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.