The Super Space
Rebecca Robins and Alison Cardy
Disruption is on-trend for retailers, from in-store influencers, used cosmetics to shared outfits. The in-store experience is still vital, but its role is shifting thanks to s-commerce and subscriptions.
In Luxury, retailers have long been familiar with the concept of the ‘House’– a space dedicated to building brand identity; the glorious Foundation Vuitton is perhaps the most famous example. In 2018, we saw this idea continued and extended as never before with a slew of new retail spaces that are less houses, and more cathedrals, allowing the passionate consumer to congregate with other followers in awe-inspiring environments. Nike, for instance, recently leapt ahead to open ‘House of Innovation 000’ in Shanghai and NYC. The stores are a peek behind the curtain of Nike’s biggest innovation moments, matched with personalized and digitally-connected shopping journeys. Nike’s Direct to Consumer President Heidi O’Neill calls them an “only-here” Nike experience.
Recently Gucci unveiled ArtLab, a 37,000-square-metre hub of creativity, craftsmanship and sustainable innovation in Florence. CEO Marco Bizzarri says, “Gucci ArtLab is the perfect expressionof the culture that we have been building and nurturing. It is the tangible expression of a place to learn skills and techniques, a workshop to generate ideas, and ideas are the lifeblood of culture.” Gucci is at #33 on Best Global Brands 2019 with 23% brand value growth YOY. Overall, we have seen a refocussing of the retail experience across the luxury and premium categories – fewer openings, but a greater concentration of strategic flagship stores in global destination cities and ultra-prime locations. The all-important Chinese consumer may be spending more domestically, but the flagship store in destination cities is playing an ever more important role in delivering a brand experience that will help drive sales whether they are at home or online. It wasn’t so long ago that commentators claimed bricks and mortar shopping would be replaced by digital. Instead we have seen market-leading companies in luxury and premium categories renewing their investment in strategic in-store experiences, understanding that the more our lives become driven by algorithms, the more the idea of discovering something physically, through shopping experiences, becomes very appealing. Creating the opportunity for customers to connect with other people who are passionate and dedicated to a common interest brings the brand to life. Glossier, the insta-famous DTC beauty brand is a master at this. In this new world, Instagram is the shop window and the store is the club. Glossier’s shop assistants are all Instagram influencers – cult leaders of huge communities in their own right, human magnets to the young customers who make pilgrimages to stores to meet them in person. Each influencer scales the reach and impact of the carefully curated set of just four concept stores, humanizing the brand along the way.
These hyper-personal and hyper-local experiences are proving the operating practices of success, as human-to-human connections take on exponential new levels. Establishing flagship store locations on every street corner of the world’s metropolitan cities is no longer single-handedly the recipe for success. In their bid to catch the attention of the new generation of consumers (luxury and premium), brands have had to become ever smarter in delivering their DNA in a much more experience-based direction. What is luxury, though, and what is merely premium? Marketing departments for mass premium brands have seized on the phrase ‘luxury’, and that tagline saturates the advertising landscape. That conflation of premium with luxury has created a view that the luxury market is available to everyone. Technology companies seek to position their products as luxury items, specifically Apple. The #1 overall brand in 2019 Best Global Brands delivers a premium smartphone product that has the profit margin of a luxury good – but technology as a status symbol quickly erodes over time. The Apple Watch Gold Edition of 2015 was priced in the $10,000-$15,000 range and aimed for an exclusive buyer, but the market for an earlygeneration technology housed in an expensive metal case proved extremely limited.
Stores, though, power the message of any brand and allow customers to soak up theproposition in person. However, this does presents several challenges. Businesses can either spend capital to build a global network of stores – with inevitable expense overheads; build digital channels – which lack the tactile presence that is critical to the luxury and premium model; or forge geographical partners – and bear the risk of ceding control over the entire experience. A limited distribution strategy remains a key element of the market so as a result we see brands weaving digital ever more deeply into their brand DNA to drive success. Gucci, again, has made huge moves to digitize its business – but has concentrated these efforts on operations that drive better purchase and delivery for the customer and efficiencies for the business. On the other hand, Chinese consumers have experienced a series of firsts from Louis Vuitton; the brand’s first release of a product drop on WeChat, and as the first major luxury player to enter social e-commerce platform Xiaohongshu. With Xiaohongshu, Louis Vuitton has experimented with a more conversational and playful approach, to engage new consumers on their own terms around their first ‘entry-level’ purchase. Adoption of social commerce among North American retailers is up about 16% from 2017 and it represents a rapidly growing opportunity area. Across the various social platforms, there have been swift moves to evolve and expand s-commerce capabilities in newer, faster, more integrated ways. Facebook recently invested heavily in Meesho, an Indian social marketplace that connects nearly 2 million sellers with customers on social media platforms. Since 2017, Pinterest has offered “Shop The Look” Pins which identify specific items within a Pin image and connect users to purchase pages for each relevant product. And in March 2019, Instagram announced Checkout, where users can purchase items directly on Instagram without being redirected to a third-party site (Snapchat released a similar native checkout feature for select influencers a few months later).
At launch, Instagram gave a select group of 26 brands access to the Checkout feature. Unsurprisingly, apparel brands were well represented at the launch with Zara, H&M, Outdoor Voices, Uniqlo, and others jumping at the opportunity to directly drive social sales. Apparel makes perfect sense within this new seamless s-commerce world. With the rise of influencer culture, brands are hoping to convert style into sales. Online millennial-centric retailer Revolve used Instagram and a network of over 3,500 high profile influencers to create a powerful brand that went public in June with a $1.2 billion valuation. UK-based brands like ASOS and Boohoo are also putting a heavy emphasis on social media to drive brand adoption. Building shoppable content is a major component to winning s-commerce. To create a stronger social community and drive sales, H&M recently launched an online fashion advice forum called Itsapark. The website answers various questions around trends, styling best practices, and other shopper inquiries in video and photo content created by influencers. Unsurprisingly, there are links to purchase relevant H&M pieces embedded in the content. Zara too launched its @livingzara account on Instagram where influencers take over each week to create shoppable Instagram content.
Looking to the future, it will be important for apparel brands to focus on two major areas for s-commerce—shoppable video and visual search. Disruptive entrants like technology player MikMak enable brands to sell from images and video across all social and digital channels (apparel giant Levi’s has already engaged MikMak in creating this type of content). Visual search is becoming critical as consumers move to a completely visual world. And Amazon recently launched a “StyleSnap” feature that mimics Pinterest’s “Shop the Look” Pins – emphasizing that the future of clothes shopping will be both socially and visually driven. Communities are emerging at scale around cultural trends like athleisure and minimalism that drive loyalty and engagement. Consumers are drawn to emerging brands like Bonobos (home of better-fitting menswear), Away (luggage for the modern traveler), and Outdoor Voices (activewear for Doing Things daily) that can target specific audience niches with authentic narratives. Patagonia is taking this notion one step further, to bring circularity into its business model and inspire brand loyalty by encouraging used purchases. On a company level, getting additional revenue at good re-sale margins, bringing in new, lower price-point customers, and improving brand loyalty via secondhand quality control. This matrix of ownership is changing to the lens of experience. The concept of a luxury good as a status symbol is morphing to that of a luxury experience, involving the customer in a life moment. A need for difference will always be vital in consumers deciding where to spend their money – a desire to experience something fresh. See our box on the right for more on this trend.
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