Retailers used to operate stores. Now they may need to also manage an onsite coffee shop, restaurant, dry bar, lounge, demo space and events venue if they want to keep shoppers engaged.
Despite all the interest and discussion around digitization and e-commerce, data from eMarketer shows physical stories remain the dominant retail channel, accounting for approximately 80 per cent of all sales. That means they can’t afford shoppers to get lost in poorly-organized aisles or waste time in long checkout lines.
Instead, the future of the in-store experience needs to offer more reasons to visit, and to encourage consumers to spend more time exploring a brand and its products. Those experiences need to bring a brand’s story to life while also using technology strategically to reduce friction and boost product discovery and consideration. In other words, it’s time for retail stores to get a customer experience reno.
The role of design, decor and in-store dining
People like Ward Kampf are already focused on elevating in-store experiences. As the president of Northwood Retail in Dallas, Tex., works with a variety of brands, including Restoration Hardware and Apple, to redefine retail real estate and turn traditional malls and shopping centers into lifestyle destinations.
According to Kampf, retailers shouldn’t underestimate the impact of design and décor on customer experiences, which set the tone from the moment shoppers walk through the door.
“Symmetry is so important,” he told 360 Magazine, referring to layouts that offer equal opportunities to explore either sides to a store’s sections. “If the store is really cluttered, that really does matter (to whether they stay or come back).”
Retailers are increasingly blending traditional opportunities to browse and pay items with dining experiences that take a page from top restaurants and hoteliers, Kampf noted.
“I think hospitality has really seeped into retail. And I think retail seeped into hospitality,” he said. “There’s a commonality there where you really want to do something different, and it keeps people engaged.”
Turning shopping from an excursion into an event
If they can’t open a coffee shop or restaurant within their space, retailers can pursue greater immersion by designing stores that feel intentional and navigable, not overwhelming, said Charlie Casey, CEO of LoyaltyLion in the U.K. The most effective physical spaces guide customers through a journey, he said, with clear zones for discovery, trying, personalisation and service. That sense of flow encourages people to slow down and explore.
“Brands like Never Fully Dressed build pop-ups and retail spaces that naturally accommodate VIP moments, whether that is private styling areas, early access rails, or members-only events,” Casey said. “When loyal customers can see and feel that they are being treated differently in-store, loyalty becomes tangible rather than abstract.”
LoyaltyLion conducted research where it asked 4,000 consumers what they wanted from their loyalty program and 54 per cent said access to instore events, showing physical spaces still matter, Casey added.
Whether they’re hosting an event or just trying to change the way it feels to shop on an everyday basis, retailers should keep the full five senses in mind. This includes smell, according to Melissa Mosseri. The co-founder of Set the Mood said her firm works with brands to create signature scenes and set up an ‘olfactory experience’ that aligns with their target demographic and narrative. This lets stores go beyond simple visual displays and merchandizing strategies, she said.
Scent plays a unique role because it subtly encourages shoppers to slow down, explore more intentionally, and form stronger memory associations with the brand, said Mosseri. Set the Mood has found retailers using ambient scent consistently across locations see longer dwell time, improved mood, increased sales, and larger likelihood of return visits.
As shopping blends more with dining and social experiences, meanwhile, sensory continuity becomes even more important to help spaces feel intentional and engaging, Mosseri added.
Chris Camacho, CEO of marketing agency Cheil in the U.K., agreed that scent, along with ambient audio, live product testing and more tactile zones builds “dwell-worthy drama” that keeps people exploring.
“Retailers should stop designing stores like floorplans and start designing them like films. We need less grid logic and more narrative logic,” he said. “If your store looks like a warehouse with lighting, you’ve already lost.”
Where AI should occupy space in retail stores
Of course, there’s no shortage of generative and agentic AI solutions aimed at in-store experiences, but Camacho warned against clunky kiosks and clumsy apps that wind up disappointing shoppers.
“Retailers need to start using AI like a backstage assistant, not a spotlight. Make your customers feel seen without feeling scanned,” he said, recommending AI tools that helps staff greet returning customers by name, understand preferences and anticipate their needs. “AI shouldn’t be the greeter. It should be the concierge, the invisible enabler that makes physical retail feel more personalized than digital ever could.”
Casey pointed to brands like Pure Seoul, which uses AI identify shoppers based on clearly defined loyalty tiers they can understand and talk about easily. “That allows recognition to feel natural, (whether it’s) a simple thank you, early access reminder, or acknowledgment of status, rather than something scripted or intrusive. When AI supports this kind of recognition behind the scenes, the in-store experience feels warmer, not more automated.”
Retailers are rethinking in-store experiences at a time when department store brands are struggling. (At press time, Saks Global had declared bankruptcy.)
As giant retailers struggle with “identity blur,” specialized brands have an opportunity to move in, said Shampaigne Graves, a consumer research strategist based in Dallas. She pointed to IKEA’s shop-in-shops at Best Buy and Warby Parker’s Target boutique, which she said cater to the “whole person” rather than someone searching for a single product category. “By using Intersectionality to curate diverse categories in one path, they respect the consumer’s limited time and complex identity,” she said.
Comacho said the future is “curated collision,” where, instead of floors organized by product type, we’ll see zones designed by lifestyle outcome.
“Customers want to blur errands with enjoyment,” he said. “The new rule is simple: if you feed them, they’ll stay. If you create community, they’ll come back.”