Retailers Enhance In-Store Experiences to Draw Shoppers

Retailers are doubling down on creating compelling in-store experiences to attract customers back into physical stores, driven by a combination of consumer behavior and the challenges of e-commerce. 

Recognizing the need to create a seamless and enjoyable in-store experience, retailers are implementing new strategies to increase in-store traffic. “It is that marriage between e-commerce capability and in-store capability that’s going to actually make you a successful retailer,” said Mickey Chadha, Vice President, Moody’s. 

“The consumer is really going back to loving retail, loving to feel things, and feeling brands in real life,” said Cyntia Leo, Head of Brand Marketing, Urban Outfitters. Despite the convenience of online shopping, Leo emphasized the importance of physical interaction with brands.

In-person traffic remains the most profitable point of sale, according to Chadha. Retailers like Target are investing heavily in enhancing the physical shopping experience. Christina Hennington, Chief Strategy and Growth Officer, Target, said the goal is to make visiting stores “pleasant and enjoyable,” offering services and experiences that online shopping cannot replicate.

“In-store discovery leads to immediate purchase,” reads an eMarketer report. Nearly a third (31.5%) of US shoppers who discovered products in-store purchased them immediately, compared with only 19.1% for those on retail sales and 10.4% on brand sites. “That is good news for brands, retailers, and advertisers looking to take advantage of in-store retail media, but they would be wise to tailor advertising to consumer’s shopping preferences,” says the report. 

This in-store discovery rate is promising for brands and retailers looking to capitalize on retail media, but it also underscores the need to tailor advertising to consumers' shopping preferences. The integration of online and offline experiences is key, as evidenced by Target's partnerships with Starbucks and Ulta to enhance its drive-up service.

Inflation has put a damper on consumer sentiment, as Mexican giant FEMSA, Nestlé, McDonald’s, and Heineken have so far reported losses in their half-year reports. However,  there are signs of recovery. The US Census Bureau reported in July that revised sales for May were 0.3% higher than previous estimates, suggesting a potential rebound in consumer shopping habits as inflation cools, according to Quartz. This is a positive development for retailers like Target, which has been dealing with reduced discretionary spending.

Price cuts have been a strategic response, as seen with retailers like Dollar General, Dollar Tree, and Five Below, which have experienced increased store visits. However, retailers are also leveraging digital platforms to build their brands and connect with customers. Urban Outfitters, for instance, has significantly expanded its digital footprint through social media platforms like TikTok, resulting in substantial increases in video views and followers.

Shake Shack has also tapped into social media by partnering with popular TikTok content creator Miri, who has produced viral videos featuring the brand. Steph So, Shake Shack's Senior Vice President of Digital Experiences, noted that these collaborations have generated engagement beyond what in-house channels could achieve.

Jerry Sheldon, Vice President of Technology, IHL Group, predicted stability in store numbers over the next several years and suggests that the decline in brick-and-mortar stores exacerbated by the COVID-19 pandemic may be stabilizing.