Nimble upstarts such as home appliance retailer Pirch and eyeglass retailer Warby Parker have made their stores into exciting destinations rather than places to make a quick purchase. Meanwhile, established brands such as Urban Outfitters are highlighting the hands-on aspects of their stores. That's raising the bar for rivals, says Doug Stephens, founder of consultant Retail Prophet, and more brands will be trying to sell experiences along with their goods next year. Says Stephens: "That's where the whole industry is headed."

Customers are willing to pay up at retailers that add pizazz to their shopping experience. Pirch boasts more than an estimated $3,000 in annual sales per square foot, rivaling the lucrative take at Apple’s storied stores. To meet consumers’ growing desire to connect with brands on a level deeper than cash, Lululemon Athletica offers yoga classes in its stores, Apple holds in-store digital art and video workshops, and some Cabela’s stores have indoor archery ranges and offer hunters classes on butchering their kill.

Retailers have good reason to try new ways of consumer engagement. The No. 1 gift this holiday season won’t be an object but experiences, according to a survey by advertising automation firm Rubicon Project. Respondents plan to spend about $440 on travel, sports, events, and shows this year, versus $228 on clothing, the group forecasts.

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