As I was shopping with my brother at a Stew Leonard's supermarket in Connecticut a few weeks ago, I began thinking about how successful some retailers have become by making shopping an entertaining experience. For those who are not familiar with it, Stew Leonard's is an independent grocer with several stores in the Northeast. The stores do a phenomenal amount of sales per square foot, despite a far more limited number of SKUs than the typical grocer. Stew Leonard's is known for what it calls its "WOW" factor. The stores aim to entertain customers, particularly children, as they shop the stores. Stew Leonard's has everything from petting zoos to costumed entertainment to fun animatronics throughout the stores. The company focuses on a simple truth: parents often bring their children to the grocery store, and that can be quite a challenge! Why not make it easier on parents as they shop?
Stew Leonard's is not alone in making shopping more entertaining. Consider Jordan's Furniture, a small chain in Massachusetts founded by the Tatelman brothers and now owned by Warren Buffett. My local Jordan's is designed to around a New Orleans theme, with the main portion of the store made to look like Bourbon Street. The store has hourly entertainment, someone handing out beads to at the front door, a virtual reality ride, and an IMAX theater inside as well. We could go on with many other examples, including Build-a-Bear and American Girl stores.
The trend is clear. Each of these retailers is trying to differentiate itself from the competition, and thus increase willingness-to-pay by enhancing the shopping experience. Retailers also compete more effectively against internet competition by making their stores more than simply a place to conduct transactions. Retail is a tough business with low margins in many sectors. Price competition can be ruinous at times. Differentiation can be difficult to achieve. These retailers have found a way to stand out from the pack by focusing on making shopping a truly entertaining experience that's about much more than buying products that can be found elsewhere, including on-line.