Shops are offering other experiences to attract customers

When shoppers walk around the all-new New York flagship store of the hip Japanese fashion retailer Uniqlo, they might find themselves confused as to where exactly they are. On one floor of the store they will find not just a cafe, but an iPad station, lounge sofas, tables and chairs. And, echoing a collaboration with the Museum of Modern Art, there’s a museumlike display of T-shirts in frames.

The message is clear: you don’t have to come here to buy stuff; you can come here to have fun – and this concept has been transforming retail spaces across the board, from high-street shops to luxury maisons. “The fact is that the old fundamentals of shopping – just putting products on shelves – are not what it’s about now,” says Matthew Brown, director of retail intelligence consultancy Echochamber.

“Brands have to connect with their customers, because [there are so many] the channels through which they can just buy products. Stores have to offer more. Hospitality is the obvious route – you’re more likely to browse if you’re going into a shop regularly to have a coffee. But the question is what much more interesting things can be done?” Analysts have dubbed it “third space retail”, and its momentum is growing. When is a shop not a shop? When it’s a venue offering some experience other than the opportunity to purchase products. The brands get to build a relationship with their customers that’s about more than spending money, that’s more of a soft sell than a hard one. More importantly, the special and free experiences or services on offer tempt customers into their expensive bricks and mortar outposts when the inclination – especially for time-pressed luxury consumers – is, increasingly, to buy everything online. By the end of this year, the total online retail market value growth in China will have grown by a factor of 10 over the past five years, according to market researchers Mintel, with fashion and tech especially in demand. Products can often be found cheaper too online.

The “third space retail” approach is increasingly being embraced at all levels of the shopping landscape. Ralph Lauren is providing his New York consumers with their daily caffeine fix, having just opened a coffee shop on the second floor of its flagship store on Fifth Avenue. Dixons, an electrical goods chain in Britain, for example, has introduced an event area and studio workshop. Moss Bespoke, a men’s suiting company in London, has a library, and the National Geographic chain offers a lecture series and film screenings. Even banks, those most dry and often dismaying of retail experiences, have cottoned on to the idea of making a visit much more pleasurable or immersive – BNP Paribas’ Paris flagship is more akin to a hip member’s club, while the ING Direct’s Toronto branch has a latte bar.

Upscale brand Dunhill sees its stores as being more “maison” than shop, with a gentleman’s club-like setting and services the likes of barbering to match. Mercedes, Bose and, of course, Apple have introduced their own element of stay-and-play. Play is an apt word too. Retailers, which target children, from Disney to Harrods’ Toy Kingdom, have understood the need to give children the opportunity to actually play in-store. The same philosophy is now being applied to the grown-ups.

Tech is certainly playing a part in this: Montblanc’s new four-storey Beijing shop includes interactive installations that allow regulars to sign their name on a screen to display their picture; Adidas’ Nürnberg concept store has touch screen windows, allowing passers-by to shop even when the store is closed; while Louis Vuitton’s Selfridges store in London has a “digital atelier”, enabling visitors to design their own bag.

Burberry has had success with its in-store, invitation-only hi-tech events to buy next season’s collection direct from a live screening of the catwalk show, and did well with its live music performances of the kind seen in the Shanghai store.

Burberry might well be the exception to Brown’s contention that the luxury sector is, as he puts it, “still a little arrogant about the idea of third space retailing, with the brands often seeming to feel that it is still only all about the product. So the flagship stores in this market tend to be posh but, in comparison, rather bland. Yet, where the luxury companies are being really creative is in their pop-up stores”. Brown cites the stand-out example of Prada’s Rem Koolhaas-designed Transformer pop-up store in Seoul in 2008 and, last year, its Damien Hirst-designed pop-up juice bar/ Prada store, situated in traditional sheep hair tents in Qatar.

Watch brand Breitling has toured malls with an impressive flight simulator for some adrenaline pumping. But even the absence of experience can be beneficial: last year Selfridges offered a silent, Zen-like space in which stressed shoppers could get away from the hectic buzz of the sales floor.

According to JWT Intelligence, the trend agency that first proposed the idea of third space retail, as shopping becomes more automated and what it calls “the windows of interaction with the tangible product and the live salespeople become smaller”, the in-store experience is only going to become more important. The provision of education and entertainment, stimulation or relaxation will allow the more progressive retailers to “think beyond the transaction”. Will doing so herald the end of the bricks and mortar store altogether? Brown is adamant that this is not the case. Certainly some stores will turn out to be more like showrooms – shoppers will see the products in an environment that makes it worth their time to pay a visit, but will then buy online.