Retailers must innovate and stage experiences if they are to survive in the modern marketplace, according to Joseph Pine, co-founder of Strategic Horizons and keynote speaker at the ICSC annual conference in Milan on Monday.
'Experiences have become the driver of the global economy and successful retailers are shifting to the experience economy,' he said. 'That is where growth in GDP and jobs is going to come from in the coming years.'
Goods and services are becoming commodities, he pointed out. 'Retailers have to move beyond that and offer experiences. Retailers can use goods as props and services as a stage, but the key thing is to create a memory. Experience is becoming a distinct economic offering.'
Citing the example of Starbucks, Pine pointed out that the Seattle-based company has turned coffee drinking into an experience. 'Starbucks has turned coffee drinking into a place. Consumers view the time they spend there as important as the coffee itself.'
Nespresso is another example, he said. The coffee company may be a maker of coffee cups and machines, but its marketing efforts have been focused on the experience of coffee drinking itself through the creation of places where consumers can enjoy a cup of coffee and experience how the coffee machine works to create their own favourite drink. 'Coffee perfectly exemplifies this progression from an economy based on commodities goods and service to experience,' Pine said.
Modern retailers are competing against rivals all around the world, Pine noted. 'The currency of the experience world is time, attention and money. You can only capture the attention of consumers once and time is limited…the basic principle of the experience economy is that the experience is the marketing.'
The quality of the product is also key, he added. 'Success is predicated on great products. When you see great physical goods combined with great experience, that’s when magic can happen.'
Commenting on the importance of authenticity, Pine said this has become a primary criterion for buying. 'Consumers want to buy something real genuine…the place, services and goods must be authentic.'
Pine said there were three rules that retailers should adhere to in the modern business world. 'If you are authentic, you don't have to say you're authentic; if you say you’re authentic, you'd better be authentic; and finally It’s easier to be authentic if you don't say you're authentic.'
