A lot has been written about the death of retail and to what extent it’s real or if it’s just fear mongering. The first worrying signs appeared as early as 2014 and by 2017 almost everyone was declaring brick-and-mortar retail defunct and heralding a future where consumers would buy everything online (likely on Amazon) and getting it within two hours by drone delivery.
Sure, retail as an industry has suffered in the last few years with big, traditional brands, like Sears, being wiped out of the market. But the truth is that retail has continued to grow. Although Amazon has been a big winner and driver of that growth, accounting for over 5% share all retail US revenue during 2018, the consensus by mid 2019 is that retail far from dying. It’s just being transformed, even reborn.
Retail is a broad, broad term that includes retailers and brands of all sizes, with different value propositions. Remarkably the secret resurgence during this turbulent times is common across the whole D2C sector: to amplify the brand values through a tailored customer experience.
Retailers whose main brand value is convenience - think Walmart, Dollar Shave Club or dollar stores - have embraced their core proposition and amped it up through digital technology and smart real estate investments. Walmart converted their stores into warehouses to enable click-and-collect and ship-from-store services. Dollar Shave Club, a subscription business, helped Gillette remain relevant by making the service numbingly easy to use. Dollar stores keep opening doors across the US by capitalizing on digital technologies to drive smart inventory and take over real estate vacated by less efficient retailers.
On the other end of the spectrum, we find companies with unique brand values, like Glossier or Adidas, whose secret to success has been understanding that consumers are looking for brands to be enablers of a social experience rooted in contemporary culture -- in other words, to get inspired by and to participate in a conversation with the brand, rather than to just be talked at by it. Glossier was born online and thrived through relevant and inspiring content designed to be shared and talked about through social media, but that was just the beginning. The physical retail stores being rolled out this year underscore the brand's commitment to providing an experience that’s reflective of its core value proposition. Adidas was able to jump back into cultural relevance through smart creative partnerships that translated into great products, but that wouldn't have been enough. To make these innovative products culturally relevant, Adidas leaned heavily on digital retail and marketing as a way to amplify their message, keeping a tight control of the digital shopping experience and ensuring it was it in line with their already fabulous retail stores.
With Amazon as a looming threat, a lot of brands and retailers, from groceries to appliances and consumer products, have rushed to roll out a digital marketplace and D2C commerce strategy without stopping to analyze whether these initiatives were reinforcing or undermining their value proposition to consumers. That is a fatal mistake that separated Best Buy from Sears, as an example. Instead of banking on their reputation of a dependable brand to get high-ticket items like appliances, Sears made a few rather desperate moves, like their partnership with the Karsdashians, that further diluted their brand equity. BestBuy, on the other hand, leveraged the high level of trust their Geek Squad garnered with consumers to launch a home-expert service line that differentiates them from the low-touch shopping experience at Amazon. In other words, they banked on the very thing Sears dismissed: their reputation with consumers.
Whether a retailer or branded manufacturer, understanding the essence of the brand value proposition and amplifying it through the customer experience, both on- and off-line, is not just the only way to survive but the key to become a leader in the market.
Javier Frank is the director of technology and commerce at Isobar US.