This Week in Retail Marketing Innovation - May 7th, 2018

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Experience is the Future of Retail

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This week Macy’s announced that they had acquired Story.  Story is the brainchild of Rachel Schectman, a long-time advisor and friend of ours, here at Perch.   Story completely shifts it’s concept every 6-8 weeks around a theme.  These themes are sponsored by brands who pay for premium placement, including by using technology such as Perch.   We have been in about half of the stories over the last year, for example.   Story describes itself as, "Point of view of a Magazine; Changes like a Gallery; Sells things like a Store."

The acquisition is a big win for both parties.   Macy’s picks up one of the brightest minds in retail to lead their Customer Experience team, and Story’s concept can now be deployed at much greater scale.  The pop-up concept will draw greater traffic in-store for Macy’s and create customer urgency and greater loyalty.   And now Macy’s has a premium asset to create deeper relationship with brands.  

Macy’s acquisition strategy appears to be heating up and here is a good piece on why Macy’s has been better executing on acquisitions than Bon Ton. FYI Macy’s just recently announced they were doubling their Backstage footprint with 20 new stores, further validating the strength in the discount market.

The Fastest Growing in Job in Retail … Software Engineer!

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Did you know that according to LinkedIn’s research, software engineer is the fastest growing job in retail, jumping from the 8th most popular position in 2017 to the 3rd?  The whole retail industry is on a tech hiring spree.  On the heels of Home Depot’s announcement of opening up 1,000 new tech jobs, Walmart Labs is hiring 150 tech jobs and Amazon announced thousands of new tech jobs in Boston and beyond last week.   Tech is coming to retail and fast.   It’s about time.

To put that in context, April showed a MoM increase in jobs of 3,700 and 49,000 YoY.   So just like the rest of industry, we are seeing a seismic shift in function and tech adoption.  

Amazon and Walmart – Friend or Foe?   

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Chico’s is experimenting with selling directly on Amazon.  Is it a wise move to plug into a large marketplace where their customers transact, or is it ceding that their owned eCommerce strategy isn’t working well enough?   Either way, it’s a win for Amazon who is now the largest online apparel company and investing heavily in the space with private brands and technology to ensure fit and reduce the ~30% return rate in the fashion category of eCommerce.

Meanwhile, Walmart launched 4 more private label fashion brands to continue its fierce competition with Target and Amazon.  At a certain point, they also have to worry about competing with brands.   How far will private label go?  No wonder brands want to build relationships directly with their customers.

In fact, Amazon just announced a new brand in a new category, Wag in Pets.  Pet as a category is out pacing retail industry growth.  Companies like Bark have been rapidly expanding in the space with subscription offerings that have high brand affinity.

Whole Foods Tries to Discard “Whole Paycheck” Reputation

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Amazon is continuing to invest in the integration of Whole Foods, by offering 5% cash back for Prime Customers.  This is a clear push to help attack the brand impression of Whole Foods (aka “Whole Wallet” or “Whole Paycheck”) as expensive.  Meanwhile, Whole Foods launched new rules for vendors designed to reduce prices and increase efficiencies, but many local providers are reeling because of new costs and responsibilities and increased competition from (less expensive) national brands.

Consumers Non-Plussed About Plus Size Clothing Options

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The average woman in the US wears a size 16, yet most high fashion brands stop their lines at size 10 or 12.   It’s no wonder that women are dissatisfied with plus-sized options.   But it is a large market at $21b and growing at 4% YoY, twice the rate of apparel in general.  This represents a tremendous opportunity, which I have seen first hand, because my wife works at Universal StandardRead this great Fung Report on the plus-sized fashion market opportunity.  

 

Generational Marketing and Social Media

 Source: http://somethingbig.co.uk/marketing-to-generation-z/

Source: http://somethingbig.co.uk/marketing-to-generation-z/

 We certainly see a lot studies published on the differences between Gen X, Millennials and Gen Z, and many of those differences are profound.    Gen Z values are driving a cultural shift in retail branding with demands for greater diversity, inclusiveness and respect for ideals.   You should pay attention.  Gen Z will represent 40% of shoppers by 2020.

While social media is extremely popular its influence has flatlined even while digital sales are up 15%.  Social commerce represents only 2% of revenue according to eMarketer.   This is a nice post on social commerce that talks about the struggles of consumer-generated content, managing brand and why certain categories will never be big on social.  Part of the struggle is a lack of authenticity and brand intimacy, further exacerbated by ad spend.

And one big generational shift is perceptions of privacy, which should give networks pause, but perhaps brands should also be worried about the perception of surveillance commerce, as this opinion piece argues.   Gen Z is much more wary of their privacy then millennials.

 

New Retail Tech Adoptions

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Zara has some fun, new Augmented Reality technology for in-store exploration.  You can now visualize clothes in-store.  Meanwhile, Sephora and Nike are testing out Facebook’s new AR tools for Messenger to help you picture products on you.  Sephora recently announced the opening of its second “Studio” store format, which is more deeply focused on technology in-store.

Blockchain applications are getting more real in retail with examples from Walmart, JD.com, Starbucks, Amazon and Carrefour.  Primarily these are supply chain tracking solutions given the need to manage a vast distributor network.   Then again, I kind of liked this Universal Rewards Protocol where you can share your shopping history across retailers to unlock greater rewards with greater insight into your shopper behavior.

Walgreen’s launched a new SkinID tool  to help customize the right skin regimen for you. Meanwhile, Target is cozying up to startups, hosting 10 beauty startups in their new accelerator program.   Is this going to become an increasing trend to spur innovation, improve the tech DNA of retail orgs and cross-pollinate ideas?

Sounding Smart at the Retail Water Cooler 

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