Picture this: You walk into a store, drawn in by an eye-catching window display. As you enter, you’re greeted by a subtle scent that evokes memories of home and music that gets you feeling adventurous. A friendly staff member offers you advice on new products to explore. You try on a jacket using an augmented-reality mirror that shows how it looks in different settings. While you don’t buy on this visit, you leave with new ideas, energised, inspired – and completely unaccounted for in traditional retail metrics.Welcome to the new world of physical retail, where stores have become theatres of experience, showrooms of wonder – and data black holes.Bricks-and-mortar retail has undergone a dramatic transformation in recent years, with a few lockdowns thrown in for good measure. Gone are the days when stores were simply places to pick up products. Retailers now need to be present wherever customers are, ensuring a seamless experience across all channels. Forget focusing solely on the purchase location; what matters is that consumers can buy easily in whatever way they want. This shift emphasises the need for blending physical and digital experiences. In the ‘phygital’ retail world, online platforms become the new storefronts, prioritising convenience and efficiency; meanwhile, physical stores transform into powerful marketing arenas, offering tangible, impactful experiences. Yet we’re still largely measuring the success of stores the same way we did decades ago – through foot traffic, conversion rates, and sales per square metre. In-store experiences need to have metrics that go beyond just sales figures. Relying on sell-through data to judge a store’s success is like a doctor diagnosing your health by asking what you had for lunch. Don’t get us wrong, traditional metrics are important, you wouldn’t have a business without them. But they’re only part of the story. They tell us what happened, but not why. They count bodies and dollars, but not smiles, gasps of delight, or moments of genuine human connection. In short, we’re measuring the skeleton of retail without capturing its beating heart. Yet there is strong evidence that experience and emotions really matter in retail. Salesforce reports over 80 per cent of consumers consider the experience a company provides as important as their products or services. And Adobe research shows 86 per cent of consumers are willing to pay more for a better experience. Perhaps most importantly, BCG statistics suggest brands that lean into experience, particularly on a personal level, experience revenue growth 2-3 times faster than competitors. So, the question becomes: In an era when physical stores are increasingly about experience over transaction, are we measuring what truly matters? We’ll answer by first exploring what experience and emotions mean in retail, then provide practical tips for measuring them. Emotions and experience in retailThere is so much content about the role of experience in retail and even a smattering on the role of emotions. So rather than rehash it all, let us focus on a few big ideas to highlight our core point about the need to measure these factors as part of physical retail.The 4 Es of experienceSo much of what we talk about today as experiential retail tracks back to the now well-known framework from Joseph Pine and James Gilmore in the Harvard Business Review.1 Even though it’s from the late ’90s, it’s remarkably relevant today, particularly in the four dimensions of memorable experiences they propose:Entertainment: Passively absorbing experiences through the sensesEducational: Actively engaging the mind to learn something newEscapist: Immersing in a different time or placeEsthetic: Immersing in an environment without affecting itWith the exception of dropping an ‘A’ in aesthetic to make the ‘4Es’ it’s a pretty strong idea. You can see instantly how these ‘Es’ flow into store experience design. Examples could be entertaining product demos, educational workshops, escapist VR experiences, and aesthetically pleasing designs. At the same time, and for our context here, it also points to things retailers could, and likely should, be measuring, such as whether customers learned something during their visit, whether they became immersed in a brand and escaped for a few minutes, how the store environment affected them, and so on. Thinking and measuring with this lens could help a lot of retailers move from the abstract concept of experiential retail to something tangible that can be measured and tracked. Customer experience creation While Pine and Gilmore’s 4Es often get attention, it’s easy to forget they were talking specifically about in-store experiences, rather than the broader idea of holistic customer experience (CX). In other words, their 4Es are about how to create memorable experiences in-store, whereas today we talk a lot about CX happening across touchpoints and journeys (more on this shortly). Peter Verhoef is a marketing professor who has written extensively on the broader form of CX, and how brands and retailers can create it. In one of his seminal papers,2 Professor Verhoef and co-authors proposed a framework for CX that includes cognitive, affective (emotional), social and physical components, and highlights the interplay between consumer and situational factors, social environments, servicescapes, branding, and even the traditional 4Ps of marketing. This idea of CX combining cognitive, emotional, and other factors is critical for retailers to understand, and easily overlooked in how we measure retail success. In practice, we see this with retailers splitting into two major camps, and frankly, if you’re not part of one of them, your future in the market might be bleak. One camp is cognitive default, which includes brands that customers pick automatically – a hard spot to secure. The other is emotional default, which is about emotional bonds and sentiments consumers hold for a brand. This is where a lot of brands need to focus if they want to cut through. The key point here is that while retail success certainly involves pragmatic, cognitive, even transactional elements, retailers need to focus not just on their products but on the emotions tied to them.Emotional and experiential customer journeys The customer’s path to purchase has evolved from a straightforward process to a chaotic, unpredictable journey. Shoppers might engage with a brand in various ways and at different stages, from discovering it for the first time to finding inspiration and finally making a purchase through any touchpoint. As we’ve seen this evolution grow, we’re seeing much more understanding and even measuring of customer experience and emotions across touchpoints; the classics of ‘pain points’ and ‘gain points’ are still going strong on office whiteboards across the sector. The challenge for retailers today is accepting that even with great digital data, we might not be tracking the full customer journey. Even as more happens online and over digital apps, there’s still so much that affects customers happening outside of the brands’ view – connections with friends or colleagues, a subjective feeling walking past a display, even an internal evaluation happening in shoppers’ minds. Accepting this can be challenging, and even a bit scary. It’s way easier to focus on the journeys happening online that we can see, track and optimise. But getting to the true essence of customer experience and emotions means taking a different perspective, and valuing new types of data about customer journeys. How, though? Well, here are some suggestions of where to start.Measuring emotions in retailEvery interaction a customer has with a brand, whether it’s in-store or online, holds value. Retailers need to create metrics to quantify these interactions, turning qualitative experiences into measurable data. For example, if a customer spends 10 minutes in a store and each minute is valued at $0.80, that visit is worth $8, regardless of whether a purchase occurs.Consider this: By developing a metric that includes the time a customer spends in-store and whether their experience was positive or negative, retailers can gain a clearer understanding of the value of their space. This offers a more accurate picture of a store’s effectiveness and customer engagement.This story first appeared in the August 2024 issue of Inside Retail Australia magazine.