Shoptalk day 3 recap: boring retail is dead

The inside scoop on highlights, buzz and key discussions from our third day at the Shoptalk retail conference.

The renaissance of brick and mortar retail was on full display during day three of Shoptalk at The Venetian in Las Vegas. As we’ve seen and heard over the past few days, retail has fallen in love with stores again, but they must be more beautiful and engaging than ever. Retail reporter and strategist Steve Dennis summed it up best: “Physical retail is not dead. Boring retail is.”

We heard about emerging brands that are anything but boring; we heard from retailers who’ve mastered the mix, and we caught snippets of what is sure to be a growing conversation on sustainability and corporate social responsibility.

In a panel hosted by Ken Fenyo, Consumer Markets Lead, Fuel by McKinsey, venture capital partners Aileen Lee, Cowboy Ventures; Nicole Quinn, Lightspeed Venture Partners, and Rebecca Kaden, Union Square Partners, shared some of the up and coming retailers that are changing the definition of what a store is.

One standout from the event is The Museum of Ice Cream, an interactive art installation with ice cream and candy themed exhibits that change every three months. “It’s built for Instagram,” Lee says. People want to photograph and be photographed there. Visitors pay an entrance fee to come in. They can also buy ice cream and candy.

The group also likes CAMP, a family experience store that is generating a lot of engagement in New York City. People pay $45 to visit a 10,000 square foot indoor play space set up like a summer camp. Once inside, they can play, read and relax. Oh, and they can also buy toys, books, games and more.

“It’s more about how people are going to experience their time than how they’re going to experience the product,” Lee said.

Quinn cautioned that for these types of experiences, authenticity is key. “We’re already starting to see knock offs of the ‘museum’ concept and they’re not doing as well. It has to make sense for your customer,” she said.

“People connect to emotion, not business models,” noted Kaden. “Successful brands sustain authenticity over time.”

Although these direct to consumer brands are emerging with a speed not seen before, we may not see them scale as quickly.

“A unique period of aggregated attention may be ending,” said Quinn. “We are between platforms. Mobile is still dominant, but we’re in the later innings. We’re most excited about brands that are going beyond omni channel—DTC brands that want to be wherever the customer is.”

“Brands aren’t going to bank on a channel as a model,” said Kaden. “They’re going to bank on products and services. Channel is just a means to get there.”

These new brands will move beyond the transactional. They might start with a transaction, but then lead to entertainment, learning, connection with a community. But, they don’t necessarily have to be high concept.

“There’s room on the landscape for upgrading everyday customer experiences,” said Quinn.

“There are still so many categories that are sleepy and boring,” said Lee. “Think about the Starbucks model. They took a 50-cent cup of coffee and turned it into an experience.”

She cited Peloton as another example: “They took an exercise bike you can buy for a couple hundred bucks, connected it to the Internet, created workouts and a community. It’s addictive, and it’s convenient--you don’t have to put your butt in a car to go to the gym.” It’s also $2,000 for the bike, plus ongoing subscription fees.

Not every established retailer is late to the store-as-an-experience-entertainment-community game, but even the old hands are doubling down. Crate and Barrel CEO Neela Montgomery described how the company operationalized its personal design services with in store tools that allow customers to see furniture and accessories in their own homes. Associates can also make home visits.

“This is something that our best associates have always done,” she said. With a more programmatic approach, it’s proven to be a very effective form of engaging clientele—Montgomery says the conversion rate for a personal consultation is 76 percent, and the average ticket is $1,000 higher.

The company has also entered into new partner ships with Zola, an online wedding registry that kept getting requests for Crate and Barrel products, and Fernish, a furniture rental platform. Both are helping the company acquire younger customers. They’re also experimenting with restaurants.

“Entertaining is at the core of our offering,” said Montgomery. “We wanted to create a dining experience that is like an elevated experience of being in someone’s home.”

28-year old beauty retailer Ulta discovered the magic of experiential retail long ago, not just with makeup samples but with other simple things like a wall of plugged in hair dryers that people can test out, and in-store salons.

“When someone has a stylist, there’s no greater connection than that,” said Chief Merchandising and Marketing Officer Dave Kimbell. “They come in regularly. They try other services. They buy product.”

This close connection with the customer has yielded a rich data set that they have always used for personalizing their offerings, but new tools have allowed for bigger steps such as using artificial intelligence and augmented reality to help customers find the right foundation shade out of thousands of options.

Kimbell was followed on stage by Mike Smith, President & COO of Stitch Fix, whose talk should have dispelled any lingering doubts about what a brand can do with data. The eight-year old digital native clothing subscription company has amassed a huge amount of detailed data simply by asking customers for it. When they join the service, customers fill out a questionnaire about their preferences to create their style profile. And, with every Fix they receive, they are asked to provide detailed feedback about size, fit, style, color for each item. “We get feedback from 75 percent of checkouts,” Smith says.

With data from over $1 billion in sales and tens of millions of fixes, they are continually refining the selection for each customer, and a human stylist makes the final calls. All that data also allows for continual experimentation, leading to breakthroughs like their “Style Shuffle” game, which lets customers react visually to different styles, thereby expressing preferences they can’t always put into words and helping Stitch Fix personalize their fixes even more.

A similar process is at work at Pinterest. Co-founder and CEO Ben Silbermann talked about continual learning to make sure that “every time you open Pinterest, it feels like it was curated especially for you.” Silberman said the company is betting big on computer vision technology which helps machines understand visual images. The goal, bridging the aspirational gap between curating and shopping, as well as closing the path between discovery and purchase when they find what they want to buy.

Computers are also learning to recognize our voices, and in the afternoon general session we heard from David Isbitsky, Chief Evangelist for Amazon Alexa. While it is still early days for voice commerce, its speed and convenience will quickly change consumer behavior, he said. “To be able to ask, ‘Alexa, reorder,’ and have an item on its way to you—nothing beats that,” he said. “Our grandkids will think it’s ridiculous that we were carrying around all these devices and looking all the time at these screens.”

Though much of the shop talk at Shoptalk this year has been about the rebirth of the store and the marriage of tech and traditional retail, it’s worth mentioning another thread we’ve noticed percolating in some sessions: Sustainability.

In the apparel industry, the second most polluting industry after oil and gas, a few brands are already putting a stake in the ground around environmental sustainability. For example, Canadian apparel company Frank and Oak is focusing on ethical supply chains and more environmentally friendly manufacturing processes. And, Gap Inc. recently achieved B-Corp. certification for its Athleta brand. B Corp Certification requires accountability for a businesses social and environmental performance, in addition to its financial performance. The certification motivates and fosters a community of for-profit companies committed to redefining success in business.

Both companies note that customer demand is driving these initiatives, so it wouldn’t surprise us if, in this world of ever-increasing customer expectations, we soon see a Shoptalk track devoted to the topic. Today’s customer wants personalization and experiences; tomorrow’s may demand social and environmental responsibility too.

“The customer is changing,” noted Aileen Lee. “They value the values of the brand.”