Forbes || The Most Innovative Retail Concepts Ever Are Being Tested Now
The business of selling products in retail stores is facing many challenges. One of the most fundamental is: What should a retail store be? That used to be simple — stores have stuff and they want to sell it. Now, technology and cultural changes have caused us to question how it should be done. Stores need to rethink the best way to serve customers and what functions a store should serve.
Lest you think stores are going away, keep in mind that no one has created a more effective mode for converting browsers into customers and building brand loyalty than physical stores. So no, stores are not vanishing. But they are going to change and right now no one knows exactly how. We are going to see more new ideas, more experimentation, more adaptation of concepts than ever before.
For now, brands have to ask themselves:
- Do I need physical stores of my own or can I sell my products in someone else’s store?
- If I need my own stores, how big should they be? At the recent Etail East conference, Jared Blank of Bluecore said, “the genius of Bonobos was that stores don’t have to be 5,000 square feet in a mall, they can be 1,000 square feet.” Blank was referring to the men’s brand that lets you try on clothes in the store but doesn’t have any inventory to sell; anything you buy gets shipped to you from their warehouse after purchase.
- How much inventory should a store have and how should that be balanced with inventory online in a way that’s appropriate for every product and brand?
- Can holding inventory in a store be justified when the cost of the space to display and store it is so high and there’s a risk that it will become obsolete?
- What else should be happening in stores besides selling stuff?
The answers to these questions are going to be different for different types of products, tires aren’t jewelry. The answers that retailers come to will determine their success or failure. Their ability to try new things will create all new sorts of retail stores that no one has ever seen before. That’s a huge challenge for retailers, but for consumers, it’s fun and interesting to watch it evolve.
There won’t be one answer or one right way or one genius who figures it out, it takes a team and collaboration to find the best solutions. At a panel I moderated recently at Etail East, Scott Friend of Bain Capital Ventures said when talking about companies they invest in, “We can’t know what will happen next. We find people who are smart about what will happen.” On the same panel, Anna Palmer of X Factor Ventures, said about the future of physical stores, “We take products where the people are,” and isn’t that the ultimate goal of a retail store?
Recently I spoke with a number of companies whose services and functions complement, compete with and challenge what stores have always done. They are all innovative and interesting and where it goes now will ultimately be up to consumers.
RevCascade facilitates drop shipments from wholesalers to consumers. What that means is — let’s say you go to a store and they don’t have what you want. A sales associate shows you a tablet or screen that displays what you’re looking for. It appears to be the store’s inventory at another location but it’s really the inventory of the store’s wholesale supplier. You can buy it on the screen and the wholesaler ships it directly to you at your home. You never know you bought something from the store’s wholesale supplier, you think you bought it from the inventory of the store at another location.
You may think that’s not such a big innovation. But one retailer that has about $2 billion in revenue starting using RevCascade and did over $50 million in additional sales using RevCascade in the first year. That’s not a small change; if that retailer has gross margins of 35%, there’s very little incremental costs and they’re adding profit of over $17 million with no reduction of anything else. For the right retailer, RevCascade is offering the possibility of meaningful incremental sales and profits.
More important, RevCascade raises the question of what should a store be? If you’re going in and buying off a screen, why not just stay home and do it on your own screen? The obvious answer is that RevCascade is turning visitors who didn’t find what they want into happy customers and that’s good for everyone. But if stores are doing that, do they really need so much inventory in their stores? Shouldn’t they just have stores that give consumers a reason to come in, like entertainment, and then help them buy things on screens? If the inventory isn’t required to be in the store, wouldn’t it make more sense to have stores do many more things to attract customers than just hold inventory. It raises the question of “store experience” to a different level of importance.
The answer will be different for every retailer because their interaction with their customer, their brand meaning and their actual product lines are all different. But with a facility like RevCascade, a retailer has to rethink what it’s providing and what gives it a competitive edge.
You can take the RevCascade concept to an extreme. Nordstrom has a store in Los Angeles that carries no inventory. If you shop online and they have the inventory in another store, you can go to the “Nordstrom Neighborhood” store and pick up your product within two hours of ordering. Or you can bring products you bought online into the Neighborhood store for alterations. Or you can meet with a personal shopper, get advice, and have the products in your home on the same day. In their new men’s store in New York, Nordstrom uses the store to allow customers to pick up products 24 hours a day, 7 days a week. If you arrived on a visit to New York and forgot something, a person will come out the door of the store in the middle of the night to give you what you ordered online. It makes the store much more than a place to look at things and decide whether to buy or not.
ShopShops is everything you already know about Home Shopping Network, QVC and Evine. Except there’s no studio, ShopShops creates videos that take place in retail stores and it showcases the products that are in the store. There’s also no TV necessary, ShopShops livestreams its events online only. It’s live but it can also be replayed later and the same products can be ordered if they’re still available. At the moment it is being used mostly by Chinese viewers who see American stores when they’re closed. There’s no reason why ShopShops can’t create events when the stores are open, it could potentially make a store a more interesting and exciting place to be for the customers who are in the store when the event is taking place.
Simpletire sells tires but they don’t keep any inventory themselves. You go to their site, enter what tires you need and Simpletire uses its buying power to find you the best price. Then you go to the installation center or automotive shop it has found nearest you and the tires are shipped there and installed by the local store. You may say that’s not so innovative, there are a lot of marketplaces selling products in other people’s stores. That’s true but typically not for products that require custom installation on your device by store employees, Simpletire is unique that way. They are leading customers to automotive installation shops that would not have found them otherwise.
Maison Marche is a startup so there’s no telling how this business model will develop. It was created by Sarah Easley who is known for her past experience curating a well-respected, high-end women’s fashion boutique in downtown Manhattan. Maison Marche creates pop-up stores in private homes, curated by Maison Marche and managed by hosts who invite their friends over to shop. The clothes are not made or even owned by Maison Marche — the company gets designers and merchants to consign the goods for 1-2 days and the host and Maison Marche each get a percentage of the sale. Maison Marche creates a template with detailed instructions about how to organize, curate and run an in-home popup shop and advises hosts with any questions.
Brideside sells dresses for bridesmaids. Unlike most retailers that invest in real estate leases, Brideside invests in stylists, who give personal advice to brides and bridesmaids. You may say that’s just like Stitch Fix or other personal styling sites. But it isn’t, Brideside organizes its services around physical spaces where brides and bridesmaids get together with their stylist, often as a group, in person or virtually, to decide which dresses complement the big event. Sometimes that physical space is a Brideside showroom in the four cities where they have them. In most places however, it’s the home of the bride or one of the bridesmaids where they organize a try-on event with sample dresses and guidance from Brideside. It’s a unique model that leverages physical space and virtual styling. The stylists help the brides and bridesmaids organize their bridesmaid dress event from beginning to end without the company incurring the cost of stores.
David Kind is also a startup and it sells luxury eyeglasses online but has a component that is different. Eyeglass retailers that want to carry the David Kind line don’t buy the glasses wholesale, they pay a fee for being loaned some inventory. The retailers can then sell the products from the inventory they have or they can lead a consumer to the David Kind website. When the retailer guides a consumer using the David Kind website, the consumer gets a link that allocates the sale to the retailer who then gets a part of the purchase price.
Reflaunt hasn’t launched, they are only now going into an incubator. They bridge the market for consumer products with the market for resale of previously-owned products. Reflaunt puts a button on the site where you buy product that enables you to list the product for resale or donate/recycle it when you’re done using it. If you’ve ever leased a car, you know that leasing is great when you want to always be driving a car that’s less than two or three years old. Reflaunt is the same idea. Once you’ve worn or used a product for a while, if facilitates an easy sale of what’s already in your closet so you can make room for the next new thing. Reflaunt is taking advantage of the very high growth in the resale market, increase customers’ purchasing power and help consumers enhance sustainability in the fashion industry.All of these companies are changing the way merchants think about their stores. The innovations that young companies are making will increase and there will be lots of opportunities for consumers to benefit from the changes. And isn’t that great?
Article by Richard Kestenbaum
Read more at: https://www-forbes-com.cdn.ampproject.org/c/s/www.forbes.com/sites/richardkestenbaum/2018/08/22/retail-innovation-etail-nordstrom/amp/