Real Estate

Experience and convenience must go hand in hand

January 24, 2014

In the battle for the consumer, the experiential value of city-centre shopping areas must be increased. A statement that few retail and real estate experts can oppose. But how do we increase experiential value? And are we not forgetting that the city centre should also be a place where people can shop efficiently?

Image: © Nationale Beeldbank

Experience versus convenience

The position of the city-centre shopping area is under increasing pressure. Shop vacancy rates have risen by more than 17% over the past two years. The retail sector is facing a major challenge. Given the intense competition between city centres as well as with the online shopping channel, how can customers be enticed back to the city centre? A frequently heard statement is that increasing the experiential value would be the solution. After all, the motivation for consumers to visit the city centre is related to whether there will be something to experience, in addition to the usual range of shops. This assumption stems from the theory on the experience economy. Pine & Gillmore, the founders of this theory, state that our level of prosperity creates new, emotional needs. A cup of coffee in a five-star restaurant can cost significantly more than the same cup of coffee served in the canteen of a sports complex, for example. The five-star restaurant provides a different ambience and experience for which the consumer is willing to pay extra. Indeed, a shop environment can satisfy these heightened emotional needs. City centres can use this to distinguish themselves, which ultimately contributes to extending the length of stay and greater consumer spending. Nevertheless, I believe that more is needed to bind consumers to the city centre. In addition to experience, convenience is a necessary and distinctive ingredient in a time when physical shopping is being combined with online shopping.

Intrinsic versus extrinsic experiential value

Nothing new, you will think. We have known for years that every shopping centre requires a good basis. Spacious, easily accessible parking facilities are essential for every city centre. But I mean more when talking about convenience. Convenience is also a form of experience, after all. I will explain my assumption in greater detail by unravelling the concept of experiential value in the context of the retail environment. To do so, I distinguish between the extrinsic and intrinsic values that a consumer may derive from a visit to a store. Extrinsic values relate to the satisfaction the consumer experiences with the purchase itself. These values are often associated with run shoppers, who are happy if they can find their shop easily, are not disappointed in the range of shops on offer, and are assisted effectively and quickly. A city centre with a high extrinsic experiential value has a complete and varied range of shops and a retailer service that surpasses consumers' expectations. The city centre's intrinsic experiential value, on the other hand, is related to the pleasure derived from shopping as an activity. Shopping can give consumers the feeling of being momentarily removed from day-to-day reality. It fulfils needs similar to those met during a visit to a festival or amusement park. A city centre can enhance its intrinsic experiential value in many different ways. Increasing the aesthetic value, adding ambience-defining elements that stimulate the senses, and organising events are good examples of this. A city centre manager has numerous opportunities to focus on this. But what should we focus on? Is this the intrinsic experiential value or the extrinsic experiential value of the city centre? This will depend largely on consumers' motivation, which has changed with the advent of smartphones and the Internet.

A mix of shopping motivations

Whoever thought that the city centre would be frequented primarily by fun shoppers or consumers who derive pleasure from shopping itself is mistaken. Together with colleagues and students from Eindhoven University of Technology, I studied five Dutch city centres by asking over 2,000 consumers about their shopping motivation, amongst other things. Academic literature does not use the terms 'fun shopping' and 'run shopping', but refers to hedonistic and utilitarian shopping motivations. Our study presented consumers with several statements in order to classify them as either hedonistic or utilitarian motivated consumers according to their responses. After analysing our results, the largest group of visitors (around 40%) did indeed appear to have a hedonistic shopping motivation. They consider shopping to be an enjoyable activity. However, no fewer than 30% had a clear or specific shopping motivation. Convenience ought to be paramount for this group of consumers. The remaining 30% of consumers were either difficult to classify or had a combination of two motives. The fact that almost a third of consumers do not have a clear shopping motivation proves that the dividing line between hedonistic/utilitarian (or fun/run) is not that sharp. A consumer can even combine multiple needs in a single shopping trip. The entire spectrum of experiential values merits attention in order to address both shopping motivations. When it comes to convenience , we must think beyond good routing and accessibility. After the car, the smartphone is now revolutionising shopping behaviour. Consumers combine online and physical shopping and use their smartphone while shopping. City centres can offer free WiFi, but that is merely a start. The use of the online shopping channel and social media forms an integral part of the overall decision-making process of a consumer. We will therefore have to assist consumers in such a way that they feel like they have been invited to visit the city centre, as part of the overall purchasing decision. This is the challenge facing retailers and city centre management.

Read more

The complete 2013 annual publication 'Signalen uit de Binnenstad' can be ordered from www.binnenstadsmanagement.org.

Relevant articles