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Retail innovation: Are emerging brands disrupting the traditional retailer model?

Source | | Shopify

This year the pressure and struggle have escalated for ‘traditional’ retailers who rely on a physical storefront, a centralised distribution model, and a ‘one size fits all’ sales approach. According to USA Today, of the 125 restaurant or retail companies tracked by S&P Global Ratings, about 30% have at least a 1-in-2 chance of defaulting on their debts this year.

They are struggling not only because of forced physical shopfront closures, but also because this type of model no longer serves the consumer and their multiple touchpoint purchase journey or ‘legacy’ concepts of personalisation. Many consumers are now shopping online-only, and online sales grew nearly 50% at the peak of the pandemic.

Newer ‘emerging’ brands — however, those born online and operating across channels — are demonstrating they are far more agile and can adjust their retail models to suit the unique circumstances in which they find themselves. With 73% of consumers now omnichannel shoppers, this is vital.  

It is these emerging and new brands that are now driving customer expectations and disrupting the traditional retail model, with strategies such as seamless online to offline (O2O) integration, experience-driven models, customer centricity, agile fulfilment and delivery, and a direct to consumer approach.

Experience-driven retail innovation and personalisation

Customer experience, whether in-store or online, is now digitally-driven. In-store purchases are significantly influenced by digital touchpoints and vice versa. Studies show 81% of shoppers research a product online before buying it in a physical store. 

So the online and offline shopping experience needs to be cohesive, personalised, and experience-driven. More brands are using technology to link online and offline to offer the same feel, regardless of channel. Emerging brands are using technology to offer customers personalised online experiences, with ideas like virtual appointments using video to give fashion consultations, much like they might do in person, and using AR to facilitate online fittings or place a piece of furniture in a home. 


Retailers are also evolving the purpose of brick and mortar stores. Culture Kings is a fantastic example of this. The physical store is there to offer a customer experience, without the expectation of sale at that point. Shoppers in stores can get a haircut, play some basketball, play video games and watch YouTube, while surrounded by the latest merchandise. Its stores are increasingly known as a place to ‘spend a few hours’ rather than as only somewhere to shop.

Flipping the traditional retail model

Since the industrial revolution, companies have been operating in the same way with relatively little evolution: They develop a product, mass-produce it, and market it so it sells. In today’s consumer saturated marketplace, this leads to unsold inventory and waste. 

However, in recognition of this unsustainable model, the 2 Chainz fashion brand has flipped this traditional merchandising model on its head. Instead of creating gear and hoping it will sell, 2 Chainz instead uses real-time social media feedback to create and sell products.

As an emerging brand, 2 Chainz recognises the consumer is unwilling to purchase branded merchandise ‘for the sake of it’, which results in an overstock of inventory nobody wants. It recognised the old model of laboriously designing t-shirts, building inventory, and marketing the product simply no longer works.

The 2 Chainz merchandising machine leverages a formula that reverses the traditional merchandising process by first gauging which designs are most popular among an artist’s social media followers, iterates based on fan feedback, and manufactures only products that appear guaranteed to sell.

This lets it create popular t-shirts on demand. Winning designs are immediately uploaded to 2 Chainz’ Shopify Plus site which automatically scales to meet the spikes in traffic that often accompany uniquely engineered product drops.

Since debuting, the 2 Chainz store has been home to several ultra-successful reverse engineered product drops, including the ‘Ugly Christmas sweater collection’ depicting Santa Claus engaged in the popular 2 Chainz Dab dance, which generated $2.1 million in sales.

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