The little girls who arrive at American Girl Place dressed like the dolls they hold in their arms show what’s possible when merchants take an experiential approach to retailing, experts say.
In addition to museumlike displays of the upscale dolls and their accessories, American Girl Place stores include a café with special booster seats for the 18-inch dolls. Then there’s the on-site theater featuring young actresses as characters from the company’s books, and a salon where girls might queue up for more than an hour to get their dolls’ hairdos made over.
It’s all about providing a rich experience for customers, many of whom travel from out of state to visit the three stores, in Chicago, New York, and Los Angeles. “For an American Girl fan, coming to American Girl Place is like a pilgrimage of sorts. They plan their trips around it,” says spokesperson Stephanie Spanos. Little wonder that experiential stores are sometimes called destination stores.
Experiential retailing means making connections with consumers who come to interactive stores for more than merchandise. “You have to win the hearts and minds of consumers by doing something that benefits them and showcases your product,” says Erik Hauser, director of the International Experiental Marketing Association in San Francisco. “Then you’ll win their business.”
It’s a holistic approach that involves both emotional and rational triggers. “People think experiential marketing is just some sort of tactic,” Hauser says. “It’s not.” Instead, he continues, it reflects a U.S. economy where consumers generally have what they need but will shop for nonessentials if given a reason.
The interactive approach means higher traffic and longer stays than typical. “Our customers on average spend over two hours per visit at American Girl Place, compared with the industry standard of around 20 minutes,” Spanos says.
The popularity of the three-level, 40,000-sq.-ft. American Girl Place in Chicago, which lures more than 1.2 million visitors a year, reportedly is prompting American Girl — a Middleton, WI-based unit of toy giant Mattel — to look for an expanded location on the city’s Magnificent Mile while also drafting plans to open smaller boutiques in smaller markets. American Girl sales hit $436.1 million in 2005, up 15% from the prior year.
By focusing on what the customer wants to get out of the retail experience, experiential marketers strive to engage customers with more than raw product. The goal is to create an interactive experience that no one else can replicate, says Mike Bills, managing partner at Fitch, an international retail design and consulting firm with offices in Columbus, OH, and New York, among other locales.
A growing number of brick-and-mortar merchants are giving experiential marketing a try and realizing gains beyond the obvious ones at the cash register. “The impact on brand equity is enormous,” says Joe Carpenter, director of retail merchandising at Manchester, VT-based Orvis Co., which takes an experiential approach in its flagship store in Manchester as well as more than a dozen of its 32 other stores. “It has a great psychological lift even among our own company. You get to see the product come to life.”
It also boosts relations with vendors, Carpenter says: “It give them tremendous inspiration about their partnership with us and the possibilities.”
Cabela’s, the $1.8 billion Sidney, NE-based outdoor-gear merchant, opened its first destination store in Sidney in 1991 to educate and entertain customers as well as to sell merchandise, says spokesperson James Powell.
Today Cabela’s has 14 destination stores ranging from 53,000 sq. ft. to 246,000 sq. ft.; together they generated about $624 million in 2005. They’re chock-full of wildlife dioramas like those found in museums, aquariums stocked with native fish, gun libraries showcasing antiques and collectibles, laser shooting arcades, archery ranges, and boat showrooms.
A typical Cabela’s store draws more than half of its customers from more than 100 miles away, Powell says. The average amount of time spent in the store is three hours.
“We know it’s paying off through our significantly increasing revenues and profits over the past decade,” Powell says. “We’re seeing increased customer loyalty, increased traffic for both new and repeat customers, and growing brand recognition and acceptance as a result of our efforts.” And all of that is resulting in a growing share of the retail market, he adds.
Destination: dollars
The experiential retail concept isn’t new. Freeport, ME-based L.L. Bean, for one, launched its Outdoor Discovery Schools about 26 years ago. “It brought more experience to the shopping excursion,” says senior vice president of retail Ken Kacere. “Not only could you come to L.L. Bean to buy the products, but we would teach you how to use them.”
Today, in addition to in-store demonstrations, Bean offers summer concerts and walk-in classes that provide introductory lessons in fishing, kayaking, and clay shooting for just $12. Each year more than 3 million people visit the L.L. Bean campus, which includes the 120,000-sq.-ft. flagship store with a catch-and-release pond, plus a hunting and fishing shop with an archery range, and a boat and ski shop, where customers can question expert mechanics.
But experiential retailing is arguably more relevant today because it can be a highly effective means of cutting through the media clutter. “From TV commercials to print to billboards to radio to word of mouth, we have so much stuff in our faces that it’s overwhelming,” says Kristen des Chatelets, managing partner/chief marketing officer at BDS Marketing in Irvine, CA. “When faced with a need to make a purchase, I’m stymied. I want someone to show me how a product’s used and how I’m going to benefit.”
The Internet is one medium that in particular has led retailers to try to create the ultimate customer experience. Prior to e-commerce, says Fitch’s Bills, “if you wanted a product, you had to buy it the way it was served up to you.” But today, with more retail options than ever, including the ability to compare products and prices quickly online, shoppers have the upper hand.
“Now that consumers have control over the purchase decision, they will reward the retailer that gives [the product] to them in a way that’s compelling and a way they want it,” Bills says. “Retailers are waking up to the fact that putting boxes on shelves isn’t going to be a compelling experience.”
Absent an engaging format, the only way to succeed is to be a low-cost provider, says Kurt Barnard, president Barnard’s Retail Consulting Group in Nutley, NJ. And Wal-Mart and a few other behemoths have already all but cornered the low-cost retail experience. “If you want to draw in customers and not be a discount store, then you have to do something to attract the consumer and make the consumer say, ‘Let’s investigate this. Let me see what it’s about,’” he says.
The strategy works particularly well in certain categories, such as consumer electronics and technology, where product attributes aren’t always obvious, des Chatelets says. The Apple Stores, for example, have attracted more than 147 million people since the first one opened in May 2001, the Cupertino, CA-based company says. During the 2005 holiday shopping season, Apple’s retail division generated more than $1 billion.
“They do a fabulous job with the experiential part,” des Chatelets says. Among the stores’ features is the Genius Bar, where users can get “hands-on, real-time solutions to Apple-related technical problems,” according to the company. Apple’s approach, des Chatelets says, “is less about entertainment and events and more about you interacting with the product at your leisure.”
At stores selling more than one brand, vendors often will team with a retailer to provide in-store demonstrations. Toy cataloger/retailer FAO Schwarz, for instance, relies heavily on vendors to come up with creative ways to demonstrate products. “This store is known as the number-one launch for many companies,” says Nanette DiFalco, the New York-based company’s vice president of public relations. As a result, FAO is often inundated with requests from inventors looking for an engaging outlet for their products. At the same time, customers come to the company’s two stores, in New York and Las Vegas, looking for “the wow factor,” DiFalco says.
In the flagship Fifth Avenue store, a forest of lifesize stuffed animals greets visitors. Also on the first floor is a 22-ft. piano that doubles as a stage for professional dancers. In addition, FAO offers in-store arts and crafts activities, a computer center where customers can create virtual Hot Wheels cars, a Madame Alexander department where doll collectors can design their own dolls, and an ice cream parlor that serves up $100 sundaes. “There’s drama to it. There’s always a theater to what we deliver,” DiFalco says.
Sporting goods retailers also have mastered the experiential concept. Bass Pro Shops likes to brag that its Springfield store is the number-one tourist attraction in Missouri, drawing more than 4 million people a year, according to Larry Whiteley, manager of corporate public relations. “People walk around with their mouths open,” he says, as they take in the indoor waterfalls, the log cabin, the rock-climbing walls, and three-dimensional depiction of ducks on a lake.
The company has 34 retail locations ranging in size from 40,000 sq. ft. to more than 200,000 sq. ft. The store’s wildlife mounts are so impressive, school groups take field trips to see them, Whiteley says. “It’s top-of-the-line awareness. The more people who come to our stores, the more money we’re able to generate, and the more money we’re able to put back in outdoor education and conservation,” which is part of the company’s mission.
Catering to your clientele
For an experiential strategy to be effective, it’s obviously important to know what your audience is most interested in. “The worst thing is to create an interactive store or promotion and not be relevant to who’s shopping there,” des Chatelets says.
In some categories, relevance comes down to the neighborhood level. By being attuned to local customers’ interests, for instance, brick-and-mortar bookstores can rise above the heavy price competition in the category and attract customers to poetry readings, book signings, and the like.
Powell’s, a family-owned bookseller with six locations in the Portland, OR, area — including a 70,000-sq.-ft. flagship store complete with art gallery and rare-book room — has created such a following that brides ask to have their weddings there, says director of used books Emily Powell.
Now the company is planning to double the retail space of its Beaverton, OR, store to emphasize the customer experience, Powell says. In the new 32,500-sq.-ft. location, Powell’s will add more space for author appearances and community events as well as a café that will allow for cooking demonstrations. “We’re creatively thinking about trying to create a place that feels like an extension of your living room,” she says.
At St. Paul, MN-based Gander Mountain, “we believe in making the merchandise the center of attraction in the store,” says Shannon Burns, director of corporate communications. About half of Gander Mountain’s 100 stores range in size from 30,000 sq. ft. to 80,000 sq. ft. While the stores offer an archery lane where customers and leagues can practice shooting arrows at a target, they stop short of the museum-like atmosphere the competitors Cabela’s and Bass Pro Shops have created.
But in most of its larger stores, Gander Mountain employs gunsmiths and archery technicians, and operates powershops to service small engines and bait shops that open early, Burns says. It also stocks more than 1,200 firearms in its hunting department, and encourages customers to pick them up and hoist them on their shoulders. And the company gives firearm-safety classes, fishing demonstrations, and instruction on cooking game.
The opportunity to learn fly-casting from experts draws many visitors to Orvis’s 23,000-sq.-ft. Manchester, VT, store. Though the town is well known for its outlet stores, Orvis offers full-price merchandise along with hands-on activities.
The four-year-old store, which resembles a lodge from the exterior, has two ponds outside the back door stocked with brown, rainbow, and brook trout, where the company offers fly-fishing instruction before taking students to the Battenkill River. “You can take a rod off the rack, go out the back door and cast it for yourself on the pond,” says director of retail merchandising Carpenter. And across the parking lot, customers can tour an Orvis rod factory to see how rods are built.
But many of the visitors end up back in the store to shop from Orvis’s large assortment of Barbour brand clothing, Adirondack furniture, and sporting gear, not all of which is available in the company’s catalogs. “Our philosophy is, if we can get the people to hang out in the store, a lot of the sales will take care of themselves,” Carpenter says.
Willamette, IL-based freelance writer Ann Meyer has written about business for The Chicago Tribune, among other publications.
Six tips for making the most of experiential marketing
- Do your homework
Start by assessing which consumer you want to target, says Mike Bills, managing partner at retail consultancy and design firm Fitch. An electronics merchant targeting women might start by exploring where women shop, how they typically purchase electronics, what they want in a shopping experience, and who, if anyone, is already marketing to women.
- Play to your strengths
Delve into what makes your company unique. Analyze your brand, what it stands for, and what it means to consumers, says Erik Hauser, director of the International Experiential Marketing Association in San Francisco. Then think of ways to bring your company’s brand image to life.
Avoid trying to look like your competitors, Bills says. A common mistake is to copy an approach that’s working for another company without considering whether it fits your company’s identity. Instead, concentrate on bringing out the best of your brand image.
- Test, test, test
Because experiential retailing involves connecting with individuals, merchants need to be aware of differences among customers in various markets. So don’t contemplate a national rollout right off the bat, Hauser says. Start by testing in one market, then proceed to other areas. “Make it relevant to that particular area,” he says. “It may mean doing it one way in Virginia and another way in Seattle.”
- Educate your sales force
The success of a hands-on marketing strategy often depends on who is interacting with the customer. To succeed at experiential marketing, you need a knowledgeable, personable sales staff.
“It’s a hard strategy to execute,” says Carl Steidtmann, chief economist at Deloitte Research in New York, a unit of Deloitte Touche Tohmatsu. “It does take a much better-educated sales force, and one that is much more socially interactive.”
Toy seller FAO Schwarz hires actors to engage customers in the merchandise, while apparel and outdoor gear merchant L.L. Bean employs experts in kayaking and fly-casting to lead classes in those areas. In addition, Bean trains its sales associates extensively so that they know how to use the products they sell. “That makes hiring people a different process,” says Ken Kacere, senior vice president of retail.
- Think beyond the superstore
Experiential retailing doesn’t necessarily mean supersize retail. “Do something amazing on a small scale,” Hauser says. The best point for activation is closest to the purchase. Think about “what are you going to do at that very moment so that the customer is going to pick your brand over someone else’s brand,” he says.
In-store demonstrations and other events can convert even a small location into an experiential format. Fashion shows, trunk shows, and how-to clinics can enliven a niche marketer. What’s key is “getting the products in the hands of consumers with an eye toward ‘if they try it, they’ll buy it,’” says Kristen des Chatelets, managing partner at BDS Marketing in Irvine, CA.
- Keep things fresh to keep customers coming back
Even experiential stores can get stale to customers. “Keeping your concept/model fresh is always a challenge for any retailer,” notes James Powell, spokesperson for outdoor sporting gear cataloger/retailer Cabela’s.
American Girl hosts a variety of special events to spur repeat traffic. In June, for example, the American Girl Place in Chicago hosted a Doll Hair Salon Spectacular, a 45-minute class where stylists provided step-by-step instructions for creating new hairdos for customers’ dolls, as well as a cooking class featuring recipes from Belize that Jess, the doll whose storyline has her visiting that country, would enjoy. Though many of the events require tickets that cost $24-$150, the store also hosts free events, such as Kaya’s Celebration Day, scheduled for Aug. 12, featuring festivities relating to Kaya, a Native American doll.
At Orvis Days, held in the spring and the fall, Orvis features demonstrations, seminars, and artists related to the sporting lifestyle the company promotes, says Joe Carpenter, director of retail merchandising. Similarly, several times a year L.L. Bean holds weekend events in Discovery Park, just outside its Freeport, ME, flagship store, with a focus on kayaking, hunting, fishing, or winter sports. “What they do is offer the customer something different, something that’s not just a shopping experience,” Kacere says.
— AM