Store Innovation Watch: August 2018

This is the third publication of our Store Innovation Watch series, which, given retailers' dedication to experimenting with store innovation, looks like it will continue to be a monthly update for the foreseeable future.

This month, I already find myself reaching back to the June post, to pick up two store innovation trends identified there: store/pop-up infrastructure and the rise of tech companies opening stores. Two of this month's innovations build on those trends. Among the other six, you'll find another store from another online retailer moving offline, vending machines, community building, and innovations in the owner experience. For retailers, the take-away involves not over-investing in one type of innovation, as even minor slip-ups in implementation can threaten the whole initiative. Enjoy!

1. Online to Offline: The RealReal Los Angeles

   The RealReal already has a store in SoHo, and has experimented with pop-ups for quite a while. But this latest store, 12,000 square feet in Los Angeles, reflects the company's evolved thinking around the physical experience, including and most especially what The RealReal calls "RealReal 360" – "a unified view of all inventory and customer behavior across channels – brick-and-mortar, desktop, mobile, e-commerce centers, and luxury consignment offices.

   The new store will offer a heavy emphasis on services, including free valuations, styling services, repairs, alterations, and expert workshops – yet more support for the idea that for online retailers, stores are more about customer acquisition or customer "owner" experiences, than about selling stuff out of the physical location.




2. DSW Las Vegas: A Giant Shoe Vending Machine

   DSW has an innovation/lab store near its Columbus, OH headquarters. The new Las Vegas store appears to extend some of the concepts tested in that store. The Las Vegas store is about half the size of a regular DSW store, and focuses on building bonds with shoppers – through things like a video tunnel that simulates being under water.

   Flash-in-the-pan attempts to engage customers don't really qualify, to me, as innovation, which is why what really puts this DSW store on the innovation map is the focus on more exclusive offerings – like molding custom insoles, or carrying exclusive product lines not available in regular stores.

   The store also features a "shoe vending machine," which delivers shoes to a customer via lifts that operate along the sales floor. That has the potential to get gimmicky – fast. So I put this particular innovation into the category of "I'd like to see it, just to see if it really comes together as advertised." Gimmicks create an initial splash, but the question is if they can draw consumers time and again. It's not about getting shoppers into the store the first time – it's about creating a lasting relationship with a brand that delivers on its promises.

3. An Actual Vending Machine of Zip Vests

   Uniqlo apparently has a vending machine in the San Francisco International Airport (SFO), which does $10,000 per month selling $50 vests that are perhaps best known as an essential accessory of the "tech uniform." What caught my eye about this one was the unabashed targeting of the right place, right time, right product, right price. I've seen the beginnings of a backlash against pop-ups or temporary venues, which would apply to someone setting up a vending machine, even for apparel. But I think the reality is, units add up to volume. Any retailer or brand which discounts the value of an opportunity to sell some units – especially when they add up to unexpected volume – is going to lose. So I count this as an innovative "store" because even though it appears on the surface to be engaging in some brand irony, it's also selling a heck of a lot of vests.




4. Right Place for a Very Short Time Only: Adidas Factory 55

   When I first read about Adidas Factory 55, I started to note it as a store I wanted to visit, because it sounded like it supports a large, complex mix of offerings: part workshops and lab sessions, a heavy emphasis on local artists, musicians, and designers, a customization studio… The only thing it was really missing (perhaps – I could've missed it) was the robot.

   But then I realized that by the time I found it, it had come and gone already. A collaborative community space, with an awful lot of effort to tap into local community, and it lasted… 3 days, basically. So I see this as either pushing the pop-up trend to the limit – it's as if Target and the Museum of Ice Cream ran "Pint" for only 3 days, and called the hype generated from that a raging success – or as a signal from a company that it is flexing its capabilities when it comes to assembling high-quality, highly localized experiences that can be delivered in very tight timeframes.

   I do worry that the pop-up trend will get pushed too far into something akin to an extreme temporary circus – one that blows into town for two nights, leaving only trampled popcorn in its wake. I prefer to believe that this is more about pressure testing what it takes to deliver these high-quality, highly local experiences, so that retailers and brands can put more effort behind them. Whether that faith is justified remains to be seen.

5. Pop-Up Infrastructure with a Purpose: Bulletin

   Bulletin is what I would call a brand infrastructure store. It has two stores, with the larger and most recent opening at Union Square in New York. The new store already has a 2,000 brand waiting list.What makes Bulletin special? The emphasis on "modern feminism" as its curation principle. The company gives brand space to up-and-coming feminist-focused brands, which are featured in the store for a flat fee + 30% of sales. Bulletin donates 10% of its proceeds to Planned Parenthood NYC.

   This plays into the idea of companies working extra-hard to be genuine when it comes to the things their customers care about. But, as one of the few brand infrastructure shops that has so far talked fairly openly about its pricing model, it also reveals one of the challenges of the model.

   Ultimately, we're talking about consignment here. I used to handle consignment for my very first job in retail IT – tracking the inventory and items sold, and authorizing payment to about a dozen consignment vendors at the home goods retailer where I worked. Bulletin, and the many others like them (like the previously covered ShopUp in Tucson), need to be careful that their curation ethic doesn't get overtaken by the revenue and profitability ethic.

   I think it's admirable that Bulletin has built its own brand around finding feminist products with Millennial appeal, and living the commitment down to the curation of the products and the social good investment made by the company. I think this commitment is also a fragile thing, easily undone by one poor choice of consignment vendor.

6. Tech Companies Diving into the Retail Deep End: Guesst and Wherewolf

   Guesst, billed as a digital match-making service for retail and brands, is a startup out of New York. Architectural Digest describes it as an Airbnb for retail space, where retailers set a price for space in their locations, and brands find the retail space they're looking for based on retailer characteristics. What makes Guesst different is that it's developed by a group of people who have experience both in retail and in finding brands that fit a specific retail space. They've taken that expertise and applied it to a technology platform that is now live.

   What makes Guesst innovative is that they are putting their money where their mouth is by opening a location on the Upper West Side in New York, this fall, to demonstrate how the technology works and prove it out to both retailers and brands.

   In a similar vein, Wherewolf, a digital shopping app, is opening its own pop-up store in partnership with some brands, to demonstrate the power of its app in an in-store setting. This is a bit smaller of a commitment, because it's not a permanent location – it was open in London's Covent Garden from August 3-15. Wherewolf provides technology that makes a store easily searchable on digital.

   Everyone sat up and paid attention when Hointer opened its concept store selling jeans, as a way to demonstrate how much the store experience could benefit from innovation. Tech giant Apple dove into stores head-first, changing the expectations for what stores could be and do, and now Amazon and even Google are getting into the game. Retailers have complained about getting disrupted by the application of digital to shopping online – it looks like stores are not immune to that disruption, not just online but directly in the physical space.

Update From July: Nike Piles On

Last month I covered Nike by Melrose, a lab store that Nike has opened in order to try out new experiences in the store. This month I have an update. Nike announced new updates to its Nike+ digital app that works in tandem with the in-store experience. Melrose won't be the only location that supports it, but what is notable about the announcement is that there will be exclusive experiences (and offers) available through the Nike+ app – making an investment in an owner experience that is different from a shopper experience.