What Are Established Brands Learning From New Players?
There’s no shortage of exciting, boundary-pushing young brands bootstrapping and innovating their way into the limelight. For heritage brands who’ve spent years building strong reputation in the market, there’s a danger of being left behind. However, the most savvy brands learn from their competitors, as well as from innovators in other verticals. Specifically when it comes to delivering a better consumer experience while still leveraging their brand recognition and strengths. To help brands of all sizes gain an edge, we’re sharing some of the lessons we’ve seen new players take to heart—and the best and brightest adopt—to grow their brand and business.
Partner (and Borrow) for Success
If you can’t beat them, join them. It can sometimes be hard for established brands to get outside of their bubble and think like an upstart. It isn’t always easy to innovate within a corporate structure, but partnering with innovators is a good way to harness new ideas with the stability and backing that years of success provides.
Swedish furniture retailer IKEA is a good example of a brand doing just that. Each year they recruit startups in the homegoods space for a hands-on bootcamp to imagine the future of furnishing. In exchange, these startups get the chance to partner with a mega-retailer that sells $44 billion worth of goods a year. IKEA is clearly embracing the philosophy of partnership more broadly: they acquired the startup Taskrabbit in 2017 to source local handymen and help customers assemble their Ikea purchases. They’re also planning to launch a furniture-leasing model in the near future, taking a note from subscription brands like Rent the Runway while tapping into rising pushback against waste and throwaway consumer goods.
Combine the Digital and Physical Experience
Is there a clear divide between physical retail and ecommerce? From the customers’ perspective, there isn’t. There is a huge amount of business to capture online, but that experience needs to align with physical touchpoints as well to maximize impact. A number of newer brands like Bonobos and Everlane have started as purely online operations and expanded into brick-and-mortar retail, with formerly online-only brands slated to open over 850 brick-and-mortar stores in the next five years. These new players approach in-store retail primarily as a way to deliver a great experience. Established companies need to learn how to form deeper connections with customers that are becoming accustomed to this less salesy approach.
One out of every three dollars of monthly discretionary income is spent online, and brands of every sort have to get serious about digital sales to stay relevant. Merchants should be leveraging technology to offer a well-integrated shopping journey across physical stores and online. A stronger digital presence will ultimately improve sales from your brick-and-mortar store—for example, 67% of online shoppers browse or make a purchase when they return an item they bought online in person.
It shouldn’t be surprising that embracing mobile is important, but creating an effective and integrated mobile experience is easier said than done. Mobile isn’t just an alternative buying channel to desktop—it’s a tool for researching and checking prices, it’s a wallet and payment method, and it’s the linchpin connecting individual customers to digital experiences like social and AR shopping.
For example, when MVMT Watches launched their mobile-first ecommerce site on Facebook to make it easier for social media users to buy directly from the platform, they saw their mobile usage increase to 60% almost overnight. Farfetch’s Store of the Future uses a combination of RFID and the phone’s radio frequency to detect when a customer takes an item off of the rail its hanging on and automatically adds it to their digital wish list. Payment is also completely mobile and happens anywhere on the shopping floor, which is becoming an increasingly common feature in modernized retail outlets. Using their app, customers can even keep in touch with whoever assisted them with their purchase. These innovations help facilitate strong customer engagement while allowing for a faster, easier, and more connected shopping experience.
The pop-up industry is valued at over $50 billion, and has become an effective and lightweight strategy for brands of all sizes to connect with customers in new ways while piloting different kinds of interactive experiences.
Pop-up shops let brands test their products and messaging in new cities and countries without the need for a heavy investment in a permanent storefront. DTC startups like Glossier have rapidly grown a following by giving potential customers who have seen their products online the chance to try them out in person. Glossier in particular has been so successful that they’ve opened multiple permanent stores that double as interactive brand experiences. But more established brands have also been able to form deeper connections with existing customers through the use of specialized pop-ups, like Kellogg’s’ cafe pop-ups or Sephora’s Beauty Hubs.
With pop-ups, brands can use a short-term store location to gauge demand with less up-front cost. And clearly this tactic is effective, because 62% of permanent clicks-to-bricks stores have opened in the same city where a brand opened their first pop-up shop. Because they naturally straddle the line between the digital and physical world, pop-ups can also further integrate customers into online channels while gathering useful information for targeting them online. Some large-scale retailers are ahead of the curve, with Macy’s acquiring experiential store concept STORY, adding more engaging and interactive elements to their store. But ultimately, a good pop-up is about experience. It should create memories and build a stronger connection to your brand that customers will carry with their purchase.
How we pay online and in-store is currently in flux. Mobile devices, peer-to-peer financial solutions, and other digital innovations are shaking up every part of the payment process just as much as the advent of the credit card in the 1940s. Amazon Go has been at the forefront of customers’ and retailers’ minds when the conversation of streamlined payment comes up, but other big retailers like Sam’s Club are already experimenting with new ways to smooth out the purchasing process. Their new scanning technology uses a combination of computer vision and machine learning to let users scan items from any angle without a barcode, then pay through the Sam’s Club app.
Easy digital payment processes take the friction out of checkout, one of the major reasons for cart abandonment. Alternative financing can help lower the barrier further, lessening sticker shock and making bigger purchases more immediately attainable. This is especially true for the next wave of Millennial and Gen Z consumers—Bread found that Millennial consumers applying for Bread’s pay-over-time financing options formed just under forty-five percent of total financing qualifications over Black Friday and Cyber Monday.
It’s not easy to reinvent your approach after you’ve found success in the past, but smart brands are always learning and growing. Stay abreast of what’s happening in your vertical and beyond, and ignore newcomers at your own risk—spotting what’s next and anticipating who to partner with and who to learn from can open up massive opportunities for businesses of every size.