KH Insight Report—02
If you have followed economics in recent times you have learned that developed countries grow their GDP in the service economy. But right now, clever marketeers and economists at universities around the world are adding new chapters to old books. The new stories tell the tale of next level economic growth, which takes place in the experience economy.
250 years ago, industrialization forever changed Europe, moving the source of economic growth from extraction of commodities towards the manufacturing of goods. 200 years later we had moved on to services. In 2018 yet another paradigm has been breached. In a world where online platforms create almost complete price transparency and logistics allow you to live on one continent and shop on another, there is only one possible way to present a differentiated offer – through the experience you offer. Economic growth comes to those who surprise and delight. This is true for nations as well as brands. When every city in the world has a high street featuring Zara, H&M and Footlocker, it is a tree hotel in Northern Sweden who gets the attention. When talented engineers can find work anywhere in the world, it is the quality of life which is the differentiator. And when anyone can assemble a car or produce a bag or a jacket or any other product through a Chinese factory, it is the experience of purchasing it which makes the product unique.
Not surprisingly, new brands are the most naturally adept at navigating the experience economy. For example, Swedish brands such as Eytys have not focused on e-commerce. Rather they have created experiences that seamlessly connect offline and online realities allowing customers to enjoy a visit and then perhaps shop. E-commerce is dead, but please bring something with you from our store and pay when you wish to.
E-commerce is dead, but please bring something with you from our store and pay when you wish to.
“I don’t want you to buy anything in it.” This may seem antithetical to the purpose of a “store,” but it captures a critical understanding – experience is the core to the future of commerce.
The rise of experiential commerce
By Sunny Dhillon
In order to stay profitable and to win in this new reality, established brands need to go back and study how they currently interact with their customers. No one necessarily needs apps, webpages or stores, but everyone wishes to enjoy a smooth transaction, regardless if it takes place online, offline or in mixed reality. Listen to your customers and ask yourself if you really know how they wish to interact with you.
And design to delight. Your product or service is not enough. It is the experience of acquiring and enjoying it, which will set it apart.
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