offers an opportunity to shift thinking to experiences that include retail, rather than simply tacking on experiential bits to existing retail. What is the experience economy? According to Joseph Pine and James H Gilmore’s seminal 1999 work The Experience Economy, it is the fourth economy following the agrarian, industrial and service economies. The authors defined the experience economy as being about a business’s need to create memorable events. They foresaw the need for entertaining and interactive contexts, and suggested malls could become amusement parks charging an admission fee. A 2017 McKinsey report indicates the growth of experience-related services such as restaurants, amusement parks, concerts and shows at a rate 1.5 times faster than expenditures on goods. Since 1987, consumer spending on live experiences and events has increased by 70 per cent relative to total US consumer spending. A 2014 study of the relationship between wealth and happiness by Cornell University’s Thomas Gilovich and Amit Kumar concluded that “experiential purchases, such as vacations, concerts and meals out, tend to bring consumers more enduring happiness than material purchases. Experiences create more lasting happiness because they are more open to positive reinterpretation, they tend to become more meaningful parts of one’s identity, and they do more to foster social relationships. Experiences help us learn, grow and connect with each other.” Online innovation and e-commerce, along with the rise of the smartphone, mean that consumers are increasingly isolated and seek to maintain a sense of connection through the immersive, experiential and physical. The experience economy offers consumers the need to simultaneously distract and engage enough to get them out of the house and away from their mobile phones, while being optimised to share on such devices. A recent Eventbrite survey indicated that 78 per cent of millennials (soon to become the largest consumer group on the planet) choose to spend money on experiences rather than material items. This is being facilitated by the rise of the sharing economy, which enables saving money on purchases for ownership, such as cars and music, to spend on experiences – and by the ability to take a selfie to showcase and make the experience tangible. Eventbrite’s study indicated that 69 per cent of millennials experience FOMO (fear of missing out), often driven by others sharing and engaging on social media. It’s not just about millennials, however. The need for connection and immersion transcends age groups and life stages. The cross-generational appeal of art collective MeowWolf’s Santa Fe-based House of No Return experience, which was rated as one of the top 10 activities in New Mexico, saw it achieve visitation numbers triple those expected. MeowWolf later this year will be launching the artist-driven “experiential retail and entertainment complex” Area15 in Las Vegas, which will include art installations, an escape room, retail and food tenants incorporating interactive VR components, and events such as drone racing, TED talks and barbecue competitions. When goods are props According to the Harvard Business Review, a company “uses services as the stage, and goods as the props to engage customers in a way that creates a memorable event”. It sounds more like retailtainment; that is, driven from retail out rather than experience in. Retail traditionally has been a goods business, charging for products rather than services. Experience businesses charge for having the experience and engagement, which has brought on the rise of mixed-use spaces. New York’s Hudson Yards on Manhattan’s West Side bills itself as “a triumph of culture, commerce and cuisine. A place to live, work, and play.” Public art includes an explorable sculpture and selfie-staging ground, and the retail area featuring both boasts “immersive installations” and custom merchandise. In the Williamsburg neighbourhood in Brooklyn, Urban Outfitters’ spin-off Space Ninety 8’s shared space spans galleries, arties, restaurants, bars, and retailers across its five floors. Advertised next to yoga classes are album signings, art classes and Lady Gaga merchandise. Time, not money, is key The product purchased is a souvenir of how that time was spent. Museum exhibition retail and what I call tourism shopping  (about which I’ve previously written) are examples of this. Instead of tacky postcard and fridge magnet trinkets, you take home something you’ll wear or use repeatedly to remind you of the experience you’ve had and where you had it. London’s House of Vans exemplifies this. It converges art, music, BMX, street culture and fashion in its 30,000 square feet. It includes cultural elements such as a cinema, cafe, live music venue and art gallery. But the crowning adornment is its free skate park which features concrete ramps, mini ramps and street courses. Accepting skaters as young as five, there are sessions allocated for BMX riders and skaters, but customers are actively encouraged to walk in on the day allowing for spontaneous socialisation. Visitors may end a day of skating with a purchase to remind them of the experience. Asian malls lead the way The US is noted for the decline of its malls. The Starbucks “third place” hangout for teens of the 1980s and 1990s, the model of just selling “stuff” and lack of relevant evolution into experiences has seen many of them die off – a phenomenon startlingly documented by the many photos of abandoned and decaying malls. Asian malls are an example of a successful change of mindset. Not just an entertainment precinct with movie theatres and dining, they have evolved into “aesthetic experiences” where shopping is a secondary outcome. Experiential spaces assume that the experience will pay off in consumption. These were first explored in 2009 with the K-11 Art Mall developments in Hong Kong, Shanghai and Guangzhou, which combined art and shopping elements in a way considered almost blasphemous at the time. China’s Shanghai Art Mall  included an urban farm where visitors grow herbs that they take home for dinner. While foot traffic went up dramatically, the developers saw the point as being about building a community as well as accessing and tracking visitor behaviour, both physical and online. Shanghai Village features tree-lined art deco promenades and bathroom lounges covered in swirling mosaics by different artists, which are often booked for local events. Seoul’s COEX mall, which claims to be Asia’s largest underground shopping centre, serves as a venue for cultural events and houses a kimchi museum and aquariums. Its 30,000sqf library includes around 50,000 books and magazines to browse, and offers free couches and reading tables. The T Galleria in Siem Reap, Cambodia, features reflecting pools, gardens and work from local artisans. Hong Kong’s Victoria Dockside, 10 years in the making, is a three million square foot “art and design” mixed-use precinct that includes an art museum, green wall, luxury hotel, apartments, offices and retail. Creating a real bond The traditional retail drivers of range, value and service are no longer enough. Today’s experience economy manifestations of brand activations, festivals and pop-up shops may not be sufficient either. Experiences create bonds between consumers and brands, frequently having 10 times the return on investment compared to other activations. Not all brands and categories may suit arts, music and cultural experiences. But it’s the shift in thinking that’s important. Retail can create places to connect, commune and experience in an authentic and experience-first way, not just to drive sales. The last word perhaps goes to Scott Malkin, the founder and chairman of Value Retail. “The war is over. Alibaba won. That means physical retail is no longer about the distribution of goods, but building brand equity.”