Delight or Die, the evolution of retail
As fireworks grace our skies of sparkling rainbows, eager contestants gobble their 74th hot dog, and mattress sales soar, I am taking a minute to think about the evolution of retail. My observations are as follows.
Observation №1: Retail Brands are struggling to delight customers and innovate. This is reflected in their challenge to sustain, grow and deliver profitable sales over time. More than ever, the customer is a trends-hungry, price-sensitive, #FOMO animal.
“In the apparel category, 80.5% of customers are looking for ‘new products’ to adopt.” And this trend is stronger in apparel and electronics than in any other categories.
Observation №2 — The need to Delight or Die:
“Digitally native vertical brands are maniacally focused on the customer experience and they interact, transact, and story-tell to consumers primarily on the web.” Andy Dunn, CEO @ Bonobos
Retailers Rue21, American Apparel and TheLimited declared bankruptcy this year. Bebe and JCrew are struggling to grow sustainably. The need to adopt “digitally native vertical brands (DNVBs) or v-commerce” brand behaviors and go-to-market quickly is pressing. It is imperative that retail companies stay relevant for their customers while accelerating experience and product delivery like fast fashion brand Zara (Inditex). To delight the customers, Jeff Bezos focuses on the “True Customer Obsession” principle.
There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.
Why? There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples.
Observation №3 — Digital to customer innovators keep innovating — Amazon’s mixed model for fashion
After digital native brand Amazon changed the game for mass commerce marketplaces, it is now poised to surpass Macys sales this year in the fashion apparel category. The newly launched Prime wardrobe is playing in the fast fashion high gross margin apparel categories, doubling the offering down with a subscription model with Prime but with no monthly cost.
J.Crew’s Mickey Drexler Confesses: “I Underestimated How Tech Would Upend Retail.” The Wall Street Journal
Observation №4 : This is the opportunity to Leapfrog into a fast-fashion world. Supply chain innovation and digital disruption give brands an edge. Brands benefit from a data-driven insights-powered supply chain. V-commerce brands can cut the middle man and go straight to the manufacturer. Brands like Amazon, Nike, IKEA and Oakley get it, traditional retailers do not. What does leapfrogging into a fast fashion world look like?
“For manufacturers, digital disruption is as much about the transformation of business processes as it is business models and revenue streams,” says Graeme Wright, CTO for Manufacturing, Utilities, and Services, UK and Ireland at Fujitsu.
As part of an evolving brand and brand essence, customers are demanding more from brands. They want to play with the brands they cherish. Customers desire trendy products right away and most brands are not able to deliver. For a lack of awareness. For a lack of readiness. For a lack of prioritizing a necessary evolution.
As an industry, 3D printing was the direct-to-customer promise who let the early majority down. While Etsy, Redbubble and other platforms enable artists self-expression into retail, they still do not enable retail brands to be more nimble. They could open up the innovation process and enable hardcore customers to be brand creators. This could create compelling and defensible margins for this new breed of products…
Observation №5 — Who will fill the fast fashion gap?
What if customers could go direct? What if there were sites where you can take a brand essence, add your own touch, then order… What if we could mash to order? In a mash to order fashion, customers would be encouraged to freely create, select and order their own clothes and designs with a baseline from the brand. The sky is the limit! Nike’s “personalize your shoes” is playing in this future by providing multiple custom options for your shoes. But it is still a constrained process.
This future is two steps away. Forward thinking brands understand this retail transformation. They understand their brand essence will live long when they evolve with their customers. When they solve real customer problems. When they develop a sticky customer experience. When they let customers participate in the creation process.
What else? The Korean Ministry of Trade, Industry & Energy is opening the first Virtual Reality shopping mall. This is a skin deep experience where customers can interact deeply with a brand with AR/ VR. Imagine a world where brands are living entities you can interact with, touch, play, co-create. As we march towards retail’s new age and transformation. let’s keep an open mindset.
Happy 4rth!
