The thought of paying to shop is a ridiculous idea, but we all do it. We pay with our time not our cash. If we think about store experiences this way… as products people buy… it can change how we should innovate retail experiences.
The thought of paying for a retail experience came to me as an epiphany while I was on a panel discussion on ‘bricks and mortar retail in a digital world’ at the Consumer Electronics Show in Las Vegas last year. The question from the panel leader was about the challenges retailers face creating loyalty. My response was “I pay $79 a year to be loyal to Amazon”. It’s true. If I am willing to pay to be an Amazon Prime customer I am going to certainly look there first for the merchandise I want so I can benefit from my membership. The enticement to become a member was ‘free shipping’, and the math seemed fair, but now by brain dilutes the cost over the entire Amazon experience and I feel value beyond the shipping savings. I can’t imagine NOT being a Prime member.
This pay-to-shop model is not new. It has been around at least since the dawn of warehouse clubs. Costco, Sam’s, and BJ’s are all acutely aware that they have to provide member value, and filter their decisions based on this foundation. They know if their members are not perceiving an annual savings AND a great experience they will bail. The issue with the club operators is that the added value is not “environmental” in the form of store design, but believe me when I say they put an equal amount of energy into the design of their store experience via curated assortments, adjacency and operations, the treasure-hunt atmosphere, and exciting seasonal merchandising.
Amazon Prime and Club stores are monetary costs, but when they choose a retailer shoppers are still weighing the cost of their decision, but with the currency of time.
I have a client friend who ran dealer development for a major equipment manufacturer who once said to me “When someone asks me what a tractor costs I tell them it costs what we sell it to the dealer for. What they pay is that plus the value the dealer adds in the sales and service experience.” Forget the Prime and Club models and think in terms of how your store, your department experience, and your category solutions deliver an experience that is worth 10 or 30 minutes versus 10 or 30 dollars. This can be a transformational way of thinking about innovation in retail.
A time/value framework can be a simple one for approaching both how a store delivers today and how it could be delivering more tomorrow. For known value items like detergent and milk the assumption is that price parity or better must rule. But for other wants and needs that are not price sensitive, and certainly part of a “reason to visit” a retailer, ask how the experience of shopping before, during, and after the trip can be worth more than the “stuff”. How can it make the shopper feel smarter, more attractive, more hip, more…something. The goal is to have an emotional end-benefit that is constantly and consistently delivered in the experience and reinforced through communications. The result is the shopper driving…or clicking past competitive retailers to get to their preferred store.
Today the seamless store experience and the digital experience are the “how”. These are the vehicles, but like driving a car they are made up of smaller experiences like acceleration, cornering, and braking (and cupholders, and a great stereo, and power seats) that make the experience a joy. Try thinking about the value you are getting for your time the next time you shop. We all do it subconsciously already, just become aware. It just might lead you to a new way to innovate.