Can Experiential Retailers Survive Long-Term?

Can Experiential Retailers Survive Long-Term?

Building a loyal customer base will be key.

As brick-and-mortar retail atrophies, much of it replaced by experience-based entertainment businesses, the question many observers are asking is whether this new breed of business has staying power.

FlannelJax, an axe-throwing establishment that opened in St. Paul’s Midway neighborhood in July, is already facing this issue. Aside from acquiring a liquor license and adding other timber sports like log rolling, president Keith Beveridge says the company is positioning itself as a team-building destination. Businesses are “sick of doing the same team-building,” Beveridge says. “Everyone has done an escape room, everyone has been to a golf outing, and everyone’s over the same-old, same-old.”

There’s more than a hint of irony in his positioning of competitor businesses as one-off experiences, but FlannelJax as different.

“They’re betting that their concept is so involving that people will go more out of their way to do it,” says Beth Perro-Jarvis, principal of brand strategy firm Ginger Consulting in Minneapolis. But luring back those same customers a second, third, or fourth time is what ultimately matters, warns Kim Sovell, a marketing professor at the University of St. Thomas.

While clothing shops can offer new fashions with each season, “these experience shops are going to have to continue reinventing themselves,” Sovell says, “because it is so much less expensive to get that initial consumer back into your store than it is to find a new consumer.”

Malls facing retail vacancies are opting to fill empty storefronts with experience businesses as well. Don Ghermezian, CEO of Mall of America owner Triple Five Group, told Mpls St. Paul magazine last year that the Bloomington mall had a 30/70 proportion of entertainment concepts to retail shops. “Ultimately, we want it to be 50/50,” he says. Just in the last few years, Mall of America has added over a dozen new attractions, including Crayola Experience and several virtual reality shops.

“Part of the reason is to give people reasons to go to the mall other than shopping,” says Sovell. “The thing is, retail is going to look entirely different five to 10 years from now. We aren’t going to recognize the model.” Whether axe-throwing, escape games, and breaking things will be a part of that landscape remains unclear.