Five Lessons In Retail Reinvention From 2019

The year is almost done — in less than a week the ball will be dropped and the new year and new decade will be underway. But before we shut the door on 2019, it bears taking a moment to note how much the world of retail has changed in the last year, a fitting capstone on a decade that has seen retail as the American consumer commonly knew it taken to the ground and rebuilt nearly from the foundations. In 2019 Barneys New York went bust, as did Forever21, Gymboree, Charlotte Russe, Payless and Diesel Jeans, among others. They join a long list of once massive brands that have fallen to the reformation around digital and omnichannel shopping habits — Sears, Toys R Us, Borders, Sports Authority, Radio Shack.

It was not all bad news, however, as while some players were coming down in the world, others were rising. Amazon is, of course, the first name that comes to mind — but the 2010s have also seen big multi-billion dollar investments in digitization from both Walmart and Target, both brands racking up massive growth in the last several years, as well as the rise of digitally-native brands that a decade ago almost no one had ever heard of, including Uber, Airbnb, Rent the Runway, Warby Parker. They are household names today, as well as major forces that reset the direction of their entire vertical.

And for all the change that has come up until now, experts and professional prognosticators think that in some sense we haven’t seen anything yet. There is no crystal ball, of course, but a lot of interesting pokers in the fire.  Will cashierless checkout become the new retail norm, will department stores finally sign off for good, will all commerce be omnicommerce, will robots someday be in charge of most of our retail experiences? We don’t know — but the way the trendlines are going, we know we’ll be watching avidly next year for the answers.

But for all we don’t know, there is plenty we do, mostly because we spent much of 2019 talking to some of the more interesting and forward-thinking retailers out there about how they go where they are today and where they hope to be going tomorrow. As it turns out, they are a pretty insightful group with some interesting lessons in retail reinvention to teach.

Lesson 1:  Think Big

“We are, at our core, a tech and logistics company that happened to have started our journey in fashion. The reverse logistics platform we have created in-house can power any rental business, and our aspiration is to be the ‘Amazon Prime of rental,’” said Rent the Runway Chief Operating Officer Anushka Salinas.

When Rent the Runway got its start a decade ago, the concept of sharing clothes with strangers was mostly alien to the retail environment — why would anyone pay to wear someone else’s clothes?

But the 2010s, according to Salinas, was the ideal decade for such a radically new retail concept to take root among American consumers. Sustainability became a theme, and while during the early part of the decade consumers glommed onto fast fashion to create an ever-rotating wardrobe of new pieces, toward the end consumers became  less enamored of the idea of filling landfills with their discarded fast fashion items.

“Rental is a much more sustainable way to achieve the goal of constant newness and variety,” Salinas said.

Tied into that, a separate trend that has become particularly potent in the last year or so is the movement toward simplicity, epitomized by the rise of Marie Kondo.

And Rent the Runway has expanded beyond its initial line up of a la carte rentals of high-end formal wear to include work clothes, kids’ clothes, casual wear and, as of this year, ski wear. The goal for next year? More growth, of course.

“Our goal is to convert 50 percent to 80 percent of every woman’s closet to rented-instead-of-bought. Watch in 2020 for us rolling out more ways to access our closet, more ways to access a subscription. What we really want is to allow millions and millions of women, who aren’t part of the platform today, to have a program that is right for them,” Salinas said.

Lesson 2: A Rewards Program is Always a Work in Progress

“We collect data to make our mobile app and DD Perks program even more valuable and relevant to our guests. We’re still early in that journey,” said Stephanie Meltzer-Paul, Dunkin’ vice president of digital and loyalty marketing. “We’ll continue to evolve our data analytics capabilities, and AI is one area we’re exploring.”

While no shortage of points based rewards offers have proliferated in the last decade, the power of rewards and loyalty program, Meltzer-Paul noted, is really in giving the brand the ability to make a connection with their customers. Which means, she said, making it easy for customers to connect with rewards on their own terms.

“As an example, we recently celebrated the start of summer with three times the points on medium or large … iced or frozen beverages,” Meltzer-Paul said, noting that DD Perks accounts for approximately 13 percent of all Dunkin’ sales in the U.S. That was good, she said, but the brand realized it could do better. Growth was stymied because customers were required to preload credit cards into their apps to use the program. Many customers were hesitant to do so, fearing security breaches.

Dunkin’ took these concerns to heart and launched a pilot program in April at 1,000 of its U.S. locations that allowed customers to receive rewards no matter how they paid. All they had to do to earn points was scan a QR code on the Dunkin’ app or swipe a new physical membership card. Meltzer-Paul said Dunkin’ plans to expand the program nationwide in the near future.

Also on deck for the future is better use of artificial intelligence (AI). The program, she said, gives Dunkin’ a rare opportunity to see what customers like and want. That, she said, gives them a chance to use the app because they want to — because what is in it is tailored to their needs.

“For instance, we can analyze a guest’s buying patterns so we can offer up more relevant future offers and promotions through DD Perks and suggest new products they may be interested in trying. We find that the majority of our guests who use on-the-go mobile ordering place their orders through the Dunkin’ mobile app, and we’re focusing our efforts on making the in-app ordering experience even quicker and more seamless for them,” she said.

Lesson 3: Any Place Can Be a Shopping Space

“We focus on those direct-to-consumer brands,” Abigail Holtz, CEO and co-founder of The Lobby, told Glossy. “They’re the ones consumers are most excited about, but they’re also the hardest for those consumers to access. A lot of these brands don’t have stores.”

While the digital era has made ordering clothes online and returning them easy, the reality, according to Abigail Holtz, is that it could be easier. And should be. Repackaging and shipping back the items that didn’t quite work out isn’t a massive friction to overcome, she noted in an interview, but it is enough of one to keep some shoppers away from the channel.

The Lobby was founded to confront that issue. It is a platform dedicated to connecting fashion-forward female customers with emerging and cutting-edge direct-to-consumer (DTC) brands they may be unlikely to encounter elsewhere. But instad of delivering the clothes the customer’s door — it delivers them to their desks at work.

Then, a week later, The Lobby’s couriers return  to take whatever the customer decides not to keep.

The model, according to Holtz, has two main upsides. The first is that it matches shopping patterns that already exist among a certain demographic of consumers, and offers them a much more frictionless way to leverage multichannel apparel shopping.

It also has the side benefit for creating buzz for the service — as one curated box of clothes going to an office of stylish millennials tends to net more boxes being delivered in subsequent weeks.

And while one might assume that employers would be less than overjoyed by a service like The Lobby, and the time lost to impromptu fashion shows every Thursday, most large employers are also realists who know their workers are sometimes shopping at work and using their time to talk about fashion.

“Smart employers recognize that, saying: ‘We know it’s happening, let’s make it easier for our employees.”

Lesson 4: Dare To Be Different, Really Different

“The original business idea was really a question: What would QVC for Gen Z look like?” noted Cyrus Summerlin, chief operating officer and co-founder of Down To Shop.

Down to Shop is a streaming home shopping service that decided to see if it could rebuild home shopping and the infomercial for Gen Z into something truly different.

It would be hard to argue that they have not succeeded.

The programming is … different. Viewers can tune in to see the ongoing adventures of Mindy and Sammy — a young couple in love and deeply engaged in discussing the products they love. Or they can watch the retail therapy-centered Dr. Sue show, focused on consumers’ well-being (as best catered to through shopping).

And then there are the goods: Tupac prayer candles, a razor for leaves, a kitty litter subscription service, a Vietnamese coffee set, a Tamagotchi.  There is probably no product too weird or wild for Down to Shop — or anything one might rate as outside of the realm of possibility. From CBD wellness supplements to camo print onesies for adult women, it is all pretty much there.

That works for the Gen Z audience to which the company caters — those who tend to like low-cost, high-contrast items that one won’t see anywhere else. In fact, Summerlin noted, among its more popular items is the mystery box, which, as its name implies, means the consumer has no idea what they ordered until it shows up on their doorstep.

“It’s pretty easy; we just have to make a couple of Super Bowl commercials every day,” Summerlin joked. “We know our audience pretty well, and so we are good at asking ourselves, ‘Will this product speak to them, and what is the best kind of show to place it on to tell the best type of story?’”

Lesson 5: Data is Power

“Imagine if Coca-Cola had a profile on every person who has purchased Diet Coke over the last 30 years. They would be able to create a new product to sell to the consumers that they’re now losing — the people that used to drink Diet Coke but aren’t drinking it anymore,” said Zak Normandin, founder of Dirty Lemon.

Dirty Lemon started with a fairly unique product — lemonade with charcoal in it to help absorb toxins in the drinkers in a way that was pleasant to ingest. There are plenty of wellness food and drink products on the market today, Nomandin noted, but Dirty Lemon’s goal was to make one that was pleasant, not a chore.

But what really set Dirty Lemon apart in its early days wasn’t the product, it was how the company sold it. Instead of offering website ordering, the purchasing system is based on text messaging. The customer visits the website and creates an account that links their card number to their phone number, then texts their order to the company. Customers must buy a minimum of six drinks for $65.

If that sounds friction-filled, it is also strategic, Normandin pointed out. In the brand’s early days, a buzz was created around the product as consumers started appearing in trendy local places carrying their special lemonade in shampoo bottles. Word got out that the product couldn’t be found at any store. That gave the brand the feel of a secret club, Normandin noted, which sharpened curiosity and enthusiasm for the product.

More important, however, Dirty Lemon had developed not just a way to sell to its customers, but also a direct channel into all of their individual product purchasing habits.

Texting, Normandin noted, is “the most ubiquitous form of communication on earth.” He believes his brand has just started to scratch the surface of its potential.

And actually, that might not be a  bad tag line to put on all of 2019 retail — many advances miraculous and unexpected, but all just getting started

We look forward to the 2020s when we see what it looks like when fuller potentials are being tapped.