The Influence of Experiential Marketing on Customer Retention Among Generation Z Consumers in Colombo Shopping Malls: The Mediating Role of Customer Engagement

Abstract

This paper discusses the role of experiential marketing in customer retention among Generation Z (Gen Z) customers in Colombo shopping malls, with particular attention to the mediating role of customer engagement. Placed within the expanding body of knowledge on experiential marketing, the study addresses a key gap in the Sri Lankan shopping environment: data on experiential marketing for Gen Z and its retention effects remain scarce. The paper examines how the experiential dimensions, such as sense, feel, think, act, and relate, as developed by Schmitt, can be used to retain customers through their behavioural and attitudinal loyalty. Thus, it discusses the psychological and behavioural processes that underlie how Gen Z consumers will respond to immersive retail experiences. The thesis is that a well-planned experiential marketing does not just boost instant gratification but also builds higher engagement, which translates into repeat customers, word-of-mouth, and a strong relationship with Colombo mall environments. The study employs a quantitative, cross-sectional design within the strategic experiential modules (SEMs) framework to examine experiential dimensions in retail environments. Primary data were collected by administering a self-administered questionnaire with validated scales for experiential marketing, customer engagement, and customer retention to Gen Z consumers in Colombo shopping malls. The limited access led to on-site data collection at One Galle Face (OGF), with digital surveys distributed to mall visitors as needed to fulfil the required sample population for the age group. Regression-based techniques were applied in testing hypothesised relationship and examining the mediating effect of customer engagement between customer retention and experiential marketing to analyse the sample. The constructs were also assessed with regard to reliable and validity through internal consistency assessments and factor-analytic processes that offer a strong foundation in further testing and interpretation of the hypothesis. The empirical findings show that experiential marketing has a firm, positive effect of strong, statistically significant customer retention among Gen Z shoppers within Colombo shopping malls. Emotional (feel) and sensory (sense) experiences appear to be the most effective retention drivers, suggesting that immersive, multi-sensory retail experiences are especially useful for developing retention among digitally native consumers. The cognitive (think) and relational (relate) experiences also contribute positively as Gen Z consumers appreciate stimulation, self-expression, and social connection. Even though to a lesser degree, participative (act) experiences also have substantial positive impacts, making active participation helpful for repeat visits and positive word-of-mouth. The analysis also validates customer engagement as an observable mediator: experiential marketing promotes customer engagement at affective, cognitive, and behavioural levels, which subsequently translates into greater retention. These results are consistent with international research on experiential marketing and engagement and provide context-specific insights for the Sri Lankan mall industry. The study is subject to several limitations in interpreting the findings. To begin with, the physical data collection was limited to one shopping mall, One Galle Face, due to challenges in obtaining permission to collect data from other shopping malls, which limits the representativeness of the sample and the generalisability of the findings to all Colombo shopping malls. Second, a cross-sectional design captures the relationship at a single point in time, so it is not possible to draw causal inferences about the relationship between engagement and retention; instead, only the relationship at a single time can be identified, even when mall experiences change over time. Third, the data were self-reported, which introduces the risks of response biases, including social desirability and recall inaccuracy, in questions about loyalty intentions and feelings. Lastly, the quantitative approach limits the profoundness of the knowledge of personal meanings and subjective experiences that can be identified by the qualitative approach. This research theoretically contributes to experiential marketing by empirically establishing the mediating role of customer engagement in an emerging, rapidly modernising retail environment and by supporting the usefulness of SEMs for the interactive study of Gen Z consumer behaviour in Sri Lanka. The results underline the significance of emotional and sensory levels, along with the emphasis on participative and relational ones, and the further theory should pay more attention to incorporating digital co-creation, socialisation, and hybrid online-offline experiences into experiential frameworks. In practice, the study can offer practical advice to mall management, retailers, and marketers, as it suggests that investments in immersive environments, interactive touchpoints, personal experiences, and engagement-oriented programmes can contribute to customer retention among young consumers. These findings can also be utilised by policymakers and organisations to promote experience-based retailing and enhance the competitiveness of shopping destinations in Sri Lanka. The research also indicates opportunities for future research, such as longitudinal and mixed-methods research, outreach to other industries, and exploration of new technologies.