The third place
Consumer preferences are shifting to prefer experiences over products, with spending on experiences expected rise to $8.0 trillion by 2030.1 While great for service retailers such as restaurants, how do other retailers compete when consumers are not buying as many things?
Some retailers have addressed this through creating third spaces within their stores – spaces that foster community interaction, positivity, and psychological support for individuals.2 Traditional third places were places that people voluntarily gathered at to enjoy company such as cafes, barbers, or pubs. But now, retailers are incorporating elements of the third place, becoming a hybrid space other than work, home, or a regular store where people can meet, interact, and exchange ideas and culture. For example, telecommunications brand AT&T has introduced The Lounge in their Seattle store that combines their products and services with a co-working space and coffeehouse designed to encourage collaboration and interaction – complete with high-speed internet.
Another example of how retailers can create third places for customers to interact and engage in meaningful activities is Apple’s community engagement initiative, Today at Apple, that encourages customer creativity and learning. For example, the brand’s Michigan Avenue store in Chicago has little retail space for product displays, acting more as a place for customers to enjoy the numerous activities the Today at Apple initiative has to offer such as music, coding, and art workshops that are run in collaboration with local artists and talent. Of course, these workshops focus on how to use Apple products, providing a great way to engage customers with the brand.
While the internet may now be the most convenient place to purchase products, it currently cannot replicate the opportunity for connections that physical retail stores can provide. The physical store of the future may be a place that has little focus on sales – that can be delegated to online channels – but instead offers consumers meaningful social interactions with other consumers, staff, and the brand itself. For now, Australian retailers should focus on creating comfortable environments within their stores that, in the future, could be transformed into third spaces that encourage connections.