POSTED : January 2, 2020
BY : Martin Mehalchin

While we’ve written extensively this past year on how retailers can survive the retail apocalypse, we’re feeling optimistic as we turn the corner into next year. Overall sales increased by 3.4% from 2018, even though the traditional holiday shopping season was six days shorter this year. Ecommerce continues to ride a 10-year high of double-digit increases. So why all the doom and gloom around store closures and labor statistics? The future of retail is rapidly evolving as sales shift to new digital channels, and we’re still feeling the effects of an industry-wide disruption.

Long-term sustainability in retail requires greater foresight. Which is why we’ve taken out our crystal ball to predict the trends that will come to define the sector. Our message to retailers looking for a leg up heading into the next decade is simple. In our brave, new, online world, anybody can sell a product. Amazon’s 2,000,000 third-party sellers are proof of that. Just having a great product won’t guarantee success. You have to look at what can’t be easily replicated.  

We see three trends gaining prominence in the space—connected membership, direct to consumer, and future-ready commerce. Taken together, these can produce unique and frictionless customer experiences that define a brand. 

Connected membership 

To predict the future of retail and consumer goods, you’d be hard-pressed to find a more forward-looking brand than Nike. As the competition for customer loyalty in retail has become a blood sport, Nike keeps redefining the game.  

Connected membership is next-gen loyalty. It’s about connecting brand loyalty through access, not just to your own brand’s benefits, but to partner brands. Nike and Foot Locker have been strategic partners in the conventional sense for decades, but in 2019 they used digital tools to take their partnership to the next level.  

The two combined for an innovative New York concept store in Washington HeightsBy connecting Nike’s digital tools and Foot Locker’s physical presenceeach was able to expand the membership experience. Nike app members can scan products to pull up Foot Locker store inventory, while also gaining access to an in-store vending machine and a chance to win limited shoes from a “shoecase.” This collaborative experience combines the best of both partnersNike’s innovative digital shopping tools and Foot Locker’s empowering “community store” concept. 

Directtoconsumer 

Brands can no longer treat customers as one-off, anonymous buyers. When the competition expands to include subscription services and e-commerce, the ability to intimately understand the preferences and needs of your customers becomes paramount.   

Digitally native brands, like the subscription service Care/Ofwhich creates a personally tailored regimen of vitamins, powders, and nutrients based on a customer’s individual health profile, have the data maturity to prescribe products. Gathering the necessary data from the customer is built into their customer journey.

But brands operating off traditional sales models may not have the luxury of being able to compile a customer profile upfront. They’ll need to reinvent how they acquire brand loyalists, steering customers towards raising their hands for data capture that can transform an aimless shopping experience into one that’s highly personalized and curated.

Nike’s partnership with Foot Locker was just one aspect of their “consumerdirect offense.” By taking on customer-centricity from all angles, Nike is honing their understanding of what customers want. The Nike Adventure Club, a subscription service for kids shoes, offers personalized shoe shipments on a monthly basis. Not only is Nike addressing the parental challenge of fast-growing feet, but they’re also grooming sneakerheads for life. By capturing valuable data on the preferences of the next generation of shoppers, they’re able to predict trends and create more appealing products and experiences.

Future-ready commerce

In order to make these kinds of connected memberships and directtoconsumer experiences possible, retailers are going to need to future proof their infrastructure. To allow data to flow freely across membership programs, as well as apps and in-store sales enablement tools, retailers will need robust API programs.

Forward-thinking retailers are expanding their reach beyond their own stores and ecommerce sites. Cross-brand loyalty programs allow for a more fluid customer experienceGap, Williams-SonomaAscena Retail, and others, have developed multiple banner rewards programs where loyalty perks accrue across all their brands. When you shop at Gap your loyalty benefits accrue and can also be spent at Athleta or Old Navy. 

Now imagine a future where a customer can purchase a blazer online from the Banana Republic customerfacing app, then be able to return it to a Gap store, where a retail associate with a clienteling app can help the customer find a better fit based on her color preferences, size, and availability. The customer’s membership status and customer profile are known in both apps, allowing her to put on the blazer and walk out the door past the cashierless exit. This frictionless customer experience is only possible through APIs and headless commerce.

Future-ready commerce is driven by a high level of data exchange and content integrationTo achieve this, many retailers are moving towards “headless” decoupled architectures that leverage APIs to speed time to market and boost flexibility through reduced development and QA cycles, enabling the business to more easily deploy, test, and measure new capabilities across multiple channels without a large investment or time commitment.

If you’re leading a retailer into the next decade, you have to be forward-looking. Even companies that rely on time-tested brand identities can’t avoid digital transformation. Connected experiences, ones that are driven by customer interaction and reinforced by customer data, will be the magic elixir behind brand loyalty. These unique customer touchpoints will only be made possible through directtoconsumer engagement and future-ready commerce. The more accelerated your digital presence is, the more you’ll be able to stake a claim in your customers’ lives. As retailers and brands modernize their architecture and join forces through APIs, they will be able to create a single, connected experience and deliver it to their shared consumers.

For more insight on major innovations in retail, download our report Reinventing the brick-and-mortar experience.


About the Authors

A picture of Martin MehalchinMartin Mehalchin is a Partner at PK where he leads the relationship with some of the firm’s largest clients and helps drive the growth of our Customer Experience Services. He has dedicated his career to working with executives and managers to help them define their strategies and then translate those strategies into results. Martin is a Brain Trust panel member on Retailwire.com and is a sought after seminar leader and speaker at conferences and on webinars. Among the clients Martin has worked with are Nike, Atlantic Records, Microsoft, Qualcomm, Expedia, Victoria’s Secret, Adidas and DuPont. Martin is a Board member and Chair of the Marketing Committee for the North Cascades Institute.

A picture of Martin MehalchinSteve Larson serves as Senior Vice President of Digital Technologies at PK. He has over 21 years of digital experience, including more than a decade driving large-scale ecommerce engagements for clients such as Target, Bed, Bath & Beyond, Starbucks, PetSmart, and many others. His recent work focuses on IT Modernization strategies that leverage cloud-based open source solutions. He’s a passionate advocate for Agile based “test and learn” approaches to optimize customer engagement through increased relevancy and connected experiences across all channels.

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