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How Landlords Can Help Form the Retail Future

How Landlords Can Help Form the Retail Future 1440 428 ASG

The way we all live, work, and shop is changing. The owners of the spaces in which we do all of that living, working, and shopping contribute to creating the future—with new experiences and spaces that attract new and innovative tenants.

With the retail landscape, culture, technology, and customer expectations in an apparent state of change, it’s time to create the retail future customers want, retailers need, and landlords benefit from. It’s no longer business as usual. How can landlords adopt a growth mindset and change with the tides?

Flexible Lease Terms Help Attract New Tenants

New retailers are coming to the neighborhood, and landlords have a great opportunity to attract them to their spaces. It requires a change in mindset because landlords must rethink lease terms to attract these new and innovative brands.

Right now, landlords can change the nature of their relationships with their tenants by not only demonstrating a willingness to be more flexible with terms but also increasing investments in infrastructure and safety. Landlords will also benefit from supporting the success of their tenants. For example, accommodating retailers with a reduction in lease length in exchange for a percentage of the retailer’s online sales could benefit all involved.

Sure, it involves a shift in thinking for everyone, but this is how we will begin creating the retail future that we want. Here are some of the ways landlords can adapt:

Shorter lease terms. Landlords are enticing tenants to spaces by providing shorter-term leases that include a variety of renewal options.

Contract flexibility. Retailers are skittish coming out of the pandemic experience and need more flexibility in terms of force majeure definitions and lease adjustments based on situations beyond their control.

In addition to offering shorter lease terms, offering certain concessions can help attract tenants, including:
• Rent deferrals
• Sublet allowances
• Rent abatement
• Options for renegotiating lease terms

At the same time, landlords can ensure that they are protecting their own interests by:
• Requiring approval of any sublet
• Adjusting percentage rent to include online sales
• Increasing pass-through costs for climate and safety related updates
• Delineating specific recourse should the tenant fail to pay or abandon the lease

Help Tenants Meet Consumer Expectations and Deliver Better Experiences

Consumers have higher-than-ever expectations of the brands from whom they purchase, and retailers are looking for spaces that support the promises they are making to their customers. Landlords who are open to a changing relationship with their tenants will have the opportunity to help reshape the future of retail to be more resilient and sustainable. To successfully do this, the process must become less adversarial and more open; landlords and tenants must learn to work together, or they all suffer. Landlords can help by:

Offering improved safety and infrastructure. Many landlords are investing in improved HVAC, redesigns to enhance BOPIS, and technology infrastructure to make tenancy more inviting for retailers who are also having to adjust how they serve their clients.

Investing in Sustainability. Retailers whose brands have made promises of sustainability will expect landlords to invest in solar panels and make other necessary changes to their buildings to better meet consumer expectations.

Remaining Spaces

Landlords are redefining the mix of businesses in their spaces by reevaluating how the space is used. For example, some landlords are converting space for retail health clinics, mixed-use spaces, and warehouse space for last-mile delivery.

“One direction for some malls is turning underpopulated sections into ‘digital districts,’ where ecommerce pure plays can try their hand at brick-and-mortar retailing in small-format spaces. The digital natives benefit from a curated location tailored to their audience, while the mall can advertise a slate of cutting-edge concepts.” – Retail Touchpoints

This is also a suitable time to reevaluate what kind of tenants are used to anchor your spaces. We’ve learned that retail spaces that are anchored by necessity shops – grocery, DIY – are more likely to remain solvent than ones anchored by outdated department stores.

The Pop-In Shop

Landlords with the willingness to be open-minded about what kind of shops occupy their spaces are also finding tremendous success with pop-ins, family entertainment, and co-working spaces. For example, empty spaces in neighborhood shopping centers lend themselves well to holiday-themed pop-in stores for Halloween and Christmas. These short-term, high-profit shops can be an ideal way to fill an empty space for the short-term. Start-up retailers are also enticed by the pop-in opportunities that let them test the waters before making a longer-term commitment.

Entertainment

From theaters and arcades to indoor paintball and laser tag, landlords that are welcoming tenants who offer entertainment value that keep consumers coming back have seen enormous success. These retail venues benefit other tenants as well, as once the customer is there, they may also want to shop, eat, and otherwise spend the day nearby.

Co-Working Spaces, Fitness Centers, and Ghost Kitchens

With more people working from home at least part of the time or working for themselves, co-working spaces are an easy way to fill empty retail space. Fitness centers are also becoming a popular way to fill empty spaces that attract consumers. And if the space has a kitchen, soup kitchens, shared kitchen spaces, ghost kitchens, pop-in food services, and other food-based organizations are jumping at the opportunity to leverage available retail spaces for innovative purposes.

Creating the Future of Retail, Together

As retailers grapple with the changing retail landscape, the way forward will require innovation, collaboration, and negotiation. The opportunities that come from all this change can be exciting, but it does make lease negotiations more complex than ever.

“Landlords and tenants must forge viable partnerships. Landlords need stores and associated rents to meet their obligations and, right now, many retailers need financial accommodation to survive. Even so, the tenant has a contractual obligation to pay rent. Once adversarial, the landlord/tenant relationship is becoming more symbiotic.” – Chain Store Age

Both landlords and their retail tenants require appropriate protections and guarantees. However, if both sides approach the negotiations from a collaborative standpoint rather than an adversarial one, both with an eye toward future successes, they can both thrive.

Brands Inspiring Our Team Right Now

Brands Inspiring Our Team Right Now 1440 428 ASG

We love working with brands, and we’re constantly inspired by the brand landscape around us. We gathered some team members to share their insight into the brands that are moving them today and why.

Andrew Miller – Woolrich

Established in 1830: Born in Woolrich Pennsylvania- the brand equipped those with a passion for outdoors. “The Original Outdoor Clothing Company” is what they call themselves.

Woolrich has produced high-quality garments for over 190 years. Crafting fine and warm wool is their calling, and their mills have lent a helping hand during major historical moments. Woolrich made a big contribution by supplying socks, blankets, and coats to the US soldiers providing them warmth, comfort and quality during American civil war and WW1.

Being a native from PA and Woolrich within 20 minutes to my hometown – Woolrich was a brand growing up that I was educated on by my family. My great grandparents/ and grandparents always sporting their product. I’m grateful that I was gifted by my grandparents, jackets, socks, shirts growing up for holidays and birthdays which grew my interest and introducing me even closer to the brand. To this day and understanding the Woolrich brand given the history, quality, plus their mission makes a difference even more valuable when you understand what you are wearing. – to this day these are high quality pieces that I enjoy wearing time to time when the elements are right.

VALUES
American Heritage: Keeping true to their products and quality- mirroring the American dream: wear Woolrich to pursue your goals, regardless of the elements.

Iconic brand elements: The Buffalo Check, whose name was inspired by a herd of buffalo owned by the Woolrich designer who developed its distinctive red and black pattern, has been a symbol for Americana and workwear since its inception, and remains one of Woolrich’s most powerful visual codes from season to season.

Purposeful design: Their Product character is pure, considered, consistent. Woolrich collections embody a design sensibility of stylish durability. They unlock the privilege of a life lived outdoors- in nature and urban environments, and anything in-between.

Brand Mission/ Values:
Woolrich is committed to putting social responsibility at the forefront of everything they do. As a brand and company, they are committed to making a positive impact on the world around us, including by taking a respectful approach to their stakeholder relationships, encouraging environmental awareness, and promoting ethical business practices.

  • Sustainability
  • Diversity and inclusion
  • Charities
  • Responsible sourcing
  • Woolrich outdoor foundation
  • Code of ethics

Morecia – Linkedin

When I think of a brand that inspires me, I instantly think of something I use daily. In our society, social media presents us not only as a form of entertainment, but a great way to connect with people and keep up with hot topics and trends. Millions of people can connect with their relatives, lifelong friends, and even business professionals through social media. So, if you’re looking to network, LinkedIn is a great platform! Their mission is simple; to connect the world’s professionals to make them more productive and successful. I have personally connected with hundreds of people from different professions, from business to even healthcare. LinkedIn also is great for creating a space where professionals can reach out to you with job offers in fields that you may be qualified for. Having this social media presents on LinkedIn gave me the opportunity to meet with several hiring managers and that’s how I landed a job with Asset Strategies Group. I would highly recommend using LinkedIn, it’s a leading social media brand, it’s easily accessible, and you can make great connections with many different people.

Max – Gibson

I’m really digging Gibson Guitars right now. They already pull on my heartstrings as a musician… but they’ve taken their brand to another level. Gibson recently opened up a best-in-class retail experience, the Gibson Garage, loaded with exclusive products, events and even a chance to build your dream guitar. So they’re totally winning the retail thing. Not to mention they’ve really invested in their content production team, and they’re telling these amazing stories that guitar junkies (like myself) salivate over. Like all great brands, there’s a story to know and tell, and I feel that same sentiment with my guitars. I remember sinking every penny I had into my first Gibson, and it’s paid it’s worth back in priceless fashion ever since.

Zach – Homer

Homer is a luxury jewelry and accessory brand founded by Frank Ocean in 2018, starting commercially in 2021. The brand is constantly on the front end of avant-garde design, from catalogs to social media marketing, utilizing unconventional techniques and art to market the line. Homer also has a unique way of launching their collections: each collection is unannounced and launched randomly alongside pop-up stores appearing in big cities for an in-person experience. Homer’s products are very expensive, but having unannounced launches with limited product lends the brand a more curated touch rather than being strictly exclusive. The beautiful design behind the brand, combined with the sporadic launches that tend to be few and far between, give a one-of-a-kind, curated feel to the products provided.

Olivia – Dr. Martens

I’m not really brand loyal to anything and just don’t buy corporate speak, so there are few brands I really “connect” to. But my one ride-or-die brand is Dr. Martens. It’s been that way since I got my first pair when I was 14, which is wild that it was 10 years ago! I fell in love with the brand and the product when I put that first pair on. I love everything about them, honestly—the attitude they bring, authenticity, durability, and how they are still that classic work boot that they started off as. They’re still that same work boot that was designed in the 60s, but they have history and ties with the music industry and counterculture, and they’re inherently cool. The brand always does its own thing and has always been authentic to themselves. They know who they are and take pride in the product and history that they have. And I really connect with that because I have always done my own thing, authentic to myself. Dr. Martens were the first thing that I found that felt like it “fit” my style, that and my winged eyeliner, of course, so the brand is pretty special to me. Dr. Martens is an icon for a reason, and I’m sure it means something different to everyone, but those are just a handful of reasons why I admire it!

Also! It is so true how awful they are to break in! But they are so worth it because they are the most comfortable and dependable pair of shoes you’ll own. 😊 Another fun fact, I still have my first pair, and they are beat to hell, but are still perfect work boots, lol.

Steve Morris Abercrombie & Fitch

Abercrombie & Fitch – a brand that was built on a cult of exclusivity to a total transformation to a brand that embraces inclusivity. Over the past decade, we’ve seen the brand change dramatically, from its image to its product and, ultimately, the store experience. That’s a lot of change, and for them to find success across each channel deserves some credit!

Louis So – Lego

Lego is my brand of choice. I got my 1st set of Legos from my parents when I was in kindergarten back in the 70s. Flash forward to modern times, where I can give my daughter her 1st Lego set years later. And, of course, it was nice, given that this was the 1st Lego set I bought for one of my own.

Lego continues to give us opportunities to build and foster our own imagination. Every block we touch is special, and we continue to build & tear them down repeatedly. Each Lego block allows our memories of imagination in the past, present, and future to visit us again. Lego brings us together, and it doesn’t matter where we tend to use them. Whether we build on the family dining table, on a car trip, on the living room carpet, a hospital bed with our kids, parents, grandparents, or friends, there will always be a place for Legos. Legos give us a way to heal, to love, to share, to collaborate, and most importantly, imagine.

The brand doesn’t stop at home either, as Lego continues to evolve into tons of activations. Legoland theme Park, Lego House, Lego Discover Center, Lego Retail Store, Lego Clothing, Lego life, Lego Education etc.. you get the point.

Got a brand you’d love to share with us?

Send us a message and share some insight into your inspirations.

Pop-Ups as a Retail Experience Lab

Pop-Ups as a Retail Experience Lab 1440 428 ASG

Pop-up shops have become a cure-all in retail business strategy over the past few decades. If done right, pop-ups benefit everyone involved, making them a no-brainer for many brands. Since they began popping up, we have watched them evolve as retail hubs, bolster marketing strategies, and even improve landlord-tenant relationships.

Revolutionizing Retail Hubs

Pop-ups started out as experimental, unique spaces for brands to test specialized customer experiences. Today, they’re revolutionizing street location shopping. Retail hubs have become modular and ever-changing; new, exciting businesses are constantly opening and revolving through these areas—making for a fun, fresh visit every time. Cities big and small have seen pop-ups appear in their suburbs or smaller neighborhoods, not just prime shopping districts.

Landlords and rental agencies have become open to shorter lease terms than have been traditionally available in retail spaces. These leases can be prepared quickly and are less-burdensome for the tenants.

Some spaces and agreements can be shared, cohabitated stores that rotate out regularly. These businesses can plan weeks or months to occupy the given space, execute their pop-up, then clear out for the next business. These shared environments work great for small business coalitions and artists especially, as they can offer lower rates with longer lease terms (offering the chance for multiple pop-ups over the lease term). This creates a win-win situation for landlords and tenants alike.

Striking Marketing Gold

Pop-ups are a goldmine for meaningful, interactive marketing for a brand or product experience that people want to share on social media. The idea is for shared content around the pop-up to create brand awareness and drive traffic to the pop-up location. Everyone wants to see fun, different shopping experiences, and consumers are apt to share. Executing a good pop-up is guaranteed to result in a wealth of valuable word-of-mouth marketing. A pop-up introduces the brand to people who otherwise might not have had it on their radar. The “exclusivity,” or more so the limited time aspect of a pop-up, amplifies consumer interest. Add this to the social media buzz, and you have created the perfect recipe for increasing brand awareness—the main goal of a pop-up.

Pop-ups are also a great way to experiment and test markets, consumer targets, specific locations, product, experience, and more. They offer total brand control and maximum brand exposure. Watching the ways in which consumers shop in a pop-up or how they respond to different experiences can give great insight into what works best for the brand in a given market. Working on the ground of a pop-up, employees interact directly with the customer base. These physical interactions with the brand are beneficial to a new retail business, making pop-ups an ideal business strategy for small businesses or new businesses entering the retail space perhaps after solely operating online.

Good for All Involved

We have seen all the ways pop-ups can benefit the businesses who execute them, but how do they benefit landlords and consumers? A pop-up could bring awareness to surrounding businesses, driving in-bound traffic. Say a shorter lease is about to expire, the landlord could openly advertise the space for rent at a pop-up event and receive far more exposure than if they were to run ads elsewhere. Pop-ups also assist landlords by filling vacant spaces quickly. Businesses might be able to get good deals on rent while the landlord fills their properties. These new businesses bring in money to the area and the public benefits from these ever-changing, interesting pop-up experiences.

Pop-Ups Actualized

Most brands have been taking full advantage of the benefits pop-ups offer, with countless remarkable experiences opening over the past few years, enticing the public to visit brand-curated spaces.

Lone Design Club works with independent brands to bring conscious consumerism-focused pop-ups to spaces around London. These pop-ups include layered experiences, such as vibrational sound meditation, professional panels on a variety of topics and industries, and community networking.

Ikea opened a “play cafe” in 2017 to rethink the way we use and view our kitchens. People could come in, enjoy some of their famous Swedish meatballs and play games with their friends and families.

Casablanca, a Paris-based luxury brand, held a travel/airport-themed pop-up within Selfridges, furnished with all the bells and whistles of an airport terminal gate. The popup let customers explore and discover merchandise set throughout the space while allowing Casablanca to test a physical retail store for the brand.

Many other luxury brands have been able to invest in the pop-up economy and are finding ways to evolve the landscape. In July 2022, Hermes held a gym-inspired pop-up in LA with live fitness classes, lifestyle-inspired merchandising, cocktails, live DJs, and more. These pop-up spaces give brands the endless freedom to curate specialized experiences to inspire, educate, entertain, or simply interact with guests. The L.A. experience is just one of several HermesFit popups around the world including Brooklyn, Tokyo, Paris, Bangkok, and more.

Here to Stay

Don’t expect to stop seeing them anytime soon, as modern pop-up culture has taken the retail world by storm and proven its value to retail strategy. Pop-ups are here to stay and are becoming more valuable as part of the retail ecosystem. They have revolutionized retail hubs and have benefitted all involved.

The Shifting Landscape of Retail Real Estate

The Shifting Landscape of Retail Real Estate 1440 428 ASG

It’s an exciting time to be part of the retail industry. For years, there have been hand-wringing warnings that brick-and-mortar was dying. 

There are still factors that keep the retail real estate market on edge – concerns about inflation, recession, the supply chain, rising material costs, and geo-political instability mean assessing risk must be part of the decision-making process. However, even with those concerns, the economy has remained stronger than expected, with retail sales growing moderately.

As it turns out, people still really love to shop in person – so much so that brick-and-mortar is seeing a revival. This revival is driven by a change in consumer behavior as well as a change in retail strategy, consumer demand, and the state of retail real estate.

Changes in Consumer Behavior Require Retailers to Adapt

Shoppers are becoming more sophisticated and selective, turning away from traditional department stores. Their expectations also are changing. While this was, in large part, accelerated by the pandemic, shoppers were already beginning to demand more from the shops they frequent. The focus for consumers is on the shopping experience.

When it’s so easy to get what you need delivered at the click of a button, physically going into a store needs to be about more than just acquiring stuff. Perhaps that is partly why shoppers are not patronizing traditional department stores, which have been steadily declining, while at the same time surging to the new, exciting experiences being offered by DTC brands that are opening physical stores. 

Rethinking The Store Experience

The U.S. leads the world in retail real estate market growth, so how do retailers take advantage of that growth and position themselves for ongoing success? How can they ensure they are choosing the right locations and putting themselves in the best position amid fierce competition? How are current trends in commercial retail shaping the retail landscape? 

Many retailers are rethinking their store experiences. They are experimenting with store design and location; they’re meeting consumers where they want to shop. This has resulted in innovations in retail, from pop-ups and temporary shops to adjusting where stores are placed, what product mix they carry, and the size of the store. It’s an exciting time for retail leaders who are open to discovering new ways to connect with consumers and reinvent themselves.

Let’s take a look at a few of the factors impacting the shifting landscape of retail real estate.

Fierce competition in top-tier centers and street locations has altered location strategy for many retailers, driving them elsewhere. This has been amplified by a mass exodus to the suburbs by consumers who can now work remotely and prefer to shop in their own neighborhoods. As consumers seek more community and connection, retailers are responding. In an interview on the Shopify blog, Vinny Martinelli, owner of Helios Sunglasses, a sunglasses and apparel store in Rehoboth Beach, Delaware, summed it up: “COVID changed everything, especially [the] shopping experience. More people [are] working from home and staying local.” 

A high number of retail vacancies is encouraging retailers, particularly DTCs, which embrace the entrepreneurial spirit of retail, to try new locations and store types. With some legacy brands exiting and a variety of DTCs moving in, the real estate market is red hot right now. Digital-first brands are gobbling up the hottest locations and bringing new retail experiences with them.

Branching out beyond physical retail, some retailers are experimenting with frictionless technology (BOPIS, tighter integration between online and in-store, and sophisticated apps), retail healthcare, and improving the user experience in order to deliver better experiences to consumers. 

Radical reductions to lease lengths have made initial lease negotiations much more critical. However, these changes also allow retailers to experiment without the six- to 10-year renewals that used to be required to secure the space. 

Lease complexities require expert tenant representation to ensure there are appropriate protections in place. Provisions that were introduced during the pandemic are now being baked into leases as a matter of course to ensure retailers have recourse for situations beyond their control.

Embrace Change To Find Success

In his book, Secrets of Retail Real Estate: How Successful Retailers Win, ASG founder Steve Morris explains: 

“Successful retailers are reinventing their customer-facing practices and technologies to create a unified customer experience. Real estate decisions and approvals can no longer be processed on a center by center, deal by deal basis, but must reflect broader market, portfolio, and customer engagement strategies. This is the new real estate world.”

Finding the Right Location in this Environment

To find the right location in this shifting landscape requires access and understanding. “It’s critical to understand how markets develop and how they’re changing,” explains Doug Tilson, who leads ASG’s Tenant Representation. “That can only happen when you have access to up-to-date, comprehensive data.” Using accurate data to drive decision-making and working with a trusted tenant rep partner can help you determine what’s possible in a retail real estate landscape that is constantly evolving. 

CBD Chic & Approachable Cannabis Retail

CBD Chic & Approachable Cannabis Retail 1440 428 ASG

Cannabidiol (CBD) is making its way into just about everything lately—lattes, cocktails, lotions, mists, supplements, oils, extracts, and so much more. The public is embracing CBD and its benefits as retailers are watching to see how the emerging industry will impact the future of shopping.

Today’s “canna big bang” is the beginning of a new era for product innovation, and it’s trailblazing a new narrative for the cannabis industry and cannabis retail. Pairing new uses for CBD with compelling brand experiences will shift how we approach more than cannabis, with the hospitality and retail industries watching intently.

Supplementing for Wellness

The vitamin, supplement, and personal care industries were some of the first to fully embrace the medicinal benefits of CBD. In 2018, 44% of the conversations around CBD were focused on using it for its medicinal qualities— and today, those conversations are becoming reality.

For example, the CBD Lounge in Covington, Ky., curates experiences fueled by CBD and offers one-on-one consultations to find the best personalized CBD personal care products for clients. This approach is about more than educating the community; it’s also helping rebuild the narrative around the medicinal benefits of cannabis. Similarly, modern skincare and supplement lines, such as MOOD, have integrated CBD into just about every product, professing its many benefits and applications. Brands like Mender have developed a full body care lineup of CBD-infused products including deodorant, lip balm, body cream, and more.

To accommodate different consumer preferences, brands are getting creative in how they use CBD. Recent research has found strong evidence that CBD can be used as a sleep aid and for stress and anxiety reduction. Pain relief lotions claim CBD is an anti-inflammatory, whereas pillow mists capitalize on its calming, anxiety-reducing qualities. Oils and oral supplements are said to combat issues with intimacy, and creams and lotions alleviate skin conditions such as psoriasis. Some CBD supplements are said even to slow aging!

CBD Collabs

Given that the cannabis industry is still relatively new, there’s a gap between hard evidence of its true effects and product claims. However, many CBD brands include complementary ingredients in their products that are proven to deliver a solution. For example, many CBD pillow mists include lavender and chamomile, which are known to have calming, sleep-inducing qualities. This approach has helped brands collaborate, ultimately creating a gateway for CBD products into retail spaces.

Looking into the future of supplements and skincare, we’re seeing a new take on products through self-mixing of independent CBD oils like Exhale, and individual CBD supplements such as Sunsoil vegan CBD capsules. Influencers are using it topically or mixing it into products to pursue positive results. This opens the door to more discoveries regarding the benefits of CBD and the growth of this deeply personalized approach to skincare and supplements.

CBD Culture

CBD lounges and bars are gaining popularity as places to relax or socialize. Entrepreneurs are finding ways to offer full CBD experiences through more than just stores.

In Cleveland, Tiger Lily at Electric Gardens entered the scene last year serving up CBD cocktails and organic wines in a beautiful atmosphere. Cocktails can be made virgin with CBD to provide a relaxing experience without the risk of a rough morning following. This concept is also engaging a growing market of alcohol-free guests.

Many CBD lounges are incorporating more into their spaces than a bar. The Summit Lounge in Worcester, Mass. hosts cannabis tastings, live music, and paint and video game nights giving people more reasons to visit these new destinations.

It’s only a matter of time until craft brews and alcohol-free spirits centered on CBD will dominate the market. Coffee shops, like CBD (Coffee Brewed Differently) in Phoenix, Ariz., is in on the fun, offering CBD-infused lattes and drinks, and even selling individual CBD capsules.

CBD culture is in its inception and yet we expect tourism surrounding it to explode as these destination experiences grow. International cannabis tourism is already starting to expand with residents in cannabis-restricted countries visiting green countries to partake in canna-culture. That same enthusiasm and interest, met with physical and cultural experiences, will move mountains for the cannabis industry, of which CBD is a part.

A New Kind of Retail Experience

CBD products are deserving of unique shopping and brand-interactive experiences. Having very few industry predecessors (aside from hemp) gives CBD and cannabis companies the chance to blow the top off the typical retail experience. There is a stigma and sense of distrust of cannabis products due to decades of marketing and campaigning against marijuana. However, the experiential factor the industry is bringing to consumers is breaking down barriers and changing hearts and minds surrounding cannabis.

We’re watching the cannabis industry embrace hyper-niche, localized branding and store environments that are changing how we expect our retail spaces to feel and operate. Toronto dispensaries, such as Superette and Alchemy, are winning the game with their detailed approach to brand that penetrates everything from packaging, store design, and even merchandising a diverse mix of unrelated products that speak to its soul. Both brands perfectly demonstrate the boundless freedom cannabis brands are willing to experiment with—from Superette’s whimsical, bold pop-art supermarket aisles to the opposite high-end, luxurious, avant-garde showrooms of Alchemy.

The cannabis industry is actively putting design at the forefront of their guest experience as it provides perfectly curated brand interactions. Consumers can wake up and choose a store based on how they want to feel or what they want to experience that day, knowing they’ll get great products at both. This hyper-niche, design-forward thinking will start to bleed into other industries as consumers expect personalization more than ever before.

The interesting, beautiful, and hyper-specific experiences these new stores offer give the chance for fun and playful interaction with their brands and products. If niche, aesthetic experiences are growing more important to consumers, think of the countless retail spaces we interact with that will change as a result. CBD and cannabis brands have opened the gateway to immersive retail experiences and interaction, and it’s only a matter of time before we see the ripples these companies will cause in other industries.

Retail Strategy: Scaling with Purpose

Retail Strategy: Scaling with Purpose 1440 428 ASG

Scaling: do it right and you win market share and brand equity; do it wrong and waste an enormous amount of resources and damage the brand. With such high stakes, it certainly would be nice to have a manual for this sort of thing. In the absence of a singular “right way” to scale, the retail strategy must come from the top.

As brands develop strategies for deliberate scaling, it is up to leaders to provide the vision and support to the scaling team. The strategy needs to be a living, breathing, evolving approach that is flexible enough to change in response to consumers and other industry shifts. Scaling is not – as evidenced by the struggles some brands have had with their approach – a one-and-done process.

Test, Learn, Adjust

Purposeful, deliberate scaling doesn’t just happen. It is the result of testing different markets, then adjusting the assortment, product mix, and operations based on what is learned. This method of expansion allows for customization without sacrificing brand integrity.

An openness to testing can lead to major successes and revelations. Home Depot has successfully and strategically scaled thanks to the leadership of its new CEO, Edward Decker. Decker has authorized testing of different store formats and different types of real estate to learn what works and how to scale effectively. His thoughtful approach has resulted in Home Depot being identified by Seeking Alpha as a “top-notch dividend growth idea.”

As we continue to explore retail strategy, it’s remarkable that no matter how much the retail industry changes, the need for strong leadership never does. Strong retail leadership is essential in developing a strategic approach to scaling a brand.

Take Smart Risks

The biggest lesson from Decker’s approach is that it includes implicit permission to fail. Experiment results are not guaranteed, so there must be an overarching message from retail leaders that it’s ok to test an idea, even if it doesn’t work out. Testing ideas allows retailers to see fallacies; sometimes, the outcome is far different than expected. That must be ok.

Deliberate scaling requires strong leaders who have a big vision for the brand—and can listen. Leaders who listen—to their teams, to their customers, to their colleagues—bring a level of open-mindedness about how, where, and when to enter a market. That open-minded approach lets them find the magic of retail; opening new locations comes with a variety of unanticipated challenges.

The Dos & Don’ts of Strategic Scaling

As we examine what works in today’s retail industry, there are good examples of what brands should do to scale deliberately, and examples of scaling fails that occur because of haphazard approaches.

The Dos

Vineyard Vines is a great case study of what brands can do to scale successfully. The leadership at Vineyard Vines is critical to its success. Brothers Shep and Ian Murray are hands-on founders, ensuring that when consumers walk into a store, they feel the EDSFTG (“Every Day Should Feel This Good”) lifestyle their brand embodies. The brothers have a clear vision of success for their brand, know exactly what their brand stands for and how to communicate it, and have a detailed understanding of their customer base.

The Murray brothers wanted to dominate their target market of suburban Boston market before expanding elsewhere. This start-small approach allowed them to expand thoughtfully while maintaining strict control of the brand. For Vineyard Vines, examining existing stores and lease agreements led to renegotiations that put money back in the company’s pockets to invest in smart expansion.

Partners for What's Next

If you’re exploring how to scale effectively, we welcome the chance to connect. From data-backed real estate strategy through experience design and store construction, we help brands win at retail.

The Don’ts

Even before the recent class-action suit against H&M, accusing them of misleading consumers about their sustainability practices, the company was struggling. H&M parent company CEO Karl-Johan Persson blames the retailer’s financial turmoil on “changes in customer behavior [in H&M’s physical stores], as well as “imbalances in certain aspects of the H&M brand’s assortment and composition (Forbes),” forcing it to close 170 stores. But that behavior change, along with the changes in the industry, offered indicators that, had H&M been more proactive and flexible it could have responded more quickly.

What About DTCs and Strategic Scaling?

As DTC brands lean into the retail landscape, they also must consider carefully how to scale their brands strategically. Thoughtful consideration of the why and how, combined with the right data to know where and when, becomes even more critical when attempting to scale the brand regionally or nationally.

Purple, a leading DTC brand, first tested pop-up stores before investing in more than 100 retail locations with goals to continue to scale their brand both with their own stores and through partnerships with furniture companies like Raymour & Flanigan.

In an interview with BedTimes Magazine, it’s clear that leadership plays a strong role in the success of the scale. CEO Joe Megibow recognizes the magic of having a product no one else has but everyone loves. “Purple has made a meaningful difference in [customers’] lives,” says Megibow. “Our job now is to scale the heck out of our operation so that we can meet rising demand and satisfy even more customers.”

“Purple has made a meaningful difference in [customers’] lives…Our job now is to scale the heck out of our operation so that we can meet rising demand and satisfy even more customers.”

So What Does Thoughtful, Strategic Scaling Look Like?

In an interview with Inc. Magazine, co-author of Scaling Up Excellence: Getting to More Without Settling for Less Robert Sutton, explains, “Companies grow well and scale badly when they focus on running up the numbers, but not the quality. They get bigger and start to look like just any organization. And there goes the value.”

The author reminds brands that scaling is about more than growth, advising brands “to spread not just a ‘footprint’—their geographic and market presence—but also a ‘mindset’—the deeply ingrained beliefs and behaviors of their people.”

Thoughtful, strategic scaling may look different for each brand. What worked two years ago will not work today. Retailers need to meet customers where they want to be. Growth, without a strategic scaling strategy, can result in the dilution of the brand and a homogenous feel.

However, when done properly, strategic scaling starts with the right data—data that is relevant to the brand, its existing locations, its customers, and its goals. The market changes so much that up-to-date analysis, in-depth insight about customers by market, and flexibility are all crucial.

Connected Wellness: Healthcare as a Retail Opportunity

Connected Wellness: Healthcare as a Retail Opportunity 1440 428 ASG

The pandemic impacted the healthcare industry much the way it did education and retail; it helped accelerate technology out of necessity. Not only did the wearable device industry grow, but our idea of what health care can look like has changed considerably too. 

Now, we log in to our computers to talk to our doctors rather than spending time in waiting rooms; we upload our own health stats from our wearable devices rather than having a nurse take our blood pressure and pulse. In a world now reliant on self-service connected wellness, the healthcare industry is ripe for evolution. Here’s a look at how retailers can take part in the health revolution and what is driving changes in the industry.

What’s Reshaping Healthcare?

An aging population – According to SeniorLiving.org, “From now until 2030, 10,000 Baby Boomers each day will hit retirement age. Millions will begin to officially retire, collect social security checks and go on Medicare. Other Boomers will keep on working either out of financial necessity or out of some less tangible need like identity and self-worth.”

Telehealth convenience – Due to the pandemic, technology has advanced rapidly in the healthcare space out of necessity. 

“While the surge in telehealth has been driven by the immediate goal to avoid exposure to COVID-19, with more than 70 percent of in-person visits cancelled, 76 percent of survey respondents indicated they were highly or moderately likely to use telehealth going forward, and 74 percent of telehealth users reported high satisfaction,” according to McKinsey’s 2020 Healthcare Report.

The wearable trend – It isn’t so much about the wearables as the data. Consumers have access to their own medical data more than ever, which allows them to be more proactive in caring for themselves.

“With 76% of adults age 50 and older indicating a desire to age in place, voice-activated tools, such as home assistants and home health-care technology (emergency or virtual care) are relevant potential purchases for them. If offered a choice, over half (53%) would prefer to have their health-care needs managed by a mix of medical professionals and health-care technology,” according to AARP.

Creating New Health and Wellness Experiences

Today’s retail consumers want personalization and convenience, and health and wellness retailers have an incredible opportunity to deliver high-quality, personalized, and convenient care to consumers. Doctors’ offices can learn how to create a patient experience that earns loyalty and satisfaction by looking to retailers’ offerings. 

Like retail, medical providers must customize the entire experience—patients want to have access to information, manage their own care, choose whether they come in to see the doctor or have an online appointment.

Think of patients as customers who want to have a consistent experience no matter how they choose to engage. If they chat online with a nurse, they expect the nurse to have the same information the doctor would if they were in the room with the patient’s medical file. But more than just consistency, patients are looking for ways to be more proactive in managing their own health.

Retail Health Clinics

Since the early ‘90s, when retail health clinics began opening, consumers have benefited from—and come to expect—the ability to seek non-emergency medical care outside of business hours. It’s clear that consumers want the same kind of convenience with their medical care that they receive in other areas of their lives. Healthcare providers who offer convenient, local care are not only popular among consumers but also are expected to see major growth. 

Self-Service Healthcare

As a multitude of wellness wearables, connected health devices and apps are developed, there could be space for an Apple Store-like offering for a health-care device shopping experience akin to the Genius Bar. 

Empowering consumers to manage and monitor their own health could eventually mean they can use a wearable to obtain information, like an EKG on the go. That could free physicians to focus on treating patients in need while simultaneously giving more people the power to be proactive about their own health.

Health Meta—Taking Telemedicine to the Next Level

Industry watchers’ speculation about potential partnerships between retail and medicine is exciting. Think about existing retailers like CVS and Walgreens, who already provide vaccines, fill prescriptions, and offer blood pressure screenings. What if they were able to extend those medical partnerships to create a one-stop telehealth shop? The future could see patients who meet with telehealth doctors in Walgreens or CVS for proactive screenings, upload their data from their wearable devices and do a little shopping while their prescriptions are filled. 

Incorporating Health and Wellness into Retail Design

Incorporating health and wellness into retail spaces can also enhance the consumer experience. Healthcare retailers can win customers by offering wellness products in-store and providing wellness experiences, such as massage chairs, meditation rooms, or spaces to host conversations on wellness topics.

“It’s not just about a breadth of product options, it’s about continuous wellness support for the consumer’s home, workplace, workouts and lifestyle. Create dedicated sections for healthy morning rituals (smoothie makers, lunch boxes, yoga mats), daytime products (working, running errands, exercising) and evening needs (sleep aids, organic cotton sheets, dream journals),” according to Medallion Retail.

As innovation drives the health and wellness revolution, design will take center stage. Design impacts the patient experience, drives patient retention, and enables health providers to empower patients to be more proactive about their health. 

The possibilities are endless.

Layered Construction: The Challenges in Retail Design

Layered Construction: The Challenges in Retail Design 1440 428 ASG

Opening a new store is essential, whether a brand is opening their first or their hundredth. A new store builds excitement, embodies the relationship between the brand and their customer, and showcases what’s new.  Those brands that choose design-driven concepts have the advantage to ensure a unique experience that also performs in the marketplace. So imagine the frustration and expense, both in capital and sales, that occurs when store openings become stalled at every turn. 

The World Has Changed.  

The variables that drive retail design have changed dramatically. And it’s not just labor shortages and supply chain issues; every step, from location decisions, lease negotiation, early concept design, through to how one structures the build team can now be a challenge and needs to be considered more thoughtfully as a whole than ever before. 

“The complexity of the system eats itself alive if one part fails,

explains Ed Hofmann, Partner of Design and Strategy at ASG-Chute Gerdeman. “We find ourselves navigating decisions that spread across multiple layers and choices – literally as an extension of the Brand’s in-house group.  For instance, the ability to move with real ‘speed’ is now contingent on the ability to navigate thru 10 – 12 decisions at once, supported by only partial information.  You don’t know everything you need to know, so we are more and more relying on instinct, strong back up plans, and our relationships to move at pace.

Vendors are wanting more up front, work is taking longer, so we are value-adding where we can, for instance, helping clients on the tenant negotiation side to suspend leases or postpone payments due to uncontrollable delays. We place a lot more emphasis on streamlining the work leading up to the construction so that the build can go as efficiently as possible, such as separating the interior and exterior builds if we must – it creates 2 permitting tracks, but it allows work to continuously move forward, rather than being totally stalled.”  

Clients Crave Control

Clients know what they want for their store designs, but they are frustrated, simply by the lack of control. Delays are increasing due to factors out of the control of both the agency and the client. These delays don’t just add to frustration but increase spending on construction and payroll. Delays in opening lead to lost revenues. 

Neither clients nor agencies can defeat the supply chain, but the situation is causing clients to lose confidence not only in the agencies with whom they work but with their own internal teams and their vendors as well. And vendors, who are either protecting themselves or simply unable to move quickly enough due to the supply chain, are driving up wait times and increasing costs.

“It used to be you got to choose 2: good, fast, or cheap….but now it includes a 4th variable: just getting it done, and you’re allowed only one mistake,” says Hofmann.

Layered Construction in Design

On the execution side, layered construction is becoming more common to help overcome the challenges of supply chain and labor issues. But these challenges aren’t just happening with the storefront. A retailer may not be able to get the correct fixtures or all of the fixtures they need, so a layered approach is being used to help keep the client moving toward opening. 

Clients may be able to have some of the fixtures installed and use alternates for the rest while they wait for the remaining fixtures. They’re making do with what they can get – literally buying things off the shelf, at second-hand stores, or recycled from other locations as placeholders until the real elements arrive. 

For example, if the space has been designed with certain color-themed rugs that you can’t get right away, they find something that works, place it in the store, open the store, and then replace it when the actual items arrive. And it’s not just rugs – it’s light fixtures, window glass, paint colors, display tables, shelving – it could be anything. Now imagine the scale of that when it is multiple locations or multiple elements. Just to get the store open, the design team might have had to get fixtures at West Elm, Arhaus® Outlet, Wal-Mart, or even Amazon, as the first layer and then later, come back and add in the desired elements. 

Managing the Customer’s Experience 

This obviously isn’t the optimal approach, because the design is part of the experience for customers walking into a newly-opened location. In order to manage this “layered” experience will require finesse and transparency. So how the retailer positions the design choices they make will influence how it is received by consumers. 

The key to a successful layered construction approach comes down to closely following the brand intent, that powerful story, with thoughtful, perhaps temporary substitutions, back up plans and complete transparency with the client and often the end consumer.  The relationship between Brand and the people that love them is paramount – it’s our job to protect that and find a way to go above and beyond, delivering unique and powerful connections, sales, and memorable experiences. 

An Era of Layered Construction

An Era of Layered Construction 1440 428 ASG

It’s tough to be a retailer trying to open new stores right now. Everyone is experiencing high costs, lack of materials, logistical issues, and labor issues. One of the hot topics at the ICSC convention this year was the idea of layered construction. Layered construction allows the retailer to open sooner, albeit not in the ideal state. Layered construction is the outcome of more than two years of pandemic-related supply chain and labor shortage issues that show no real signs of letting up any time soon, which have only been exacerbated by the war in Ukraine.

What Is Layered Construction?

Layered construction is an approach to launching a new location in the midst of all the construction industry challenges currently besetting the industry. It can take much too long for a brand to realize the ideal design for a new location due to shortages or wait times for materials, labor, and partner resources, so they sacrifice or alter the design to help facilitate progress towards opening. This can look like many things, but basically, it means implementing a new prototype in layers. For example, a store has a new, beautiful storefront design, but the design requires certain materials which are not accessible for 22 weeks, despite sourcing locally or looking for custom-made solutions. Waiting 22 weeks for the materials isn’t feasible when the store needs to be open for customers now, so the design is built in layers. Often, this means creating an alternative to the prototype that can be built immediately, then returning later to update with the correct materials when they’re finally available.

Drawbacks of Layered Construction

For retailers, the design of a location is a significant piece of the branding. By opening without having the design elements in place, they risk losing that all-important customer experience element that drives loyalty and return visits. However, this is the world everyone is living in right now. While it adds complexity to the construction and design build, it’s important to move forward, even though there may be a slower response to what should be a great store experience.

Even with these drawbacks, because labor and supply chain issues are having such a significant impact on construction schedules, retailers who want to open more quickly are using a layered construction approach to be able to open their doors to consumers even before the elements of their retail design are complete. It’s not a perfect solution, but when handled properly, it can be a way for retailers to more quickly.

Processed Have Changed

Processes have changed dramatically, and because most of these things are completely outside the control of the agency and the client, it becomes a matter of adjusting to the changes, communicating them effectively, and adjusting internal processes to accommodate the changes. For example, permit times have doubled in the last year.

“Speed is no one’s ally”

explains Liz Seitz, ASG’s Store Planning and Construction Leader. “What used to be a 6-8-week timeline, is now 20 weeks in some scenarios.” What agencies must do to help assuage the frustration for clients is to perform due diligence and organize everything prior to construction to make the process quicker and more efficient to execute.

Agencies must be vigilant, keeping their eye on the swiftly changing environment. “As soon as one lever opens up, another one, down the road we never expected, shuts,” says Seitz. Sometimes, Liz explains, it’s important pump the brakes earlier- talk to vendors and ensure construction schedule will align for everything to come along as scheduled.

“Companies will do anything to get into their space,” says Seitz. “They will literally rig their HVAC to make it into their space quicker.”

Globalization is Challenged

For years, the industry has relied on globalization as a solution that delivered cost-effective materials. Now, sourcing materials are part of the challenge. Could anyone have possibly predicted that just as we were coming out of the worst part of the global pandemic that a war would break out? Ukraine may be a small country, but it is pivotal politically and geographically for both food (Ukraine is a major wheat supplier) and oil (most of Europe imported oil from Russia and have stopped because of the invasion.

“None of us expected that after covid, another massive global crisis would emerge,” says Seitz.

Global struggles have a direct effect on US construction in some fashion, and all these factors make it more difficult to consider offshore manufacturing, at least in the short term. Complicating matters is that fewer and fewer people in America can actually put things together.

It’s the agency’s responsibility to have everything organized, to simplify the process and make the job simpler for vendors, contractors, and partners, but that’s far more difficult to do when everything is so much more unpredictable.

Supply Chain Woes

As with so many other industries, the construction industry has been plagued with supply chain issues. These issues are now compounded by a backlog of projects, a new infrastructure bill, and pent up demand for projects that were put on hold during the pandemic. These supply chain issues are impacting every phase of construction, and lead times are growing, exacerbated by the labor shortage in the trucking industry that moves the materials.

Labor Shortage

According to the Associated Builders and Contractors (ABC) organization, the construction industry needs 650,000 additional workers on top of the normal pace of hiring in 2022 to meet the demand for labor. In 2023, ABC says the industry will need to bring in nearly 590,000 new workers on top of normal hiring to meet industry demand. The labor shortage is compounded by a tattered supply chain. It’s not just that there are labor shortages in general. It’s that the labor shortages are hitting blue-collar jobs, so even when the store is finally able to get the materials, they may not be able to find enough people to do the work, whether it’s installing fixtures or painting, or specialized services like plumbing and electric.

Alternative Buildout Matters

One of the wonderful specters we see in retail over and over again is a willingness to be flexible, to switch gears, and to change directions in order to keep moving forward. It’s one of the most invigorating reasons to be in this industry. There are many creative and innovative options rising to the forefront to make it easier to complete construction as expected.

“Just as we’ve seen new store formats or logistics solutions in response to the pandemic, businesses are becoming more adaptable and flexible overall in response to a new normal. Those that are prepared to make the most of this will benefit in the long run if any other supply chain issues arise.” said Tom McGee, president and CEO of ICSC, in an interview with Costar.

Some of the alternatives being considered include:

3D Printing

3D printing is becoming an innovative way forward in retail design construction. There have been entire buildings manufactured from 3D printing, and it’s offering retailers who need to open sooner a way of moving forward without losing all the elements of their design. According to Construction Dive, 3D printing is more cost-effective and projects can be completed much more quickly.

Using Different Materials

Even though lumber prices are starting to fall, the overall cost of construction remains higher than expected. Many retailers are seeking out alternative materials to be able to complete their projects, whether for construction or for interior design elements.

Local Sourcing

There has been an increase in demand for materials manufactured in the U.S. in order to shorten the supply chain. While this may not be a permanent solution to the issue, in the short-term, it allows construction to move forward with both construction.

Prefab

Robins & Morton makes the argument for prefabrication to ease the supply chain issues, reduce costs, and overcome labor shortages: “Once dismissed by skeptics as a risky idea destined to diminish construction quality, prefabrication is now universally embraced as an industry best practice. Companies in all building sectors are investing in it, clients are intrigued by its savings potential, and the field staff is integrating it in ways that will forever change the traditional supply chain in construction.”

Using Existing Construction

Not only can it be cost-effective to use an existing building and transform it for your brand, but it can ensure you get the location you want. Demand for prime locations is growing rapidly but given the cost and delay in constructing an entire storefront, the investment in retrofitting an existing location can be worthwhile. It can even be inspiring.

At the end of the day, suggests Seitz, you have to set the tone early and understand the client’s priorities. Then use your experience to develop forward-thinking design that is flexible enough to withstand the current industry climate.

Social Segmentation: Connecting & Marketing in Modern Retail

Social Segmentation: Connecting & Marketing in Modern Retail 1440 428 ASG

The data every retailer relied on to connect with consumers before the pandemic must be reevaluated. Today’s consumer – the post-pandemic consumer who was isolated at home for several months, learned to rely on others to choose their groceries and deliver them, and refurbished their homes while shopping online – are not the same consumer they were before the pandemic. And more than ever, demographics are no longer an accurate predictor of consumer behavior on their own. Consumer behavior crosses gender and generational lines in ways retailers have never seen before. As we think about analytics and strategy, fully understanding a consumer requires demographic, psychographic, and social analytics. In fact, social segmentation has become an influential piece of the puzzle.

According to Synchrony, “In a world where consumer behaviors have been turned upside down, businesses have to rethink what loyalty looks like — and create new paths for building and maintaining customer loyalty for the long term. Smart brands are on it: finding ways to adapt technology, social media and other tools for the current environment while still leaning into the human elements of incentives, rewards and personal connections that sustain loyalty over time.”

Social as Part of the Shopper Journey

Rachel Lloyd of Green Room discussed the social retail trend in Retail TouchPoints:

“…despite the fact that most customer journeys start on social media through product discovery, there will always be a huge desire for people to experience brands in real life. Humans have an inherent desire to come together and connect in social settings. Yes, the rules of retail are changing, but the human needs and desires that retail fulfils are not.

But in order to survive, the store’s connection to the brand’s wider digital ecosystem is now absolutely vital to ensure that a dialogue is maintained long before a customer goes in-store and continued long after they leave.”

So as retailers find new ways to “adapt technology … while still leaning into the human elements…” social media rises to the forefront of the new way to not only connect with customers but learn about them. Consumers are turning to social media more than ever to explore and connect with brands. The search for and discover of products online fulfills a sense of adventure for consumers – it’s like being on a quest. And consumers are eager to share their discoveries and take pride in being the first to know about an unknown brand.

So while most consumers still want that in-store experience, for brands to get consumers to walk through the doors, they need to be accessible on social and paying attention to what their customers want. In other words, even as retail continues to change, the need for human connection and in-store shopping isn’t going away. Social retail is the connection brands need – and the way forward for more intelligent marketing.

The Need to Move from Demographics to Social Segmentation

Retailers currently have an enormous opportunity to connect more authentically and more effectively with their customers. In combination with actual physical shopping behavior and historical data, brands have an opportunity to leverage social sentiment to guide how they move forward. In fact, a social view is critical now to form a complete picture and guide retail strategy. By incorporating social listening and social segmentation, it’s possible to gain a more holistic picture of today’s consumer and how they’re interacting with your brand.

Moving Beyond Demographics

Retailers have historically lumped customers into targeting groups based on demographics. Messaging and advertising, maybe even product mix, became based on age and generational characteristics. People of a certain age were in specific stages of life. 20-somethings were starting families and buying homes. 30-somethings were making home improvements and raising families. 40-somethings were thinking about things like investing and insurance. 50-somethings were becoming empty nesters, focusing on travel and retirement planning. It was concrete, and everyone was following along with their age group in terms of life stages. Now, we have 80-year-olds graduating from college and 40-year-olds having their first child. Millennials aren’t even thinking about buying a home until they’re in their late 30s – if at all – and consumers across all demographics are spending their dollars with brands and companies whose beliefs and behaviors align with their own.

Benefits of Social Segmentation

In building the case for social segmentation as a strategy for better consumer engagement, consider these statistics:

  • 77% of consumers say they are more likely to buy from a brand they follow on social media over one they do not (Social Media Today)
  • In 2020, over 3.6 billion people were using social media worldwide, a number projected to increase to almost 4.41 billion in 2025. (Statista)
  • 71% of consumers say it’s important for brands to raise awareness and take a stand on social issues. (Sprout Social)
  • Half of worldwide marketers have turned to social listening to understand consumers’ changing preferences during the pandemic. (eMarketer)

In the past few years, retailers have learned to be quick to pivot because of how rapidly consumer sentiment can change. Using social signals gives retailers a deeper understanding of what consumers want – and how they want to buy. Instead of relying on what has happened in the past, a social view provides context around what is influencing buyer behaviors in real-time. Benefits include:

  • Increase Customer Lifetime Value
  • Improved customer engagement
  • More cost-effective customer acquisition
  • Improved omnichannel/integrated experience
  • Significant improvement in anticipating customer needs, wants, and behaviors

How Can Retailers Use Social Segmentation?

Customers are more than their demographics. Social listening allows brands to identify not only consumer sentiment – toward brands and toward social issues they care about – but also can help brands measure what consumers say online against their actual behavior as consumers. And it allows brands to customize and personalize their messaging. For example, if consumers are talking about sustainability, a brand can tailor messaging with social segmentation around sustainability efforts. If they’re concerned with diversity and inclusion, the brand could then create content around the efforts they’re making in DEI. Knowing what is important to customers is crucial to building and maintaining loyalty for every brand.

Brands Doing It Right: Leveraging a Social View to Create Better Experiences

Understanding customers in real-time through social listening and targeting customers based on social segmentation rather than demographics can help brands connect more authentically with their consumers.

Target

Target is so good at attracting customers to their stores that they have their own entry in Urban Dictionary. They incorporate a variety of marketing strategies, an in-store shopping experience that makes people want to be in their stores, and partnerships with brands people love but in limited quantities that create FOMO – the “fear of missing out.” Their social media effectively connects them to their customers and explain that they try to post what their customers want, not what they think they should post. They incorporate user-generated content in their social media and website, from sharing shopping experiences posted by customers to reviews to answers about products on their website provided by users.

Sephora

Sephora uses a variety of social listening tools and social segmentation to reach their customers. They’ve recently been highlighted by Wall Street Journal for how they are using social media to share their purpose. In the interview, Suzanne Kounkel, CMO of Deloitte US says, “Organizations are seeking to demonstrate to all stakeholders—from customers and employees to partners and investors—why their companies exist and how they make an impact beyond profit.”

Gymshark

Gymshark, which we recently named a DTC brand to watch, is in part having success because of their approach to social retail. Not only are they leveraging influencer marketing to turn their brand into a household name, but they are using social listening to more accurately target their customers. Giraffe explains, “Gymshark is a key player in knowing your audience and using social media channels in a hyper-targeted way. For instance, Gymshark owns 3 different Instagram accounts (@gymshark, @gymsharkwomen and @gymsharktrain) all with different goals and purposes.” Maybe conducted an in-depth analysis of how Gymshark used social media to listen and connect with consumers here.


Social Retail Connects You with Your Customers

Social listening provides more accurate and up-to-date information than typical historical data and forecasting. And by using social signals, retailers can more quickly adapt to changing sentiments. Most importantly, however, social signals provide a cross-section of data that moves beyond generational demographics and allows a brand to align with consumers and use social segmentation to deliver more impactful experiences. With the great wealth transfer well underway, there are invaluable opportunities for companies to listen and learn from their customers in new ways.

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