Wednesday, November 2, 2011

Experiential retailing

Jon Bird wrote an excellent story on Online Retailer titled 'The End of Stuff'. In it he discusses how consumers are moving away from conspicuous consumption and instead are spending more on digital experiences, both digital and physical. He cites as evidence the explosive growth of Apple's App Store and Flight Centre's impressive 24.5% expected profit increase in the most recent financial year.

We're also firm believers in this trend. The growth of experience sites like RedBalloon of which we're part highlight this.

Traditional retailers are also capitalising on this trend. Woolworths' new grocer chain Thomas Dux is a simple and fantastic example of experiential retailing. Rather than walking into Woolworths to buy a packet of corn chips off a standard store shelf, walk into Thomas Dux and you'll see a beautiful centre aisle display of corn chips where you can taste them, try them with salsa and where, when I took this photo, they suggested picking some up for the football finals in September. When I took this photo they were also serving slices of smoked salmon pizza cooked using ingredients all available in store.

And most of all, the trend towards mass customisation sits with consumers moving towards experiences. Why would you want to buy a normal pair of shoes when you can have the experience of designing your own shoes and have them made for you? Why settle for off the rack shirts and suits when you can design these yourself too? And you have a number of great companies to do this with like Blank Label, YouTailor, and Indochino who are all doing well in the space, as well as Sydney based Joe Button and InStitchu who have both launched recently. And why settle for a standard chocolate bar when you can select the ingredients?

Mass customisation businesses are no longer just small businesses. NikeID turned over $100m in revenue in the niche category of custom sneakers last year (I love their product).

What other examples of experiential retailing have you seen?

Posted to Power Retail.


  1. Michael,

    Shortomatic is another one that I have seen in Inc magazine. I think that its interesting that Vans would partner up with them to launch the business. This along with your NikeID example tells me that the big cats are looking at mass customization pretty seriously.

    Speaking of which, I am currently working on a business plan that involves custom (fit and colors) wetsuits for surfing and other watersports. This would involve an indochino-like interface. The business is historically done in surf shops and no company has built a user friendly web interface and utilized a low cost overseas source. Its definitely an industry that is behind the time sin terms of an experiential online presence.

    Its only a $110.4 million dollar industry for surfing with around ~$150 million more in other watersports but I think it might be nice to carve out a 3-4% market share .

    I know of course there is much more info needed to give an accurate judgement but just initially, what do you guys think?


  2. It's great to see some of the traditional retailers looking at new ways to encourage customers to buy although a little late compared to the online companies. I've ordered some shirts off InStitchu before and they were excellent. Designed them myself and couldn't be happier. It great to see that customers are starting to have far more say in what they buy and what the product will look like!

  3. Alex - custom wetsuits sounds like a decent idea. Are those numbers global or AU only?

    Richie - glad to hear your InStitchu shirts were excellent.

  4. i've ordered shirts from them... really cool website, it started off with just clothing but now you can customize pretty much anything. although the website is a bit daunting if you don't already know what you want to buy... think they launched in japan last year as well. and yea, nikeID is awesome. they have been around for ages though, i remember designing a pair in like high school!
    also, my friend recently got gluten free cereal from here: a design your own cereal website. pretty cool. cheers!

  5. haha custom cereal...amazing!

  6. Custom cereal .... awesome!

    Michael - those numbers are only for the US and surfing only, Im not sure what the numbers are for worldwide wetsuit but I assume it would be at least a couple hundred more million. I would of course look to ship worldwide.

    My thought is that it is much more challenging going for a big market as it will undoubtedly be more saturated instead start with a niche product in a smaller market and expand from there if it is successful.

  7. i'm not sure if my post was deleted from the other topic, or if i am not submitting correctly. apologies if this is a duplicate.

    burberry launched a mass customization site for trench coats the other day, and i thought it was relevant for what you are working on. as you said above, mass customization businesses are no longer just small businesses.

    you should check out the burberry trench builder over at their site. it's written in flash so i think you're one step ahead, but it might give you some ideas for your own site.

    good luck.