In January of 2020, I wrote a piece for Total Retail that outlined why and how emerging brands are winning. Now, almost 4 months later, in the midst of the most disruptive pandemic of our lives, these same concepts and principles still remain true.
As the cost to acquire customers online continues to rise and categories continue to get more crowded, modern brands must be focused on building and differentiating their brand by catering to their customer. The Amazon effect is real and without strong brands, categories will be commoditized and the seller with the lowest price will win.
The most thoughtful emerging brands understand this and have prioritized deepening the connection with their customers—by meeting them where they are, both online and off. Some of best new brands have translated their digital experience into the physical realm effectively and have benefitted from the inherent advantages of connecting in real life. These stores are not only opportunities to reach new consumers, but also to drive higher LTV and NPS. It’s clear when stores work in conjunction with online channels, omnichannel customers quickly become the most valuable.
While headlines might be overloaded with debt-ridden, legacy retailers closing stores, modern, emerging brands have approached their growth strategy differently. By leveraging tools and platforms, emerging brands are able to keep laser focused on building up the most important brand building competencies — customer focus, product, supply chain, and marketing. To de-risk growth, Brands have looked to platforms and tools like Shopify, 3rd party logistic companies like Bergen Logistics, return portals like Loop and ERPs like Netsuite. This ecosystem not only connects brands to their customers seamlessly, but also allow brands to focus while protecting them from the inherent risks of trying to build in house.
When it comes to a branded retail strategy, the tools, platforms and choices have traditionally been few and far between, leaving really just two options: to embark on retail headfirst or to wait. While the desire to build the brand through IRL experiences is tremendous, the costs to the company can outweigh the benefits. Between real estate, leases, design, staffing and operations — retail is a maze of complexity that brings on significant risk and implications that fundamentally shift the value of a company.
As we think about the future of retail — especially in a post COVID-19 world — we believe brands should first maintain focus on their customer, and approach physical retail with three key principles in mind.
It’s these three principles that continue to be our north star as we build out the Leap Platform.
1. Mitigate risks and lower costs
To build LTV with existing customers and reach new ones, retail stores—if done thoughtfully—will remain a top priority for brands in the post COVID-19 landscape. However, retail can be as expensive as it is daunting, and with lease liability and upfront capex costs — opening a new store can be quite risky to a company’s balance sheet and cash flow. And, once the store opens, the focus must quickly shift to driving efficient, profitable stores which is no easy feat.
Recently, brands have de-risked retail with new concepts and short-term pop-ups like Glossier in Boston’s Seaport. Bonobos pioneered the Guideshop with a small format, no inventory model. Target has launched small stores in cities and there’s Nordstrom Local with an inventory-less pick up + try on format to support e-commerce.
Just like a brand launching their ecommerce on Shopify, brands can leverage Leap to deploy stores with less risk, and, ultimately drive profitability faster with Leap’s data-driven operations and frameworks. The Leap platform de-risks a brand’s physical retail strategy by both signing the lease and paying for upfront store development capex. Ongoing, operations are enabled by our platform data & analytics driving further efficiencies and benefits.
2. Ensure flexibility & agility
From adjusting pricing to A/B testing campaigns and optimizing funnels — being iterative and agile in how brands communicate with and attract customers are no longer differentiators, they’re antes. Physical retail is no different — yet most stores do not allow for flexibility, especially in elements that drive performance like the layout, merchandising and the physical store location.
Setting up retail stores to be flexible is paramount to success. Stores must be designed efficiently and with modularity so within hours, they can be optimized to better drive performance — just like a website. As we continue to design and develop future stores and optimize current ones, flexibility and modularity are must haves. Location flexibility, once only reserved for pop-ups, is also now an option as our Platform allows for optimization across stores and brands.
Now, more so than ever, brands are showcasing their ability to be agile. From brands shifting their production lines to make hand sanitizer and masks, to Summersalt creating an emotional support text hotline to restaurants and retailers offering curbside pick up the landscape continues to evolve.
3. Operate with excellence
Consistent operational excellence in retail is the difference between a 1-star review and a 5-star one; an unprofitable month and a profitable one. From front-of-house interactions with customers to back-of-house SOPs, operational excellence in retail is necessary 100% of the time.
Great brands like In n Out burger have cult like followings and some of the highest rankings on Glassdoor thanks to their operational excellence. The well trained staff and integrated omnichannel experience at Aerie make it one of the fastest growing brands.
At Leap, our Platform foundation is built on data, omnichannel technology and retail best practices to drive operational excellence day in and day out. The result of this excellence transcends bottom line impact and manifests itself by delivering awesome customer experiences. To be successful, modern retail must leverage data to power decisions from location, to staffing to merchandising. A well-trained team is also essential, ensuring operational standards and great customer experiences.
While today stores might be closed during the COVID-19 pandemic, the future of retail is still very bright. Brands will continue to prioritize retail strategies and customers will continue to shop. However, going forward retail is sure to look very different — both from how brands approach it and how the shopper experiences it. As we look to re-open stores and get back to our collective growth plans, I’m excited to enable brands to stay focused on their core competencies and reach the customer in the right places.
Amish Tolia is the Co-Founder and Co-Ceo of Leap