Evergreen Trading recently sat down with Board of Advisory member Rich Last to get his perspective on retail. This article is the result of that conversation. 

Rich has enjoyed a 25-year career in digital retailing including his launch and leadership of the Digital Retailing degree program within the University of North Texas. Under his early leadership at JCPenney, the chain began selling merchandise via the Web in October 1994, becoming the first Department Store online. By 2005, they were the first $1 Billion Apparel and Home Furnishings website. 

Last week, the National Retail Federation gave Rich the “Spirit of Sam Taylor” award for service to the retail industry and for exhibiting the traits of service, positivity, and innovation. 

To state the obvious, retail is struggling. Just through July of 2019, 7,600 retail locations have closed. Even considering the 3,000 new stores that opened this year, ‘that’s still a net loss of approximately 4,500 stores.

While it’s easy to blame Amazon, other causes for retail struggles include the 24/7 demand for goods, the impact of mobile, the long tail of online sellers, and the global availability of pretty much anything a consumer could want.

According to Last, the middle section of the retail pyramid is disappearing. At the top are retailers providing genuinely unique customer experiences like some of the retailers highlighted here. At the bottom is the long tail of selection, price, and convenience from retailers like Amazon, Target, Walmart, and Wayfair. The middle ‘can’t survive with business as usual.

So who is currently doing retail well and how are they serving the needs of customers in ways that are allowing them to strive in these tough retail times? Here are five that Rich mentions (in no particular order) that are among leading retailers who are elevating the game.

Walmart

In an article about cutting edge retail, Walmart might seem like an odd choice. But earlier this year, Walmart reported its best U.S. comparable sales growth in nine years. Walmart’s U.S. e-commerce sales in the first quarter 2019 grew 37%.

Looking at Walmart’s e-commerce growth, they have been smart about their leadership. Much of their digital growth has come since acquiring digital brands and businesses such as  Jet.com, Bonobos, ModCloth, Shoes.com, and Art.com. But more importantly, where other companies make acquisitions then retire the founders of those companies, Walmart places these people at the top of the organization to run those areas of the business that they know best.

One notable example is Marc Lore, founder of Jet.com who is now the Chief Executive Officer of Walmart eCommerce US. Marc and other similar executives come to Walmart with a digital DNA that is indispensable for producing results.

Apple

It may surprise you that Apple is ranked number two in the U.S. in terms of online sales behind Amazon and just ahead of Walmart. But their physical retail success is probably less surprising. Former retail chief Angela Ahrendts stated in an interview that rather than simply selling merchandise, the company is bucking the trend of store closures though “experiential retail” and providing education to the customer.

More than most, Apple understands that success at brick and mortar retail must come from experiences that online cannot replicate. Apple is now opening fewer, larger stores so that customers can get the full experience of everything that’s Apple. The aim is to build long-term customer relationships in its stores. That can only be done by showing as much of its products and services as possible to customers.

Leadership at Apple still recalls Steve Jobs admonishing his teams when he opened retail 18 years ago, “Your job is not to sell. Your job is to enrich their lives and always through the lens of education.”

Sephora

Someone at Silicon Valley-based Sephora, number 20 in U.S. online sales and number one in the beauty category, must have heard Steve Jobs back then because Sephora is creating breakthrough store experiences to simplify, educate, and enrich customer experience like no other.

Sephora partnered with AI and AR app provider ModiFace (recently acquired by ‘L’Oréal) to launch both its mobile app and in-store 3D augmented reality mirror. Customers can virtually try on makeup and instantly switch from thousands of colors and even get recommendations on matching makeup to their particular skin tone.

Sephora also took the unusual step of merging its in-store and digital retail teams to create one omni-retail department. The result, according to Mary Beth Laughton, EVP Omni Retail at Sephora, “The power of using data to better appeal to her at every touchpoint and understand her in a deeper way enables us to create these experiences that she cares about across our channels. Loyalty is a data-driven ecosystem, so that’s hugely powerful.”

Starbucks

Most people may not think of Starbucks as a retail innovator, but they would be wrong.

Starbuck’s app is at the center of their innovation and connection with customers.

Using a machine learning platform, the app is able to make tailored selections for food and beverage based on local store inventory, popular selections, weather, time of day, community preferences, and previous orders. The app gets to  know the individual customer preferences. If you consistently order high caffein products, for example, the app will steer you clear of lower dose drinks you probably ‘won’t want.

Starbucks is also rolling out drive-through displays that understand and cater to store transaction histories and more than 400 other store-level criteria. Eventually, customers will be able to opt in to recommendations that are even more explicitly personalized. To collect this data, Starbucks is implementing IofT – enabled store machines to collect customer data. For example, Starbucks collects more than a dozen data points for every shot of espresso. From the type of bean to the temperature, they collect more than 5 megabytes of data in a typical eight-hour shift. 

B8ta

Pronounced Beta, Rich considers this the next evolution of retail. “B8ta is a new retail concept that could shape how products are sold both off and online. Think of it as a software-powered experiential retailer.”

‘B8ta’s core business is not just the physical store itself, but also in the facilitating of the retail mechanics for its partners. One such partner is Toys R Us. According to B8ta CEO Vibhu Norby, “The new Toys ‘R’ Us stores will be the most progressive and advanced stores in its category in the world, and we hope to surprise and delight kids for generations to come.”

In essence, B8ta is a presentation center for tech and other innovative products. Companies pay to rent out space to display their products inside the B8ta store locations, along with a tablet that each brand customizes with their individual software. An interactive environment is fostered in which all of the products within the stores are on display out-of-the-box and can be touched and demoed. The products are also sold directly to consumers. Store employees, which the company calls “b8ta testers”, help customers with demos and product information. The companies selling the products train these b8ta testers to be well-versed to demo and answer customer questions.

CEO Norby says it best, “If you shop in one of our stores, you will feel different because we have gone to such a great length to remove the idea of your visit being about buying a product.”

Wiser words have never been said about where retail must head in this mobile, digital, distracted world. All retailers should take note.

For tips on what it will take not to be caught in the “disappearing middle”, and to meet interesting solutions providers for your retail business, contact Rich at Richard.Last@Axcelora.com or go to www.Axcelora.com