At Retail, Innovation in High Gear

Years ago, innovation in retail was the purview of a handful of companies, notably Walmart Inc., Target Corp., Amazon Inc., Apple Inc., Selfridges & Co. and Nordstrom Inc. excelling in such areas as logistics, everyday low pricing, direct-to-consumer, experiential merchandising and service.

Now innovation is table stakes for staying in the game — and COVID-19 is forcing transformation at unprecedented rates.

“The sector wasn’t very innovative until Amazon or some of the New Age retailers showed up,” said Amitabh Ambo Bose, chief practice officer, consumer packaged goods, retail and hospitality, at Fractal Analytics. “Preceding the pandemic, there was always talk of transformation and experimenting. When the pandemic came, it was either innovate or die, there was nothing else — no other option.”

“There has already been a massive amount of innovation in retailing. The underpinnings go back years, with the beginnings of omnichannel retailing and understanding the consumer holistically,” from channel to channel, said Steve Sadove, Mastercard senior adviser and former chairman and chief executive officer of Saks Inc. “Investments by bigger retailers made years ago, they’re reaping benefits now.”

Sadove said for the near future, “I see major investments ahead in analytics, technologies, fulfillment, robotics, AI — all of that.”

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“Retail as a sector has been forced into a tsunami of innovation in digital marketing,” said Stacy DeBroff, founder and CEO of Influence Central, which conducts consumer panels and trendspotting for 350 retailers and national brands. “Retailers were too reliant on the in-store experience, flyers and catalogues. But COVID-19 forced a tremendous amount of experimentation and innovation, and the innovation that we are seeing, it’s reaching maturity levels in 2021.”

“Retailers need to become savvy in social media selling. It’s going to dominate a lot of retail sales,” DeBroff added. “Already, 69 percent of consumers have purchased something directly via Facebook posts, Instagram shoppable posts and swipe-up links, and every social platform is creating ways you can shop right from the site instead of going to the brand site. You can complete the purchase without ever leaving the social media platform.”

Increasingly, brands are turning to influencers, to lift sales via social marketing. “Charli D’Amelio on Instagram generated more than two billion impressions with a 100 percent surge in sales for Aerie and American Eagle,” she said.

Livestreaming activity is limited in retailing, but on the rise, DeBroff suggested. “Every social media platform has just come out with livestreaming functionality, be it Facebook, TikTok, Amazon Live, YouTube, Etsy or Twitch. You see Burberry used TikTok to launch their fashion collection. L’Oréal has also livestreamed to sell products.” The selling format, she said, “is just emerging but in 2021 it will really come alive.”

“Video and social commerce is the future of retail, and at Xcel, our Longaberger brand is a trailblazer,” said Robert W. D’Loren, chairman and CEO of Xcel Brands Inc.

Longaberger, a social commerce retailer, launched a monthly livestreaming series in early February, providing an alternative venue for shopping the brand’s artisanal handcrafted American home goods. It enables shoppers to learn more about the products by interacting with hosts who know all about the merchandise. Rachel Longaberger, the brand ambassador and daughter of Dave Longaberger who founded the brand in 1973, hosted the first show, on, whereby viewers had access to one-night-only offers and a chance to win a $500 gift card. Otherwise, Longaberger’s social selling format involves “life stylists” who use the Longaberger template to create their online storefronts to sell their own edited versions of the brand’s assortment on social media.

The livestreaming, D’Loren said, “enhances the customer experience by integrating live video shopping with a compelling host and new exclusive product.”

“Think Amazon; Shopify; The RealReal; Rent the Runway; A.I.; buy online, pick up in stores; ship from store, and sustainability,” Sadove said, underscoring his view that retailing as an industry is very innovative. “You used to have to make big investments in technology to play online. But companies like Shopify have given small companies the ability to play online. That’s been transformational for the smaller companies,” Sadove said.

Sustainability, he added, differentiates the retailer’s product in a way that appeals to the environmental sensibilities of many consumers.

According to a Coresight Research report, “Sustainability suffered a brief dulling of interest as the COVID-19 virus captured mindshare in early 2020, and attention was diverted to health, employment, family safety and finance. However, as 2020 progressed, the effect of COVID-19 appeared to accelerate interest in sustainability as consumers increasingly sought out brands, products, services and retailers with values and purpose beyond mere commerce.

“We predict that environmental awareness and a push for sustainability will impact a range of sectors and regions in 2021,” the report indicated. “Most industries have a handful of environmental concerns that are destructive to the ecosystem but also carry with them the potential for reputational risk and financial harm. We believe that this year, corporates will resume and increase their focus on improving sustainability efforts following 2020’s lull.”

Innovative solutions for retailing are emerging from social media. “Whether it’s Facebook, Instagram, or TikTok, we are starting to see social shopping evolve,” observed Anjee Solanki, the national retail director for Colliers, a commercial real estate firm involved in brokerage, property management, landlord and retail representation.

“During the pandemic, there’s been a 50 percent increase in adults using social networks. It’s no longer for the young. This will definitely start to gain additional traction,” said Solanki.

She explained that social media is becoming as much a shopping platform as a platform for educating and deepening engagements with consumers. Moreover, to a degree it’s happening in a down-to-earth manner, with brands shifting from using celebrities or actors, to partnering with everyday people, such as store associates, to deliver the brand message. There’s more authenticity and aura of inclusivity to the message that way, plus it’s a money-saver, Solanki said.

She also sees technology further integrating convenience, data collection and providing information to shoppers on brands, such as with QR codes to access videos that tell the brand story. “It’s taking you on a longer shopping journey in the stores,” or on your mobile at home. “The integration of online and offline is a must-have for all retailers,” said Solanki.

She cited the repurposing of malls from traditional retail to mixed use, and in one dramatic case, a 980,000-square-foot center in Cary, N.C., is being converted to an Epic campus for developing games and as a learning center. Mall of America in Bloomington, Minn., is repurposing, adding office concepts, educational centers and other alternative uses.

Fractal’s Bose highlighted several innovations: First, resetting inventories. He estimated that post-COVID-19, retailers will display 65 to 70 percent of their pre-coronavirus assortments, with about 50 percent of the items in their assortments selling during the pandemic.

“COVID-19 forced everyone to figure out new or better ways of doing things,” said Vic Drabicky, founder and CEO of January Digital, a digital consultancy which lists Tumi, Sandro, Drybar, Peapod, The Honest Company and David’s Bridal as among its clients.

Some of the innovation has become standard procedure, like buy online, pick up in store and curbside pickup, whereas QR codes which were “never really key to the mix,” are gaining popularity because they provide all sorts of information on products, including videos, and “ways of interacting with the product without having to physically touch the product,” he said.

Drabicky also cited an evolution with personal stylists, which companies like Saks Fifth Avenue and Neiman Marcus have adapted to communicate with customers at home, escort them through stores when they come in and show them around and have styles ready for them before they come in, to save shoppers time, and exposure to other people and products. “Saks has done a great job with this. It’s always been a service, but people didn’t use it because they felt it was an over-the-top luxury and made them feel they had to buy. Now it seems very basic because it’s safe, you get to where you’re going quickly and you get advice.”

Citing other retail innovations, Drabicky said Home Depot, where it can be difficult for shoppers to find what they want, updated its app listing the exact aisle and exact placement for every product.

He sees livestreaming taking on a different dimension. “There is always going to be a place for really big influencers and celebrities, but there is a big movement toward authenticity — using actual workers in your stores. That can be a really impactful sales mechanism and way to build a real relationship. Nordstrom has been doing it, Sephora as well.

“If you think of retail as a pendulum, stores on one side, digital or innovation on the far right, COVID-19 swung way to the other side,” said Drabicky. “I expect the pendulum to swing back. People are tired of being cooped up and want to have more of that socializing aspect.”

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