Why third spaces are the retail trend to tap into in 2025

If 2024 was all about pop-ups, in 2025, it would appear that retailers are leaning into ‘third spaces’. 

The concept was originally coined by American sociologist Ray Oldenburg in his 1989 book, The Great Good Place, and refers to places beyond work and home where people gather and connect. 

However, as Nick Gray, founder of the Australian-based retail consultant agency I Got You, observed, the concept has been increasingly adopted by brands amidst the closure of public third places, heightened by Covid.

“It is a simple solution that bridges lifestyle and retail and allows brands to reflect their values and aspirations to their audience,” Gray told Inside Retail. “Whether through design, curated menus, or experiences, these spaces help communicate a brand’s narrative while also addressing digital fatigue and noise from the cluttered platform online. It is now a place that offers moments of respite and discovery that online shopping cannot replicate.”

Consumer interest in retail third spaces

American apparel and accessories brand Coach recently opened a Coach Coffee Shop within the Jersey Shore Premium Outlets. 

In addition to a traditional array of beverages, the cozy coffee shop concept offers unique items like pastries modeled after the brand’s classic handbag styles and tote bags featuring the Coach Coffee Shop logo for customers to enjoy long after the edible products have been consumed. 

The idea of a third space in retail isn’t new. Retailers like Tiffany’s, with its Blue Box Café, and Ralph Lauren, with Ralph’s Coffee shops and trucks, have been playing around with this concept over the past decade. 

However, as Gray pointed out, there has been growing interest in unique third spaces where consumers can chat with one another while browsing for unique concept-related merchandise. It comes as retailers and consumers adapt to a post-pandemic world and younger generations display interest in non-digital spaces and growing financial independence. 

Additionally, a report released by trend forecasting company WGSN revealed a growing consumer profile type, a group they dubbed “Gleamers”. 

With Gleamers, WGSN remarked, “burnout has left this group yearning for a simpler life. From rural revitalisation to chosen families, they are redefining what community, care and fulfilment look like.”

In order to connect with this worn-out consumer group, WSGN recommended retailers to provide “uplifting products, services and experiences that offer small but significant improvements to everyday life.”

One strategy retailers can tap into is aligning their brand with “these spaces – whether it be an exercise event in a park or a learning event in your store – to create memorable experiences that go light on the selling and big on the positive takeaways,” the trend forecasting company emphasised. 

Not only do these aesthetically designed retail third spaces create optimal opportunities for shopping and for creating user-generated social media content, but they also help create a positive and more personalised set of memories for consumers to carry a long-lasting positive association with a brand. 

How brands can tap into the power of third spaces

Melissa Minkow, a director of retail strategy at CI&T, believes society is at a place where “there’s a craving for more in-person experiences”.

“In order for these to do more than just establish positive associations with brands and drive some brand awareness, retailers will be wise to ensure consumers have a desire or reason to visit these places more than once,” she said.

For example, Minkow pointed out how Capital One cafes have become a place where customers can not only seek out financial advice from the banks’ representatives, but they can also work in a peaceful atmosphere. 

The retail strategist emphasised that it is increasingly important to encourage digital engagement in tandem with physical store visits. 

“In 2025, smart retailers will find ways to connect these third spaces to their apps and websites so that brick and mortar is solidified as part of their unified commerce strategy, rather than a standalone venue,” Minkow said.

One strategic move retailers can make is to offer discounts on the products in the experiential venue via the app. Or consumers could gain access to an exclusive web destination on their site that sells third space-related merchandise, once they receive a code with their coffee order at the physical shop, Minkow advised. 

The opportunities are limitless for how a retailer can leverage third spaces and create authentic experiences that align with their brand identity, Gray enthused.

“Anything from hosting purpose-driven events like workshops or art installations to engage audiences [is possible], but personalisation is key,” he said. 

Gathering customer data beforehand is a great way to ensure that the third space is tailored to create the right offerings. 

“Simply collaborating with local cafes, chefs, or artists adds huge credibility and also attracts new like-minded audiences and should be seen as an extension unified omnichannel,” Gray elaborated. “We have to also focus on the senses and things that spark emotions, things like comfort and aesthetics, inviting seating, curated playlists and photogenic design all encourage longer stays and deeper engagement.”

The rise of third spaces highlights a shift back towards “physical retail as a destination,” he said, where stores lean into their emotional default and provide meaningful and intentional experiences. 

“Only those [retailers] that are providing emotional connections and sensory engagement will stand out and even survive in 2025. The role of your physical store is not about sales distribution but how your measure and foster in real-life experiences that focus on the feeling you are selling and not the product,” Gray concluded. 

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