The High Cost of Competing on Price Alone

For years, the debate of the internet killing the high street or becoming the death knell for bricks and mortar retail has persisted and the resulting competitive retail landscape has allowed a dangerous myth to emerge: that running the "least worst" stores at rock-bottom costs is a viable long-term strategy. Let's be blunt – this approach will never win and I’d argue has become a slow death sentence for brick-and-mortar retail as experienced by some incredibly well known brands across the years - Think Debenhams or Sears!?

The recent Wall Street Journal article highlighting US retailer, Dick's Sporting Goods ‘House of Sports’ stores isn't just a feel-good story; it's a wake-up call for retailers everywhere to bring relevance back into bricks and mortar retail. Shopping isn’t just about fulfilment of the purchase (which the least worst stores route takes you down), in order to make stores relevant to customers you have to give them more than just immediate access to the product at a price that matches online.? As has been proven time and again if price is your only weapon, Amazon, Temu, Shein and all the other online players will crush you every single time.

While this “bare-bones” model might reduce overheads, it often results in sterile shopping environments that lack the personality and engagement needed to capture today’s consumer imagination. A purely cost-focused approach tends to overlook the emotional connection that drives brand loyalty. In a world where convenience is expected, standing out means offering more than just a product—it means delivering an experience.

The Power of Experiential Retail

Experiential retail transforms shopping from a mundane transaction into an immersive adventure. By integrating elements like interactive displays, sports simulators, creative play areas, in-store events, and importantly knowledgeable and engaging colleagues, retailers can turn a visit into a destination experience. These experiences:

• Boost Customer Engagement: Interactive elements encourage customers to spend more time in-store, leading to increased discovery and impulse purchases.
• Create Memorable Brand Moments: A well-designed store theatre generates buzz, both online and offline, fostering organic word-of-mouth and social media sharing.
• Differentiate in a Competitive Landscape: When competitors are content with offering only the basics, an experiential space signals innovation and investment in the customer’s overall journey.

Dick’s House of Sports – A Model of Success

Dick’s Sporting Goods has embraced experiential retail with its House of Sports concept, first launched in 2021. As of today, there are 21 locations across the US, with plans to expand to 75–100 by 2027. These stores feature immersive elements like:

• A 30-foot, 360-degree rock climbing wall
• An 18,000-square-foot outdoor track and field
• Multi-sport cages and golf simulators for trying out equipment
• Interactive areas, such as batting cages with real-time data feedback

The model aims to provide a completely immersive experience for customers, setting it apart from traditional sporting goods stores. The success is reflected in Dick’s reporting its largest sales quarter in company history for Q4 2024, with Dick’s House of Sports reporting a 22% sales lift in locations with experiential features, proving that immersive retail drives revenue beyond mere footfall.

Challenges and Considerations

Investing in experiential retail is not without challenges and cannot be entered into half-heartedly - with higher build costs initially, operational costs with colleagues and a more frequent refresh cycle to keep the experiences new, there is a lot that you need to believe in order to make the benefit pay off and to importantly sustain the advantage.? That being said, the ‘least worst’ option may be cheaper to build, with lower running costs in the short term - but how do they play out over the longer term?

Comparative Analysis: Cost vs. Benefit

To illustrate the trade-offs, consider the following table comparing low-cost stores and experiential retail:

This table highlights that while low-cost stores may save on upfront costs, experiential retail offers superior long-term benefits, aligning with Dick’s strategy of prioritising customer experience over cost-cutting.

A Call to Action: Invest or Perish

Retailers - are you taking control and defining the future of retail, or are you simply the custodian of a managed decline into obscurity?

The future of retail belongs to the bold. It's time to:

1. Rethink your stores as destinations, not just points of sale.
2. Invest heavily in unique, shareable experiences that can't be replicated online.?
3. Train, empower and importantly reward your colleagues to be brand ambassadors, not just cashiers.
4. Embrace technology that enhances the in-store experience, not just cuts costs.?
5. Go the hard yards to ensure that you are building a format and operating model that is flexible and sustainable be that in cost, service levels or in-the-moment experience.

The choice is clear: evolve into experiential retail leaders, or join the growing list of retail dinosaurs facing extinction. The clock is ticking, and the customers are waiting.?

What's your next move?