models are in decline due to online competition.
The company hosts experiential retail shops based on the experiential nature of the skin care products and cosmetics business. The customers need to see and try the items in person, and it leads to foot traffic to the different brick-and-mortar locations. The design resulted in an increase in same-store sales by 16.7%, and its shares increased to 273.90. In the third quarter of 2017, its retail comps rose by 14.3%, and this included 10.3% of salon comps. Its rewards program also increased by 28% to 21.7 million active members, and this increased the base of its loyal shoppers.
Comcast opened its second experiential retail store at the Gallery Place building in D.C. It opened its first experiential retain Studio Xfinity at Clybourn Corridor in Chicago in July 2015 as an experimental experiential store. The first experiential store opened in Chicago was designed to help Comcast improve its reputation by offering an experiential treat to its customers. Customers are able to "schedule appointments, receive demonstrations and use an interactive space to test out Comcast's latest products. The Chicago store also hosts events and activities from educational workshops to game nights." The opening of the second experiential retail shop in D.C. suggests that the response to its first experiential shop was very successful.
Hard data on the direct contribution of the experiential store to Comcast's revenue is unavailable. However, in general, the revenue of Comcast grew from $74.51 billion in 2015 to $80.4 billion in 2016, and this represented a revenue growth of 7.9%.
Sephora opened its experiential beauty studio for makeup and skin care in Boston in July 2017. It also confirmed three similar studios in Brooklyn, Hoboken, and Washington with the aim of providing a more intimate engagement with customers. The concept involves digital welcome screens with menus that greet visitors and "all employees are equipped with an iPhone 7 for mobile point-of-sales purchases instead of cash registers." The employees can also "customize customer recommendations and email digital makeup guides to them to be saved in their online or mobile app Sephora beauty profiles."
It also offers a digital care guide and a 75 minutes makeover. In addition, there is an "integrated AI “virtual artist” in the digital make-up guide gives a before-and-after look."
According to Calvin McDonald, President and CEO of Sephora Americas, the experiential stores represents their best personalized services in line with their vision "to create experiential retail through ‘teach, inspire, play’ across digital, stores and at home.”
Although details on the revenue from just its experiential stores are unavailable, the company recorded a 12% organic revenue growth in the first nine months of the year 2017. After launching the new experiential design in France, it proceeded to launch another in Spain, showing that the experiential store model is essential to their growth. In addition, its online sales have been growing steadily.
In conclusion, the experiential design has resulted in measurable success for different companies, however, the direct impact is not always easy to quantify because companies don't release the specific data. However, indirect evidence shows that such designs have helped companies increase their revenue and such companies are opening up more of such experiential stores. For example, Comcast saw an increase in its revenue by 7.9% one year after implementing the design, and it has also enabled Ulta Beauty to increase its same-store sales by 16.7%.