Blazing the retail trail

Bricks-and-mortar retailers in the age of the internet face increasing threats. Leslie Clifford and Laura Moser have scoured the world for examples of the kind of mould-breaking retail innovators that shoppers love and that are succeeding in this more competitive environment.

What comes to mind when you hear the term ‘renegade’? Do you think deserter? Outlaw? While the dictionary definition has a negative connotation – ‘an individual who rejects lawful or conventional behaviour’ – renegades often have a positive impact on culture. Many are rejected by society during their lifetimes only to be admired later as innovators.

From Mark Zuckerberg (father of Facebook) to the Grateful Dead (who believed music was becoming too commercialised and encouraged fans to tape their live concerts), renegades have significantly enhanced our lives. Put another way, renegades often provide a glimpse into the future.

Depending on your perspective, a retail renegade’s actions could range from a monumental shift to a more subtle strategy. We find both to be relevant. Our goal in this feature is to share some of the most intriguing global examples, highlight commonalities and provide inspiration for establishing deeper shopper connections.

As competition across many channels escalates, retailers have increased the sophistication of all aspects of their marketing mix. Our research uses the five Ps (product, people, price, place and promotion) as a framework to share examples of those who buck convention. Our research took us on a metaphoric shopping spree around the world, where we found some innovative, unusual, and even irrational examples of retail (see table, opposite).

While vastly different in many ways, our renegades share several traits we believe will shape the industry over the next five years.

Fulfilling Deeper Desires The first ‘P’ in most marketing models refers to product. Renegade retailers have found ways to ground both products and product selection in emotional needs not broadly acknowledged by other marketers. These retail mavericks link their items with unexpected services that let shoppers fulfil intangible needs – even somewhat ‘darker desires’.

In Japan, Nike opened a retail outlet with a concept inspired by Tokyo’s Harajuku neighbourhood – where originality is critical to defining your personal street-style – and features a NIKEiD Generator and NIKEiD Studio. These tools elevate colour selection to the art and science of creating a unique colour ‘identity’. The NIKEiD Generator is an interactive kiosk that scans shoppers’ clothes and creates a personalised colour shade. Shoppers take this shade to the NIKEiD Studio for one-off Nike shoes, stickers and wallpaper, allowing Nike to tap into the youthful craving for a new form of individuality.

Wet Seal uses technology to provide customisation that allows shoppers to virtually ‘snoop’ into their friends’ closets before committing to a purchase. The retailer’s instore kiosks and Fashion Community site enables shoppers of their bricks-and-mortar and online outlets to create and post their personal outfits.

About 20,000 new combinations are created each month. This allows both shoppers and Wet Seal to get a pulse on what’s hot for the season. While fashion is often touted as a means of self-expression, teens still need assurance that their tastes are aligned with those of their friends.

On a more extreme level, a group of retailers in China created a women-only ‘venting store’. Female shoppers who spend a given amount at select retailers in the mall receive a voucher for one minute of destructive bliss – complete with a protective helmet. For 60 seconds, shoppers can smash and destroy inanimate objects. This revolutionary offering recognises the emotional need that can drive the shopping trip itself – pent-up frustration.

A Broader View Most retailers spend a considerable amount of time, money and energy building personal connections with the people who shop in their stores. Renegades, however, take a broader view of their shopper connections and help individuals build ties with other shoppers, the community at large and even competitive retailers.

Tesco has tested a ride-share programme in London. The expected execution of this initiative includes helping loyalty-card members arrange carpools to three north London stores. The irrational, renegade component includes also facilitating carpools to school, rides to sporting events and transportation to shows. Tesco may or may not receive any direct sales from this aspect of the service, but we suspect shoppers who participate will feel a deeper sense of loyalty – perhaps obligation – to the retailer.

A grocery store in Oregon, Mercado Los Gavilanes, moves beyond food products to hosting anniversary parties, church fundraisers and teen nights. This US retailer of Latin products has converted an unused storeroom into an events centre that accommodates up to 500 people. The room offers a stage, bar, restroom and kitchen as well as a children’s room adjacent to the main hall. This service not only increases the store’s profit per square foot, it also recognises a strong community need unrelated to food. Shoppers have begun to see the store as more than a business: it’s now a destination.

The owner of a small London coffee outlet, Gwilym Davies, turns the very definition of loyalty on its head. Winner of the 2009 UK Barista Championship, Davies’ love of the category runs deep. He feels education is key to coffee appreciation and rewards his patrons for visiting other outlets. Davies provides a dis-loyalty card that features eight high-quality coffee outlets across east London. Once individuals visit each of the listed venues, Davies rewards their category exploration with a free cup of his own brew. This twist on relationship marketing has already spurred imitations in Seattle and Toronto.

Defying Channel Norms Pricing is the backbone of all business models and therefore the least likely of the Ps to stray from conventional strategies. Most retailers resort to established channel norms to define their pricing structure. Our renegades have discovered ways to defy channel norms through pricing strategies that express their unique DNA.

Topshop, a global fashion specialty store with more than 400 outlets, has a brave and irreverent approach to style and a product range that has captured the imaginations of fashion-conscious shoppers. This specialty fashion retailer has a price offering that aligns with how women stock their closet. Merchandise ranges from $20 sweatshirts to $800 designer dresses – but all are sold in a unique, fashion-forward environment. At Topshop, edgy style drives fast-turn inventory and price does not define them or their clientele.

The Panera Cares Café also refines the price model. This bakery café suggests a recommended price for each item, but customers pay what they can or think is fair. Around 65% pay the recommended price while others pay more or less, and some pay nothing at all. The organisation was operating a nearly breakeven status with its first two outlets, and the company expanded in 2011.

In an environment where consumers are increasingly concerned about their communities and the role they can play in supporting them, this retail price model is a daring demonstration of how charitable retail programmes can be self-sustaining entities, even in the toughest of times.

Real-Life Retail One of the most interesting aspects of retail renegades is how they approach place. Shoppers’ heightened focus on options, authenticity and immediacy has these retailers going to extremes in terms of interior design and shopper experience. Incorporating real-life context into your retail format or distribution point provides instant relevance and a compelling competitive edge.

A Tokyo Adidas outlet has taken a bold move in how flexible the place of business can be. Near Imperial Palace, a popular area for the city’s runners, the Adidas Runbase Store reinvents the traditional sports gear channel. Expert staff are on hand to help with a broad array of cuttingedge Adidas shoes and clothing options that shoppers can don for an immediate, and literal, test run. Included onsite are 16 shower cubicles and 248 lockers for rent, accessible to the public at large.

Adidas’ extreme destination demonstrates an innate understanding of the runner’s mindset: ‘I need to feel how it performs.’ With a huge selection to choose from, runners can sample product combinations for the ultimate purchase confidence.

Like Adidas, Luxottica, a manufacturer and retailer of eyewear, recognises its products are fashion statements as well as functional; therefore, real-world trial is key. At the EyeHub, Luxottica provides shoppers with a simulator room to evaluate glare and wind resistance. For the sports enthusiast, Luxottica has a treadmill and exercise bike to test eyewear in real-world, everyday situations.

Fashionista purists can take a touchscreen photo of themselves wearing each option and select from an array of printouts. Shopping with kids? No problem. The store has a dedicated play area for children. Going the extra mile to provide shoppers with real-world conditions underscores a true understanding of how to maximise the role that place can play.

"Many renegades do not aspire to be contrarians, but most refuse to take things at face value. They are open to examining multiple facets of their businesses, placing bets and making investments without guaranteed outcomes"

In their relentless pursuit of new outlets and formats for delivering products to shoppers in real time, some businesses are proving to be extremely innovative. Travellers, hotel guests and visitors to fast-food restaurants in the US can use vending machines to buy items ranging from prescriptions to freshly baked pizza. Best Buy recently installed more than 100 vending kiosks at airports with high-end electronics – from digital cameras to portable gaming devices.

Taking the number-one position in renegade vending retail, a butcher shop in northern Spain understands that people do not always think about dinner until it is dinnertime. They have developed a touchscreen vending machine in front of the store; shoppers can purchase fresh steak, poultry or hamburger around the clock when the shop is closed. If you don’t speak Spanish, no worries, the vending machine recognises multiple languages. The High Road to Sa les Results Conventional retail approaches promotion as a short-term sales driver that directly benefits the retailer. For many years, this has been a winning formula to provide a competitive edge, drive traffic and increase overall basket. Leaders today, however, have discovered ways to put their own financial needs on an equal footing with prominent social movements. Promotional efforts that take a less direct route can instill a deeper expression of brand positioning or create a more compelling point of difference during competitive sales periods. Renegades have the same goal as their competitors – to drive ROI – but deliver programmes anchored in ideas bigger than savings. The Waffle Shop is a neighbourhood sit-down restaurant in Pittsburgh. It operates a take-out window that sells food from countries engaged in conflict with the United States. The goal is to bring people from all walks of life together over a common element (food), encourage dialogue on challenging topics, and share them via a live, streaming talkshow.

This promotion increases foot traffic as customers gather to participate in community discussions. Its success has gained the attention of retailers such as Whole Foods, which is now a contributing sponsor of the promotion.

Desigual, a Spanish clothing retailer, understands the power behind the idea of random acts of kindness. It recently launched a programme that rewards its shoppers for being kind to bloggers online. Desigual alerts its fan base of favourite bloggers to target with cheerful comments; the first 100 to get a reply from the blogger each win a clothing item they have pre-selected interest in. All blogs are non-Desigual related, just destinations that represent what Desigual stands for.

All participants in the Happy Hunters programme also receive a 20% discount on Desigual items. Developing a promotion that exploits a behaviour in current culture is a compelling way to grab attention.

Thinking Like a Renegade

Being a renegade takes more than just a willingness to challenge convention. Renegades are tenacious and passionate. They view obstacles as opportunities and believe that trial and error can lead to true and lasting improvement.

This last characteristic is a difficult pill to swallow and in conflict with many corporate environments. In today’s corporate environment, it takes courage for retailers to adopt such an attitude. Here are some ways a renegade perspective can infiltrate your initiatives:

• Align the product selection process with actual product usage traits. Look for even small modifications of your physical environment that will help shoppers enjoy the process more, feel better about their selection and perhaps even increase the contents of their basket.
• How does your pricing structure limit you? Look for ways to expand your positioning in shoppers’ eyes via different pricing structures. Identify what factors truly influence the selection and purchase of your products. Look for ways to link these need-based factors more strongly with your pricing structure.
• Think of your retail outlets as individuals living within a larger community. What roles and responsibilities do other residents have? Does your outlet carry its weight within the community?
• Does your view of relationship marketing incorporate shopper-to-shopper links, cross-generational ties or even cross-cultural connections?
• Zig when everyone else is zagging. Many renegades do not aspire to be contrarians, but most refuse to take things at face value. They are open to examining multiple facets of their businesses, placing bets and making investments without guaranteed outcomes. Determine which aspects of your business model are ripe for a ‘renegade makeover’ and do what feels right.

Leslie Clifford is executive director, strategic planning and consumer insights at G2 USA.

Email: [email protected]

Laura Moser is executive director, retail strategy at G2 USA.

Email: [email protected]