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Retailers Fall Short On Creating Shopping "Experience"
Howard Lindzon, creator of Stock Twits and Wall Strip, recently lamented the fact that Apple (Nasdaq:AAPL) dominates experiential retail with little competition from other big name brands such as Google (Nasdaq:GOOG), Facebook and Intuit (Nasdaq:INTU). I think he's right, so let's explore the subject further by looking at what already exists and what might be with a little corporate imagination.
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Hands-On Experience
Walk into any Apple store and you'll see Lindzon means: you can't help but play with all the toys. Eventually what is essentially a time waster turns into a real purchase and then another and so on. It's because we love the experience of Apple products that the company's revenues and earnings keep growing at such a rapid rate. Authors Joseph Pine and James Gilmore wrote about this in their 1999 book, "The Experience Economy: Work Is Theater & Every Business a Stage." At the time, I can remember thinking that this book was going to be a huge bestseller as the concept was so obvious, but it never really took off. A decade later and we still haven't seen much on this front.
Brand Extensions
Brand extension is where most of the quasi-experiential retail takes place. Procter & Gamble (NYSE:PG) recently created Tide dry cleaning stores and Mr. Clean car washes so that you, the consumer, get to experience the brand in another dimension. It's not what Lindzon's referring to but it's as close as Fortune 500 companies seem to want to get. Another example is the Kellogg (NYSE:K) Pop Tarts store inTimes Square, where v isitors build their own Pop Tarts. It's lame but that's marketing these days.
After all, do you remember that Ford (NYSE:F) owned Hertz (NYSE:HTZ) between 1994 and 2005? Ford sold the rental car company to concentrate on the automotive business, but that may have been a big mistake. In doing so, the company gave up a fantastic opportunity to market to potential buyers by providing travelers with the ultimate driving experience while on holidays or business. You could argue that Ford could still do this with Hertz but it's much more difficult when you don't own the business.
Potential Opportunities
I mentioned Intuit in the opening paragraph. Lindzon suggests the maker of Quicken open Mint stores - a tribute to its personal finance site Mint.com - across the nation as a way to make personal finance fun. Amen to that. It's something H&R Block (NYSE:HRB) could have done years ago to cement its position in financial services. Who better to help you understand personal finance than the people who do your taxes? In the end, it's all about wanting to hang out with the brand. I remember when Barnes & Noble (NYSE:BKS) was a welcoming place where you'd pick up a coffee and then check out some magazines or books in a comfortable chair or sofa. Then they took away most of the chairs because it wasn't a library. Unfortunately, this took away the experience.
What's In It For Me?
Successful experiential retail should provide consumers with something fresh and new. Kitchen classes at Williams-Sonoma (NYSE:WSM) is not what we're talking about. What might be more interesting is if Williams-Sonoma sold travel packages toNapa Valley Viking Ranges
Bottom Line
Apple's living proof that people are seeking new experiences when shopping. Ideally, these things are simple, yet out of the ordinary. I'd love to hear from retailers who feel they're providing a special experience for their customers, but frankly, I just don't see it. (To learn more, check out Hype It Like Steve Jobs.)
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Hands-On Experience
Walk into any Apple store and you'll see Lindzon means: you can't help but play with all the toys. Eventually what is essentially a time waster turns into a real purchase and then another and so on. It's because we love the experience of Apple products that the company's revenues and earnings keep growing at such a rapid rate. Authors Joseph Pine and James Gilmore wrote about this in their 1999 book, "The Experience Economy: Work Is Theater & Every Business a Stage." At the time, I can remember thinking that this book was going to be a huge bestseller as the concept was so obvious, but it never really took off. A decade later and we still haven't seen much on this front.
Brand Extensions
Brand extension is where most of the quasi-experiential retail takes place. Procter & Gamble (NYSE:PG) recently created Tide dry cleaning stores and Mr. Clean car washes so that you, the consumer, get to experience the brand in another dimension. It's not what Lindzon's referring to but it's as close as Fortune 500 companies seem to want to get. Another example is the Kellogg (NYSE:K) Pop Tarts store in
After all, do you remember that Ford (NYSE:F) owned Hertz (NYSE:HTZ) between 1994 and 2005? Ford sold the rental car company to concentrate on the automotive business, but that may have been a big mistake. In doing so, the company gave up a fantastic opportunity to market to potential buyers by providing travelers with the ultimate driving experience while on holidays or business. You could argue that Ford could still do this with Hertz but it's much more difficult when you don't own the business.
I mentioned Intuit in the opening paragraph. Lindzon suggests the maker of Quicken open Mint stores - a tribute to its personal finance site Mint.com - across the nation as a way to make personal finance fun. Amen to that. It's something H&R Block (NYSE:HRB) could have done years ago to cement its position in financial services. Who better to help you understand personal finance than the people who do your taxes? In the end, it's all about wanting to hang out with the brand. I remember when Barnes & Noble (NYSE:BKS) was a welcoming place where you'd pick up a coffee and then check out some magazines or books in a comfortable chair or sofa. Then they took away most of the chairs because it wasn't a library. Unfortunately, this took away the experience.
What's In It For Me?
Successful experiential retail should provide consumers with something fresh and new. Kitchen classes at Williams-Sonoma (NYSE:WSM) is not what we're talking about. What might be more interesting is if Williams-Sonoma sold travel packages to
Bottom Line
Apple's living proof that people are seeking new experiences when shopping. Ideally, these things are simple, yet out of the ordinary. I'd love to hear from retailers who feel they're providing a special experience for their customers, but frankly, I just don't see it. (To learn more, check out Hype It Like Steve Jobs.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Will Ashworth
Will Ashworth lives and works in Toronto, Canada. He's worked in and around the financial services industry for much of his adult life. He loves investing and is passionate about helping others learn how to put their money to work.
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