Retailers know this, so they are selling experiences in addition to goods. Cooking classes at Sur La Table, rock-climbing walls at REIand golf-swing simulators at Dick’s Sporting Goods are all part of this experience economy — gimmicks to get consumers into stores. And even if shoppers go home empty-handed and buy online, more stores are charging for their special attractions in an attempt to make up for the fact that serving bowls and stationery aren’t flying off the shelves. It’s something of an unofficial tax on showrooming, a tendency for customers to just browse in stores but buy online.
“The people who are just filling boxes are in big trouble in the long run,” says Jodie W. McLean, president of Edens, the developer of Union Market, a new foodie getaway in Northeast Washington.
Now that the experience economy is here to stay, retailers are competing not just through their goods but through the shopping experiences they offer. If customers are willing to pay for an experience, then there’s an opportunity to turn every service worth paying for into something worth paying more for, whether it’s buying a doorknob, having your pants hemmed or getting your hair blow-dried.
Joseph Pine and James Gilmore were among the first to identify this phenomenon in their 1999 book, “The Experience Economy: Work Is Theatre & Every Business a Stage,” in which they warned that big-name stores could be in trouble. More than a decade later, Borders, Circuit City, KB Toys, Linens ’n Things and Ritz Camera have filed for bankruptcy or liquidated.
“I would say the experience economy was emerging back then,” Pine told me recently. “Now it’s here.”
The question now is: Where is it going?
For a guide, Pine raised one of the most-discussed examples when it comes to the future of retail: Best Buy, which remains the country’s dominant electronics store but whose stock has lost two-thirds of its value in three years. Best Buy is considered to be on life support in part because of showrooming.
Pine thinks the most valuable part of Best Buy is not its hundreds of stores but the Geek Squad service it acquired — because people are willing to pay extra for computer repairs if the technician arrives at their house dressed in a dorky outfit and driving a Volkswagen Beetle to match. There were fewer than a dozen Geek Squad agents when Pine and Gilmore first published their book. There were 24,000 when they updated it 12 years later.
“Geek Squad was originally stand-alone, and you can still imagine the Geek Squad stand-alone if Best Buy goes away,” Pine said.