All products are experience goods

In the online era, offline retailers are facing significant challenges. For instance, the well-known supermarket chain EMart in Korea has decided to close underperforming stores every month. The reason is simple: survival. Over the past few decades, the retail industry has undergone considerable changes, from mail orders to the internet, and the transition to e-commerce platforms like eBay, Amazon, and Shopify. This shift towards Direct-to-Consumer (D2C) trends presents substantial challenges for retail operators.

Moreover, the logistics sector, particularly last-mile delivery to consumers, is now competing with tech startups. Drone companies often face issues with battery life and payload capacity, but these are expected to be temporary obstacles.

These changes suggest that current retail stores may need to transition into urban delivery hubs or warehouses. While this may seem far-fetched now, it becomes more plausible when considering shopping trends. Internet shopping has enabled a 'one-click' system, from Amazon Dash to Amazon Echo devices with Alexa.

Thus, the convenience of online shopping has significantly increased the occurrence of purpose-driven purchases of daily essentials. For example, when consumers are running low on laundry detergent, they are more likely to order it online through Alexa rather than planning a trip to the store. This convenience is due to the ability to order anytime, 24/7, with voice recognition or a single click.

However, the emergence of new trends and various categories has made selecting the right product more challenging. Consumers often switch brands to find the perfect allergy-friendly detergent. This is because they are not just purchasing a product, but seeking a better user experience.

Modern consumers value the experience a product provides over the mere act of purchasing it. For instance, when buying a smartphone, they consider not only the basic functions like calling and texting but also the camera quality, app ecosystem, and design. This desire for a richer experience drives their purchasing decisions.

As a result, every product has become an experience good. This has intensified competition among brands to offer diverse options and unique experiences. Consequently, reviews and comments play a critical role in online shopping. Brands frequently collaborate with influencers for product reviews and provide incentives for reviewers. They also build AI systems for review verification.

Each individual has unique perspectives and experiences, making it difficult to decide based solely on others' reviews. For example, while reviewers might praise a new keyboard, it's essential to consider whether it meets your specific needs. A YouTube review might give insight into the typing sound, but you also need to think about the size, portability, and other personal preferences.

As a result, especially for brick-and-mortar stores, prioritizing the shopping experience is crucial. Consumers still want to visit stores to experience products firsthand. Therefore, retailers should look beyond just sales and inventory numbers. They need to consider whether customers visit specific shelves, try products, or compare multiple items in the store. These factors are common in online shopping but equally important in physical stores.

Maximizing consumer experience is the strong value proposition of offline stores. Consumers still want to touch, try, and compare products in person. This differentiated experience is something online shopping cannot offer, making it a key reason for store visits. Thus, retailers should optimize store operations to enhance these experiences, providing spaces for product trials and easy comparison of various options.

However, measuring these experiences is challenging for offline retailers. How can they verify and manage customer experience? Were customers satisfied? Did their experience lead to a purchase? Can staff alone efficiently and accurately determine this? How do they account for promotional seasons, product collaborations, and in-store pop-ups?

Answering these questions can provide valuable insights and solutions for offline store operations. For example, data on millennial foot traffic, interactions with pop-ups, and responses to in-store ads during promotional periods can yield actionable insights.

PLUS INSIGHT offers solutions to these problems. We use privacy-protected Vision AI to analyze consumer behavior and in-store experiences. By leveraging LLM, we process vast amounts of in-store trajectory and behavioral data to provide actionable insights.

Contact us today! Capture the potential growth opportunities for your offline business with PLUS INSIGHT.

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