Retail Pulse Report: Why Are (Good) In-Store Experiences So Difficult to Deliver?

And also, are UK consumers doom spending?

Adobe Stock: “Phygital experiences” - yes, WHY would you want the VR version of a shirt when you’re standing right in front of it?

When I first started this newsletter, one of my biggest fears was a slow news week. What would I write about if nothing happened in retail that week? I had some contingency plans, like the very slow-burning series on IT strategy in retail, but I wasn’t sure if that would be enough.

Here we are in what turned out to be a slow news week (I think other news has squeezed everything else out and even the trade press has tired of covering the potential impact of tariffs). So you get a hybrid article this week. We’ll see if it works – let me know what you think!

Retail Economic Indicators

We’ll start with the usual: economic indicators.

In the third week of the month, the UK releases a slew of economic indicators, which makes it easier to keep track but also gives an opportunity to look at a bunch of different indicators all together. The first to go was inflation – which hit its highest level in ten months, coming in at 3% in January.

The cost of food, which fell in December, rose in January, which was discouraging for inflation progress, but it turns out that airfare and private school fees drove more of the increase than food prices alone. Airfare typically falls from December to January as the peak holiday travel season comes to an end, but that didn’t happen this year. Overall, prices fell 0.5% from December to January, when they fell 2.8% during this period last year.

UK retail sales in January came in… strange. After having to spend all of last week reminding everyone that retail should not be measured month to month, but year over year to really get any kind of valuable comparison, the UK month over month numbers came in positive. I said a fall from December to January is a “dog bites man” story. Well, the UK delivered a “man bites dog” story: sales were up 1.7% over December, which was down 0.6% from November.

What the what?!? Digging into the numbers that the ONS provides (which, frustratingly, do not include the year over year numbers), retail sales increased 1.7% from January 2022 to January 2025. When you consider that these numbers are not adjusted for inflation, it’s no wonder that UK retailers are lamenting how bad consumer demand is. But segments hide a lot of variability. Food stores were up 5.6% for the 3 year period – again, low when you consider how much higher food inflation was within that time period. Clothing was down 2.7%. Ouch.

And rounding out the trifecta, consumer confidence in the UK hit a “new low” in February, declining nearly 40 points since July 2024, according to the BRC-Opinium data. Expectations about the economy over the next 3 months declined for the 5^th straight month, reaching -37 in February vs -34 in January. And yet, expectations about personal spending rose from -9 to -5. The main concerns driving the loss of confidence appear to be uncertainty over the impact of April’s employer national insurance contribution increase, plus an increase in price of domestic energy.

All that to say, it looks like UK consumers are doom-spending? Maybe? I just spent a week telling anyone who asked that sales never rise from December to January, so the joke’s on me, I guess. To do that despite inflation increases that are coming from other parts of the household budget, while also showing increasing concern over what the future holds… Sounds like doom-spending to me.

Special Topic: Why Are In-Store Experiences So Difficult?

There were a handful of stories this week that all centered around the store experience, which got me asking the question, why are in-store experiences so difficult to pull off? I’ve asked this question before. I still haven’t seen a satisfactory answer, so we’ll try it again to see if we can chip away at this challenging, but necessary question.

First let’s start with the inspiration. Yes I am a nerd, yes I read widely. No, I am not a regular subscriber of the following publication, I only found it because they used the right combo of key words that I track.

Frontiers in Neuroscience shared a “provisionally accepted” research article titled “The Contagion of Neurologic Immersion Predicts Retail Purchases”. The authors measured the neurologic immersion of sales associates serving customers (a very small sample size across two luxury department stores), to see if they could predict customer purchase. They found that “peak immersion” had a positive effect on consumer purchases and that the outcome could largely be predicted based on the behavior.

In English, they found that the more engaged a store associate was with the customer, the more likely the customer was willing to buy. When you say it like that, it sounds like a candidate for the Ig Nobel Prize, but there are two reasons why this is more notable than it sounds. One, we live in the age of "AI can do everything" and some people out there are more focused on bypassing the store associate than they are about enabling that store associate, and this provides more (unfortunately, needed) evidence that the store associate is an essential part of the store. Two, it also demonstrates that an engaged store associate is way more valuable than someone just standing behind a cash wrap.

This is key for the discussion below: an “engaged” store associate is one who is genuine, enthusiastic, and focused on serving the customer. That’s basically what “peak immersion” means.

And then I read this article, on how “phygital experiences” are “transforming” customer engagement. It was actually more of a focus on why retailers and brands think phygital is important, but without any meat around what kind of experiences work or why. I mean, what does a phygital experience even mean? Most times people mean bringing technology into the store to make it part of the store experience, but more often than not, it’s targeted to the shopper, and cuts the sales associate out of the equation. Don’t ask the store associate a question, interact with this kiosk instead!

I was frustrated until I read an opinion piece on why brands need to make stores a bigger part of their DTC strategy. Actually, it went more into why brands have under-estimated the value of stores in their overall strategy – due to an over-reliance on digital metrics. I have a whole speech/presentation on this, where I compare digital metrics to the sugar rush of a donut versus the boring but wholesome metrics of the store as an apple. The author was pulling these quotes straight out of my heart:

• "Brands frequently over-rely on digital performance metrics. While these metrics are convenient to measure, they often fail to capture the full picture of consumer behavior and long-term growth potential."

• "Metrics like app engagement and clickthrough rates offer only a partial view, often overlooking the emotional connections and loyalty that physical experiences foster."

• "…digital metrics miss the multi-sensory experiences and social connections inherent in physical retail. These intangible elements often play a pivotal role in strengthening brand perception and loyalty."

• "Just because digital metrics are easier to measure doesn't mean they capture what truly matters. Overreliance on these metrics can lead to shortsighted strategies and misplaced investments."

You need proof? I wonder why Selfridges made this investment: an expanded loyalty scheme that rewards customers for time spent in stores. The program is based on digital “keys” that shoppers collect while in the store, eating in its restaurants, visiting its in-house cinema (I had no idea), or using its beauty services. The keys are based off of the founder’s practice of originally giving real-life keys to the store to customers, going all the way back to 1909, which I thought was a nice tie-in. Rewards include events, access to product launches, and free shipping, and there are different levels that shoppers can achieve to drive access to more benefits. The best part is, store associates can play a role in this endeavor, either helping consumers find and collect the digital keys, or introducing customers to the program, or celebrating when the next key collected moves the customer to the next level.

You need a counter-proof? How about the fall and then fall again of Forever 21? My daughter was and still should be their primary demographic – a high-school into college teen. And they could not hold her attention (I can see her making a face at even the mention of the company). They couldn’t defeat Shein or Temu, and they didn’t adapt to the rise of environmental consciousness of teens who turned to resale for both low prices and feel-good impact.

Sure, super-cheap prices and a willingness to buy market share from both Shein and Temu. Sure, de minimis. But you know what? Forever 21 had something that both those companies lacked: stores. And, theoretically, store associates. I say “theoretically” because every time I went into that place it had maybe 2 people working, lines 20 people deep, a trashed store, and a bewilderment on my part about how they weren’t getting robbed blind (they probably were).

Forever 21 could have used their local presence to lean into resale, to provide an in-store experience and sense of community that Shein and Temu will never be able to provide. But they didn’t do those things. It’s not Chinese fast fashion that did them in, it was ignoring and undervaluing their most valuable asset: their stores.

Yes But HOW?

Stores need to be more experiential. And “phygital”, whatever that really means. OK. But how? Why has everything that has ever been offered up in this category ended up underwhelming, or turns into something boring and predictable two months in, or breaks and gets shoved in the corner?

I have two theories, and they’re inter-related. One, experiences in stores need to be delivered through the store associate. Not around them. Not despite them. Not even alongside them. Through them. Your delivery mechanism for store experiences should be your store associate. Anything less is doomed to failure because it cuts that essential element of sales success out of the picture: that store associate running at “peak immersion”! Stores have 10x the conversion rate of online. Why? What do stores have that online doesn’t? Store associates.

There’s a caveat here, though: peak immersion. It’s extremely difficult to get store associates to that level if say, they’re also watching a pile of online orders come in to be fulfilled because they don’t have enough staff, they’re worried about their safety or getting chewed out for theft numbers that are too high because they don’t have enough security help, or they’re worried about whether they’ll be late for their second job because they need two in order to make ends meet. If your store associates have to carry all that around in their heads, they’ll never be able to achieve “peak immersion” for customer success.

Two, the experiences need to be targeted at broader objectives than just sales. Sales is an outcome. Experiences can, potentially, distract from that outcome, but that’s only if you’re focused on the sugar-high sales metrics and not the long-burning loyalty and lifetime value metrics. Yes, you want to move the customer along from consideration to purchase, but you need to consider carefully the role that you expect experiences to play in enabling this journey.

Let’s take the height of the mattress wars, when Casper debuted their first physical store with nap pods so that customers could try out their mattresses by sleeping on them in the store. Experiential, right? Moving a customer along a journey to purchase, right? But how much of a nightmare were those nap pods for store associates? I can only imagine: dealing with people sleeping longer than 30 minutes, keeping the pods clean, dealing with “accidents”, dealing with people who have no intention of buying a mattress... (Casper had a lot of other problems like trying to “buy market share” in a category that turns over once every ten years, but that’s a story for another day).

I’ll make it easy to take something away from all this. Here are the rules for high-value in-store experiences:

• Any in-store experience should be delivered THROUGH the store associate

  • Corollary: That also means they need to buy into the whole thing – enthusiastically

• In-store experiences need to have a purpose that serves the retailer, the store associate, AND the customer

  • Corollary: The purpose should be broader or more upstream than just focusing on closing a sale in that moment

• And, while I didn’t talk about this one explicitly, I will add, the experience should be a natural extension of the brand, whether the value proposition, the history (as Selfridges did), the lifestyle or values that the brand stands for, etc.

One Last Thing

This week I saw the coolest application of GenAI in retail, and one that I can 100% get behind and endorse. Crocs launched a GenAI way to create custom jibbitz (the little buttons that plug into the holes on Crocs shoes) (full disclosure: Crocs is an Aptos customer but we had no part in enabling this). I bring it up, not just because it seems impossible to get away with an article on retail without having the word “GenAI” in it, but because I think there’s a really great opportunity here to bring this into stores!

I don’t know anything about how custom jibbitz are made, but I would hazard a guess that a 3D printer or some other additive manufacturing process is involved. Put one in every store, for heaven’s sake! Offer customers, design your jibbitz and watch them get printed right in front of you! Can you imagine that experience? And please don’t make it self-service. Staff it with someone who helps shoppers (kids) design their jibbitz. Who talks them through how it works as they’re getting made. Who is in “peak immersion” and creating an experience that will drive lasting loyalty (and sales).

And keep it evergreen by adding new elements over time: gamify it, for example. Have people vote on their favorite design printed in the store that week or month, where the winner gets a gift card. Have regional winners. National winners. Global winners. Offer limited runs of winning designs. Offer sister city swaps – Denver’s top design is now available for a limited time in Singapore and Singapore’s top design is now available in Denver (or whatever locations work). So many options for how to keep it from getting stale (and don’t do all of this all at once – build it out over time).

Anyway. Store experiences matter, and they are the future of the store. And they’re not cookie-cutter. They need to be a natural extension of your brand and no one else’s. And they need enthusiastic store associate support. That’s not easy to deliver, and that’s not easy to sustain. But it will definitely set apart the winners from the losers.

Until next week!

- Nikki