Retail Entrepreneur Predictions 2019
After debuting Fifth Wall’s 2019 Retail Predictions, Part 1 in December, we decided to go straight to the source — the entrepreneurs and innovators in our portfolio who are on the front lines of the omnichannel transformation. Here’s what they had to say:
FW: You are all part of a cohort that is diving into physical stores directly — but what are your thoughts on the wave of “retail as a service” type options that are out there — how would you advise entrepreneurs who have not yet made the leap to think about these as an option or opportunity for their brands? Where do you think we’ll net out on this being a bigger “trend”?
“Given the major lease commitments that high street retail demands in most markets (5–10+ years), retail as a service can be a great option for brands to quickly spin up and get in front of real customers — seeing how they interact with the product, the questions they ask the staff and a whole host of other interesting insight you’ll only see once the front door is open. That said, all the unique details that turn a generic, nice-looking space in to a true brand-building retail experience require full control over the store’s layout, design and features — things that require real thought and a custom build. Retail as a service can be an excellent way to experiment and learn, but true scale and great customer experience will come with real commitments.” — Mike LaVitola, Foxtrot”
“Look at the brands where you personally engage in and analyze why you enjoy their physical experience. There will always be little things from this process that you can bring in to your own new experience, ensuring it’s relevant to what you’re doing. I think its important to distinguish between fad and trend, as you want to build something that’s sustainable — so not necessarily playing to the “it” thing of the moment (where the market is today) but think about where the market is going. My advice would be to not spend too much money initially as you want to figure how what part of the physical experience resonates with your customers versus which ones don’t. The last thing you want to do is sink a lot of money into something the customer doesn’t value. This means you need to have an 80/20 approach to the physical experience — and then you can make some changes once you have feedback from the market. I’ve spent far too many hours in my career sitting around a conference room table arguing about what the customer wants — with physical retail we’re fortunate to get feedback everyday — so let’s use that feedback to our advantage to hone the experience.” — Adam Ross, Founder & CEO, Heyday
“Retail as a service makes sense for brands in certain categories and at certain points in their retail evolution. For instance, brands entering physical retail for the first time, selling less considered goods that do not require a consultative sale. In cases where interaction with a customer is a primary point of brand differentiation, we believe it is difficult to effectively outsource the experience.” — Rob Royer, Founder & CEO, Interior Define
“We’re bullish about retail as a service, and it’s been exciting to see more businesses launching in the space given the demand. Whether your designing your own inline space, a pop-up, or permanent store, there is a retail as a service operator to help you at any stage of your company. That said, we think it’s only the first inning of many.” — Kevin McKenzie, Executive Vice President and Chief Digital Officer, Macerich
FW: Any retail tech you wish existed but you haven’t found a great solution for?
“The ability to measure how establishing a physical brand presence translates into a lift in online sales. Any retail technology that further clarifies how a store visit translates into a sale online can dramatically help brands scale their business effectively.” — Kevin McKenzie, Executive Vice President and Chief Digital Officer, Macerich
“While we’ve experienced measurable online lift in our retail (Guideshop) markets, cross channel attribution continues to be a vision no one has cracked. While we have (and utilize) proxy data, effectively measuring online to physical traffic remains an imperfect science.” — Rob Royer, Founder & CEO, Interior Define
“Client adaptive booking technology! This would greatly assist in better matching team availability (supply) with customer demand. The client gets more booking options, and internally we can improve our service utilization. Win-win! (Even though I don’t like that term, I don’t have a better one!)” — Adam Ross, Founder & CEO, Heyday
FW: What new technologies are you most excited about experimenting with in 2019?
“Offline retail analytics. More specifically, measuring anonymous foot traffic and transactions like you can capture your Web traffic and transactions. I’m excited for the industry to really be able to measure omnichannel performance and see how offline sales are directly impacting online and vice versa.” — Kevin McKenzie, Executive Vice President and Chief Digital Officer, Macerich
FW: What will Amazon buy next?
“No idea — although healthcare/pharmaceutical seems like one of those 900 pound gorilla categories that has so many fulfillment inefficiencies that needs some focus and would greatly benefit from Amazon’s supply chain. I do feel that part of Amazon’s longer-term strategy will be owning brands that engage customers through real experiences and are less time-sensitive. They don’t have this capability in house and while there’s a real “I want it and I want it 5 minutes ago” customer mentality, this doesn’t apply to all categories.” — Adam Ross, Founder & CEO, Heyday
FW: We seem to have crested the pop-up experience wave with the Museum of Ice Cream, Beautycon Pop, Candytopia, etc. What’s next for experiential? And how has the focus on it / the “instagrammable moment” translated to how you think about everyday merchandising at your own bricks and mortar stores?
“Instagram continues to be a driver of brand awareness and commerce, and the natural progression would be a more seamless integration of social commerce with concepts in the physical world. We don’t think the Instagrammable moment is over, but we’ll see more sophisticated merchandising of products into experiential programs.” — Kevin McKenzie, Executive Vice President and Chief Digital Officer, Macerich
“I think there will be more experimentation and fluidity with how this evolves — so it will be less static. Whether that experience is changing weekly, monthly or by season — this cadence will depend on the category you’re in. Customers increasingly crave not just an “experience”, but variety. So you need to have a point of view on what will always be core to the experience, and what components of it you want to mix up and change. I feel leading with “instgrammable candy” is a dangerous way of thinking — yes it needs to be part of the decision-making process, but with the increasing emphasis on stories, video can now better capture experiences and you’re overall in-store approach, so it’s less of a “moment” and more a series of “moments”. To our mind, this will better tie to an overall in-store experience.” — Rob Royer, Founder & CEO, Interior Define
FW: Are you thinking about stores as fulfillment centers and last mile delivery any differently going into 2019 than a year ago?
“This is the year where brands really hone in on how stores can drive all aspects of the business. We expect to see an increase of omnichannel use cases like buy online and pickup in store, and consumers generally moving seamlessly more between Web and physical to engage with brands. For example, how Indochino has built a successful business taking appointments online and fulfilling a service offline, and Rent The Runway is expanding its brick and mortar presence for personal styling and a faster clothing “swap” experience.” — Kevin McKenzie, Executive Vice President and Chief Digital Officer, Macerich
FW: Are there any international trends you are hearing about or seeing that you think are prime for US adoption (for example, China’s facial-recognition-to-purchase technology)?
“It will be interesting to see when or if the U.S. is ready to adopt a closed loop payment system. Ninety percent of payments in China are happening on Alipay and WeChat, and we’re only just testing the waters with seamless checkout technology in places like new Amazon Go stores.” — Kevin McKenzie, Executive Vice President and Chief Digital Officer, Macerich
FW: What are the biggest pain points in your ongoing transition from digitally-native brand to omnichannel business?
“Operating physical retail presents a different set of challenges than building an online presence. Brands need to learn how to staff, merchandise, and effectively convert sales in a new environment. The good news is there are so many new services being released to make it a frictionless experience — such as BrandBox!” — Kevin McKenzie, Executive Vice President and Chief Digital Officer, Macerich