When consumers step into any retail store these days, they’re looking for more than the products on the shelf or even the quality of the service they receive. Increasingly, they expect an engaging, entertaining experience, and will reward the same with their spending dollars. Multiple stories in my book INVENT REINVENT THRIVE (McGraw-Hill, 2014) illustrate how retail entrepreneurs have succeeded by building businesses that deliver an entertaining experience to their target customers.
Here, we consider three massive retail successes (Build-a-Bear Workshop, Costco, and Starbucks) and the entrepreneurs behind them (Maxine Clark, Jim Sinegal, and Howard Schultz), as profiled in my book, along with Abt Electronics, a Chicago-based retailer, which, though not detailed in my book, is the subject of a Kellogg School case study I authored. All are great examples of the retail-is-entertainment concept across sectors.
Build-a-Bear Workshop: When Maxine Clark came up with the idea of a retail store where customers could create their own teddy bears, she knew she was selling much more than teddy bears, even more than a stuff-your-own-animals experience. She aimed to provide an entertainment venue where all family members—children, parents, grandparents, and others—could be part of a process that tied them to the product, the process, the experience, and the company. That meant creating a bright, whimsical, colorful space with different stations, the ability to customize and personalize the products in multiple ways (such as a recorded message built into the stuffed animal), and windows through which customers could view the entire process. By the time people received their personalized products fresh off the “assembly line,” they had bonded closely with the brand through the engaging, entertaining experience.
Costco: Jim Sinegal’s approach to keeping his company Costco engaging evolved over time. Beyond offering a smaller number of SKUs (stock-keeping units, or different product types) and larger unit sizes than traditional discount retailers, he changed the product lineup and added multiple departments over the decades to keep customers interested. That meant the addition of bakery items, seafood, gasoline, pharmacy, and many other products. The company also introduced customizable products such as liquor bottles onto which customers could engrave gift messages. Costco’s famous cornucopia of free samples in almost every aisle and outsized café items (a hot dog and a soda is still $1.50, the same price as when Costco first opened in 1983!) only add to the festive atmosphere. Again, the business’s ability to engage customers has contributed greatly to its success.
Starbucks: Howard Schultz’s vision for Starbucks included providing a warm, inviting atmosphere for people to enjoy on their way to or from work. The combination of premium coffee products, comfortable furniture, and relaxing music—including jazz and other compilations made specifically for the company—has made it a place where many people come to work and socialize, a “third place” between work and home. So much so that many communities provide sufficient demand for multiple Starbucks stores in close proximity. While Starbucks may not offer entertainment per se, the business provides a master class in how to engage customers and keep them coming back again and again, daily in many cases.
Abt Electronics: Another business that embodies the retail-as-entertainment concept is Abt Electronics, a family-owned retailer in the Chicago area. Bob Abt, who passed away recently, built the company over several decades from a small store his mother started into an extraordinarily successful retail phenomenon. The warehouse-sized store sells appliances, TVs, sound systems, vacuum cleaners, fitness equipment, watches, phones, furniture and much more, all out of a large, single location. There are interactive displays for family members of every age, and even free chocolate chip cookies available daily. Bob Abt was inspired to offer such a large-scale, engaging, entertaining experience by Las Vegas casino mogul Steve Wynn, of whom Abt was a big fan. Not surprisingly, many customers report feeling like they are in an upscale Vegas casino while shopping at the store.
INVENT REINVENT THRIVE offers many more details of the first three retail superstars above, along with examples of other entrepreneurs who understand that retail is entertainment. The message is clear: to thrive as a retailer, you need to engage your customers by creating an environment and experience that engages them fully, connecting them on multiple levels with your products and company. That translates into long-term customer value, and market-beating profits.