You’ve probably gotten the memo already, but in case you missed the message, here you go: Mere retail is boring. Mere retail is not enough. What works today – or, at least, what is supposed to work – are commerce and payments experiences.
The thing is, someone, or some organization, has to give birth to those experiences and the ecosystems that support them.
Foot Locker has become the latest big brand to embrace the concept of retail incubators, joining such companies as Walmart and Target in hopes of fostering innovation that will translate into more sales and customer loyalty. Called “Greenhouse,” the incubator, which was introduced at Foot Locker’s recent investors’ day, “encompasses three new facets: collaborations, concepts and a think tank – all aimed at feeding new ideas into the organization,” according to Footwear News.
More specifically, according to Foot Locker CMO Jed Berger, the Greenhouse incubator project “is a development platform to build and cultivate new relationships, new initiatives, new brands and new ideas, all while looking at what they could be in the future as opposed to what they are today.” According to the report, he said that “Greenhouse will operate as a separate unit that sits outside of our walls, both figuratively and literally. We did this purposefully to allow the team to take on industry challenges while being progressive, disruptive and responsive to perpetually evolving consumer and culture.”
That’s as much detail as Foot Locker shared about Greenhouse, but a look at the brand’s recent moves confirms the company, like so many other digital commerce and payments players, is interested in creating customer experiences – something beyond the normal sales and transaction process.
The retailer recently launched its Power Store concept, with the newest one opening in January in Eastpointe, Michigan near Detroit – even as Foot Locker wrestles with closing older, more traditional stores.
According to Foot Locker, that store has 8,500 square feet of retail space and “is home to an activation space that will host regularly scheduled events and activations for the sneaker-obsessed.” Beyond that, the Michigan store – like such “Power Stores,” it is meant to be specific to local tastes – offers “exclusive, city-centric products including adidas AM4DET, a new SPEEDFACTORY shoe designed by Kayla Donaldson, a Detroit native who took inspiration from her city.”
It’s hard to say if any store or in-person retail concepts will emerge from Greenhouse, but it’s certainly not a stretch to think they might. But incubators from other retailers tend to have a broad mission when it comes to commerce, tech and even payments.
Take the Walmart example.
Its tech incubator has given birth to tech innovations and entrepreneurial efforts, as PYMNTS has covered. Target, via its new incubator program – called Target Incubator, plainly enough – is, according to the retail chain, “designed to help Gen Z entrepreneurs-in-the-making nurture and grow their better-for-people or better-for-the-planet businesses, even if they haven’t launched yet.”
Again, providing a retail experience is part of the foundation for the incubator effort. “To truly engage our next generation of guests, it’s not enough to create great brands. We need to cultivate communities and have real conversations,” said Rick Gomez, executive vice president and chief marketing officer of Target. “So we’re using our expertise and brand power to connect with our young guests, amplify their voices and support their great ideas for the future.”
While incubators seem so very of-the-moment, the general idea comes from the days when analog, not digital, dominated the worlds of commerce and payments. “The first business incubator program opened in 1959 to give new business owners access to the practices and assistance needed to grow successful companies,” reads one history of the concept.
Granted, those incubators were more about various young and small businesses coming together to share resources and ideas, but that spirit is certainly part of the go-it-alone incubators operated by major retailers and brands, at least on paper. Today, the U.S. has about 1,250 incubators, according to the National Business Incubation Association, though the vast majority – more than 90 percent – are unlike the Foot Locker, Target and Walmart efforts, and instead operate as nonprofits dedicated to local economic development efforts.
It’s safe to say more retail concepts and experimentation will emerge from these latest brand-specific incubators as merchants strive to build more experiences for consumers.