Glenn Smith
Aug 13, 2008

Feature... The consumer connection

Hands-on consumer experiences are driving sales in the region across an increasing variety of retail formats.

Feature... The consumer connection
If there were an X-Games category for extreme branding, the adidas marketing assault in China would surely win the gold. Not only has the German sportswear company budgeted a reputed US$200 million for Olympic sponsorship rights and supporting advertising campaigns, it has also been adding two new adidas stores a day across China, pushing the total to 4,000-plus locations in 540 cities before the start of the opening ceremonies.

Topping it all, however, was the opening on 5 July in Beijing of the  34,000 square feet Adidas Brand Center, which leaped past the company’s 19,000-square-foot Champs-Elysee location to claim bragging rights as  the largest adidas  store in the world.

When only weeks old, the Beijing Adidas Brand Center was already considered one of the best examples of experiential retailing in the region.  “It is a great illustration of what experiential means - fusing cutting edge store layout design, with interactive opportunities around every corner,” says Arnaud Frade, regional director for retail & shopper at TNS.

“It delivers a truly holistic overview of what adidas stands for, while also offering the entire product range. Shoppers are free to roam from experience to experience - customising shoes or watching a game - while feeling little pressure to buy. But, of course, they will.”

Chris Aubrey, head of global retail marketing, sport performance, for the adidas brand, says rather than simply showcasing the adidas brand through traditional marketing and point-of-sale, the sportswear company wanted to enable the consumer to actually participate and experience it for themselves.
“The retail landscape has changed vastly over the last few years - consumers expect more, competition is stronger than ever and the distinction between a brand and a retailer is more and more blurred,” says Aubrey.

Designed by ShoP of New York, the four-story structure is a testament to architectural understatement, relying on subtle visual cues to guide visitors through sections for men, women and children, and between zones for hardcore athletics and casual street gear.

Everywhere has opportunities for engagement. Holograms help customer visualise customised shoes. Fun machines test kids’ fitness. Scientific apparatus gauge adult athletes’ strengths and weakness, and provide professional coaching. The adidas brand message is ever present, from the juice bar to the rooftop basketball court. Together, these interactive parts merge as a larger experiential whole. “We have gone beyond where we usually go with our flagship stores,” says Katja Schreiber, corporate PR, adidas China.

However, Frade cautions that flagship stores are not necessarily experiential; many are simply big stores. “Most ventures have little to do with experiential,” he says. “Many so-called flagship stores provide a generic view of the brand and, for the consumer, the experience is limited to a blaring soundtrack or a few video screens. It is experiential in design, but boring in practice.”

To Frade, one of the defining elements of experiential retail is the ability to transcend the need for a direct sales pitch. “The Louis Vuitton shop in Hong Kong connects with shoppers at a different level, and there are VIP rooms away from the public. Chanel does the same in Ginza. There is a store within a store reserved for the best customers.”

Experiential is currently mainly in the luxury or fashion domains, he adds. Membership is important. The people who connect with a brand are connecting with the values and experiences they want to be associated with.

But single brand flagship stores are the exception rather than the rule. In Asia and elsewhere, malls, department stores and supermarkets are where most products are sold, and brands compete side by side on store shelves.

Is experiential marketing possible in this mixed retail environment? Of course, it is, says Tim Isaac, chairman of Ogilvy Asia-Pacific. “Full on, 100 per cent-proof experiential marketing is possible in a totally controlled shopper experience in a wholly owned brand store,” says Isaac. “But one would miss the point - and a lot of opportunities - if one concluded that this is the only brand experience at, or close to, the point of purchase.

“There are other less purist brand experiences that can ‘close the sale’. Music, sampling, display options, promotions can all contribute, and if done well, they contain some important experience of the brand.”

Call it what you will — experiential marketing, brand engagement, activation or whatever - the last mile of retail is where 48 per cent of purchase decisions are made across Asia, says Ross McFarlane, managing director, Ogilvy Action Analytics.

“The trick is understanding how each experiential activity is driving sales, so you have an idea of what the payback for each is,” he says. “In other words, you want to be a little grown up about it.”

In a recently completed multi-country study, Shopper Decisions Made in Store, Ogilvy Action found three fundamental truths regardless of category or brand. “In-store display drives category growth, while price drives volume, but neither of these factors determines brand choice,” says Rafe Ring, global planning director, Ogilvy Action.

Instead the driver is engagement. “This can take many forms - a brand creating a powerful experience with shoppers outside the store, or brand ambassadors interacting with them in the aisle,” adds Ring. “Brands that actually engage consumers experientially or emotionally tend to turn shoppers into buyers.”

Experiential retailing, in its essence, means controlling the environment around a product, thus conjuring a brand ‘experience’ for the shopper. This can happen at the shelf level or at the store level. But what about the mall level? This question is especially important in Asia where malls are becoming the dominant shopping venue.

“Eight of 10 of the worlds largest malls are in Asia, and within three years seven out of 10 of the largest malls will be in China,” says Ring, quoting a report by the American Studies Department at Eastern Connecticut State University. “Only a few years ago the world’s 10 largest malls were in North America.”
But not all malls are created equal. Economic prosperity in China and India has sparked a boom in destination malls. Hundreds are under construction. This popular retail format assumes that if people gather at a place they will spend money, something that is not always guaranteed.

“KLCC is the flagship mall of Kuala Lumpur, and it is at the base of the Petronas Towers, the most touristic emblem of Malaysia,” says TNS’ Frade.

“It has all the big stores -  Cartier and such. But on the weekends KLCC is taken over by migrant workers and maids, which is perfectly okay, of course, but these are not the people who buy a $50,000 handbag or watch. In effect you have a great draw for visitors. But where are they shopping? In the supermarket on the lower floor.”

Matching the foot traffic to the retail concept is an essential element of mall planning, says David Sylvester, vice-president of Las Vegas Sands Corp, Retail Development, Asia. His employer is currently building one of Asia’s most ambitious resort/retail ventures, The Cotai Strip, said  to be the region’s first experiential mall.

“What we are creating in Macau is really a mega-mall,” says Sylvester. “There are five separate malls, each with its own retail niche, all connected by bridges. We are expecting people to come just for shopping trips.”

Each of the five malls is paired with a hotel. The first to open was the Grand Canal Shoppe at Four Seasons. Next will be Cotai Central, to follow next year. The others, as yet unnamed, will be open by 2010.

“The hotels act as a filter,” says Sylvester. “If you can afford to stay at the Four Seasons, then you are the customer who will be shopping at Louis Vuitton, Chanel, Gucci, Prada, all those brands.”

The degree of luxury of the hotel sets the tone of the stores in the adjacent mall. “We try to mix the malls so they don’t compete for the same dollar,” says Sylvester. “When you go from one to the other there won’t be a lot of  sameness. Each will have a different brand line up.”

One might say that LV Sands in Macau is doing for malls what adidas in Beijing is doing for sports flagships. Both are pushing their respective retailing formats to the limits. Both are setting new standards of blur - between brand and retail in Beijing, and between retailer and landlord in Macau. For shoppers, blur is good. Blur is fun. Blur is experiential.

Digital retail: Connecting with shoppers in Japan

The Gyre is one of the newest upscale malls in Tokyo’s Omotesando District, with Bulgari and Chanel dominating the first floor, the city’s first MoMA Design Shop on the third, and galleries, haute couture and cuisine scattered throughout. The Gyre might also be the world’s first digitally interactive mall, according to Alex Lopez, founder of Suitmen, the company that developed the technology to make it possible.

The digital platform is called CREAM, an acronym for ‘Connected Retail Entertainment and Marketing’, and is based on mobile phones with mobile wallets, in particular the Felica chip now embedded in all handsets sold in Japan. “I believe this is the future, and I gave up a cushy job to pursue it,” says Lopez, who was formerly head of Beacon Communications and before that creative head at Leo Burnett in Tokyo.

 Here’s how it works. Upon entering the mall, shoppers swipe their mobile phone at a reader near the door. Their profile is sent to The Gyre’s system and passed on to relevant retailers. Their mobile phone enables two-way interaction with The Gyre’s retailers during the visit.

Later, retailers can follow up sales inquiries via the shopper’s mobile. The availability of this real-time data makes retailing a ‘smart process’ for shop owners.

“The phone becomes a proximity device,” says Lopez. “The retailer has the power to know that you are in the store and know your preferences.”
 Shop owners can match digital posting materials based on how many men there are, how many women there are, and the age brackets. There isn’t anything else like it in retailing, says Lopez.

“The closest thing that comes to mind are points cards,” he says. “But with a redemption cards for, say, an electronics store, the retailer only knows when you make a purchase. [The shopkeeper] doesn’t know that you just walked in, nor your past purchases. There is now a way for the store to change the environment or the experience for you.”

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