The recent retail experience innovations by Sephora, Nordstrom, IKEA and Amazon have certainly created a lot of noise, but what does it all mean and how can you navigate the rapidly changing retail landscape?
According to the recent Meaningful Brands report by Havas , ‘75% of us expect brands to make more of a contribution to our wellbeing and quality of life, yet only 40% believe brands are doing so’. Commercially, the Havas report also highlights that brands that do respond to these emotional consumer needs have benefited from an ‘increased share of wallet by up to nine times’. At the same time, our ever-evolving technology landscape is enabling product stories to be told and for products to be sold in more meaningful ways than ever. This technological complexity coupled with rising consumer expectations means brands need to be sharper than ever when navigating the blurring lines of retail, content, and new product development.
To cut through the noise, brands need to keep three principles in mind.
Digitally mature brands create content rich digital products that educate, entertain, or even enable escapism for consumers, whilst providing a rich source of insight for the business. Joe Pine, coiner of the concept ‘experience economy’, suggests that brands must have a transformational relationship with the consumer in order to ‘guide individuals through a process of change.’
One great example of this is Adidas’s ‘All Day’, the new 360 fitness app. The technology guides consumers through a holistic physical and mental transformation offering daily ideas, techniques and motivation to improve movement, nutrition, mindset and rest.
While the likes of Nike has partnered with Instagram to sell sneakers, Amazon has gone one step further building their own social channel. Amazon Spark is an interactive community for consumers to discover areas of interest, share personal stories and connect with the Amazon community. Threaded throughout the experience is the ability to place a product order with a click, which is no doubt driven by the data you create within the ‘community’. So whether you’re looking for interior inspiration or advice for the best long-distance running shoes, Amazon is listening.
Just because Amazon can create a community does not mean that they should. The fact that my inbox is littered with adverts anytime I search for a product online makes me think about how Amazon will glean conversations to create more targeted ads – an activity that does not foster a sense of community. A thought that chimes with a recent report by the world leader in digital security Gemalto, that highlights, ‘only 30% of consumers believe companies are taking their personal data protection very seriously.’ In contrast, Adidas All Day is a more credible and authentic platform that extends their brand story from sport to well-being.
Effective ‘products as channels’ provide consumers with unique content, stay relevant and credible to the brand, take data privacy seriously and are not seen to be motivated by the sale.
Scrolling through a product page is about as uninspiring as it gets during the shopping journey, and it’s amazing how this has become the default approach to online commerce. Innovative brands are successfully fusing content and commerce to deliver engaging shoppable stories and overcome senseless scrolling.
Futurist and philosopher Marshall McLuhan said that ‘technological change is the basis of social and environmental change’ and in today’s rapidly changing retail landscape, this statement could not be truer. Wirewax uses the world’s most powerful AI technology, to create interactive and shoppable videos that are used by Disney and the BBC. Their ‘hotspot videos’, can automatically identify people, objects and products whilst tracking motion. This allows viewers to direct click, touch or use a device to interact with any item in the video.
For the Ted Baker Christmas stoppable video, this sent more than $75,000 in sales straight to TedBaker.com in one week.
IKEA Place is an app that uses augmented reality to ‘see’ what a piece of furniture would look in your home before you buy it. Allowing users to experience and experiment before committing to the purchase, whilst giving you the opportunity to argue with your partner about IKEA interior anywhere. Joking aside the app is a playful and far more exciting way to shop online than scrolling through a website. This is one of the few apps to use Apple’s recently announced ARKit and only time will tell if it provides commercial value to support the customer experience benefits.
NET-A-PORTER.COM’s PORTER magazine combines the intimacy of print whilst enabling you to shop thousands of items straight from the page, with it’s ‘See it. Scan it. Shop it’ app feature. According to Lucy Yeomans, Porter’s Editor in Chief who previously served as editor of Harper’s Bazaar until 2012, ‘In traditional print magazines, it’s a tease…when flipping through pages of Vogue, you could see a coat or a bag you’d like to buy, only to be unable to find it anywhere.’ The publishing play responds to consumers print preferences identified in market research, whilst introducing subscription and advertising revenue. The Yoox Net-a-Porter group combined revenues of €2bn in 2016, €1bn was on mobile.
Crafting content that is interesting, unique and relevant and then pairing it with the appropriate technology to make it shoppable let’s you lead with content and enable commerce. Consumers can then engage with the stories and shop if they want – rather than feeling like commerce is being forced upon them.
As we all know, the role of the store is changing. E-commerce allows us to shop wherever we are and the physical store is no longer integral to the buying process. Brick-and-mortar stores, however, are still crucial in elevating the consumer experience and innovative brands are creating immersive environments to engage consumers.
Nordstrom’s first ‘Local Store’ will open in West Hollywood in October and is ‘service-focused concept store’ with no dedicated inventory. Instead the space will offer a more immersive experience for it’s guests, who will be offered the usual refreshments espresso, cold-pressed juice or glass of wine anyone?) and personalised stylist services. Stylists will create digital mood boards via a ‘style board app’ and can place orders for home delivery or retrieve stock the same day. Commercially, the markets response to the news was not positive, Nordstrom shares fell 5.4%. To take parallel example, we’re all aware of how Netflix shares tanked when they shifted their focus from analogue to digital and look where they are now.
Despite the perceived risk, this shift from shops to showrooms-with-services is a burgeoning approach and one that also been adopted by Sephora. The Sephora Studio offers private 45-minute Custom Makeovers and 15-minute Mini Facials and Mini Makeovers. The services are supported by digital tools to empower store staff (rather than displace them), giving Sephora beauty advisors the ability to quickly customize recommendations on an individual basis.
The renewed role of brick-and-mortar environments has seen online only players such as direct to consumer fashion brand Sézane open their first physical stores. Sézane L’Appartement is a Parisian destination that ‘transports you to the world of Sézane’, so you can discover Sézane in person, check out and try on pieces, then place an order ‘online’ with in-store staff. An approach that leverages online operational efficiencies for the business whilst delivery in-store experiential value for the consumer.
Today the physical store is no longer about selling. Instead, it has become a stage to showcase what your brand stands for and leading brands are using the retail footprint to deliver memorable and meaningful experiences – hosting events and other complimentary services. Creating a space that is more like a branded event space, rather than a box to hold products. If it’s a box to hold products consumers might as well just go online.
In summary, the principles provide an opportunity for brand differentiation. Of course, developing products that can act as channels, combining content + commerce and creating stages not stores are principles that need to be shaped to simultaneously solve for your consumer and commercial context.
As the noise level of modern life has become a cacophony, the ability to deliver a more meaningful story that cuts through the noise, whist simultaneously solving for the consumer and commercial needs is increasingly in demand. So what’s your story?
By Alex Bradley
Alex is fascinated by the future and what it means for businesses, brands, products, and people. As a Senior Consultant at Fahrenheit 212, Alex connects the dots between insights, opportunities, and execution. He loves to help companies understand their customers, their future context, and opportunities for innovation and has delivered innovation and product strategies, both as a consultant and client, spanning physical and digital products, geographies and sectors.