In Dickens’ famous novel “A Tale of Two Cities,” he famously wrote, “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”
The recent news that Mattress Firm was looking to file for Chapter 11 bankruptcy protection at the same time digital native hotshot mattress retailer Casper announced its plans to open an additional 200 stores brought this Dickens’ passage to the top of my mind. Today’s retail is both exciting and frustrating; hopeful and depressing. There is amazing innovation happening throughout and yet, many legacy retailers still just don’t get it.
I’m encouraged by retailers like Macy’s that are both legacy and innovative – the work they are doing with b8ta, This is Story, and The Market at Macy’s all point to a plan to bring customers what they want – innovative experiences that inspire shoppers (and recent financial results back up that strategy). Likewise, The Home Depot’s and Walmart’s strategies to connect the complete shopping journey are both paying off in spades. However, there is still a long watchlist of retailers that should be able to connect with consumers but aren’t, while the digital natives (brands that started online before growing into physical stores) continue to expand their store fleets at a somewhat breakneck pace.
These digital natives (RetailNext has compiled a list of more than 300 companies we believe are poised to open stores within the next two years) simply think about business differently. They are, in large part, founded by millennials and their expectations for retail are very different than generations past. The businesses start with a customer-based digital journey, powered by an understanding of data that carries through the entire experience. By first learning about their shoppers and buyers online, these brands are able to better curate products and assortments, store locations, and even offers and promotions. To me this is the biggest thing holding legacy retailers back, technical debt that includes antiquated systems and a lack of ability to map the shoppers across all channels. The challenge for legacy retailers is that these companies can move SO FAST.
Beyond the technical limitations and talent constraints that plague the legacy players, the digital natives just have a different DNA. Decisions are made fast, teams are nimble, the “fail fast” mentality drives innovation and, honestly, these guys and gals are winning. Sure, some of these digital natives will not ultimately succeed – but there is no doubt the retail landscape will look very different in five years than it does today. I expect more legacy brands to close their doors, retrench, or continue to muddle along, and we know more start-ups will continue to fill the void.
The truth is there are still an untold number of retail experiences that miss the mark. The Mattress Firm/Casper parallel is an easy one to make because of the stark difference in the experiences. Casper stores feel like something special. Traditional mattress stores feel like a chore. (Doubt me? Check out #mattressfirm vs #caspermattresses on Instagram or Facebook to see what I mean).
So what does this tale of two retails mean for the future? To start, it definitely means that the excitement that surrounds this industry will not subside. For every experience that misses the mark on customer expectations, there is a creative entrepreneur thinking about how he or she can disrupt that space. It’s happened with eyewear, mattresses, and intimate apparel (in spades), so there is no reason to think the trend won’t continue to accelerate.
But does this mean the digital natives will win and traditional retailers will lose? I don’t think so. Traditional retailers have the benefit of scale. Even incremental wins on a better experience for shoppers have exponential benefits to the bottom line. However, standing still is not an option. If traditional retailers don’t continue to invest and innovate in data, analytics, and giving shoppers the experiences they deserve, they will be disrupted.
I’d love to hear your thoughts on what the next “Tale of Two Retails” will be! Comment here or message me at firstname.lastname@example.org.
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