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Experience And Showrooming Are Big Trends In Retail. But How Do You Measure Their Success?

Samsung's 20K SF unit at Coal Drops Yard

As consumers spend less on stuff and more on experiences, and increasingly use physical stores as a means of trying out products before buying online, experiential retail and flagship product showrooms are two of the big trends in retail right now.

But how do retailers gauge the return on investment from stores and services not directly hawking products in the way people have been used to for the past 100 years? And how can retail property owners position their schemes so that they snag the showrooms and flagship stores that will make up a bigger part of brands' shrinking store portfolios?

Attendees of Bisnow's London Retail: An Industry In Flux event last week heard from retailers and owners at the forefront of this trend. It is a big change, but experiential elements and showrooms are helping brands to alter their business models and can help landlords do the same.

Samsung is pushing the boundaries of showrooms and experiential retail. This summer it will open a 20K SF concept store in Argent’s Coal Drops Yard scheme at King’s Cross Central, in a bespoke space designed by starchitect Thomas Heatherwick. This follows on from similar stores in New York and Seoul, and further global launches are planned. It is a big investment, so what does Samsung hope to achieve from it?

“Samsung is not actually a retailer, it is a manufacturer, and the business as a whole has a long way to go on its journey to becoming a true retailer,” Samsung Director of Showcase Tanya Weller said. “About 98% of our products are sold through third parties, so for us the role of the showcase is about control to some degree, and owning that customer journey and controlling the customer experience. But it is also about creating brand loyalty, and immersing people into the brand and what it stands for.”

Weller pointed to an example of a company that used a retail store presence to bridge the gap from manufacturer to retailer in a way that more than justified the expenditure.

Bisnow London's retail event at Café de Paris

“If you look at Apple, they were in a similar place, but 10-12 years ago they said ‘right, let’s go out into the retail space, because we don’t think our partners can sell our products as well as we can’, and look at them now. When they opened their first flagship no one thought that would be scalable in terms of the amount they invested: double height spaces, really beautifully kitted out. So for Samsung we are looking at going above and beyond what Apple is doing. As a global brand we can roll things out globally, but in each flagship everything we are doing will be tailored and bespoke to their location. There is a big focus on community and how we can support the local community with events and courses.”

Of course, Samsung has an advantage: It is new to the retail game, and doesn’t have legacy stores that need to be modernised. But retailers that do have an existing portfolio are embracing the experiential world, too.

Department store giant John Lewis used experiments in stores across its portfolio to inform what it included in its new store in the Westfield London shopping centre, and it will now decide whether to roll such experiments out across more of its 51 stores. Examples include personal styling rooms, demonstration kitchens and areas to hold events for the local community.

How does it measure the return on this investment? For elements like the personal styling service, it is the fact that appointments are always booked out and the customers that have a free consultation spend on average 150% more than the average shopper, John Lewis Senior Sales Manager Miranda Graesser said.

But then there are the less tangible elements designed to enhance experience, often around staff training.

“We have a lot of wine connoisseurs who stack shelves in our Waitrose stores that might occasionally talk to customers about wine. But that is an amazing experience that our customers really trust, so we’ve invested in more training. It’s not about making them buy more stuff, but giving them knowledge in an exciting way.”

Samsung's Tanya Weller

For Weller, the purpose of Samsung’s flagship stores, and how the company measures their effectiveness, is not just about selling more phones and washing machines.

“Smart retailers are looking at it holistically,” she said. “We are a wholesale business, an online business and a retail business, so how do you make sure all three parts are working well together?”

That holistic view can create a snag, particularly in how sales are attributed when people browse in store and then buy online. Weller said Samsung is grappling with this challenge, and more data can help. But whether a sale is closed while someone is in the store can be less important than that the person came to the store at all.

“Beyond the purely commercial side, my key metric for the flagship store is not revenue, it's about driving footfall, driving the fame of the brand and creating customer engagement, or recommendations — would you recommend Samsung after being in the store — or intentions to purchase.”

What about for retail property owners? As retailers move toward having a smaller number of these larger, flagship showrooms, it will become increasingly important for property owners to appeal to retailers and make sure their schemes are the locations chosen for these stores. Knowing the clientele and providing retailers with good data about them will be crucial.

“Understanding the customer is key and being able to say to brands, ‘we know your customer and we have them coming here,’” Cadogan Estate Place Manager Steve Medway said. “You also need to give places a real identity. A lot of people would say that the [Cadogan-owned] King’s Road became a typical bland high street, but we’ve worked a lot to change that, brought in a lot of independent retailers, and so you have brands like Peloton choosing the location for their London showroom. They knew that their customers were in this area, but they also want a sense that an area is a destination, and it is evolving and changing.”

It will not be the easiest trend to embrace. But it will be important.