By Loren Padelford, VP & Head of Retail, Shopify Plus
The way we shop has changed forever — and it’s causing seismic shifts in the way retailers plan for the future. With the introduction of smartphones, and the continued advance of online shopping, commerce has fundamentally shifted from retailer led to consumer led. With consumers in full control of how and when items are purchased, their expectations for brands are rapidly evolving. Ultimately, there are four major trends that all retailers, regardless of size and scale, must pay attention to if they want to survive and thrive in the future of commerce.
1. Commerce is now all about the experience
The ways we are interacting with brands and products has exploded over the last few years. Regardless of the format, one thing has become paramount for retailers: the shopping experience must be exceptional. If retailers aren’t thinking about creating a brand-driven, sensory experience for their consumer, they are operating in the old world and risk becoming obsolete.
Some of the most innovative retailers in the world are working to develop retail strategies that engage consumers while creating shopping experiences that evoke emotion. One recent example of this thinking: Nordstrom this year announced a new concept with services like manicures and on-site tailoring, as well as a handful of dressing rooms where shoppers can try on clothes — even though the physical store doesn’t stock them. Instead, stylists will pick up the pieces from larger Nordstrom locations in the Los Angeles region and deliver them to the customer.
Another brand that’s focused on experiences is Nike. Last year, the world’s largest athletic-gear maker opened a giant new store in Soho neighborhood, featuring a basketball court and a 400-square-foot soccer trial area. That’s an entire sales floor that’s dedicated to experiences, not clothes or shoes. It helps make the Nike brand more engaging — and that’s what consumers will continue to expect in the future.
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2. Multi-Channel is replacing Omnichannel
Before online stores, most retail shopping flowed through brick and mortar locations. It could take decades for a brand to become nationally or globally available. But today, the playing field has become more level. With technology, everyone can go head-to-head against the world’s largest retailers and brands. If an entrepreneur wants to sell something, it can become available globally overnight by way of an ecommerce shop.
But it’s not just online stores which brands have to optimize for. To effectively create an experience and engage with consumers, brands must manage a huge landscape of channels where their ideal customer might want to shop. Social media, offline stores, online stores, mobile phones, online marketplaces, and pop-up shops are just a few options from the ever-expanding list of shopping channels. The best brands understand their consumers’ profile and behavior, and select the right channels, right products, and right experiences to best suit those needs. But the days of a single channel approach are long over — and a multi-channel strategy is a must-have.
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3. Everyone must act like an entrepreneur
Dozens of e-commerce companies have percolated to give small business owners the opportunity to own and operate a flourishing startup. There is Etsy for handmade items, eBay for used goods, and ecommerce software provided by Shopify that’s used by hundreds of thousands of merchants. In fact, the five biggest shops on Shopify all generate over $150 million in revenue — and none of those companies even existed five years ago.
One of Shopify’s greatest success stories has been Kylie Cosmetics, which is run by reality TV star-turned-beauty mogul, Kylie Jenner. Within less than a decade, Jenner’s e-commerce- exclusive cosmetics line is projected to achieve $1 billion in annual sales. In comparison, it took L’Oreal’s Lancôme franchise 80 years to hit that same mark. E-commerce retail has democratized the reach of new brands in a way we never imagined, and is disrupting every single consumer-product category.
4. Brands are leveraging technology instead of building it
In November 2015, Kylie Jenner launched her cosmetics company Kylie Cosmetics online. Eighteen months later, the company is selling over $350M in lipstick, eyeshadow, and lip gloss, a feat that took industry leaders L’Oreal and Revlon decades to achieve. Gymshark launched their athleisure business to take on giants like Nike and Lululemon in 2012 from their apartment; and now in 2017 the company is fast approaching $100M in online sales. There are countless examples of companies disrupting established industries by focusing on their brands and their stories, as well as leveraging technology to amplify their growth.
Retailers must react quickly to changing consumer demands. Waiting months or even weeks to make changes to the online or offline experience can cost customer loyalty and sales. The days when retailers spent huge amounts of money on technology infrastructure to support online shopping are over. Those resources need to be allocated to building products and marketing. How a retailer leverages technology is quickly becoming a strategic advantage for some — and an anchor for others.
