Last week, I listened to an interesting podcast from Business of Fashion: 10 Retail Archetypes of the Future featuring Dough Stephens.
Stephens is a Canadian futurist, keynote speaker, author and business advisor on the future of retailing and consumerism. He also founded Retail Prophet.
These are some compelling insights from the podcast:
Last year, during the lockdown, I wrote about short-term and mid-term strategies that could bring retail businesses to adapt to this new era. I even said that long-term strategies would disappear because planning with such a volatility has “no sense”. But I agree with Stephens on the importance of seeing the big picture in order to face this big bang.
During the Covid-19 era, there is a huge risk of becoming myopic, focusing too much on the short-term or the new cycle. It’s important to look at long-term horizon. Everybody is mentioning how Covid-19 has accelerated trends (e.g. subscription model, omnichannel, resale or circular economy) but there is a bigger change: we are living an unprecedented transformation.
“Life is not a reflection of retail. Life is not a reflection of how we shop. How we shop is a reflection of life” (Stephens. BoF. 2021). As mentioned in previous articles, Retail is a reflection of society. Understanding retail is understanding social, political and economical trends. A retail business should be analysed like social phenomena: from different angles. In order to understand the future of retail, we need to understand how this crisis has fundamentally changed our lifes:
- Working from home
- Educating from home
- Cities are changing: the nature of cities is being rethought. Cities are experiencing outbound migration, a new redistribution of population and wealth.
- Changing in transportation models
- Social and professional experiences are changing with technology
Social media apps or online platforms have changed the way we communicate, express ourselves and shop. Take the example of instagram (1 billion active users). “Instagram posts would be art, and art was a form of commentary on life. The app would give people the gift of expression, but also escapism” (No filter. Sarah Frier). New generations look for experiences but social media has transformed human profiles into product experiences of real or fiction lives.
Digital technology has radically changed the relation between society and business. Music, Media and Retail were the first industries to feel the impact of digitization. But the world wasn’t prepared for the Coronavirus. No one was created for this digital era. We are on the threshold of the digital age, as Stephens said.
The end of the beginning of e-commerce
According to the podcast, today, about 3 trillion dollars worth of the global retail economy is transacted online but the opportunity that still remains is 27 trillion dollars of retail activity. Large companies like JD.com, Alibaba, Walmart or Amazon will start attacking categories that are vulnerable to disruption and promiss exponential returns in the form of revenue and profitability. Categories like banking, healthcare, insurance, shippping or education will be targeted. For example, Amazon launched 9 major initiatives in healthcare over the last 3 years aiming to disrupt the category. Last november, for example, Amazon announced that was launching an online pharmacy service. Such companies will evolve from being competitors to Apex predators.
These companies will transform from being large international retailers to become more like utility companies that power every aspect of consumer’s life.
In an effort to compete to those apex predators, businesses in the market would require to revisit its fundamental core positioning. Purpose is the new positioning. I’m not talking only about corporate vision, values, mission, or segmentation (e.g. luxury vs mass-market). If your brand is the answer to a question, what is that question? Stephens asks.
Why do you think we buy Nike products? Because its design, relatively-affordable price, …? Stephens thinks we buy stories. (read more about retail, culture and brand ethics) Stories about justice, equality, perseverance, challenge… We are buying a cultural point of view and Nike answers to the a specific question: who inspires me? Other brands can take another approach like Patagonia and its values. Patagonia is an activist brand that appeals to a customer sense of cause (e.g. sustainability).
Other positioning could be expertise, design or fun. In this regard, Stephens mentions Camp. CAMP is a Family Experience Company that helps answer the question “What should we do today?” through a unique combination of Retail & Media. Launched in December of 2018, CAMP operates five retail locations in New York, Texas and Connecticut and serves families everywhere via its digital platforms.
In the post pandemic era, your stores, your physical assets, are going to become a media channel according to Stephens. (This is what I described as retailtainment in Fashion Goes Tech). Your media is becoming your store, a new engaging ecosystem. Lululemon store, for instance, is not displaying only its yoga garments but visitors can seat and watch mindfulness courses through individual tablets, in a relaxed ambient. Sonos store in NYC doesn’t limit its offer to displaying its speakers and customers can listen to music as would at home. The objective is going beyond the tangible to offer the best experience within the brand ecosystem.
It’s not about selling products, it’s about creating a special atmosphere and getting closer to experiences and lifestyle (Nowness, LVMH online media platform. The Fashion Retailer. 2017).