From Amazon to Etsy, ZaoZao and Zappos … through branded boutiques and online marketplaces, digital walls and mobile marketing, big data and personalised promotions … what is the future of retailing, in general, and for your business?
Walking around the Burberry flagship store on London’s Regent Street, with its beautifully arranged clothes, it magic mirrors that superimpose your image in the clothes of your fantasy, and place of your choice, and the VVIP room on the top floor, it is a world of imagination, where emotions not rational desire prevails. It is the work of designer Christopher Bailey who has overseen the rejuvenation of the brand from its “chav” ubiquity to its super premium status. The $100,000 limited edition, white alligator skin jacket, not to everyones taste, perhaps demonstrates this stretch. It is a brand that is truly global, more Asian than European if measured by its custom, and more digital then physical, based on the focus of its innovations. Burberry shocases the future of retail – as a niche focused, premium branded, hybrid experience.
Smart shoppers, smart stores
Online retail has grown rapidly over the last decade, from a marginal bolt-on, to major revenue stream in a multi-channel model. In the US, it has grown by around 18% per year, and now accounts for 8% of all sales. But digital is more that this, it is not just another way, but a fundamental capability that can enhance every channel. Search on your phone, buy online, pick up in store. Go to store, use your phone to buy, delivered to your home. Retail innovation is about hybrids, combing physical and digital activities and options in a more experiential and valuable way.
Retail purpose, formats and incentives all change – whilst loyalty cards originally drove behaviour through points, people soon became wise that the rewards were trivial compared to special offers in store. Whilst stores have enhanced their shopper experiences, markets have fragmented with more space for discounters. In Turkey for example, BIM has taken around 40% of the food market with low price, small outlets across cities. At the same time, online players have morphed into credible alternatives, where Amazon sells wines and eBay replaces physical outlet stores. More emotionally, technologies such as Synqera from Russia can “mind-read” a shoppers emotions, judging how to best engage them as they shop, and how to make them smile.
Digital hybrids, data and mobile
Mobile is already a huge factor: at upmarket fashion retailer Gilt, 50% of shoppers, and 30% of sales is by mobile. It is the glue that brings together online and offline, creating more personal experiences, from individual promotion geo-targeted, for in-store research and navigation, price checks and comparisons, as well as fast and safe payment. As newspapers are replaced by digital news, TV is on demand, and online retailers never close their doors, the ways retailers engage and serve consumers changes. We expect 24 hour access, we don’t tolerate stock outs, compare prices instantly, shop beyond our borders, and demand delivery in 24 hours.
Big data, the huge quantitites of transacational data, mashed with other sources of personal and behavioural data through complex algorithms, means that marketing is highly personalised. Around 35% of all Amazon purchases and 75% of Netflix movie choices are based on recommendations. Of course these suggestions compete with the much more trusted recommmendations of friends and peers on social media, often valued around 10 times more highly than anything from a brand. A brand therefore needs to think laterally, about how to influence communities, and give them the abilities and incentives to influence each other. Consumers also become much less tolerant of failures, unavailable products or poor service, they expect free and easy returns, and they immediately tweet their feelings, particularly the negative ones, to thousands of people like them.
Together, our gamechangers show how the variety of innovations build a future vision of retail. The demand side is led by the engaging, personal experiences – driven by the passion of Zappos, collaboration of Threadless, affinities of Greenbox or latest desires of Zao Zao. On the supply side, this is about the efficiency and speed of Amazon, the reach and richness of Aramex or Etsy, and the transparency of Positive Luxury. In between is the ability to match niche segments with lifestyle store experiences, and whilst the Aberchrombie brand portfolio is not without challenges, it knows how to connect.
Meet the Gamechangers in Futurestore
& Other Stories – Where women curate their own personal style
& Other Stories headquarters in Stockholm are surprisingly low-key. Located on a quiet street in a residential part of the city, it's a far cry from the vision of ultra-hip Swedish cool that H&M and its other brands seek to project on the world. Unlike Zara's portfolio of fashion brands that target different ages and attitudes, H&M's portfolio is more a collection of different lifestyle concepts. More interesting, and distinctive.
77 Diamonds – Diamonds are the real thing, even for online retailers.
Europe’s largest online diamond jeweller, set up by two twenty-something friends, one a banker, the other the son of a diamond miner. Today they run a $25m business, across 77 countries, delivering finely crafted diamond jewellery direct to consumers through a luxury service that offers great value.
Amazon – A mission to become the world's most customer-centric business
Amazon, from Dash to drones, Alexa and Echo, uses technology to disrupt and redefine a range of adjacent industry, and then do it again, whilst adding new business models that create a convenient and personalised customer experience.
Brooklyn Superhero Supply Co. – A gallon of gravity, a can of X-Ray vision
Charities and non-profits can be some of the most innovative businesses. Yet too often they forget to engage and inspire their audiences, with all predictable fundraising campaigns. Not here!
Casper – Reinventing the way we sleep
The concept was simple: Produce the best mattress possible at an affordable price, sell a single model, and deliver it quickly, for free, with a 100-day trial period. It worked: Casper had sales of $1 million in its first month. The company has since raised $70 million in venture capital, grown to 120 employees, and hit $100 million in cumulative sales in its first 2 years.
Coupang – Delivery by dawn
Coupang is often described as the Amazon of South Korea. But it is much more. The company's Rocket Delivery network provides same-day or next-day delivery of more than five million unique items, claiming that 99.6% of its orders are delivered within 24 hours. It's Dawn Delivery service is even faster, promising to deliver anything by 7am that is ordered by midnight of the previous day.
Depop – Instagram meets eBay for millennials
Depop is the “love child of Instagram and eBay”, a mobile-centric marketplace for second-hand teen fashion, and more. The free app enables consumers to easily sell items by taking a square format image, adding a description with hashtags and setting a price. Buyers and sellers can ‘like’ items, message each other, haggle over prices and share comments, creating a community.
Etsy – The world's largest maker market, bringing the world's most creative people together
Etsy has created given local artisans, and local markets a global reach, bringing together like-minded buyers and sellers as a passionate movement. The business model makes it fair and accessible to the smallest trader.
Farfetch – 400 designer boutiques in one place, anywhere, anytime.
Farfetch is a revolutionary way to buy fashion, bringing together hundreds of the world's best independent designer boutiques.
Go-Jek – One-stop everything on demand in Indonesia
Established in 2010 as a motorcycle ride-hailing phone service, Go-Jek has evolved into an on demand provider of transport and other lifestyle services.
Inditex – Fast fashion from La Coruña to Bershka, Mango and Zara
Inditex group has built on the global success of Zara and its fast fashion, to develop a range of retail brands that carefully target adjacent market segments with distinctive and relevant fashions. As markets and trends evolve the portfolio gives the group strength and agility.
Klarna – Buy now, pay later
Klarna seeks to "make shopping smoooth". Klarna was founded by Sebastian Siemiatkowski CEO and colleagues in 2005 in Stockholm, Sweden. It is Europe’s highest valued private fintech company, offering products and services to consumers and retailers within payments, social shopping, and personal finances. With 2500 employees from 86 nationalities they focus on one goal "to keep exploring just how smooth the future shopping experience can become". In 2020 the business was valued at over $5.5bn and is growing by almost 40% a year. It processes more than a million transactions a day, working with 170,000 merchants, in 17 core markets, and with key offices in Stockholm, London, New York and Berlin.
Le Pain Quotidien – Rustic breads, communal tables ... being human in a digital world
Le Pain stands out in a cookie-cutter world of standard formats as authentic and sustainable, human and communal. Whilst the world becomes anglicised, it’s great to see a little French on our streets, albeit Belgian.
Magazine Luiza – Brazilian retail
Magazine Luiza, or Magalu, is one of the largest Brazilian retailers. The company was founded in 1957 in Franca by Brazilian billionaire Luiza Trajano and family.
In 1992, it launched its first “virtual” stores, which at the time were physical retail outlets equipped with multimedia ordering kiosks. There are 162 stores in Brazil today with such kiosks still in use. In 2000, Frederico Trajano, a third-generation Luiza and the company’s current CEO, joined the company to direct the launch of its ecommerce division with “a simple philosophy to do an omnichannel strategy,” involving ecommerce orders that could be shipped directly to consumers or picked up at physical outlets.
Currently the company has more than 1001 stores and 9 distribution centres, selling 10 thousand items in their stores, and at the end of 2018, its online marketplace hosted more than 3,300 vendors offering a combined total of 4.3 million products. The company reported annual sales of $220 million from its online marketplace for 2018.
Meituan Dianping – China's everything-app to "Eat Better, Live Better"
China's No. 1 marketplace for services and O2O (online to offline) platform. Meituan was founded in March 2010 in Beijing as China's first group buying website. Today, Meituan is China's largest provider for local services with leading market position, tremendous annual turnover growth, and over 130 million annual active purchasers. Meituan currently operates its businesses through three business units: Customers to Shop, Hotel Tourism, and Home Delivery Service, and a subsidiary Maoyan Movie.
Pinduoduo – Shopping together, for more savings, and more fun
Pinduoduo is an innovative and fast growing technology platform that provides buyers with value-for-money merchandise and a fun and interactive shopping experience. The Pinduoduo mobile platform offers a comprehensive selection of attractively priced merchandise, featuring a dynamic social shopping experience that leverages social networks effectively
It is the second-largest online marketplace in China, and the world's leading "interactive" online retailer. It has pioneered several new trends including social e-commerce, team purchase and consumer-to-manufacturer (C2M) that have revolutionised online shopping in China. Founded in 2015 by Huang Zheng (aka Colin Huang), Pinduoduo has become the fastest growing tech company in the world.
Positive Luxury – The butterfly mark of brands you can trust
Curation is a key role for retailer, editing and guiding in a world of infinite choice. Making sustainability positive, being better rather than less bad, being authentic and natural, softer or brighter.
Rakuten Ichiba – Asian shopping ... crabs and kimonos with “omotenashi”
As markets become more fragmented into specialist niches, the economics of local stores gives way to online platforms. With careful focus, small businesses can become global and profitable, without the costs of becoming big.
Snipes – Streetwear for Europe's youth
Snipes is one of the most successful sneaker and streetwear chain stores in Europe - with over 200 stores in Germany, Austria, Switzerland, the Netherlands, Spain, Italy, Belgium, France, and the USA. Since opening its first store in Essen in 1998, Snipes has been an integral part of the urban fashion scene. Hip-hop and urban dance, basketball and BMX: everything revolves around a contemporary lifestyle and urban youth culture.
Sonae – Portugal's leading retailer focuses on "improving life"
A stock market flotation was the catalyst for Sonae to diversify its business into many new categories. Innovation lies at the heart of Sonae's vision for improving life. Most important platform for this is Sonae's Continente retail brand which has recently extended across Europe, and also take its own-label brands into other retailers in order to go further faster.
Tchibo – A new experience every week
Germany's favourite coffee brand, has spread its retail concept across the world, offering everything from flowers to mobile phones, with a constantly changing range. Pop in for a coffee, and to see what's new!
Trader Joe’s – Local food stores with a cult following
Trader Joe’s curates to simplify and humanise. With less it can do more, bringing its personality to life through discovery, humour and storytelling. At the same time, caring about community, environment and good value.