BoF VOICES - Reinventing Retail

By the end of 2020, COVID-19 had made it clear that our current ways of life are vulnerable to rapid changes and shocks. Suddenly, shops that had been at the heart of cities for decades closed, such as Matches Fashion, three independent Notting Hill boutiques, Gwyneth Paltrow’s Goop store, as well as Instagram’s favourite Reformation and All Saints. Almost as rapidly, businesses were keen to reconfigure their retail strategy in order to survive and the result was a series of newly adapted retail concepts. To find out more about how fashion brands and retail companies have evolved to respond to the pandemic, I attended The Business of Fashion’s three-day annual event – ‘VOICES’ — which was held online, and hosted hundreds of speakers, brand leaders, stylists, and fashion-lovers. On the second day of the event, instead of focusing on the short-term responses, the talk delved into the behavioural shifts in the last 10 months that will leave a permanent imprint on the retail landscape.

[Caption on website: VOICES 2020 will be delivered via a live global broadcast from a pop-up studio in London. BoF.]

Ten Retail Archetypes of the Future

Doug Stephens, Founder, Retail Prophet

Doug Stephens, founder of Retail Prophet, argues that COVID-19 has uprooted society from its industrial era and thrown it into the deep end of the digital age, far from the capacities of the ‘digitalisation’ that we are familiar with.

In response to the pandemic, there will be companies like Amazon that will emerge as the “apex predators” in the retail ecosystem. Last month, Amazon launched its online pharmacy service where customers can purchase prescription medicine. This means Amazon is not just an online shopping platform, but rather, a growing multi-sector international retail enterprise, which functions like utility companies but on a much greater scale, powering every aspect of a consumer’s life and drawing more customers into its ecosystem with its products and services.

Most brands will never be able to compete with apex predators, but what they can do is to establish a dominant archetypal position in terms of product, expertise, content and experience, to remain resilient, profitable and vital in the future. For example, these are:

1. The Storyteller, such as Nike, inspire people to persevere, challenge themselves and push through failure to reach success.

2. The Activist, such as Patagonia, who have a commitment to environmental activism that appeals to consumers’ values and beliefs.

3. The Oracle, such as Hodinkee started by an editorial expert on watches. It is an authoritative voice that people trust implicitly which initially benefitted the brand (watch marketplace) he decided to open.

The 7 other types of positions are the Renegade, the Artist, the Tastemaker, the Concierge, the Clairvoyant, the Engineer and the Gatekeeper. Equally important for companies is to build a robust media ecosystem where electronic gadgets essentially ‘become’ the store by making purchases as simple as a click, and (as YouTube, Instagram and TikTok have already done) to integrate purchasing options within social media platforms.

Evoking Emotion in the Last Mile of Customer Service

Will Shu, Founder & CEO, Deliveroo

Sojin Lee, Founder & CEO, Toshi

Imran Amed, Founder & CEO, The Business of Fashion

As the pandemic dragged on, it also became apparent that the readiness of fashion brands to serve at the doorstep is expected as part of good customer service. Doing exactly this is the white label fashion brand Toshi, the ‘Deliveroo of fashion’. Its on-demand service ensures customers’ online shopping experience is what they are used to in shops: offering to let customers try on before purchasing, bringing extra sizes for free, and inspiring them with items that go well with what they are already interested in. Having its employees ready to go to a customer’s address is an extremely intimate activity that allows the staff representing the brand to personally connect with its customers, read their emotions, and then give them exactly what they need. This includes making sure that the return process is just as convenient as buying. The added value of Toshi’s service was not a priority until the COVID-19 pandemic reached its height.

Inside the Game-Changing Farfetch, Alibaba, Richemont Partnership

José Neves, Founder, Chairman & CEO, Farfetch

J. Michael Evans, President, Alibaba Group

The recent game changing Farfetch, Alibaba, and Richemont partnership is an opportunistic investment that took many in the fashion industry by surprise. The State of Fashion 2021’s Report by BoF predicted mega-deals of a similar nature will be part of a wider trend amongst companies vying to grow market share and extend consumer reach in the post-pandemic reality. According to Neves, the founder, chairman and CEO of Farfetch, this collaboration aims to facilitate rather than replace physical retail. It is the joining of forces between the Chinese tech giant—one that is responsible for 20% of all transactions in China— and luxury brands, retailers, and consumers to create a digital ecosystem where shopping for luxury goods is easier for everyone. This works particularly well in China because 90% of the growth in the luxury sector in 2019 originated from the Chinese consumer in the first place, says Evans, the President of the Alibaba Group. Limitations in travel that diverted Chinese spending power inwards (known as repatriation benefit) was simply the catalyst.

Small-to-medium brands gain visibility and access to the global inventory, China benefits from re-emerging consumer confidence and an economy that is back at 4.5-5% growth rates, and consumers from multiple markets around the world enjoy the convenience enabled by technologies and creative solutions for the future of retail. It is a win-win solution for all.

A New Playbook for Direct-To-Consumer Brands

The world has never needed positive messages as much as it does right now. Companies and brands are now starting to take on that role, aiming to introduce the customers to a brand new product experience based on self-expression and vulnerability. Topicals is a skincare brand targeted at every 1 in 4 Americans that experience chronic skin conditions such as eczema and hyperpigmentation. Started by Claudia Teng and Olamide Olowe, the two women of colour take the lead in disputing the current division between skincare isles with enticing packaging and a lackluster product experience for consumers with skin conditions. Topicals fulfilled the urgent need to diversify the beauty spectrum because the way retail is merchandised, shapes customers’ thoughts about certain categories, which in turn can have significant implications as seen in the Black Lives Matter social movement last summer. As Cami Téllez, co-founder of underwear brand Parade aptly said, “brands write cultural scripts” —we live in a moment that embraces the myriad of interpretations sexiness can have and brands are responsible for empowering customers to express that.

The Payments Race: The Rise of Buy Now, Pay Later

Silvija Martincevic, Chief Commercial Officer, Affirm

‘Buy now, pay later’ (BNPL) is the fastest growing online payment method in countries such as Brazil, U.S.A, Australia, France, Japan, the Netherlands and the UK. These payment solutions have seen a massive rise over the course of the pandemic. Monthly installs of the Top 4 (BNPL) applications, Affirm, Afterpay, Klarna and Quadpay, rapidly rose by 400,000 in the span of a month between 20th August to 20th September 2020. This growth is expected to trickle down to at least the next two years, because it is affordable. Suddenly something out of budget is now accessible because you can pay for it over a set period of time. It is predictable because you pay the same amount at the same time each month, and it is transparent as you are told exactly how much you need to pay upfront and there is no added interest for delayed payment. Overall, this allows consumers a greater control of their budget. The next step would be to bring BNPL into physical stores, as Brazil has implemented a decade ago, and contactless payments that will speed up the process of transaction. This will be key for businesses when the pandemic is over because they will need a resurgence plan that ensures affordable purchases, as income may still be unstable. And as consumer confidence slowly rises, it is more likely to guarantee its survival.

Retail Media 2.0: Content Is the New Merchandising

Rachel Shechtman, Founder, Story

Ben Kaufman, Co-Founder & CEO, Camp

Lastly, Rachel Shechtman, Founder of Story, an experience-driven retail concept in New York which “had the point of view of a Magazine, changed like a Gallery, and sold things like a store”, spoke with Ben Kaufman, Co-Founder & CEO, Camp. Camp is the New York-based toy store that combines the appeal of toys with a cinematic experience where 75% of its revenues come from; it brands itself as a place where families can have fun. When lockdown measures were placed, Camp could no longer count on its in-person experiences for profit. Kauman turned to a number of strategies that helped their profit grow more than three-fold from last year. Firstly, it launched virtual birthday parties for 10,000 kids. With the sponsor of Ally Bank, it was able to deliver free gift packages to customers’ doors. A summer camp programme was subsequently rolled out in partnership with Walmart, where 200 videos of interactive content were made available to help children learn new things. When stores started to reopen, tickets were sold for events at Camp so that a timed entry was maintained, and some activities were held online. Most remarkably, its Halloween experiment at Hudson Yard mall, a scavenger hunt, gained $40,000 in revenue just on ticket sales where participants scanned a code at 18 different stations to receive a trick or a treat, and to win a free toy if they solved a puzzle. On top of that were sales driven by the increased traffic at the mall over the weekend.

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Edited by Ketki Mahabaleshwarkar, Deputy Editor-in-Chief

Image Credit to Business of Fashion website: https://www.businessoffashion.com/events/news-analysis/voices-2020-explore-the-full-agenda