In brief
Experience-driven retail marketing is reshaping the performance and operation of physical stores, particularly in the luxury sector. Brands are increasingly using in store experiences to attract customers and reinforce brand identity in ways that cannot be replicated online. While this shift is driving renewed footfall and engagement, it also means retail premises are no longer functioning as straightforward shops. Instead, they operate as hybrid spaces combining retail, leisure and social experiences.
Below, we consider some of the legal and practical implications of this evolution, highlighting key issues for landlords and tenants to address, with more flexible, carefully structured leasing arrangements to support increasingly complex experiential retail models.
Driving retail success through in-store experiences
Experiential marketing is now increasingly used to draw customers into stores, position them within the brand’s vision and tempt them to adopt its lifestyle. Many brands have pivoted towards a unique in-house experience, incapable of replication through a browser, to place the customer in their midst and make it part of their brand narrative.
The nature and specifics of any in-store experience will be guided by both brand and product, though there are some common factors. Experiential placement usually needs the physical space to be as attractive as the online space to drive profitability in the long term. A growing visual trend has been the introduction of bespoke installations, creating photo opportunities to increase social media engagement. However, the scale of such installations may give rise to a range of legal and technical issues, including building regulation requirements. Work to alter the leased, or offered, space requires advance planning, preferably before taking possession of the premises, to ensure that any required structural, non-structural or external alterations are approved by the landlord.
Some experiential marketing is non-visual. A brand with a perfume line, and even one without, may seek to create customer affinity with both brand and product through a signature store scent, using diffusion mechanisms integrated into the store’s HVAC systems. From a legal perspective, where service media integration is required, tenants will likely need to accept enhanced maintenance and repair liability for the ventilation systems, as well as possible carve-outs in the lease to ensure this will not be classed by the landlord as “nuisance”.
Collaboration between retail sectors is apparent through the expanding offerings of traditional luxury retail outlets. These include hospitality services, often by third-party restaurateurs, integrated within luxury stores to enhance the shopping experience.
Hospitality encourages customers to linger in-store and supports the sense of exclusivity that has traditionally been at the heart of luxury’s appeal. And while a glass of champagne is always welcome, hospitality extends much further these days. Some brands have expanded their offering to promote a sense of community engagement and celebration, offering collective experiences that digital shopping cannot. For example, group yoga sessions at upscale sportswear stores allow customers not only to buy into a brand’s image but also to share it.
Legal and regulatory considerations
All of this is positive progress for bricks-and-mortar retail. However, experiential marketing can raise specific legal, regulatory and operational challenges in the UK, some of which may arise because the space is no longer just a straightforward “shop”.
Planning restrictions: Use classes and planning restrictions need careful consideration by both sides. Although the post-2020 Use Class E regime is relatively flexible, experiential concepts (such as fitness classes, wellness treatments, paid-for events or workshops and alcohol-led hospitality) often stray beyond pure retail. That activity may trigger material changes of use, and potential breaches of planning conditions, which typically restrict hours, noise or certain types of undertaking. For example, while an ancillary fitness class will fall within Class E(d) so will usually be encompassed within a retail outlet, the supply of hot food and drink will not.
Lease restrictions: use, rent and alterations. Experience-driven retail facilities add complexity to the legal documentation needed to support the retail letting. The diversification of what a store now provides beyond its product requires more thought, and usually a request for increased tenant flexibility, when negotiating a lease. Consider, for example:
- Is the user clause wide enough? Traditional user clauses restrict retail use to the sale of goods, and either expressly, or by interpretation, prohibit other uses such as the sale of food and drink or public events. In such cases, experiential activities might breach express letting provisions, require express landlord consent or lease variation and/or risk forfeiture if not regularised. Limitations on opening hours might also cause a headache for out-of-hours hosting, so should be checked.
- Is there an impact on rent? The experiential element could introduce additional complexity to traditional turnover rent arrangements. For example, for paid services on top of traditional retail sales, consider whether any additional income (such as from ticket sales or membership fees) counts as turnover for rent calculation purposes. And, in a broader move, some landlords are tentatively seeking to introduce “halo effect” drafting within turnover rent provisions to capture income from consumers influenced to buy online after visiting flagship or experiential stores (where the store becomes, in effect, a brand showroom).
- Will the experiential fit-out works require landlord’s consent? Experiential concepts often involve structural or non-structural works, bespoke spaces such as kitchens or treatment rooms, or audio-visual installations. Tenants should expect to require landlord’s consent for the works, and to accept enhanced obligations for compliance with building regulations and fire safety. Reinstatement obligations may also need adjusting, to account for new cabling to connect the required technology, and ancillary documents such as wayleaves may need to be executed alongside the lease, to facilitate installation of the apparatus.
- Will service charge costs increase? This will very much depend on the lease drafting. If increased technological integration is required to enhance the shopping experience – for example, the installation of AI-integrated mirrors to enable shoppers to “virtually” try products – this can lead to higher energy consumption and additional costs to upgrade data-monitoring facilities. Landlords will undoubtedly want to ensure that any extra costs are passed back directly to the tenant.
Regulatory restrictions: Depending on its model, experiential retail may be subject to specific licensing and/or regulatory requirements such as premises licences (for alcohol, and live or recorded music), temporary event notices, food hygiene registration or even local authority consent for events. Failure to comply is likely to attract criminal penalties, and result in potential reputational damage, so the importance of advance due diligence in this area should not be underestimated. In some cases, the complexity of this can mean that brand experiences are better placed away from the physical store; a recent weekend brand takeover of a London pub (re-signed in the brand’s signature style) provided a creative experiential alternative for a weekend of cocktail making and sewing classes.
Other specific areas of legal concern may emanate from individual consumer experience and necessitate greater consideration of occupier and third-party liability insurance issues.
Bricks-and-mortar retail has clearly found a new, and compelling way to drive consumer engagement and encourage growth. The enhanced requirements of physical retail spaces now require increasingly bespoke legal drafting to support in-store experiences designed to encourage and cement brand loyalty.
Our Baker McKenzie lawyers are able to provide expert advice in this area. Please get in touch with your usual Baker McKenzie contact, or the authors of this article, if we can be of assistance to you.
This article was originally published in Estates Gazette on 8 June 2026.