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REAL ESTATE: Review on the development of Experiential business in Retail Market
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Review on the development of
Experiential business in Retail Market
By Michael Hart & Hongfang Jiang

BT 201903 real 01关于发展的回顾
体验式商业零售市场

随着越来越多的购物中心的出现,零售市场的竞争也越来越激烈。多种因素迫使业主和开发商改变他们的商业模式以提高他们在零售市场的竞争力,例如消费者购物习惯,技术进步和经济增长等等。在这种情况下,体验式商业模式应运而生,并应用于改善商业前景。

天津体验式零售
在天津,体验式零售的例子包括许多体验式购物中心。据统计,截至2018年底,天津商场总量已达330万平方米。在快速增长的情况下,许多商场不断升级和创新自己的业务运营。

购物空间装饰更具创意,通常结合不同的文化,娱乐和艺术主题。例如,大悦城的洗手间由许多不同的主题改造。通过改革空间和环境来提高消费者的参与度和体验,购物中心也可以从与其他公司合作并获得赞助中受益。此外,许多购物中心使用科技产品来提升商场的吸引力。他们推出了AR,VR产品和无人机。

With the emergence of increasing shopping malls, the competition of the retail market is becoming fiercer. Multiple factors have forced the landlords and developers to change their business model in a bit to rise their competitiveness in the retail market, such as consumer shopping habits, advances in technology, and economic growth. Under this situation, experiential business model emerges and is applied to improve business prospects.

BT 201903 real 02Traditional Retail

First, let’s take a step back and look at how retail has changed over the past two decades. Retail in its physical form focused on how to get brands in front of consumers. This generally happened in four main ways, department stores, shopping malls, big box formats or street front shops.
 

Traditional department stores would have multiple brands packed into one large building with the products grouped by type. For example, cosmetics on the ground floor, shoes and women’s clothes on another, kids up a bit further and usually somewhere in there, a bit of men’s clothes, too. The store operator’s decided how much space each brand got within that category.

BT 201903 real 03Next came shopping malls, where several large stores, maybe department stores themselves, would anchor one end of a mall, which connected to other parts of the mall and shoppers would meander along these street like areas past individual retail shops, which were strategically arranged to keep people exploring. Large atriums and high ceilings meant malls could extend up to multiple floors with shoppers able to see and be tempted to explore the upper floors.

BT 201903 real 04Eventually big box stores, sometimes called ‘category killers’ or ‘hypermarkets’, were developed that generally focused on a single product type, such as food, electronics, or furniture (think Carrefour, Best Buy or Ikea). The appeal of these stores was a deep set of options around a single theme.

BT 201903 real 06And finally to a type of retail called ‘street shops’ or ‘the high street’. This is actually one of the earlier retail experiences, where shoppers literally walk along the street and look into the windows, only going inside if they found something interesting in the windows or knew they needed a specific product. Street shops still play an important role, especially if a brand wants to launch a new product or push a specific image. Sometimes they will lease a combination of street shops and shops in malls to make sure people see the concept in a highly trafficked area, but also can find it in their local mall.
 

On-line shopping shocked the system

BT 201903 real 08So that is how retail traditionally worked, of course a big shock came to traditional retail when online shopping took off. First, people didn’t need to leave their home or figure out how to transport goods home if they shop online. Second, they didn’t need to venture out on a cold winter day or worry about store opening hours, they could just rely on their computer or their phones for their shopping experience.

To counter these malls and other, traditional retail landlords have added in more experiences, such as restaurants or play areas for kids, to try and get shoppers back into the “bricks and mortar” or traditional retail formats. This has happened to some extent, but more work is needed. And so now “Experiential retail” that is retail that includes some kinds of experience is attempting to do this. There are a couple of ways this is happening.
 

First, think about how little the sales people know about you as a shopper versus what your online shopping profile knows. When you log in to an online store, options are often recommended for you based on your previous browsing or purchase history. So some stores are now allowing shoppers to “log in” to their profiles within a store to find out what is in the store now that might be of interest, or offer coupons or discounts to valued customers. Additionally, smart mirrors might be able to suggest shoes or accessories for a dress or suit you might be presently trying on.
 

Another part of experiential shopping could be bringing together like minded people. Press reports have talked about a store in London called “House of Vans,” an experiential store from Van’s, a retailer selling shoes to skaters. The store includes a place to skate or bike in the stores basement, which lets people put their new shoes into action, and becomes a social gather place for people who like the sport and the brand, further linking up the retail group with their demographic.
 

Other retailers, such as Adidas in Shanghai, allow shoppers to customize shoes or shirts in the store. Any experience that gets customers into stores and allows them to interact with the brand can enhance their loyalty to the brand, and maybe even spontaneously share the moments online with friends thus creating free advertising for the retailers.
 

Experiential retail in Tianjin

BT 201903 real 07In Tianjin, examples of experiential retail include many experiential shopping malls. According to JLL statistics, by the end of 2018, the total stock of shopping malls in Tianjin has reached 3.3 million square metres. Under the situation of rapid growth, many shopping malls constantly upgrade and innovate their own business operations.
 

Experiential marketing is applied to provide more personal emotion in response of external motivation for shopping. The shopping space is decorated to be more creative, generally combining different culture, entertainment and art themes. For example, the washrooms of Joy City were reformed by many different themes, such as the finless porpoise theme toilet, and Coca Cola theme toilet. It is more effective to improve consumers’ participation and experience through reforming space and environment, and also shopping malls could also benefit from this method and corporate with other companies and obtain the sponsorships. What’s more, many shopping malls use technology products to improve the attraction of shopping malls, such as Grand Yuet City, Aegean Sea, Luneng City, etc. They introduced the AR, VR products and drones to build the technology interactive parks, which cover the all-ages consumers.

BT 201903 real 05
In addition, increasingly experiential retail stores expanded rapidly in shopping malls. The most notable format is children related stores. In the past four years, the children's brand occupancy rate in Tianjin retail market has risen from less than 10% to 20%, which has clearly become one of the main drivers of demand. The play area and art centre occupy a lot of rental space, such as Tomato Art School and Oriental Kid‘s Art. The outburst of children's experience makes the shopping centre constantly add parent-child business, while bringing a large number of customer sources with family as the unit for the shopping mall, and at the same time, driving the passenger flow of other business forms in the vicinity.
 

Many brands of service format also emerged by the experiential business model. For example, Yan Ji You bookstore expanded stores in many shopping malls. It not only provides a platform for consumers to buy books, but also gathers coffee, food, and gallery, cultural and creative products to create a distinctive and comfortable reading environment for consumers.
 

So we think the trend towards experiential shopping will continue. These types of stores will help some savvy landlords like mall owners edge out their competitors. They will allow consumers to link up their online shopping with their in-store experience, making the interaction more valuable for both the consumer and the retailer. Additionally, experiential retail will help bring together like-minded communities around the brands they love, providing loyalty and advertising for retail brands along the way.

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