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How to Generate Profit from Experiential Retail


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Every retailer and every brand is talking about experiential moments. Whether you’re a mainstream business like Macy’s that is trying to reinvent itself or you’re just trying to take your sales to a new level, experiential selling is a key ingredient to success. The goal of experiential marketing is to appeal to the rational and emotional sides of the consumer so they have a product or service experience that is truly memorable.  

Experiential selling seems to be a simple enough concept that everyone should embrace, but experiential and profit tend to be in conflict. The extra expenditure that comes with investing in nicer displays or any additional operational add-ons tends to be viewed by business operators as an extra expense.

How much is too much? When do you invest in experiential, and when do you back off? It’s natural for store owners or operators to not want to invest when they don’t see an obvious incremental gain in sales dollars or unit volume. The reason for this is that profit tends to come from the portion of the product lineup that is rooted in routine or commodity items, which means that the more you sell, the better that commodity item does from a penny profit perspective.

So, experiential moments seem like they are going to remove that penny profit by adding services that cost you in dollars for displays, extra services and extra tools to make those experiential moments. Why do it? Where’s the profit in that?

There are three things that can make experiential moments profitable. Let’s take a look: 

Better shopper knowledge. This seems obvious and doesn’t seem like it’s going to make you any money. But knowing your shopper and learning more about their behaviors ultimately leads to purchases. Better shopper knowledge goes well beyond knowing what Mr. Smith likes to buy for his dog every week or the kind of snacks his dog likes. This is about how to build a set of products that Mr. Smith will want to buy even though he doesn’t know about it yet. Knowing what Mr. Smith likes and his dog likes helps you identify products that are similar in ingredients or similar in brand profile, which allows you to suggest an upgrade in products and to recommend more products you know Mr. Smith will love. This brings Mr. Smith back more often and nets you the ability to replicate this process with other consumers.

A bigger shopping basket. One of the best side effects of experiential retailing is that it removes the commodity, or routine, shopping from a consumer’s mindset and brings them back to being a shopper. When you bring delight to a shopper, they’re coming back for more. As in the example above, Mr. Smith will be delighted to find out about new products that he’s been missing. That shopping joy turns into more products sold—hopefully with higher margins—and will help return your investment of time you’re spending with Mr. Smith.

Shopping joy also equals a trusted space in the mindset of the consumer. This means that your store now might have a spot in their routine shopping list, which means more trips back to your store. Where consumers might have come back once a month, you might be driving them back once a week or more. This equates to more store traffic and better profit per square foot, and it probably allows you to take some risks on new product that you know Mr. Smith will like.

In case the above aren’t reason enough to add experiential moments to your retail space, it’s a proactive measure as well. The commodity items of your lineup are going to get cheaper as competitors such as Chewy, Amazon and Walmart compete with each other, so you’ll want to move your consumer base away from commodity items to avoid the price matching that inevitably follows those retailers.

Follow these tips and you’ll have happier customers in your store looking for advice, following advice and coming back more often. The contribution you’ll make to their lives will go beyond a simple transaction, and, for a little bit of investment, will net a large return in fulfillment and your pocketbook.


As a retail industry expert and co-host of “This Commerce Life” podcast, Phil Chang tracks emerging trends and insights that could impact businesses engaged in commerce. With 20 years of experience under his belt, Chang helps brands and retailers adapt to the new realities of retail and the next generation of commerce. With three kids, he’s more familiar with gen Z than he’d care to admit. A frequent speaker at industry events in Canada and the U.S., across multiple verticals, you’ll find him searching for unique local businesses everywhere he goes.

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