uCommerce

Consumer is directing

Perspective by:
Research Squad
Moxi Ventures

Have we passed peak big-box retail? Large-store, large-chain retailers have seen dramatic growth. Companies like Wal-Mart, Ikea, and the like have brought new levels of consumer choice at highly competitive price points. But now, as we keep riding the digital wave, commerce is getting ever-more distributed, cashless, and hyper-personalized. The big-box model of B2B2C is yielding to a demand-driven, direct to consumer approach whose success is predicated on knowing the consumer as an individual at ever-greater degrees of granularity.

Knowing your customer in intimate detail is the new table-stakes for retail players. When Unilever shelled out a billion dollars to buy Dollar Shave Club, for example, it wasn’t just getting one of the hottest brands in male grooming, it was acquiring a digital business that had spent years developing a deep understanding of its customers.[1]

Those customers are far less wedded to in-store shopping than they once were. And that’s changing the function of the physical store. It’s still a vital means of attracting new customers – and selling products of course – but the function of the retail store is shifting from shopfront to showroom for a digital inventory.

That makes the in-store customer experience ever more vital. And retailers are thinking big when it comes to curating unforgettable shopping experiences. Nike’s newest New York store features a mini basketball court, a soccer pitch, and treadmills augmented with virtual running simulators, making it a hotspot destination for the city’s experience-driven shoppers.[2] The physical store will become increasingly the venue to show and reinforce a company’s brand ethos.

Today’s store is a place for getting immersed in a super-personalized brand environment. It’s about designing your own luxury bag at Coach. It’s about 3D-mapping your design for a customized Adidas hoodie.[3] And it’s about designing personalized Nikes just for you. Because, hey, you don’t need to be Macklemore to create custom sneakers that are straight fire.

For payments, too, it’s all change. Cash is dying. It’s preferred by just 11% of US consumers, for example, whereas 75% favor credit cards or digital payments.[4] China has emerged as a leader in the cashless economy, with mobile platforms like WeChat enabling one-click purchases via QR codes.[5] Total electronic payments in China are set to quadruple to $45 trillion by 2021. Similar things are happening in India, where Google-backed digital payment app Tez is just one of a host of services driving a transition to cashless retail.[6]

The behemoth of digital retail, Amazon, is changing how all retailers need to think about their own digital storefronts. The power and reach of Amazon’s platform sets a high bar for others as it extends across categories - from sneakers to salad. By building each customer’s unique experience around their specific tastes and preferences, Amazon knows what it customers want - often before they know it themselves.  

All this personalization is only possible thanks to today’s powerful platforms and analytics-driven algorithms. It’s enabling brands big and small to bypass the retail middleman and sell directly to customers. Nike is driving up sales on its own e-commerce site with algorithm-focused targeting and enhanced personalization, for example.[7] Similarly, Care/of delivers its customized vitamin packs direct to subscribers, without the need to go through big-box retailers.[8]

This all tells us something essential about retail today: its paying to personalize direct.

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