By Jonathan O’Connell
WASHINGTON: For a storefront to survive, just selling things isn’t going to cut it anymore.
Sure, people still buy stuff, but many of them do so online. Internet sales on Black Friday, for example, topped $1bn for the first time and are expected to rise 17 percent this holiday season. So if consumers are going to shop in person, they want the experience to be a memorable one. They want to do something unique while shopping — something with a story they can tell later. Something they can share on Twitter.
Retailers know this, so they are selling experiences in addition to goods. Cooking classes at Sur La Table, rock-climbing walls at REI and golf-swing simulators at Dick’s Sporting Goods are all part of this experience economy — gimmicks to get consumers into stores. And even if shoppers go home empty-handed and buy online, more stores are charging for their special attractions in an attempt to make up for the fact that serving bowls and stationery aren’t flying off the shelves. It’s something of an unofficial tax on “showrooming,” the tendency of customers to browse in stores but buy online.
“The people who are just filling boxes are in big trouble in the long run,” says Jodie W McLean, president of Edens, the developer of Union Market, a new foodie getaway in Washington.
Now that the experience economy is here to stay, retailers are competing not just through their goods but through the shopping experiences they offer. If customers are willing to pay for an experience, then there’s an opportunity to turn every service into something worth paying extra for, whether it’s buying a doorknob, having your pants hemmed or getting your hair blow-dried.
Joseph Pine and James Gilmore were among the first to identify this phenomenon in their 1999 book, “The Experience Economy: Work Is Theatre & Every Business a Stage,” in which they warned that big-name stores could be in trouble. More than a decade later, Borders, Circuit City, KB Toys, Linens ‘n Things and Ritz Camera have filed for bankruptcy or liquidated.
“I would say the experience economy was emerging back then,” Pine told me recently. “Now it’s here.” The question now is: Where is it going? For a guide, Pine raised one of the most-discussed examples when it comes to the future of retail: Best Buy, which remains the country’s dominant electronics store but whose stock has lost two-thirds of its value in three years. Best Buy is considered to be on life support in part because of showrooming.
Pine thinks the most valuable part of Best Buy is not its hundreds of stores but the Geek Squad service it acquired — because people are willing to pay extra for computer repairs if the technician arrives at their house dressed in a dorky outfit and driving a Volkswagen Beetle to match. There were fewer than a dozen Geek Squad agents when Pine and Gilmore first published their book. There were 24,000 when they updated it 12 years later.
“Geek Squad was originally stand-alone, and you can still imagine the Geek Squad stand-alone if Best Buy goes away,” Pine said.
Bookstores were among the first types of shops to run into trouble with showrooming. But some local outfits have found a way to sell books without depending on them to pay the rent. Kramerbooks & Afterwords Cafe and Busboys and Poets, for example, offer book sections that serve in part as decor and ambience for restaurant and event businesses. People can sip their drinks among the books and maybe stumble upon a few that would make good gifts — even if they aren’t going to buy any until they get home.
Showrooming threatens other kinds of stores as well. Eight in 10 retailers are concerned about how the trend will affect their sales this holiday season, according to a recent survey, with respondents saying sales of electronics, appliances, sporting goods, home goods, furniture and apparel are all at risk.
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