Set the story straight … despite the headlines, retail isn’t dying. After all, Amazon, the world’s largest company, with a significant web services business, 47 Emmy nominations, and exponential growth, is at its core, a retailer. Reinventing retail yields answers most of the time
But rather than write them off, we should see this industry as primed for a reinvention. And, while it may sound self-serving, many categories are where the resurgence of the American department store can happen.
How we arrived here
Despite what many believe, the internet did not kill department stores. In fact, many have well-developed e-commerce businesses, which for some, are larger than the online pure plays. The truth is there wasn’t one tipping point where department stores went wrong; it happened incrementally over time.
It was an amalgamation of numerous challenges, either ignored or wrongly addressed, that has led to the question of relevance plaguing the industry today. The problems start with how retailers view and serve the customer. The entire process, cradle to grave, has failed to evolve and innovate with the customer in mind.
Department stores, particularly those catering to the specialty markets, were an experience, even before being “experiential” was something to strive for.
We know customers want to buy things as they need them, but the industry has not kept that basic concept in mind. Instead, department stores have been hindered by a severe disconnect between product availability and demand, which hurts retailers, designers, and customers alike.
In many businesses, the disconnect is just as pronounced. The “pre-fall” delivery comes at the beginning of May. What do we do? Department stores mark down the seasonal product currently sitting in stores to make room for the incoming inventory.
This vicious cycle results in retailers not only paying for products four months before they sell them but offering products to customers four months before they need it.
Why we need to reinvent
At our core, department stores offer customers fun, escapism, fashion, and service; they provide an experience that goes beyond the transaction. Whether online or in-store, it is about building deep and meaningful relationships with clients, understanding and anticipating their needs, and providing a depth that is exciting and fits their lifestyle.
Our relationship-based service has been and continues to be our bread and butter, and what sets us apart. Back in the day, sales associates knew everything about their clients—from their anniversary and birthday to their annual family vacation destinations—allowing them to make timely recommendations with an unparalleled level of personalization.
Don’t get me wrong. I am not calling for a rehash of the American department store of yore. Rather, I am saying there is value in evolving the industry. And, if done right, we can create an experience that better serves our customers, supports our suppliers’ brand aspirations, creates career paths for our employees, and bolsters our communities.
The needed fixes
We must focus on the idea that the customer is the boss, and everything we do should be centered around this mindset. It may sound obvious, but many have forgotten this basic principle.
It starts with supply chain innovation. We need to go all the way upstream—from working with our fabric suppliers and factories to tightening commitments and lead times.
Both in-store and online, building strong customer relationships is a key differentiator, especially in many specialty spaces. Regardless of where customers shop, they’ll still feel that highly personalized level of service.
Stores remain an important part of the ecosystem as they give customers a sense of immediacy, experience, and theater. Even top e-commerce players such as Amazon recognize the need for a physical presence as they themselves start to open up brick-and-mortar locations.
Innovative retail trends for reinvention
As always, with a new year comes new trends in the world of retail and eCommerce. From innovative retail technologies to surprising new sales channels, here are some of the top innovative retail trends to keep an eye on in 2020.
Physical stores for digital-native brands
While digital-native brands like Bonobos, Glossier, Casper, and Warby Parker started online, many are launching and expanding their physical presence.
According to real estate experts, digitally native brands are predicted to open 850 brick-and-mortar stores in the next 5 years, with New York being the most popular destination.
Most of the digital brands opening stores sell apparel, which makes sense; it’s a category where shoppers definitely benefit from interacting with the product in person. We’re sure to see plenty more storefronts from these ecommerce brands — apparel and other categories alike.
“We’ll continue to see marketplaces and traditional retailers converge. It’s happening both ways, where marketplaces like Amazon are moving to forms of traditional retail, and traditional retailers like Albertsons are making the move to marketplaces to stay relevant in the digital economy.”
– Greg Chapman, SVP Business Development, Avalara
Shopping with Augmented Reality
The future is now: augmented reality (AR), machine learning, and artificial intelligence (AI) are here to stay. Retailers are leveraging AR technology to bridge the gap between the digital and the physical.
Mega-brands like Target, Lowes, and Amazon have launched AR features that allow shoppers to picture furniture in their homes.
Amazon Scout is just one example of how the Marketplace is leveraging AR to assist shoppers.
To help level the playing field, Shopify is making this innovative retail technology more accessible to smaller brands through Shopify AR (see below). This feature provides an easy-to-use toolkit for businesses to create their own AR experiences to showcase their products to customers using the Safari browser on iOS 12 devices.
Visual search
Another AI-powered retail trend, visual search allows shoppers to find and buy a product just by snapping a photo. AI works its magic to identify the product (or similar ones) across multiple sites and retailers in just a click.
Pinterest’s Lens feature, for example, uses AI technology and the camera on the Pinterest App to search for visually similar pins. Searches on Lens increased 140% year-over-year between February 2017 and 2018, proving that visual search is more than just up-and-coming.
To benefit from visual search in 2020, retailers should make sure that their visual assets are high quality and current. AI-powered search is sure to become more and more common, making it easier for shoppers to find and buy what they want when they want.
Pop-up shops
Speaking of digital-gone-offline, pop-up shops are having a moment: according to Storefront, temporary retail is expected to generate $80 billion on an annual basis.
Temporary storefronts leverage the scarcity principle and the excitement of never before seen products to provide an experience that drives shoppers to show up — and buy.
From Amazon to luxury fashion brands, retailers of all sizes are popping up across the country. These impeccably designed and curated shopping experiences engage customers are a great way to generate new revenue, interact with customers face-to-face, collect shopper data, and generate social buzz.
Social shopping
Ecommerce and social media are becoming intertwined. Shoppable Instagram posts and stories, in particular, have taken off in the last year, with 41% of eCommerce brands using this feature.
We know that consumers are heavily influenced by what they see on social media, especially from influencers; being able to buy directly on their social platform of choice is the next logical step in omnichannel commerce.
2020 is a great time for retailers to get on board and leverage the social channels their customers already use.
Retailers can take advantage of the rise in social shopping by partnering with social media influencers and dedicating time and resources to building out shoppable social profiles, especially on Instagram and Pinterest.
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The increasing importance of digital advertising
Online advertising has always been an important part of any brand’s marketing strategy. But their value–and the demand for them–has been increasing in recent years.
As it relates to the Amazon Marketplace – this is reflected in the surge in CPC pricing. In the past, average CPCs for popular keywords had never broken a dollar. These days, it’s not strange to see CPCs for high-competition keywords in the $2 range (or higher).
This isn’t necessarily a bad thing. The costs are increasing, but so is it’s value.
Brands are paying more for their ads, but the payoff is growing exponentially greater.
In Q1 through Q2 of 2019, Amazon advertising was proven to make up more than 25% of the total sales of brands that Tinuiti has worked with–sometimes even up to 60%.
Part of this can be attributed to the larger number of what we call “serious” advertisers who invest a lot of money and effort into their campaigns. Inefficient players who don’t add value to the market have since exited, and are no longer contributing their ads to the noise.
Industries expected to be disrupted by Amazon
Amazon isn’t the same online bookseller it was fifteen years ago. Today, Amazon has surpassed Walmart as the biggest U.S. retailer and become a fierce competitor in industries like consumer electronics, artificial intelligence, cloud computing, and entertainment media.
The eCommerce supergiant has its fingers in so many industries that nobody can predict what they will step into next. But it’s fun to try!
We polled people at Tinuiti’s Addiego 2019 event for their votes on what industry Amazon would disrupt next. From Amazon airlines to auto sales and even online dating – the responses were definitely entertaining and surprisingly likely!
The evolution of Google Shopping
Google Shopping is a shopping service that allows consumers to browse, compare and purchase physical products across different retailers without having to visit each individual brand’s website.
It’s a frictionless way to shop since you can accomplish everything you need without ever having to leave Google. You can be doing product research and looking for inspiration one minute, and then quickly jump to making the actual purchase in the next.
Advertisers can now take advantage of new and updated campaign types and features on the platform, namely:
The future of Email Marketing is Personalization
The value of personalization is well documented by this point, and research shows that marketers who use advanced personalization tactics have significantly greater email revenue than those that don’t.
Despite these results, a surprisingly high number of campaigns are still being deployed without meaningful personalization. A recent research report found that nearly 40% of marketers said that they almost never personalized their emails in the previous year.
And even when some type of personalization is implemented, it is often limited to the same basic customization we’ve been using for years: a first name in the greeting, a recent purchase in the body, a static city or state mentioned in the subject line, and so on.
These tactics can be effective—and at least are a step in the right direction—but you’ll have to do better to meet the rising demands of your customers – here’s how.
New breakout channels for eCommerce brands
Brands have endless creative options to reach their audiences (or new audiences) more now than ever before.
An app like TikTok although new to the advertising space is one of the fastest-growing and most popular digital platforms out there, claiming 30 million active users every single month (in the U.S.) and more than 150 million users worldwide.
The bottom line
A business plan that stresses four or five priorities is a plan with focus and power. You can understand and manage 4-5 main points. A plan that lists more priorities doesn’t really have any.
Agree on performance goals and how to measure them. Make them numerical, objective, so you can track the results and the results will stand for themselves.
There are many great business plans we can learn from. Please post your comments below, offering questions or your own examples for writing business plans.
