Samsung Store Sells Experience, That’s It
Paco Underhill, the author of Why We Buy and the founder of Envirosell, told The New York Times recently that in the era of big-box retailing, “The theatrical side of retail was lost.”
Today, Mr. Underhill said, consumers are looking to move past the clutter of the average retail store and “get deliciously lost” in the experience of something different than what they’ve become accustomed to.
Samsung Electronics is hoping that it created the type of environment described by Mr. Underhill with its first “experience store” in America.
Located in midtown Manhattan, the 10,000-square-foot store has all the consumer
electronics wonders the Korean company produces. Consumers are encouraged to
check their email on Samsung computers, watch shows on Samsung flat-screen
televisions, hang out on a couch and listen to music on an MP3 player or even
make long-distance calls on Samsung cell phones. One thing the folks at the
Samsung store won’t let visitors to its stores do is buy something there.
Nope. Consumers are there for the experience only and, if they want to actually buy a Samsung product, well, they’ll just have to go to one of the company’s resellers online or down the street.
What Samsung is doing is not that unusual. A number of others, primarily manufacturers (retailers have gotten involved in pop-up stores), have opened stores to engage consumers through the use of their products in a comfortable environment. What is different here than say an Apple Store is that Samsung is not looking to move product from the premises. That doesn’t, however, mean that product isn’t moving.
According to Paul Kim, senior manager of North American marketing for Samsung, 31 percent of consumers who took in the experience at the Manhattan store and bought a high-definition television set within a year of their visit purchased one of the company’s models.
Last year, according to Mr. Kim, half a million people visited the store. The company projects those visitors will eventually spend $55 million on Samsung brand products. (Now that’s an experience many retailers would welcome.)
Discussion Questions: What are your thoughts on the Samsung “experience store”? Is this a concept that will only work for a manufacturer? Do you believe the experience will lead to greatly increased purchases of Samsung products over the lifetime of visitors to the store?
I agree with Ben. The story behind the story is that manufacturers are spending money to improve the customer experience that retailers don’t seem able to give.
I know of another CE manufacturer that is doing something similar, just so that they can get objective consumer feedback on their products.
The best retailers are working WITH their manufacturers to improve the experience. That’s the extended retail industry at its best.
To the extent that you can extend, develop, or strengthen the relationship of brand to shopper or consumer–this is a viable approach. Car shows, models walking down runways, technology expos, etc., all show the world what “could be” but are not necessarily designed to take orders right then and there (though the ability to follow up and generate orders is of paramount importance). The idea is fine if it expands the brand’s reach into the psyche of the shopper/consumer as THE place to go for satisfaction, answers, insights, etc. The execution is where it may rise or fall and success will be determined.
Remember the Gateway stores? Same principle. In fact, you couldn’t leave the stores with anything in your hands–it was against the rules. ‘Nuff said?
Manhattan has many showrooms supported by world-class brands intent on (1) getting prestige media attention and (2) showing retailers how to display their wares. Most of the showrooms are like Apple’s GM Building store, open for on-premise sales to the public. Unlike Apple and Samsung, most of these Manhattan brand-owned stores are apparel, shoes, and jewelry. Samsung has decent distribution through its conventional dealers. If Samsung started to open its own stores selling to the public, depending on the retail pricing, their dealers might be tempted to drop the brand. Samsung is the #1 chaebol in Korea, with $141 billion sales and $9 billion profits last year. They can afford a 10,000 square foot showroom in Manhattan, even if it doesn’t sell anything on premises.
A great idea. Not sure if it would work in non-durables, but for semi-durables it should be a big hit.
Why does it take so long for any retailer to realize the value of touch, feel, try on and operate something, in order to buy? Does a farmer walk in to Caterpillar and say, “I’ll take that blue tractor” without operating it? Do we buy cars without driving them, and researching them on a web site?
Even in the specialty foods shoppes and supermarkets, and Sam’s Club type outlets, demonstrations are used to sample and consider the purchase of something we haven’t eaten, or used before.
If Home Depot would add this ‘experience’ stage into the purchase cycle, to its past sales associates’ expert knowledge and service levels, one could give it a ‘WOW’ experience and hopefully, a shopper’s experience. Makes sense. Hmmmmmmmmmm
Jim Gilmore (no relation) and a partner whose name escapes me at the moment wrote a fantastic book in 2006 called “The Experience Economy.”
It suggests that we are moving from an industrial based economy, past a services based one, to one driven at least in part on “experience.” The Starbucks phenomenon is one example of this, as is the great demand now for extreme or exotic travel packages, and many others, including this new Samsung store. I suppose we could even say it is an element of the growing clout of “virtual worlds” that are being developed (including by many retailers.”
It is in part the inevitable progression in the more affluent societies.
This “experience” thing will be one of the great drivers of innovation going forward.
The advantage of these stores from a marketing perspective is that you can create true “brand experiences,” where consumers can get a feel for both the brand and the product in an environment unfettered by the noise of other brands and commercial activity. As a design firm, we have done several of these and in so doing emphasize to our clients that there is a difference between “consumer” behavior (how people perceive and interact with a brand before going to any kind of store to shop) and “shopping” behavior (once they enter the store environment). Shopping behavior is much more tactical, and predatory, and it can be difficult to establish an emotional connection with your brand, particularly if like Samsung, your brand is sold in multi-line environments. This trend is likely to continue, as brands seek ways to connect with consumers outside of excessively crowded advertising and online media.
My first thought, with a background in supermarkets, is that in a sense this is taking “store sampling” to the next level. Grocery manufacturers have often funded representatives to distribute new product samples in the aisles of supermarkets.
But there is another aspect to this whole thing that makes its benefit difficult to quantify. Why does someone visit the Samsung location in the first place? Are they already “brand loyal” and just trying to bolster the decision to buy Samsung brands or are they truly brand agnostic and will also be visiting regular retail outlets to try other manufacturer products?
I think the biggest advantage this approach presents is the well focused and informed sales staff. They should be very familiar with the category, the Samsung features, and the competitor’s weaknesses. By building this relationship with the potential consumer, the informed staff can make the agnostic consumer a brand advocate. And that is the other aspect to this whole thing. Many consumer surveys confirm the importance of “advice from a friend.” The consumer who visits the Samsung demo store may not only be become a customer but they are likely to promote the brand.
The folks above who are talking of “experience” hit the nail on the head.
The benefit of the Samsung (or Apple or others) store is that the customer is encouraged to actually experience the product. And in the case of Gen Y and electronics, that is a BIG benefit. I’m not so sure about Aunt Gladys and canned peaches, however.
I once heard a Best Buy executive say that one of their “Buzz” interviews said “I love Best Buy and I’d never leave if they sold beer….” (Anyone been to the “Escape” concept store in Chicago?) Enthusiasts love to experience the latest and greatest in gear. This is why auto dealers give test drives, pro shops let you hit the clubs and rackets, etc.
The hidden indictment here is that traditional retailing does just the opposite. We do everything we can to PREVENT the customer from touching the product. Maybe it’s time to invite Aunt Gladys to “squeeze the Charmin” again.
Good idea for Manhattan or Tokyo or London. Bad idea for anywhere else. The reason the concept store works in Manhattan is that that there are tens of thousands of out-of-town tourists staying at hotels within a mile of the store. This consumer doesn’t want to take their merchandise home with them because of duties, airport securities, extra luggage, etc.
I admire Samsung for staying true to their indirect distribution channel. But when you are facing a consumer, you must completely fulfill their needs. Given their tourist customer, they should at a minimum, take an order for their distribution channel partner to fulfill when the shopper returns home.
Shoppers understand and embrace channel conflict, especially in consumer electronics. Samsung should do what other manufacturers (Nike, Apple, Polo) have done when they dipped their toe into retailing: open full-service stores to complement the heightened experience they offer.
This idea may or may not sell more product. For many customers, once they make the decision to purchase, they want instant gratification.
But at least Samsung customers have the opportunity to try out the products, touch them, talk with an expert about different options, and get them in touch with a store that can sell them the product. There’s a “face” to the “name.” What would even be more amazing was if they provided service on products with warranties, with a “fix it” department on-site. Imagine getting your “broken” products fixed on-site, by the makers of the product–this would replace the need to mail your broken product halfway across the world to get it fixed, or, with your “next day” service warranty, get a technician that also services every other manufacturer’s machinery in town.
Definitely, the retail experience is something that no retailer or for that matter, manufacturer, can afford to ignore. But the point to be noted is that the retail experience should not be misunderstood for just providing plush ambiance and exclusive displays. I think what we need to realize (which many have already realized) is that this experience factor has to be extended well to the merchandise sold also, by stimulating the customer to touch, feel and get involved in the merchandise before coming to decision of buying. But also, such a moment of truth must be long enough to make an impact on the customer’s mind to facilitate the buying decision. This is achieved to a larger extent by the Samsung experience store, but the shortcoming on their part is that they are delaying customers’ buying decisions by not allowing the customers to make a deal there and then only. Though I appreciate this idea (of not letting them buy) but still I feel that the customers’ orders can be routed from there only, to a dealer which is nearest to the customer’s place. It would do two things, 1) Tap demand in the store only without the possibility of losing it once the customer steps out of the store and 2) the dealers would also develop an extra association when they find the manufacturers working the extra mile for them.
But, even after having all that, only thing which I wonder is how can a retailer selling product like luggage give their customers a true ‘experience’ factor?