Photo: Warby Parker
January 6, 2016
BrainTrust Predictions 2016: Niche specialist
According to Lee Peterson, EVP brand, strategy & design, WD Partners, a “Third Wave” of hybrid retail is arriving in 2016.
“Whether they started in e-com or simply with the omni-shopper in mind, they’re winning due to their focus on quality, simplicity and connectivity,” added Mr. Peterson. “Warby Parker, Shake Shack, Blue Bottle and Bonobos may seem like strange bedfellows, but all are in line for a fantastic year.”
At the same time, WD Partners’ studies find that the closer a retailer is to operating like a warehouse, the closer they are to getting crushed by Amazon. Said Mr. Peterson, “This puts the ‘stack it high – let it fly’ category of retail in real jeopardy to us. Whether it’s this coming year or they get thrown into the death-by-a-thousand-cuts future, the writing’s on the wall.”
A poll of RetailWire BrainTrust panelists exploring 2016 predictions highlighted a number of other niche specialists.
Patricia Waldron, global marketing director, retail, consumer products, IBM Corp, believes Eataly will continue to benefit by customizing its food emporiums by market and capitalizing on the trend for social spaces and cuisine.
“They provide a wide range of beautifully curated products. It’s an immersive experience that is conducive for social or solo shopping and learning, drinking and dining,” said Ms. Waldron. “And I heard founder Oscar Farinetti speak at the World Retail Congress in 2015, where he discussed his philosophy on quality, sustainability and ethical conditions. All these factors contribute to their on-going success.”
Debbie Hauss, editor-in-chief, Retail TouchPoints, is impressed with Kate Spade New York, which has launched interactive, shoppable barricades to introduce shoppers to the brand at locations that are still under construction. Added Ms. Hauss, “Touchscreens allow consumers to shop the location before the doors open. The interactions are personalized via quick quizzes that access personality traits and style preferences.”
She also believes REI’s #OptOutside campaign during Thanksgiving and Black Friday demonstrated the outdoor retailer’s forward-thinking philosophy. She added, “By embracing a mobile-first mentality, REI is ensuring that its shoppers get the information and products they desire, whether they are shopping online or in the store.”
Karen Herman CEO, Gustie Creative LLC, has been impressed with the interactive digital signage systems at Gucci’s flagship as well as Kiehl’s broad reach in the luxury channel. Ms. Herman said, “Kiehl’s offers true authenticity with its unique products using high quality ingredients and has excellent brand recognition and brand affinity, which should resonate with Millennials nicely.”
Discussion Questions
Which niche specialists most impress you on the retail scene? Which emerging concepts are best positioned to capitalize on opportunities around omnichannel and/or social media engagement?
Poll
BrainTrust
Cathy Hotka
Principal, Cathy Hotka & Associates
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These are important points for every retailer to consider.
What these brands have in common is a consistent and careful brand presentation, authenticity, and a tight focus on customer experience. They are the exact opposite of the department store. Retailers that want to thrive in this new environment should be huddling each day to create new strategies to hone their outreach to the enabled customer.
Mr. Peterson’s comments on retailing trends and the fate of big-box warehouse retailers are spot on. Retailing today has become nothing more than a consignment business. Retailers continue to resort to price cuts and discounting to move products off the shelf all at the manufacturer’s expense. And in the end, whatever is left, retailers expect the manufacturer to accept and credit all the returns.
In light of this consignment environment, I believe technology enabled displays/fixtures that allow brands to monitor, manage and invoice their inventory on a daily basis has tremendous potential. These capabilities can leverage the “shop-n-shop” concept down to the display level. In addition to brands taking control of their own supply chain this concept can also manage shrink and hold the retailers accountable.
This technology and its associated workflow will also allow brands to leverage delivery and logistic services (e.g., UPS, USPS(?!), FedEx) to deliver directly to the aisle, stocking the correct items in a timely and efficient manner.
Costco, Sam’s Club and BJs are all actual warehouse retailers who outperform Amazon and engage in limited omnichannel and social media engagement. Price, product and place still hold the keys to success to retailing in today’s environment..
One of the key words here is simplicity. Well executed experiential innovations can definitely help a retailer stand out and gain consumer share. The danger is when these efforts get too contrived, they can bleed over into “servicetainment” which repels consumers and distracts internal focus. One recent example of a brand trying too hard may be Urban Outfitters’ acquisition of an Italian restaurant chain.
The winners will be the stores and suppliers that can leverage inventory and reduce inventory risk the most. Costco is very good at that right now, using a big box approach. However, smaller specialty retailers and their suppliers have a tremendous opportunity right now to leapfrog into a new world of inventory efficiencies. If the small specialty retailer can work together with their suppliers, using omnichannel methods, the small specialty retailer can service their customers directly from the suppliers’ ecommerce inventory, and suppliers gain new sales at a fraction of the customer acquisition cost of an ecommerce customer. Win-win on sales. Win-win on inventory efficiency. Most of the technology and business processes are already in place, and is mobile.
Smaller stores/bigger back rooms for area-wide distribution. Digital fitting rooms expand beyond clothing to home decor, travel expeditions, and dining.
Future concept: what to do with all your free time when you use a driverless car.