Retail Disruption

vlad —  July 10, 2013 — Leave a comment

Disruption
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Online ecommerce/market places, volatile real estate markets and evolving consumer demands on brands has led to the disruption of large-scale traditional retail. Traditional retailers need to evaluate market disruptors and adapt to new ways of working in order to continue driving footfall and moving products off the shelves. This post will go through current retail disruption trends and suggested adaptions that every retailer needs to make.


1. Product playgrounds

Brands like Nespresso and Apple have turned their in store experiences into product playgrounds where customers can escape the outside world and immerse themselves with the products whilst chatting to over-enthusiastic product experts. The investment in fostering experiences rather than transactions is paying off – with an average of 250,000 visitors per store per quarter across 406 stores in 14 countries Apple’s stores are more of a media channel than a retail outlet.

Not only is Apply attracting an unthinkable amount of footfall, they are able to convert it into profits. Apple has the most sales per square foot of any retailer in the US and they yield $57.60 revenue from each visitor that goes through their product playground.


2. The shopazine

Start up STORY, is pushing the conceptual boundaries of the pop-up shop phenomenonn and teaming up with brands to do so. STORY is a 2,000 square foot space in Chelsea NYC that completely reinvents itself every 4-8 weeks like a gallery and sells things like a store [quote].

The space is reinvented based on stories such as ‘wellness’ and ‘making things’, these stories frame the curation of the products that are featured in the store and the brands that are allowed to pay to be featured. STORY’s founder Rachel Shectman describes STORY as retail media and views her store more like a magazine than a traditional store.

Similarly:

  • Fab sends a daily email of curated design pieces based on a specific theme.
  • Bespoke Post gives men monthly advice on various manly topics (shaving, scotch, flying) accompanied with products.

3. Short circuit the store

Amazon is working hard to own your entire shopping dollar and is happily stepping on traditional retailer’s toes to do so.

To own the experience around low ticket items like FMCG products Amazon has Subscibe&Save which lets you save 15% by subscribing to purchasing a product e.g. toothpaste every month. Start ups like Manpacks and Dollar Shave Club have launched off the back of Amazon’s success.

Amazon hasn’t stopped with attacking grocery stores, they also have their sights firmly fixed on high-value retailers. In order to do this they have experimented with driving consumers in store to interact with sales staff then incentivising people to purchase the product through the Amazon app by offering a higher discount if you scan the physical barcode of the product. No point managing a store and hiring and training staff when any number of electrical retailers will do it for you.


4. Skynet delivery

In the past next and same day delivery have been key competitive drivers to building major e-commerce brands such as Zappos. Today the feature is reaching parity as the majority of e-commerce businesses have adopted and offered it to their shoppers. Thanks to new advances in drone technology, we may all soon be looking back and laughing at the fact that we used to ever have to wait for stuff.

Imagine being at the beach and breaking your headphones, annoyed you order a new pair via your smartphone and within an hour the new headphones are delivered to your GPS location. Skynet delivery baby.

State-of-the-art drones powered by your iPhone are now on the market and retailing for $AUD 349.95. Indeed, pizza chain Dominos has already experimented with delivering pizzas via airborne drone


Adapting

So how does a traditional brick-and-mortar retailer compete with these large-scale disruptions? Ultimately the majority of these ideas has taken an issue facing traditional retailing and used it as a strength. In order to do the same traditional retailers need to evolve how they evaluate their properties, customer needs and offering. The new processes and disciplines required to do this include:

  • Understanding use a product such as euclid to understand the behaviour of store patrons. Look at traffic patterns and create heat maps of your store. Break visitors up into cohort categories to better understand your customer’s behaviours.
  • Dynamism react to your new customer understandings in as near real-time as possible. Global fashion force de-jour Zara built its business on the capacity for production to be able to meet the changing demands of their outlets at near realtime levels.
  • Explorations whether it’s trailing premium experience stores, subscription models or other new distribution methods, retailers need to try to disrupt themselves constantly.
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