Rethinking physical retail: What businesses can learn from Amazon Salon

Deloitte’s recent Retail Forecast tells us what retailers have been feeling: the pressure of a retail recession we’ve been in for more than 18 months. Rising inflation and interest rates, and declining consumer confidence and spending, are increasing the costs of doing business. 

So in looking for opportunities above the parapet to adapt and innovate, and to prioritise resources right now, it might be useful to first look at the latest data from the Australian Bureau of Statistics, which tells us clothing, footwear, accessories and department stores all experienced a marginal decline in July turnover compared with June 2024. 

It’s worth noting that online retailing shows growth despite the challenges in retail overall. Online sales in July 2024 reached $4.22 billion – a 0.3 per cent increase from the previous month, and seasonally adjusted through-the-year figures have increased by 15.9 per cent. 

So if everyone is buying online, what other purpose can physical retail destinations serve for customers?

That online behemoth, Amazon, could have the answers we seek.  

Back in 2021, Amazon launched its hair salon in central London with both B2B and B2C ambitions. The salon offered hair styling by well-established London-based stylists, but it also allowed the business to capitalise on the power of its brand. 

You might describe Amazon Salon as a playground. Or an experiment. Or an experiential hub. It provides customers with opportunities to experiment as much with new technologies as with their new hairstyles – visualising what your colour might look like before you commit, for example. 

Customers are not just buying products – although they’re more likely to do so through immersion – they have in-chair access to entertaining streaming, plus ‘point-and-learn technology’ that puts product information at their fingertips and showcases items on display (offering orders via home delivery). Customers are immersed in relevant, value-adding technologies that not only affect their immediate experience but, by the end of their salon visit, have an impact on their self-image. 

As well as getting closer to customers – enhancing key moments in their hair-styling experience – the salon serves to strengthen Amazon’s position in the B2B hair and beauty sector by promoting its Professional Beauty Store, which supplies thousands of wholesale products to salons and stylists. 

The Amazon Salon is a commitment to differentiated and immersive customer experiences bringing together Amazon’s online and offline smarts. So how can retailers follow suit?

In a market where discretionary spending is under pressure, creating unique in-store experiences that focus on value-adding and immersive experiences, perhaps in adjacent categories, could encourage customers to visit physical stores and spend more, counteracting the downward trend in non-essential retail sales.

By adopting relevant and useful technology and focusing on customer experiences to solve real customer points of friction, retailers could better navigate the retail recession and position themselves for recovery as consumer confidence eventually returns. 

Perhaps your next experience design brief could start with the question: How might we…enhance the customer experience beyond buying our products in-store? 

Create an experience where they can interact more, see into their future, or experiment with unpolished prototypes you can scale or connect more deeply in the future – in a way that solves a problem or is exponentially valuable to your customer, and different from how the others do it. 

Could you dedicate a small area of your retail environment to becoming a customer playground, where you can then be a fly on the wall witnessing, first-hand, what customers value and where there are opportunities to be more useful? 

By transforming physical spaces into hubs of interaction and experimentation, retailers can build stronger, longer-lasting relationships with customers. The challenge isn’t just to sell a product but to create a moment that leaves a lasting impact. Give customers a reason to come back, not just for what they need, but for what they didn’t expect.

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