These brands shift their marketing-strategy investments from pre-promotion and sales to after-purchase brand loyalty. This builds brand-value advocacy in their consumers' lives, rather than accomplishing the short-lived benefit of a one-off sale. All have started thinking of new ways to provide value and build ongoing relationships with their customers, treating them more as members or users than one-time purchasers. Digitally savvy startup brands, in fact, obsess over experience, not revenue.
Look around your town and think back to what it looked like 10 years ago. Chances are, the stores that line the streets or anchor the malls are different. Circuit City, Linens-n-Things and Radio Shack are all gone. In their place are names like Nordstrom Rack, Saks Off Fifth and Zara. It's a physical representation of how the consumer has changed over the last decade. The financial crisis of 2008 left an indelible mark on consumer behaviors that still affect how Americans spend today. There may be new reckoning to face as the advent of online shopping allowed for a new cohort of retailers to multiply. These new retail companies launched their businesses online and built their brands unencumbered by costly stores and past debts. Among them, Bonobos, Warby Parker and Allbirds, used the internet to grow their reach. Now established, they are chartering new territory by launching stores slowly and methodically.
Loyalty comes through experiences and creating memories. The last several years have challenged retailers to become digital and then mobile brands. They’ve had to shift their focus from selling products to creating memorable experiences for consumers. Now the time has come for all brands to prioritize the user experience (UX), designing every customer-brand interaction with the user’s emotions and exact needs in mind. The UX mindset is more software developer than salesperson, and it works. Retailers today must treat visitors as ongoing users instead of merely potential buyers. Brands including Nordstrom, Sephora, Glossier and Warby Parker have implemented UX practices in retail to increase long-term customer loyalty.
From Anthropologie to Walmart, old-school chains are starting to get a handle on this whole shopping-in-the-digital-age thing. The clearest signs of strength have come from the big-box category, where Walmart posted its best comparable sales growth in more than a decade and Target roared with its biggest increase on this metric in more than 13 years. Nordstrom Inc. saw solid results at both its department stores and off-price concept, and Urban Outfitters Inc. saw eye-popping double-digit increases in comparable sales growth at its namesake chain as well as Anthropologie and Free People. Just look at some of the pleasant surprises.
The bazaar, the souk, the forum—wherever it emerges and whatever it’s called, the market has long served as the center of society. When the invention of agriculture brought the need for trade, towns grew around central gathering places where people could exchange not only goods and services but also ideas and inspiration. Along the way, the market became the mall, the mall became a Costco and the Costco became Amazon. As commerce increasingly became a commodity, the social functions of the authentic, community-making aspects of the market largely retreated behind shelves promising unlimited choice and convenience. As a result, a new paradigm emerged, one where community building and shareable, physical experiences serve as the foundation of commerce.
Amazon is schooling the retail industry on how to turn "1+1" into science. Hopefully, retailers are taking notes. Prime Day has pushed up the shopping season by nearly a month. More important: The report finds that Prime Day back-to-school shoppers spend 17% more at brick-and-mortar stores and 16% more at combined brick-and-click stores, compared with shoppers who don’t participate in the event. A major contributor to the earlier kickoff of the back-to-school shopping season is that other retailers, such as Target, have responded to Prime Day with their own earlier promotions. In addition to higher sales, however, several studies reveal that how shoppers buy their clothes, backpacks and dorm-room furniture is shifting in important ways that could predict the course of school shopping in years to come.
The best retailers are constantly curious, continually in the market, and actively shopping in order to unpick retail experiences, and unlock inspiration. And they don’t just keep a check on their own category. While it’s important to know what your competitors are up to, all that may do is reinforce existing paradigms. The sharpest retail merchants look beyond their own category for inspiration, and they steal shamelessly, but also inventively. Being a student of retail is not about mindless duplication, however. As Picasso said (and Steve Jobs endorsed), “good artists copy, great artists steal.” Learn from others, but make those learnings your own.
Bon-Ton, Toys R Us, Sears, Claire's, Abercrombie & Fitch and Sam's Club are just a few of the major retailers that have shut hundreds of locations altogether across the U.S. this year, leaving a glut of commercial real estate on the market. Now, foreign brands and "e-tailers" like Warby Parker are helping to fill some of the millions of square feet of retail space that went dark last year. The new tenants have helped to ease concerns about an uncertain 2018 for shopping center owners.
The 33-year-old brand has 140 stores worldwide. How does it stay relevant amid fierce competition from retail juggernauts and direct-to-consumer brands?
Francis Pierrel, Club Monaco’s CEO, has been tinkering with a little experiment: What if an established brand like Club Monaco remade itself in the image of a fledgling company? “Not so long ago, the better retailer was the one who had as many stores as possible. But customers no longer treat stores like warehouses, where they go to pick up products in their size; they go to stores to hear a brand’s story and to be entertained.”
Digital transformation is a term on the lips of many a retail CEO. There are a lot of ways to digitally transform a business, especially in retail. With its staggering size and reach, the retail industry is one of the few business sectors that has a tangible impact on the daily lives of average consumers. But the industry is famously slow to adopt new technologies, and many retailers wind up sticking to legacy operations for fear of upending painfully tight profit margins.
“The impact of AI on business as a whole is poised to be more dramatic—and disruptive—than the Internet.” As the Cannes Lions International Festival of Creativity kicks off today, bets are high that the realization that advertising is broken and humans alone can’t fix it will be top of mind among the nearly 20,000 marketers, advertisers and tech companies set to descend on the event. Indeed, there is no overlooking the numbers that underline a dangerous disconnect in what brands want to say and what people want to hear. Millions of ads are ignored every hour by consumers and evidence is mounting that people crave meaningful experiences, not marketing speak. However, the work required to deliver personalization at scale has moved beyond human capacity.
Supplements and aromatherapy aren’t just for Goop anymore. Traditional retailers want in on the wide-ranging, $3.7 trillion, so-called “health and wellness” category. Today’s consumer is far more informed and therefore plays a far bigger role in dictating the nature of new products. That shift is changing how retailers position and market themselves. “This is just an extension of everybody wanting to live a healthier life in general, companies are just trying to target multiple facets of people’s lives. Beauty is not just for the sake of vanity anymore. Companies are trying to provide an additional benefit to consumers.”
U.S. retail is definitely not dying, but it is certainly evolving at an accelerated rate. Week by week, the brick-and-mortar retail landscape is changing rapidly—and, in some cases, belatedly—in response to shifts in how and where consumers shop. The mall of the future is coming, and it promises shoppers a richer, more varied experience than they have seen in the past.
For years, augmented reality has been posited as the new frontier in retail innovation. The visual technology, which went mainstream in the industry around a decade ago, offers an array of benefits to businesses, whether in the form of product visualization, enhanced customer service or concept testing. Now, an increasing number of brands and retailers are investing in immersive tech for customers who crave something more than the average shopping experience. From A to Z — that is, from Adidas to Zara — FN rounds up 10 fashion names that are moving toward an AR-enabled future.
Global mobile commerce will hit $1.8 trillion in 2018 after 40% growth last year, and almost 60% of traffic to retailer's sites is mobile. Does that mean actual physical stores are toast, and desktop is dead? Absolutely not. In fact, brands like Citi, Home Depot, Walmart, Unilever, and eBay are finding new and powerful ways of melding mobile commerce, ecommerce, and innovative in-store experiences to create retail experiences that surpass both digital-only stores and bricks-and-mortar only retailers.
In most stories about retail these days, private equity is depicted as the bad guy—dooming operators by piling on debt. And not without reason. Buyout firms have been behind many of the industry’s biggest bankruptcies. In fact, 10 of the 14 biggest retail bankruptcies since 2012 were buyout-backed chains. The roster of buyout busts includes a host of familiar brands such as Gymboree, Sports Authority, Payless ShoeSource, and Nine West Holdings. More carnage is on the way. The retail reckoning continues. But as the example of Canada Goose shows, private equity investors can offer retailers a huge boost when things go right. PE firms have helped speed up the evolution of dozens of companies in ways that now seem to be helping them stay competitive in the much-changed, Amazon-disrupted landscape. The sheer number of struggling retailers linked to private equity today, however, reflects a burst of optimism about retail in the PE industry more than a decade ago.
“Digital brands have been experts at getting in front of a consumer, understanding them, capturing data, messaging to their consumer, but it’s an expensive endeavor. It’s increasingly expensive to acquire customers through Facebook, Instagram, Google or retargeting—these companies have been relying upon raising a lot of money at high valuations but not necessarily building sustainable businesses.” Retailers also are experimenting with virtual reality, chatbots and augmented reality as new ways to show off products. But unlike other retail categories, like consumer packaged goods, there’s a larger onus on retail to make sure those tests prove worthwhile for consumers and are not overly gimmicky.
Malls are at an inflection point. The old mall business model is in the scrap heap, and reinventing a new type of mall out of the old bones of yesteryear’s mall takes significant investment, creativity and time for planning. The way to find that “never looked better” future for malls is to reimagine and reengineer malls and shopping centers as “Consumer Engagement Spaces” or CESs. The now outmoded idea of malls as places for retailers to push out product offerings into a mass market must be replaced by a pull-marketing approach where the mall is designed around the needs and interests of an increasingly
With the ability to open multiple browser tabs, shoppers today have zero tolerance for high markups and experiences that haven’t been updated in decades. The store has become obsolete. However, despite declarations of a retail apocalypse, the reality is that brick-and-mortar has a genuine shot at survival, but only if it abandons its traditional ways. Retail must embrace a different mindset, one that blends physical space with digital technology and keeps savvy consumers on their toes. Enter the flagship experience, the next generation of brick-and-mortar retail.
With the plethora of sales and deals, it’s no surprise that the holidays are when Americans get to enjoy their favorite pastime — and Easter is no exception. Apart from the more hyped-up Black Friday, the holiday, which falls on the first of April this year, has long marked a shopping tradition. Easter spending is expected to reach $18.2 billion in 2018 — the second-highest level on record, trumped only by last year’s $18.4 billion. “Despite a modest drop, the Easter forecast is still very positive and nearly as high as last year’s record,” NRF president and CEO Matthew Shay said. “Consumer spending remains healthy both for this holiday and this spring, and that paints an optimistic picture for the U.S. economy in the year ahead.”