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You visit Dolmen mall in Clifton with your mom for the usual trouser dupatta matching, but as soon as you step inside a retail shop you run into a scene which seems like something out of a music video. There are lights, music and a bunch of famous people having fun. Buying clothes is no more a chore, but an immersive experience.
That’s exactly what the new age fashion retail stores are headed towards. First Khaadi, and now Ethnic has welcomed its first experiential store, turning around the whole idea of shopping into a larger than life experience.
Ethnic’s new Creative Studio opening at the Clifton Dolmen mall was the talk of the fashion industry last month. Celebrities and influencers alike, were all seen admiring the enormous new store.
The event did not only open doors to a consciously designed store for Ethnic’s customers to relish in a novel shopping experience, but also opened room for some important questions. What is the potential of retail stores becoming more than just a point of conversion? Apparel retailers, like Ethnic and Khaadi, now have outlets that are more than just a shop – they are a point of entertainment. One cannot help but wonder why and how these brands are expanding their footprint by acquiring bigger shops. Do bigger stores mean bigger revenues?
Profit asked Ethnic’s Deputy General Manager Marketing and Creative Head Zunira Iftikhar if their recent launch was an expansion move, and if so how they are able to make such bold expansion moves when the economy is in shambles. She agreed to the former part of the question and for the latter she replied, ”I would not say that business is not suffering, I’m sure every business is suffering. But even if it is suffering, it doesn’t mean we will stop loving what we do. This attitude has allowed us to grow so drastically! Ethnic started as a sub-brand of outfitters and there was a time when we had Ethnic by outfitters written on our logo. Now I would say very proudly that we are a sole brand, with a sole identity and we are proud to be ethnic in one itself.” Clearly, the brand is set to make waves, but are consumers ready?
Inflation’s impact on consumer behaviour
According to the Pakistan Bureau of Statistics, our economy is experiencing a three-year high inflation, whereby it has more than doubled in comparison to 2019.
Survey data from November 2022 reveals that 53% of Pakistanis have experienced a deterioration in their household’s financial situation in the last six months and only 45% anticipate improvement in the next six months. So what does this tell us about consumer trends when it comes to buying apparel? Does this inflation not depress consumer spending? Well, according to the SPB’s Consumer Confidence survey in November 2022, there was a 1% decrease in Consumer Confidence Index for urban Pakistanis since September 2022.
Considering these conditions, the sales performance of apparel and footwear retailers is expected to dip by approximately 5% from 2022 to 2026, according Euromonitor forecasts. However, data collected by Passport, Euromonitor International shows that the retail value of e-commerce shares of Pakistani retailers, like Gul Ahmed and Khaadi, has experienced an increase in the last five years. While consumer spending in retail seems to be suffering, spending on online shopping has seemingly escaped the brunt of inflation.
Industry sources have supported the idea of a shift in consumer behaviours, whereby more and more people are gravitating towards the idea of e-commerce shopping platforms. An industry source informed Profit that, “Our consumer research and data shows that people do not have the time to stroll around in shopping malls, when they can easily order whatever they want online. It saves them the time and hassle of sifting through multiple racks of clothing.” They continued, “Shoppers look for instant gratification, so they can order what they like online and have it picked up from the store, without having to browse through the store in real time.” This insight indicates towards the dwindling popularity of retail stores. Then what is the point of opening bigger outlets when consumers are moving towards online platforms? Perhaps, experiential stores will be the saving grace of retail!
Reimagining the retail landscape
While retailers in the country are cutting costs due to skyrocketing inflation, others are using these trying times to experiment with bigger things. But standing out in a highly competitive and saturated apparel market is like playing with fire.
Digital anthropologists, like Brian Solis, believe that utilising technological tools, such as video game design and spatial computing, along with the ‘experience’ element can help them do so. Through the incorporation of technological innovations and reimagining the retail landscape as more than just a space to display products, retailers can get a headstart on current trends and monopolise the market.
Retail stores are largely missing what Solis calls the “wow factor”. It is becoming a formative part of the new age of retail as it unfolds before us and an important ingredient in the recipe for success in emerging retail trends. This gives us the answer to why retailers are seemingly keen on divorcing from their older business models and rebranding their retail experience to serve a purpose greater than just shopping.
Proving Solis’s point, Iftikhar told Profit, “We are shifting towards catering to this new trend that helps our customers associate with the brand and for that to be made possible, store experience means a lot. Here we are aiming to give them the right space and environment to make shopping a beautiful experience more than anything else. Having a bigger, better store and everything that it offers is key to succeed in the current market.”
How are retailers bringing the wow factor to their retail experience?
The answer, in two simple words, is sensory engagement. Profit asked Amna Jatoi, visual merchandiser and product manager at Sana Safinaz what an experience store actually means. “What we basically aim to do when we design an experience store is to create a store that engages all five senses. We use our sense of smell, touch, sight and hearing to perceive things, which then creates an overall experience. Engaging the customers’ senses is essential for creating a unique experience, which then contributes to brand recognition,” replied Jatoi. “For example if you walk past a Louis Vuitton store, before you even enter, you will immediately think ‘oh maybe this is a Louis Vuitton store’. This is because just the colour scheme from the outside, window displays and the overall aesthetic combined gives it way. That is what we essentially also understand by the term brand recognition,” she continued.
Similarly, if you walk past a Hollister store, you will recognise the distinct smell that all Holister stores have. “They spray an air freshener that can be sensed from outside of the stores and everyone who frequents Hollister would know it because all their outlets smell the same,” Jatoi explained.
These aesthetic and sensory elements are combined to form an experience that customers then start associating with the brand, bringing us back to our initial point- brand recognition. Moreover, the pleasant colour schemes and scents also create a feel good atmosphere that is more inviting than a bland shop. It will probably be easier to justify why Khaadi has a cafe in their Experience Hub at Dolmen. They are utilising the sense of taste, which customers can then associate with Khaadi, something no other brand has done so far.
In the new age of retail, where combating the decreasing popularity of physical shopping has become an issue, retailers are prompted to improve the experience of shopping. So, what else goes in to make shoppertainment more appealing. Jatoi said that “we live in a very tech savvy era, where anything that is instagramable sells. Our prime customers at this time are millennials, who are greatly concerned with aesthetics and social media.” Backtracking to the Khaadi example, we can now see why they have photo booths right by the entrance of the store. Any store that looks pretty will have people piling in. We are all human and humans by nature are drawn towards beautiful things. Have you ever entered a beautiful store, even when you didn’t need anything from there? Well, this is what retailers want – footfall. “Once you are inside, it’s likely that something will catch your eye. It becomes hard to resist and you end up impulse buying something that you didn’t really need,” Jatoi remarked.
You cannot open a successful experiential store unless you understand what draws people in. Some brands take this very seriously. Gul Ahmed employed machine vision technology to convert visitors into customers. They use SenseR, which gathers data ranging from a customer’s time spent in the store, products they are most gravitated towards, the routes they take within the store, as well those who return to the store. Identifying these behaviours and demographics makes them cater to their customers better than they were able to previously, by doing what Jatoi also told us – strategic product placement. This makes one thing crystal clear: whether you want to create a unique experience that people subconsciously desire or give them exactly what they want, you cannot shy away from technology.
While some brands are still catching up to the concept of store experience, others like Khaadi are already a step ahead. One wonders, how? Well, they take an important lesson from Zara’s handbook. Having a one stop shop, where you can find products ranging from apparel to accessories to home decor, brands are now swayed towards the idea of creating an ecosystem. A market that offers an all-in-one solution to buyers.
“Most brands would eventually move towards opening bigger stores. The reason for this is that they are aiming to make themselves a lifestyle brand. The concept obviously comes from Zara. You don’t just want to sell clothes, but you wanna sell the complete look so that is where the need for bigger stores comes in,” Jatoi mentioned.
If you have been to Khaadi’s Experience Hub, you have probably seen their PIT installation. PIT stands for put it together, whereby you can put together a complete look by getting the fabric, as well as button and laces and tassels all from the shop.
To answer the question we posed at the beginning, retailers achieve the wow factor by a strategic store layout, conscious product placement, incorporation of new technology and offering a diverse range of products. Some are even creating markets where the overall experience tends to at times over-shadow the product itself. Are we missing anything? Yes. Customisation! Khaadi’s PIT might allow some degree of customisation, but Ethnic’s new studio has one-upped them by their DIY installation. Ethnic’s latest Karachi store is a custom studio, as Iftikhar puts it. Their DIY installation allows you to pick your own cushion, tote bag or kurta and design it yourself with different laces, motifs and customised embroidery. They have an embroidery machine that lets you design your own product all in real time!
What is the charm of an experience store?
Just like any other life cycle, the business world is also a survival of the fittest. Same applies to Ethnic’s adoption of experiential stores too. “We are targeting a younger audience, who happen to be more aware of current trends, as opposed to typical customers. The younger generation is all about having a memorable experience, where they can associate with the brand instead of just shopping to buy a new outfit.” said Iftikhar.
In order to stay in tune with fast fashion trends, retailers are now more concerned with providing a unique shopping experience, along with affordable prices, which remain the essence of fast fashion. Iftikhar agreed that Ethnic identifies as a fast fashion brand “Yes, I would say that we are a fast-fashion brand. Even though our target market is not selective, it is in fact quite diverse, since we aren’t just catering to teens, or millennials, or the Gen Z, but we are one of the leading brands when it comes to prêt. And prêt is all about fast fashion. With Ethnic, everyday we are trying to make us faster and more relatable to younger audiences. So disposable fashion helps keep up with everyday changing trends and that’s what we are aiming for here,” Iftikhar continued.
But why are these big stores popping up only in Karachi? Well, if you are from Karachi, you would know that the only affordable and accessible recreational activities that people can enjoy include going to the beach, dining out and visiting the mall. The appeal of experience stores seems to be in line with the growing demand of improving shopping as an entertaining experience, whereby a unique shopping experience becomes part of the avenue of entertainment for people.
But the lack of entertainment and recreational activities remains true for other Pakistani cities as well. An industry source has informed Profit that Khaadi’s current strategy involves shutting down smaller stores and compensating for it through their presence in e-commerce avenues, meanwhile opening bigger stores. According to the same source, we can expect to see at least two new market-like Khaadi stores in Lahore. Maybe we will see other cities having similar pop ups soon. Let’s ask a more focused question. Why are the only two experience stores we have in Karachi located in the same mall, within such close proximity?
Why Dolmen?
It takes more than just creating a one-stop shop and utilising better marketing strategies, such as effective visual merchandising, spatial computing and store layout design to start a successful experience store. Location matters greatly.
Opening a big store is expensive to say the least. Opening a big store in Dolmen City is even more expensive. Well, firstly, Dolmen mall, Clifton is located in one of the most posh areas of the city. This means exorbitant rents compared to other market areas. Secondly, it is not easy to rent a shop at Dolmen because they are currently at 96.7% occupancy according to Dolmen City Reit’s latest quarterly report from September 2022. Considering the current inflation, it seems fair to ask why Ethnic chose this location to launch their custom studio?
Well, firstly due to the popularity of Dolmen and its internal marketing efforts, which draw people into the mall, retailers are indirectly benefited. According to Dolmen City Reit’s annual financial report, their tenancy strategy is “focused on encouraging footfall and retail spending through selecting tenants that help each other increase sales by creating shopping/purchasing synergies.” This results in better overall sales volumes from mall operations.
According to their latest quarterly report from September 2022, Dolmen City has been “bustling with healthy footfall,” during the quarter in review. In their annual report for the fiscal year ended in June 2022, the average monthly footfall was 585,085 visitors compared with 535,714 visitors in FY21. Dolmen estimated an average of 7.021 Million visitors during FY22 compared to 6.43 Million visitors in FY21. These figures entail that we are slowly reaching pre-pandemic levels of footfall, despite the consistently rising inflation. When the mall is able to draw in a good amount of visitors, stores within the mall are also able to welcome a better overall consumer traffic, so Ethnic choosing this location makes complete sense.
Secondly, you need to keep up with your competitors. We have all heard the saying keep your friends close and your enemies closer. Khaadi Corporation Pvt. Limited is the parent company to three retail brands namely, Khaadi, Chapter 2 and Kanteen. They employ a business model that does not simply focus on product, but the overall experience of being a customer at Khaadi, a model that has worked very well. Looks like Ethnic is also imitating a similar model. Khaadi’s Founder and Ceo Shamoon Sultan in an Instagram post suggested that, “Imitation is the sincerest form of flattery”. Could this be a direct diss at Ethnic because it sure looks like it.
But is Ethnic even competing with Khaadi? Well, according to industry sources, both brands generate a revenue of roughly Rs 15 billion from just their prêt collections, which puts them in direct competition. Profit asked Iftikhar to comment on this to which she replied “I wouldn’t say that we are following what other brands are doing because we have our own identity. So, we will expand the way we want to expand. The custom studio is our new experiment in that direction. I will not say that we are not expanding into home textiles because you never know, but to answer your question we will not be following hard and fast rules. Just because khaadi is doing something we will also do it.”
Even though they deny any claims to similarity with Khaadi, there is only one other retailer with an experience store, so whether they like it or not they are competitors. Will they be as successful in this endeavour as the predecessors of this emerging trend in Pakistan? Only time can tell.
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