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Getting Engaged in the Era of Experiential Retail

In April, I had a very busy week at the ProMat tradeshow in Chicago.  The show, which originally billed itself as a materials handling equipment event, now has something for everyone involved in supply chain, manufacturing, and distribution.  It offered a whole world of ideas on what’s happening in our industry.

Photo courtesy: ProMat.

Photo courtesy: ProMat.

It was an interesting mix of offerings. About a third of the show involved robotics including associated components, control systems, gear mechanisms, motor actuators, and software systems. I saw an arm of a robot with fingers exactly like human fingers, which reminded me of Arnold Schwarzenegger’s arm in Terminator 2.

My real reason for being at the show was to meet with prospects and customers. I wanted to share some of the conversations I had at the event. It pointed to some important industry trends, particularly around something called experiential retail. It’s something that we’ve suspected in high-tech electronics for a. while now—and it’s going to change our supply chain in a variety of ways. 

I spoke with a vice president of a toy company that had both retail stores and a distribution center that carry educational toys for schools and other companies.  They are planning to try an experiencial retail store as well—so they are developing a model where kids can play in the place and experience some of the toys right in the store. They represent a journey that every retailer, including electronics retailers, will need to figure out and perfect.

In the clothing retail space, I’ve seen signs of this trend for ages but success has been hard to capture. In 2014, Norstrom bought the Trunk Club for $350 million, but two years later it had lost $150 million.  The department store sector has been hard hit by the changing market and big retailers are looking for alternative to the ineffective anchor store model that has been used traditionally. I thought it would be interesting, now that more time has passed if the Trunk Club is delivering value to customers and learning how it fits into Norstrom strategy.

The Trunk Club assigns a stylist who offers a virtual trunk show of potential purchase options based on your preference and profile. Approved clothing will be shipped to your home and you can try them and keep the ones you like. The trunk comes with a return UPS shipping lable to make it simple.

While I was in Chicago, I decided to visit the original Trunk Club Clubhouse.  When I entered, I was greeted by a receptionist and offered a drink at the bar.(I had to decline because I was driving but I could see that it might relax potential customers and help them be open to a style change. I browsed until my assigned stylist found me.  Beth, a senior stylist, told me that she had a philosophy of it being better to overdress than underdress, since it shows you care and respect people. In the Indian culture, that might be seen as showing off—so I shared my dilemma. Finding a happy medium became a collaborative task. Although the clothes seemed expensive, I settled on two pairs of pants to give it a real try.  They seemed to meet all my requirements—and I felt like Beth tried to give me what I wanted.

I asked Beth about her job. She told me she was paid a base salary and paid on commission. She has 475 customers all over the US who buy regularly.  She also told me that Trunk Club maintains the same pricing as Nordstrom. She can also help customers who want a bespoke suit or blazer and are willing ot pay more. (That fits the Nordstrom brand for sure.) This seemed like a model that many retailers could replicate to adapt to the sweeping retail transformation. 

In retail, getting customers to buy is going to get increasingly harder. How do you think organizations can offer a fulfilling experience that includes expertise that only a human provide? It’s going to take the right recipe that creates lots of questions:

  • What is that fulfilling experience?
  • How can a retailer provide that at a reasonable cost, in a way that translates into value for the customers?
  • Is there any way to leverage technology in the effort?

Perhaps robots will be a critical part of the supply chain and manufacturing effort while humans take the special retail roles. Consider companies like SoftWear, which use sewbots (sewing robots) to make clothes. Maybe in future you can walk into a store and a sewbot will spit out a perfect suit (today it’s more about basic T-shirts). Maybe the toy store will use 3D printing or robots to create cool as you wait high-tech toys. Who knows?

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