Articles

The Pet Retail Economy
The Pet Retail Economy 1440 428 ASG

Were you one of the many people who made a lifestyle change during the pandemic? Maybe you started a new hobby or workout regimen, or maybe you were one of the 23 million Americans who adopted a new pet. One in five Americans nationwide took in a new pet, according to The Washington Post. Do you fall into this category? If so, you helped change the way pet retail looks and will look for the foreseeable future. And if you are a retailer in the pet space—the outlook is good.

According to ZIPPA, the pet industry is booming. The U.S. pet industry expenditure has more than doubled in the last 10 years and is projected to continue that growth. Here are some staggering stats:

  • 70% of U.S. households own at least one pet, 32% of them being Millennials, followed by Baby Boomers (27%).
  • During the pandemic, the global pet industry saw spending growth of about 28%.
  • Owners are spending an average of $1,332 a year, which adds up to $13,000 over the average lifespan of a dog or cat.
  • The pet industry is worth $76.8 billion and is projected to reach $325.74 billion by 2028.

Shifting From Children to Pets

With pet ownership at record levels, owners are increasingly treating their pets more like a part of the family—and they want to be the best pet parents they can be. In an article from The New York Times, Andrea Laurent-Simpson a sociology research assistant professor at Southern Methodist University and author of the book Just Like Family: How Companion Animals Joined the Household, states that Baby Boomers have evolved into thinking of their pets as family members, especially as the cohort has become empty nesters. Many in the younger generations are fully leaning into the idea of dogs as children, with more Millennials postponing pregnancy and Gen Zers passing on having kids altogether. In fact, in a 2022 Consumer Affairs survey of 1,000 pet owners, “58% of Millennials said they’d prefer to have pets over human children.”

The consumer mind shift from pet owners to pet parents has brought many new opportunities to the pet retail market. With pet parents willing to spend big on a nice life for their pup, the pet housing market is hot.

Pimp My Pet’s Crib

As consumers spend more time at home, the aesthetics of pet gear can no longer be an afterthought. Owners are making sure their pets live just as high quality (and stylish) life as they do. From custom playhouses, dog showers, built-in litter boxes, and crates, to personal watering stations, there are endless designs pet owners are incorporating into their homes. One pet owner building a new home in Tulsa, Okla. requested a dog kennel-like structure off the main bedroom. “The kennel has a dog door that opens from the outside and leads directly to the dog shower, as well as built-in crates and their own refrigerator and dedicated freezer drawers for their raw food.”

With a lot of pet owners still working remotely, brands like PetFitness are seeing success. In January 2022 they released a dog-focused exercise plan. The online library of 50+ workout videos (created with consultation from vets and dog trainers) is designed to build strength, endurance, flexibility and balance.

Another company, Get Joy, announced in 2022 the establishment of the first-ever dog park in the virtual world of Decentraland. “Get Joy aims to increase dog joy through three things: nutrition, the cornerstone of what we do; educating pet parents on how to be the best dog parents they can be; and now, expanding our commitment to establish and improve the places dogs can go,” said Get Joy Founder and CEO, Tom Arrix. “We are turning to the metaverse to dramatize the fact that in most real-life communities, there is an imbalance between the size of the dog community and the available recreational space for those animals.”

Back To Work

For Americans on the go or returning to the office, some of those household amenities might not seem appealing. But services like “doggie daycare,” pet healthcare insurance, and even pet-friendly restaurants and workplaces take priority for those pet parents. Many pets and their people have had to adjust to returning to the workplace, and it’s not easy for either party. Over half (57%) of American pet owners said they would be happiest returning to their workplace if they could bring their pets with them according to a recent Stylus report.

Many owners say they are concerned about the separation anxiety their furry friends may experience as they leave them for more extended periods of time. Doggie daycare may be reasonable for some pet owners with costs averaging round $30-$35 per day, while others want the flexibility to work part-time or bring their pets to work with them. A study by LiveCareer found :

  • 52% of respondents said that pet-friendly benefits and policies are important when considering an employer.
  • 49% said that a pet-friendly work environment could convince them to take a job offer.
  • 52% felt more supportive of pets in the workplace due to the pandemic.

Although bringing pets into the office has some negative sides such as allergies, accidents, and distractions, there are some studies that show pets help reduce stress, enhance physical health, and enhance one’s ability to think, plan and concentrate. Some large companies welcome dogs to the office, including  Amazon, Google, Petco, Kimpton Hotels & Restaurants, Procore Technologies, Cliff Bar & Company, Airbnb, and Kurgo.

From Pet Owner to Pet Parent

As people continue to adopt pets, they will continue to spend plenty of money on them. From cuddles to playtime, pets can contribute to your quality of life— so it only makes sense that pet owners choose to contribute to theirs in return. Not every pet owner will be purchasing items like designer dog clothes, human-grade dog food, or vegan luxury dog beds. But the shift in mindset from pet owner to pet parent means today’s pets have it good—and the brands creating the plethora of products for them have it even better.

Building a Brand Family
Building a Brand Family 1440 428 ASG

When Olivia stepped into the corridors of her local mall, she was on a mission to pick up a few much-needed clothing staples for herself and her kids.

Weaving in and out of stores like Aeropostale, Eddie Bauer and Forever 21, she found most of the items she was looking for on her list. For the rest, she would stop at a department store on her way out, where she could find favorite brands like IZOD, Volcom and Nine West.

Although Olivia visited at least four different stores and shopped half a dozen brands, like most consumers, she didn’t realize that each retailer she visited fell under a parent brand’s umbrella. In other words, she essentially shopped at one company—a brand family.

In her scenario, the parent brand was Authentic Brands Group, a brand management company whose portfolio spans various industry sectors, including entertainment, sports, and beauty and wellness.

While each merchant carries different products and features a unique personality, vibe, and characteristics that are entirely their own, they all fall under the same umbrella organization.

We all have our favorite store or brand, but the above scenario begs the question: Who owns it? You may be surprised at the answer, as well as how a multi-brand strategy can help brands become market leaders.

What is a Sub-Brand?

A sub-brand is a secondary brand that is associated with a parent company. Often, consumers are unaware of the connection, yet sub-brands are common in most industries, from food and beverage to electronics.

The Toyota Motor Corporation has several sub-brands, including Lexus, Hino Motors, Fiji Industries, Isuzu and Daihatsu. Madewell is a sub-brand of J.Crew, while Amazon owns Audible and Ring. If you’ve been to a mall lately, you’ve probably been tempted to stop at Auntie Anne’s, Cinnabon and Jamba Juice. They’re all under the parent brand, Focus Brands.

It’s easy to understand why it’s not obvious that these sub-brands are connected. Each brand has its own comprehensive identity that includes a unique logo, color palette, images and messaging. Each brand has its own target customer as well.

While some sub-brands coordinate closely with a parent brand for strength and credibility, other sub-brands stand entirely on their own.

Take Ben & Jerry’s, which is owned by Unilever, the same company that owns Seventh Generation, Dove, Axe and Vaseline. Ben & Jerry’s revenue is $450 million annually, yet the respected brand in the ice cream industry stands on its own as a highly recognized product. With a loyal customer base and a strong commitment to social and environmental activism, Ben & Jerry’s doesn’t necessarily rely on Unilever’s affiliation and resources.

Yet Unilever certainly benefits from having a successful company like Ben & Jerry’s under its umbrella, and for the parent companies that expand their product lines and target different customer segments, they often see the advantages like building brand equity and enhanced creativity across the entire organization.

The Success Behind Sub-Brands

A parent company doesn’t always begin as a conglomerate of brands. In fact, one of the primary ways a company develops sub-brands is through acquiring other businesses. Others may create a new sub-brand if they see a void in a market and want to capitalize. They may also have organizational goals to target different customer segments.

Regardless of the reason behind developing a sub-brand, companies recognize that having multiple sub-brands can provide many benefits, and ultimately, success.

New Revenue Streams
Sub-brands offer a unique way to unlock new revenue streams. Companies may use them to differentiate products or see an opportunity to expand into new categories. In 2000, Abercrombie & Fitch acquired Hollister Co., adding a new brand concept that focused on a “laid-back California lifestyle.”

Other times, a company may deliberately create a different sub-brand to reach a new niche or market, as Abercrombie & Fitch did in 2022 when it announced an all-new activewear sub-brand, YPB. YPB stands for “Your Personal Best” and advertises itself as a fashion-forward yet functional activewear for men and women.

Deeper Connections
Sub-brands also create deeper connections with specific audiences. By better connecting with customers based on their distinct interests or values, companies can tap into the buying power of entire markets.

Since its launch in 2014, Aerie, a lingerie sub-brand of American Eagle Outfitters Inc., has achieved remarkable success through its #AerieREAL Life campaign. This international campaign aims to foster positivity and inclusivity by featuring models from diverse backgrounds. Photo retouching is forbidden.

The campaign has struck a chord with consumers, resulting in an impressive growth for both the brand and its parent company. As of 2021, American Eagle Outfitters Inc. has generated more than $5 billion in revenue.

In 2021, clothing giant Hollister introduced its gender-inclusive apparel brand, Social Tourist, in collaboration with TikTok stars Dixie and Charli D’Amelio. The brand empowers teenagers to discover their unique fashion sense and engage with their beloved TikTok influencers. Social Tourist’s inaugural brick-and-mortar store debuted on Melrose Avenue in Los Angeles, utilizing Leap’s technology. With Social Tourist’s potential to appeal to a younger demographic, Hollister can enhance customer involvement and potentially establish long-lasting loyalty.

Success, Even in Failure
Even when brands don’t find success in exploring new concepts without compromising their brand identity, they take away valuable lessons that can help them grow their businesses.

Lululemon’s launch of Ivivva in 2009 is the perfect example of this. The launch was aimed at expanding into the market for young girls’ athletic apparel. Although the brand was ultimately unsuccessful, Lululemon was able to learn some valuable lessons from the experience.

One of the key insights that the company gained was that the concept performed stronger when it was linked to the Lululemon name. Building on this knowledge, Lululemon has since applied its learnings as it expands into other areas.

For example, the company launched a men’s concept that focuses on athletic apparel and accessories, and it has also launched Mirror, a high-tech fitness equipment and content platform. In both of these cases, Lululemon has leveraged its brand recognition and reputation for high-quality products to establish itself in new markets.

Lululemon’s experience with Ivivva demonstrates the importance of brand recognition and the power of leveraging existing brand equity to launch new products and expand into new markets. By building on its reputation and focusing on high-quality products that align with its core values, Lululemon has been able to successfully expand its business and reach new customers.

A Multi-Brand Strategy: Top Trends and Benefits

If it ain’t broke, don’t fix it. It’s an old phrase used to express the idea that if something is working well, there is no need to change it. While this approach may be appropriate in some situations, it can also limit a company’s potential for growth and innovation.

In fact, a multi-brand strategy can provide numerous advantages to a company:

You increase your potential to expand your customer base. By offering different brands, a business can cater to a variety of customers’ needs and preferences, which can attract new customers who may not have been interested in the company’s previous products.

Cross-selling and up-selling becomes more effective. When multiple brands are available, it allows a company to offer complementary products and services to different customer segments.

You become the leader of the pack. A multi-brand strategy can help a company become a market leader. By offering a wide range of brands and products, a company can increase its visibility and appeal to a larger audience, which can lead to greater market share and revenue.

Internal competition is stimulated. Having multiple brands can stimulate healthy internal competition, which can lead to more innovation and growth.

Diversification reduces dependence. Building several brands allows a company to spread its risk and reduce its dependence on any one product or market. This can help the company weather market fluctuations and reduce the impact of any single product or brand failing.

A powerful tool for businesses, a multi-brand strategy offers many benefits. Yet it’s important to consider that having a successful multi-brand strategy requires careful planning and execution to ensure that the different brands complement each other rather than compete with each other.

Designed for Versatility: Q&A w/ Ben Checketts of Rhone
Designed for Versatility: Q&A w/ Ben Checketts of Rhone 1440 428 ASG

In just eight short years, Rhone has carved out a space for itself in men’s apparel with a focus on luxury materials and versatile products. We sat down with Co-Founder and Creative Director, Ben Checketts to talk about the brand’s expanding vision, intentional restraint, and knowledge gained along their journey.

Q: Ben, thank you for spending some time with us. First of all, “Creative Director” can encompass a number of things, so start by telling us about your focus at Rhone.

Ben: I am split between two teams, product and brand marketing, and we recently adjusted to bring product under one creative direction.

On the product side, I try and stay current on trends. I look at our positioning in the product category and what stories we can explore. In brand marketing, I explore larger seasonal themes and how they translate into individual campaigns and product marketing. On the brand marketing side, we are finding ways to show that we are a little bit more sophisticated and a little bit different than anything they’ve seen.

I obsess about how we talk to our customers, whether that’s in product or whether that’s directly through messaging and brand marketing. My obsession is understanding our customer better—the psychology behind why he makes certain decisions on his daily journey and how we can serve his needs better. The better I do that, the better the entire business is— both on the product and on the marketing side.

Q: Give us a little background on why you and your brother, Nate started Rhone and what you hoped to accomplish in the retail space.

Ben: When we started Rhone, we were one of the only brands focused on men and athleisure, although we prefer the term “work-leisure,” and we have a robust active performance side as well. We knew we had to be a brand that spoke to men of a certain age and demographic because at some point you graduate from wearing Nike and Under Armor. You want something a little sleeker and more sophisticated. ASG really did a fantastic job of helping us bring those concepts into our stores in a way that wasn’t heavy-handed. You know when you walk into stores and there are words plastered on the wall? We didn’t want that. We wanted something more elevated. Something that matched our brand.

Q: When you started thinking about Rhone’s ideal store, what was most important?

Ben: I wanted to create a space where men of all sizes, shapes, backgrounds, etc. would feel comfortable shopping. Our staff is committed to creating a place that’s safe for all men. Shopping is not the easiest thing for men. So how do we make it as comfortable and as inclusive as possible?

If we create a product that people love and create spaces that are safe for them, those are really our main objectives in terms of an in-person brand experience.

Q: Is there any correlation between bringing product under a single creative view and Rhone’s transition to physical retail?

Ben: Definitely. As we grew our retail presence, it became increasingly clear to us that our product was a little bit all over the place. We were hard to understand as a brand, mostly because of the variety of our products. A lot of brands get into this trap. We started out with four styles, and we had tremendous success, and we thought, you know what’s better than four styles, like 300 styles.

But the art of essentialism is doing less but better—and that was kind of the transition. So as we went into retail, we knew we needed to simplify in order to better serve our customers. Shoppers are just now starting to see some of the changes that we made to condense product as well as the execution of certain creative ideas and themes that make us easier to digest and easier to understand as a brand.

Rhone: Q&A with Ben Checketts

Q: How has your approach changed since opening the first store?

Ben: We incorporated storytelling (where appropriate) and let the product be the star. We are also educating on the products. Other brands call in-store associates “Educators.” We wanted an element of that, but honestly, for us, especially as men, we almost want to discover that for ourselves.

Our main objective is to just get guys to try on. There is this crazy stat we discovered that 83% of people who try on our clothing, buy it. Usually, in retail, it’s much lower than that. Our objective is to create curiosity and educate so that all they really want to do is just try it.

Q: Digitally native brands often feel like they have to bring technology into the stores. How does Rhone think about digital as part of the in-store experience?

Ben: We believe our product is the best statement of who we are as a brand and what we believe in. Even something such as a simple TV screen that shows videos of your campaign can distract from the product.

We want people to get off their phones and experience the story. We had people come in and tell us, you need a statement wall so people can post on Instagram. What 37-year-old man, who’s in the exact middle of our target demo, do you know that’s looking for a statement wall to take a picture with? I know of none.

But we do need new technology to make it convenient for our guy, to make it so that if he orders online, he can pick it up easily. If he has a discount that can apply online, it can carry through to the point of sale. But we don’t want anything that’s going to detract from their experience and that first interaction with the product or trying it on. If we can get him to that point in the customer journey, we know that more than likely, he is going to convert.

 Q: Rhone has worked with ASG now for over a year now. I would be foolish if I didn’t ask how the partnership has been for you and your team.

Ben: In a word, it’s been fantastic. It’s been transformative for our business. We had some initial calls and the ASG team fell in love with the way we talked about and positioned the brand and our values but they said, “look, we love this—but we don’t see this translating in any of your stores.”

ASG helped us see that not only is the in-person experience a statement about your brand in new and different markets, but it’s also an opportunity to inform about why we’re different from other options. They taught us that the physical store is really about the personal connection and the opportunity to speak about your brand.

Path to In-Person: A DTC Guide for Physical Retail

See the Guide >

Q: So, what’s next for Rhone?

Ben: We want to have a real community space. This is one of the areas in which I believe Lululemon got it right. They deserve all the credit for being an innovator and using their spaces for their community.

We have had groups of men come in for what we call Mind and Muscle. There’s a little workout or a breathwork class for 20 to 30 minutes. Then it’s 20 minutes of, essentially, group therapy. The format is men talking and responding to prompts and sharing their feelings, and it’s remarkable to watch. Especially within the world of physical fitness influencers, you see these guys who look like their body is Photoshopped—they don’t look real. And suddenly their walls come tumbling down. They tell you about the issues they’ve had with their father, issues they had growing up, the fears, and the anxiety they have as fathers themselves. We want to create these safe spaces, where men can come in and shop, but also where we could hold these community events.

We’re also looking at active. During the pandemic, people really fell in love with the idea of getting good at something specific. They started running marathons, started cycling, weightlifting, or powerlifting, trail running as opposed to distance running. We are creating products that are a little bit more specific on the fitness performance side—an active refresh that will sit perfectly alongside our work leisure apparel.

And then, it’s just all about expansion—finding the cities and the areas where we fit in best.

This interview is part of our continuous DTC series, Path to In-Person: A DTC Guide to Physical Retail

See the Full DTC Guide >

Material Procurement: Tips from the Trenches
Material Procurement: Tips from the Trenches 1440 428 ASG

Economic uncertainty, supply-chain disruptions, and a shortage of skilled tradespeople. While it is undoubtedly a challenging time for the construction industry, Andrew Miller, our own procurement and materials manager, says that despite the known volatility, it’s business as usual for many retailers.

Although retailers are trying their hardest to move on, the impacts of COVID are still rattling consumers.  Political unrest, astronomical inflation, and slow lead times have made resources more difficult to secure. However, Andrew says despite a perceived economic slowdown and logistic challenges, many retailers are in post-COVID growth mode. “The majority want to go hard with designing, constructing, and opening stores.” Meanwhile, there are some brands that are taking more of a wait-and-see approach, he says.

Andrew’s expertise lies in both environmental design and materials sourcing, which gives him a solid understanding of all the forces at play when it comes to bringing a design project to life. From flooring to facades, Andrew and his team procure all the materials needed to build a modern store. We recently sat down with him for some insider insights about the current state of retail construction and some tips from the trenches for anyone considering a building project right now.

Tip 1: Keep Calm + Communicate

Other issues impacting materials right now include difficulty obtaining the ingredients used to make materials like powder coatings for fixtures. Even when materials are readily available, it can take an exceeding amount of time to get them to where they need to be, causing headaches for retailers, designers, and general contractors. Thankfully, Andrew says, continually communicating the situation with clients is key to their understanding of the challenges facing the building materials and construction industry today. ­­­­

“Prices have increased a great deal for materials. Even though we create a timeline, the project can run longer than anticipated because of delays and so forth,” says Andrew. “Following up and communicating regularly is key, not only with clients but also with suppliers and contractors.” The process can test even the calmest of procurement managers. “It can be challenging not to get frustrated. Clients have been understanding overall, but, like us, most clients are also very eager to get the project done.”

Tip 2: Tweak the Plan + Find Workarounds

Innovation often comes from working within restraints, and Andrew welcomes this kind of progress within his industry. By finding workarounds within the design, using alternative materials, and tweaking construction plans, Andrew finds answers to project problems that would otherwise cause delays.

“Sometimes there are answers. We can work within the design concept to choose materials that have a shorter lead time,” he says. When it comes down to it, if a timeline is at risk, another material may have to do. “We have to work around it and find another source. It’s all part of the gig. These times are challenging, and it helps us to think outside the box about other directions we can take. It’s important to stay nimble and adaptive to meet brands’ needs.”

Tip 3: Work Ahead

Andrew says that it helps to get as much construction done ahead of time in-house. “When we build on-site and in layers, it helps keep things on track,” he says. Working ahead as much as possible can be a critical timesaver. When necessary, utilizing layered construction practices allow the team to build onto what they have as materials become available.

Tip 4: Keep it Local

Nearshoring is the new buzzword when it comes to sourcing—and with good reason. The movement of sourcing closer to home shortens lead times, lowers costs, and reduces carbon emissions. We can expect to see new, closer, manufacturing hubs dedicated to meeting U.S. and European demand. A Business of Fashion annual survey of chief purchasing officers in North America indicates that more than 75% expect to increase the share of sourcing from Central America in 2023 and more than 35% expect to increase the share from Mexico.

Another trend Andrew welcomes is local sourcing. His team calls on local suppliers to obtain materials and get the work done more quickly rather than waiting for a shipment to come for them to get started. “Sourcing locally and working with local suppliers on our projects has helped us weather the storm,” Andrew says.

Tip 5: Work Only with Trusted Partners

There’s also another issue at play within the trades industry right now—they are just too busy. “Jobs in the trades are in high demand, and an issue is holding people accountable when they can’t manage their workload,” Andrew says. Another challenge is the amount of effort it takes to build a great experience. “That’s why it is critical to call on only the ones you have a trusted partnership and working relationships with—and trust to get things done correctly.”

Tip 6: Slow Down + Think Sustainably

“I would love to see more sustainable materials used, but really, we are all just moving very fast and trying to get the materials,” says Andrew. “Some clients really want to incorporate sustainability where they can—but it’s usually in flooring material or eco-friendly fabric, not so much with building materials.”

While his team has created fixtures made of engineered plywood and he sees clients using sustainable materials to craft their mannequins. “I hope when the industry slows down (in a good way), we will be able to focus more on using the sustainable products of the future—fixtures, building materials, flooring, and even playing around with 3D printing to make small tables and stuff,” he says. “It’s the future. I hope we can use it to think bigger.”

Bold Moves: The Evolution of Legacy Brands
Bold Moves: The Evolution of Legacy Brands 1440 428 ASG

Think about legacy brands like Porsche, Lacoste, and Nike. These brands have won a place in the hearts and minds of older consumers, earned over decades of brand-equity building. But what about the younger generations, who are building wealth and gaining spending power? How can established brands earn the loyalty of younger generations of consumers while not taking their brand off the rails?

Changing It Up to Appeal to New Generations is Not New

Brands have always reinvented themselves to be relevant. Just scroll through these ads from the 1920s for a sometimes amusing, sometimes cringeworthy look at marketing to the shoppers of the time. The evolution of fashion has always been driven by the evolution of the consumer. So who are today’s younger consumers, and why are they so appealing to legacy brands?

With the Transfer of Wealth Comes the Transfer of Power

Perhaps more attention is being paid to the efforts of legacy brands now that they have tuned in to how critical it is to capture the younger consumer—and they are going to great lengths to do so. The great wealth transfer currently underway is shifting not just money but also influence to Millennials and Gen Z consumers. As up to $70 trillion dollars in spending power transitions to younger generations, brands not refocusing energy toward capturing this market will go the way of Sears. But it’s easier said than done, as technology rapidly evolves, and today’s shopper demands an omnichannel experience.

Brands Making Bold Moves to Connect to Younger Consumers

Some brands are not waiting for trends to dictate that it’s time to change; they are making dramatic changes to ensure they get the attention of Millennials and Gen Z. For example, Ralph Lauren, a stalwart in fashion since 1967, is turning a keen eye toward attracting fresh customers, designing a new logo designed to “win over Fortnite players.” Their logo has not changed since the company started, but in their new Fortnite Collection, the iconic polo rider sits atop Fortnite’s iconic piñata llama.

With younger generations spending time on VR and in virtual worlds like the metaverse, we are seeing bold new brand interpretations. As a recent Fast Company article says, “Fashion brands go where their customers are, and their customers are increasingly in virtual worlds.” Brands that are accelerating their entry into VR to reach younger generations include Burberry and Balenciaga.

The Future Isn’t the Only Way to Connect with Gen Z

Yes, Gen Z are digital natives who are perfectly comfortable with a phone in their hands—but unlike their Millennial counterparts who live, eat, and breathe online—Gen Z tends to be more old school. Legacy brands can reach Gen Z with compelling stories and a trip down nostalgia lane.

“Balenciaga’s recent pink faux fur-clad London store launch is a knowing celebration of noughties maximalism, while fashion brand Coach built a vintage drive-in cinema for a runway show steeped in nostalgia last year. Throwing it back even further, Old Spice recently launched its own version of a traditional barber shop—paying homage to this beloved pastime with a themed retail space that hosts celebrity barbers on rotation.” – Fast Company

Why so nostalgic? Maybe this generation is longing for what they’ve never known, because their lives have been a staccato of war and pandemic.

“Nostalgia is making its way into how we spend our free time via streaming and social media. Metallica and Kate Bush are currently topping charts, each with songs released nearly 40 years ago. While many would attribute it to their recent airtime on Stranger Things / Tik Tok, we believe it’s something more significant. For many, this is their first introduction to these artists, leading a charge of discovery into a category of music and culture that many never experienced. It’s almost as if these songs were brand new.” – Chute Gerdeman

What Legacy Brands Must Get Right

Whether legacy brands get futuristic or nostalgic as a way to connect with younger generations depends on what works best with their brand and the young people they wish to reach. What does matter more than approach is the authenticity of the connection. If a brand is obviously just making a play for profit, trust us, Gen Z will see right through it. They want real connection and meaning. If you ask a Gen Zer what it takes to connect with them (and we did), here’s what they say:

“Be affordable. Be present. Be worthwhile.”

This generation is careful about what they spend and where. That’s why accessible luxury has been such a successful way to reach the audience. Everything is an experience. And if the legacy brand is not online and in person, forget it. They aren’t going to come looking.

Future Pharmacy

Future of Pharmacy: The Why & How of the Next Evolution
Future of Pharmacy: The Why & How of the Next Evolution 1440 428 ASG

It’s time to rethink the traditional pharmacy, from its purpose to its experience.

This wouldn’t be the first evolution. You would be hard-pressed to find a pharmacy with a soda fountain today like you could in the ’50s, and just a few short years ago, leading pharmacy brands like CVS decided it was finally time to stop selling tobacco. Why? Because the meaning of health has evolved and continues to evolve, it’s time for the pharmacy to change again along with it. The future of pharmacy is fueled by a set of needs, some new, some that have been slowly burning in the minds of consumers and healthcare professionals, but all important.

The timing couldn’t be more appropriate, as many pharmacies struggle with declining reimbursements, poor medication adherence, increasing online competition, and demands from health-conscious individuals looking to do more than treat symptoms.

A more complex definition of health means that for pharmacies to be the face of neighborhood healthcare, they’ll need to reimagine their role and the experience they provide.

Mental Health Crisis: A Second Pandemic

The Covid-19 pandemic changed lives dramatically. Health issues, economic hardships, fear, and stress ensued, and it quickly became obvious that the virus wasn’t the only health concern many were grappling with as they navigated uncertain times.

Mental health professionals began posing the possibility that a second pandemic was underway—one that would expose the lack of resources available for people struggling with their mental health.

In 2021, CVS Health launched in-store counseling, which opened in locations where consumers were unable to access and afford private therapy. Resembling traditional doctor’s offices, therapists’ private offices are located inside CVS Minute Clinics, providing reassurance that patients are receiving high-quality care.

Other pharmacies like Rite Aid and Walmart began offering affordable mental health support options as well, including counseling services with licensed behavioral health clinicians to help patients cope with anxiety, stress, and depression.

Nearly 90% of all U.S. residents live within 5 miles of a pharmacy, according to the Journal of the American Pharmacists Association. By offering critical mental health services, more pharmacies can close significant gaps in care left in the pandemic’s wake.

Consumers Want a Holistic Experience

The wellness economy is worth nearly $450 billion in the United States alone and is growing more than 5% each year. At the same time, the U.S. pharmacy market is projected to grow to more than $861 billion by 2028. There are remarkable opportunities for pharmacies to expand their services as more shoppers are seeking holistic experiences that offer well-being strategies.

According to global mall group Westfield, 78% of shoppers want in-store health experiences. That’s up 20% from 2019. Rather than simply a place to fill prescriptions, evolving pharmacies need to create clinics that offer holistic services within their retail locations.

Walk into The Organic Pharmacy’s sleek U.K. store, and you’ll find a concept that embodies some of the latest trends in holistic wellness, from skincare to bioenergetic scans. Enter one of the retailer’s consultation pods to learn more about how these three-minute scans can detect health conditions like infections, vitamin deficiencies, hormone imbalances, or food intolerances—then shop for your specific needs.

Pharmacy As a Nutritional Space

Pharmacies are a highly competitive business. Surviving generation after generation has meant evolving to meet customers’ needs and refocusing their brands to better reflect what customers want.

Today, it’s still common to walk into nearly any pharmacy and see aisles upon aisles of candy, salty snacks, and sugary drinks. Yet future pharmacies will no longer claim to be focused on health while creating an environment that encourages unhealthy choices. By taking it a step further and offering consultations on vitamins and wellness products, pharmacies can be the new one-stop shop for wellness.

Coastal Pharmacy & Wellness, an independent pharmacy in Portland, Maine, does much more than fill prescriptions—it stocks nutritional products from more than 150 vendors. Five wellness specialists research and select vitamins and supplements for customers, many of whom only visit the pharmacy destination for its wellness expertise.

Modern consumers are paying more attention to their diets than ever. Nielsen reports that 60% of Americans use diet to manage their chronic health conditions. With an estimated 133 million Americans suffering from at least one chronic illness, there is value in bringing nutritional intelligence into the pharmacy.

Several major pharmacy brands like CVS have recalibrated their food focus by expanding their healthy food and snack options. Yet still, only 25% of checkout space at the national retailer is now occupied by healthy items rather than sweets. Is it enough that you can now access healthy whole foods at some local convenient stores?

At Belgian pharmacy Van Dijck, customers can enjoy a refreshment station that offers fresh fruit-infused water, while Harpell Pharmacies in New York City offer cold-pressed juices that arrive at customers’ doorsteps for at-home cleanses.

An Aesthetic Facelift: From Cold to Inviting

It’s a classic look: Draining fluorescent lights, white epoxy floors, rows of products, and a fixed pharmacy window often in the back (so you must walk through rows of products to reach your destination). It’s the typical not-so-appealing look of today’s pharmacies, and it quite honestly feels like the place to be sick, not the place to get and stay healthy.

Yet some fresh-on-the-scene brands see brick-and-mortar as a blank slate—an opportunity to create a calm and relaxing setting that considers omnichannel retail. A 1,900-square-foot space in Brooklyn is one of the latest examples of pharmacies challenging the usual uninviting aesthetic. U.S. prescription app Medly opened its first brick-and-mortar store with the goal of enticing customers to a relaxing setting where calm aqua-blue interiors and minimalist display shelving set an inviting tone.

A pharmacy’s appearance matters more than many think. A study published by the Royal Society of Public Health in England found that the “architecture of pharmacies,” or how pharmacy spaces are designed, can impact how users participate in community-based pharmacy health services.

The study concluded that for pharmacies to optimize how pharmacy health services are delivered and experienced, spaces should be engaging and inclusive.

Those findings aren’t necessarily unique to pharmacies versus other healthcare settings. Researchers who have examined the impact of salutogenic architecture, or how an environment supports the healing process, have found that space design can improve health outcomes. For example, one study found that lighting, sounds, and the comfort of seating areas can all impact a patient’s mental well-being.

A pharmacy’s environment reflects the type of relationship it hopes to foster with patients. The appearance reinforces a consistent state of mind that a pharmacy is projecting, which then fosters brand loyalty. A customer’s experience will almost always answer the question: Which pharmacy are you more likely to go back to time and time again?

Pharmacy Digital Transformation

While more patients have embraced online pharmacies (there are currently more than 30,000 active online pharmacies), brick-and-mortar shops have also benefited by embracing digital tools.

A research study found that the number of online pharmacy users is expected to reach 1 billion across the globe by 2027. While experts point to the pandemic as the leading cause for the growth of e-pharmacies, the pandemic also showed the need for brick-and-mortar locations to improve services.

Many have turned to digital tools to help them reach more customers and improve workplace efficiencies. By leveraging new technologies, pharmacies have incorporated solutions like online shopping and delivery, secure messaging, e-commerce storefronts, and remote consultations.

Especially among the elderly population, remote consultations offer a viable option for those who have mobility issues. They can be an important tool for healthcare systems as a whole as well. In Minnesota, Fairview Health Services offers 24-hour remote pharmacy services to hospital pharmacy programs. When on-staff hospital pharmacists go home, Fairview Health Services steps in and offers patients, physicians, and nurses access to a pharmacist.

The program benefits all parties involved. Pharmacies can develop long-lasting relationships with healthcare systems. Hospitals can save costs on pharmacy staffing and reduce preventable medication errors. Patients can receive timely care and a better patient experience.

Digital transformations have also allowed pharmacists to connect with more patients. That’s important, considering pharmacists are often the first point of contact for patients. The National Institutes of Health reports that pharmacists see patients an average of up to 10 times more per year than they see their primary care physicians.

One digital tool that has become popular in underserved communities is telepharmacy. Telepharmacies operate like traditional pharmacies, except that a pharmacist reviews prescriptions and counsels patients from a remote location using cloud-based software. This technology has allowed pharmacists to expand their reach while providing high-quality healthcare.

While a digital boom has transformed the pharmacy industry by opening the door to more accessible care, brick-and-mortar pharmacies have continued to serve as the front door to care. It’s likely that we see both thrive and coexist.

Changing the Rules and Building Healthier Lives

“If you can’t win the game, change the rules.”

As the pharmacy industry continues to evolve and faces new challenges, both small, independent apothecaries and large pharmacy brands must buy into and support a larger view of health and position themselves as experts on health-related matters, as well as customer service.

Building patient loyalty isn’t about solely creating a place where customers go to pick up their medications. It’s about making a commitment and building relationships to help patients lead healthier lives.

The Art of Sensory Experiences in Retail + Restaurant
The Art of Sensory Experiences in Retail + Restaurant 1440 428 ASG

We’ve all experienced it – that moment when a single whiff of a scent of cinnamon takes us back to grandma’s kitchen during the holidays. The smell of buttered popcorn and we are taken back to the movie theater in our minds. A song whose first few notes make us remember a special moment with a significant other. It’s no wonder that restaurants and retailers are trying to find ways to capture the art of sensory experiences so that they linger on in our minds a little longer.

Incorporating the senses into shopping and dining experiences does more than just create a unique experience for the customer. By ensuring that all the senses are engaged, restaurants and retailers have an opportunity to make an indelible impression on customers and connect their brand positively to everyone.

Creating a sensory-driven experience in retail is a thoughtful, deliberate process that must incorporate brand story, the location, and the clientele. Lily Pulitzer’s Palm Beach store was designed with the senses in mind, with luxurious textures and colors, indoor and outdoor areas where customers can feel a breeze and smell the ocean air, and even an orange juice bar to energize the taste buds.

“Sensory marketing can turn a one-time customer into a loyal repeat brand advocate. By appealing to all five senses, retailers can solidify their store as a must-visit place for shoppers by creating an unforgettable experience that just can’t be replicated online. If you want to give your brick-and-mortar store an edge over e-commerce competitors, follow these tips for incorporating sight, smell, taste, touch, and sound into your retail experience.” – The U.S. Chamber of Commerce

How to Incorporate the Senses

While not every interaction with a customer can deliver a sensory experience that includes all five senses, it’s important to consider all five and determine which senses can best help enhance your brand story.

Sight
The visual experience is, in most cases, the first sensory experience a customer will have with a brand, and it can start well before they ever visit a store. The logo, website, social media, online menus (food photography, clear descriptions of menu items), and color schemes all play into the visual experience. Once they step inside a store or restaurant, the visual experience continues. Lighting, menu boards, digital signs, and displays all play a part, but so does simple order and cleanliness. Neil Saunders pokes fun regularly at Macy’s for their inability to deliver a visual experience that delights customers, which is contrary to their knowledge that the visual experience is the first one with the brand they’ll have.

Sound
The music played in a restaurant or store sets the mood, so the music must match the brand and the intended experience. It’s more than just the style of music and volume, though. Especially in restaurants, the sounds from the kitchen –clanging pots and pans, the voices of employees, even the sizzling sound of fajitas being delivered to a nearby table – can all enhance or detract from the experience.

Smell
Smell as a sensory experience needs little explanation for a restaurant setting, but how does smell play into other retail settings? Can a brand have a signature smell? While it’s necessary to find a balance between overwhelming the senses and creating a subtle sensory experience, smell may be the most powerful sense when it comes to sensory marketing.

“[The] brain regions that juggle smells, memories and emotions are very much intertwined. In fact, the way that your sense of smell is wired to your brain is unique among your senses.” – Live Science

Touch
Touch is an underrated sense, in both retail and restaurant. But everything about touch contributes to the customer’s sensory experience. From having the opportunity to feel the fabric of an item of clothing before making a purchase to the weight of the silverware used in a restaurant can impact the overall experience.

Fast Casual points out that not all touch is physical and that personal space is a part of the overall sensory experience of touch. “A person’s figurative sense of touch may also be impacted by their perception of personal space. For example, if you’re sitting alone at a small table near a wall, you would probably feel cozy and secure. However, if that same table were positioned in the middle of the room surrounded by the hustle of others, they would now likely feel exposed and possibly invaded.”

Taste
While taste is a logical piece of the sensory experience in a restaurant, as with the orange juice bar at Lilly Pulitzer, retailers can also benefit from signature tastes. From offering coffee and tea to shoppers to having a signature cinnamon bun that has become a celebratory event, retailers can use the power of taste to connect with customers more effectively. Because taste and smell are intricately linked, associating the two can be even more powerful.

“Modern chefs are recognising that flavour is more potent than taste as it engages all the senses and can evoke nostalgia, reminiscence, and emotion. Using audio and other sensory influences enables them to enhance the flavours of their dishes and make them more memorable. Curious, up-for-anything diners are just as hungry for enhanced dining experiences that play on all their senses. What’s more, they are willing to pay a pretty penny for them.” – CordonBleu

Grocery Stores Embrace Sensory Marketing

Grocery stores are highly competitive. According to Vericast, the average grocery shopper visits four different retailers for groceries. So how can a grocer keep shoppers coming back through multisensory experiences?

Albertsons is going straight for smell and will begin piping in the smell of cheesecake at Philadelphia cream cheese displays in certain stores. But Vericast points to visual marketing in the form of the printed circular as the most essential sensory marketing for grocers. The circular is to grocers what the toy catalog is to retailers during the holidays– something that defies the odds of the digital world we live in and allows people to see and touch something physical as they plan their shopping.

C-Stores Deliver Multisensory Experiences

While not every c-store can be an Omega Mart, convenience stores are upleveling by delivering a better, more personalized experience to customers. A great example is Mapco, who have transformed the idea of a convenience store from being an in-and-out stop to a place where customers can linger.

Multisensory Experiences Are the Future

Engaging the senses creates an enhanced experience, but it also increases sales. Consider these statistics from Mood Media:

  • 75% of shoppers say they are more likely to stay longer in a place of business if they’re enjoying the music, visuals, and scent.
  • 90% of shoppers say they’re more likely to revisit a brick & mortar business if the music, visuals, and scent create an enjoyable atmosphere.
  • 43% of consumers around the globe have been inspired to make a purchase based on digital signage content they viewed while in-store.

Engaging in more than one sense amplifies each of the senses involved. So a visual experience in a retail location that is accompanied by both sound (music) and a tactile experience, or a restaurant experience in which smell, taste, and sound are combined to create powerful and memorable moment can be much more powerful than focusing on an individual sense.

Consumers are looking for ways to make the time and money they spend more meaningful and memorable. Engaging all their senses from the moment they begin engaging with a brand can lock in loyalty and increasing revenues.

Adaptive Fashion

Reimagining Adaptive Fashion
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Many of us have or know someone who has experienced health challenges that make everyday activities like self-care, cleaning and dressing difficult. Brands like OXO Good Grips found their niche by overhauling the kitchen utensil drawer to make it easier for everyone to perform essential activities. It’s time we overhaul fashion to meet the needs—and styles—of people with adaptive needs. Not only is this an incredible opportunity to help people maintain dignity and independence, but it’s a relatively untapped market, rife with opportunity for apparel brands.

Reimagining Adaptive Fashion

In the past, adaptive fashion was difficult to find, and there was really nothing fashionable about it. These days, greater access to adaptive fashion recognizes the wide variety of consumers with different adaptive needs who want to dress stylishly. But there is a big opportunity to more fully embrace adaptive fashion, as the industry will be worth an estimated  $400 billion by 2026.

Adaptive Fashion

Adaptive Fashion, Defined

Adaptive fashion is clothing that is designed for the unique needs of people with disabilities that is also fun, stylish, and trendy. Adaptive needs are as varied as are the people who need them. Some adaptive clothing is designed to foster independence, with magnets, Velcro, and zipper closures rather than laces and buttons. Some adaptive clothing has disguised openings that allow the wearer access to tubes and monitors, and some are designed to work with prosthetics. Stylish and fashionable designs have long been difficult to find, but a number of popular brands are embracing adaptive fashion.

However, as journalist Gus Alexiou explains, there is still a long way to go. “For a start, a paucity of consumer choice and competition inevitably drives prices up and makes products harder to source. Beyond this, personal style and identity is just as important for the disabled consumer as anyone else – therefore, limiting the pool of products available to them only narrows and curtails such choices.”

Brands Breaking into Adaptive Fashion

As the Internet revealed Influencers sharing DIY adaptive fashion hacks and throngs of people with disabilities showed interest in trendy clothing that could fit their needs, retailers answered the call.

Target has introduced an entire line of adaptive clothing for kids. They have designs for kids with autism and sensory issues who need clothing without itchy tags and scratchy seams; clothing with abdominal access for kids with stomas; and clothing with side openings that are easier to put on for kids who use wheelchairs. Tommy Hilfiger has an entire line of adaptive fashion featuring clothing with easy closures, styles designed to be worn with prosthetics, and for those needing abdominal access. Zappos is now carrying an entire line of BILLY Footwear, with easy to use slip on shoes with side zippers

Adaptive Fashion

#RethinktheRunway

At the forefront of bringing awareness to the need for adaptive fashion is the Runway of Dreams Foundation, whose mission is to “empower people with disabilities with confidence and self-expression through fashion and beauty inclusion.” The foundation has garnered support from a range of brands and retailers, from Neiman Marcus to Kohl’s. Bringing so much visibility to the growing need for adaptive fashion is having an impact. Their New York fashion show, #RethinktheRunway, brought adaptive clothing – and their models – into the spotlight.

Opportunity in Adaptive Fashion

The future of adaptive fashion is exciting, not just for big brands but for creating entrepreneurship opportunities. Journalist Jonathan Kaufmann writes for Forbes, “With the evolution of the economic realities and the social vision of adaptive fashion continuing to evolve across the catwalks of the world and the ubiquity of social media platforms, there is a question that arises what is the collective impact of adaptive fashion on the disability community? It can be argued that the rise in adaptive fashion is a recipe to look at issues such as social mobility. The growth of the space is not only confined to the larger brands but is a cradle of entrepreneurship where creatives with disabilities can define their paths and help shape a future economic reality.”

What’s Next in Adaptive Fashion?

Not only will we see a proliferation of brands entering the industry, but we expect to see new designers gain acclaim for their inclusive designs. We are keeping our eyes on these brands:

IZ founder Izzy Camilleri launched a line of clothing after being asked to create private clothing for an individual in a wheelchair. She now has an entire line, offering a wide variety of adaptive clothing “to offer timeless adaptive clothing to as many people as possible so that they live in comfort, style, dignity and empowerment.”

AUF AUGENHOEHE founder Sema Gedik’s cousin Funda, is a little person. Through her she discovered how difficult it can be to buy clothes for little people that want to participate in fashion and lifestyle and decided to launch a brand dedicated to creating fashionable choices.

Social Surge designs adaptive clothing that is ethically sourced and sustainably made. Because the founder, Meredith Aleigha Wells, is nonbinary, they chose to incorporate universal design into their fashion – the “first-ever universal fashion line that doesn’t segment consumers by their appearance or abilities.”

Liberare’s tagline is “adaptive can be sexy, too.” Founder Emma Butler recognized a gap in the industry and partnered with designer Maddie Highland to create lingerie that was more than just functional.

The Alternative Limb Project seeks to challenge the idea that prosthetic limbs should be made flesh tone to blend in rather than be a fashion statement unto themselves.

Adaptive Fashion

The Importance of Adaptive Fashion

Clothes do more than protect our bodies. They help us express ourselves. For kids, it can be about fitting in. For everyone, it can mean a huge difference in confidence. Kieran Kern says it best: “The importance of having adaptive clothing is something able-bodied people don’t really understand,” Kern says. “It’s not just about putting on a shirt. People start to see you as a person with a sense of style, and it sparks a conversation other than, ‘Oh, hey, I like your wheelchair.’ Accessible style is like this gateway—to acceptance, socialization, easier employment. Everything.”

The Hidden Cost of Returns
The Hidden Cost of Returns 1440 428 ASG

We have all done it. Find the perfect item, order a size up or down, maybe a different color, and keep the one we want…right?  Well, we’re paying for it.  

From clothing to cameras, mattresses to mowers, the retail industry is inundated with returns—over $100 billion of them each year. It’s a conundrum. Consumers buy with the guarantee of free returns, and they return about 20% of all purchases. 

But those free returns aren’t free.

They cost retailers enough to often cut into profitability. So, while retailers offer free returns to remain competitive, the hidden costs are adding up.   Those “hidden” costs then are added back to the cost of the product raising prices.

“Shoppers are making buying decisions based on retailers’ return policies, according to a new consumer research study. Free returns are important to shoppers when making an online purchase, and a majority of consumers check a retailer’s return policy before deciding to buy.” – Forbes

How can retailers manage these hidden costs without losing loyal customers? And what are the hidden costs that retailers need to better manage?  

When it comes to the cost of returns, it’s more than just the cost of the refund for the returned merchandise that retailers are absorbing. Other hidden costs must be factored in that impact both the retailer and the consumer.

Shipping Cost

It’s more than just the cost of shipping that costs the retailer; it’s the labor involved in managing the entire carrier network. Most retailers offer a variety of shipping options for returns, including specified drop-off points that don’t require the customer to even package the return. 

Flex Logistics points out that, “the transport costs not only include the transport from the collection point to the warehouse, but also the trips to and from the repair center (if necessary) and the movements to recycle, reuse or dispose of the shipment’s original packaging.”

Retailers must determine the value of the return to determine if it’s worth the cost of shipping it back. Some items (seasonal, low-margin items, and items that can’t be resold) cost more to return than to have the customer keep or dispose of them. For items that can be returned, a third-party logistics partner can help manage and control costs.

“For low-retail-price-point, low-margin merchandise, and many food/perishable product companies, many companies find it is cheaper or feasible to tell the customer to keep the product than to take the product back as a return. Also, consider the customer’s time, frustration, and the shipping cost as well as your center’s return processing expenses.” F. Curtis Barry & Company

Customer Service

The labor spent on customer service teams responding to complaints and issuing return authorizations adds to the profit loss. These costs are exacerbated when customers are forced to follow up multiple times for a refund due to lost merchandise, poor inventory management, or slow response times. Customer service costs are increased when the service team has to manually review return policies on a customer-by-customer basis, chase down returns by coordinating with the shippers and manage refunds. 

Retailers can start to reduce costs by automating the returns process. If the retailer’s policy is to allow returns, then the more of that process that can be automated, the better. Retailers use everything from AI and automated return systems that allow the customer to use a QR code to drop off an item at a specified location without having to contact customer service, which reduces the cost of after-purchase customer service. 

It’s a tricky balance because how the return is handled can often determine whether the customer returns.

Warehousing & Refurbishing

The cost of storage is high but having to receive returned merchandise can add significantly to that cost. Leasing space, employing people to manage deliveries, ascertaining the product’s condition, and potentially refurbishing the product for resale all add costs that eat directly into profitability.

Technology is a critical factor in reducing return costs. It provides visibility throughout the entire return process, from managing refunds to collating information about what products are returned and why, so that retailers can make decisions about merchandise. Some technology can even help retailers manage returned inventory to fill backorders and new orders. Third-party partners can help manage the overall returns program to reduce costs further.

Retailers Aren’t the Only Ones Bearing the Hidden Costs of Returns

The $100 billion in retail returns annually isn’t just costing retailers. There’s a sustainability factor at play, too, when calculating the impact of more trucks on the road and more merchandise heading to landfills. While brick and mortar receive fewer returns and can restock more of the items that come back, it is still costly. But online orders result in an approximately 25% return rate, and that’s taking a heavy toll—not just on profitability, but also on the environment. 

“All of that unwanted stuff piles up. Some of it will be diverted into a global shadow industry of bulk resellers, some of it will be stripped for valuable parts, and some of it will go directly into an incinerator or a landfill …. We can dispense now with a common myth of modern shopping: The stuff you return probably isn’t restocked and sent back out to another hopeful owner.” – Atlantic 

An estimated 6 billion pounds of landfill waste and 16 million metric tons of carbon emissions are generated by returns each year, according to Tobin Moore, CEO of returns solution provider Optoro, in an interview with CNBC. 

CEO of returns solution provider Optoro, in an interview with CNBC.

As more brick-and-mortar retailers offer online shopping and free returns and shipping to compete with their ecommerce competitors, their return costs are quickly rising. “While traditional retailers have been retooling and upgrading to capture more online sales, back in the shipping department an unintended consequence has been piling up—mountains of returns. And worse.” – Forbes

Maximizing Efficiency in Returns Management

If the customer’s needs aren’t met, the biggest loss to retailers is the return customer. Customers who must jump through hoops to complete returns or who wait a long time for a refund get frustrated. The next time the customer chooses to shop, they will likely choose a competitor. 

The first step in making retail return management more efficient and cost-effective is to employ data analytics to understand what is being returned, how often, and for what reasons. 

A return policy should be designed with the customer experience at the forefront. Retailers don’t accept returns for any other reason than to improve customer service, increase customer retention, and amplify customer loyalty. To make the return management program as effective and cost-efficient (and sustainable) as possible, retailers will need to invest heavily in technology that can automate and track returns, minimize the labor impact, and maximize the repurposing and valuation of the merchandise being returned. 

There are no perfect solutions; customers want to have the option to return what they buy, whether they’re in the store or on the website. If the retailer doesn’t offer that option, they may simply lose the sale. So, the key must be to ensure that return management is as much a priority as every other component of your retail strategy.

Retailers are Banking on Buy Now Pay Later
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Today’s shoppers are used to recent innovations like BOPIS and curbside pickup for delivering products, and they want more payment options at the register too. Buy Now Pay Later (BNPL) solutions, also known as Shop Now Pay Later, caught fire last year, making up nearly 2.5% of the global eCommerce market, and the payment method is now catching on in U.S. brick-and-mortar stores.

Many retailers are now turning to BNPL platforms, such as Afterpay, Klarna, and Affirm, to create an alternative payment option for the in-store shopper. Retailers are using BNPL as a payment differentiator to diversify their target market and lure Millennial and Gen Z shoppers who love the contactless nature and budgeting muscle BNPL options provide.

BNPL 101

As inflation remains high, consumers are looking for ways to fulfill their holiday lists while overcoming economic challenges. Enter “Buy Now, Pay Later,” the modern-day reverse layaway option that allows buyers to get the product they need now, but pay for it later in interest-free installments. In most cases, a consumer makes an upfront payment or initial payment. The balance is then spread out over a predetermined number of payments. There are usually no added fees for the consumer unless the borrower misses a payment.

Are consumers using it? In a big way, particularly Millennial and Gen Z shoppers, whom retailers want to woo. With their general distrust in credit cards, many Gen Z shoppers like being able to budget for their goods post-purchase, without the plastic or a hard pull of their credit. That helps explain why BNPL loans grew more than 10 times from 2019 to 2021 and they have only been increasing.

A recent survey found that 48% of Gen Z respondents said they planned to use BNPL to pay for gifts this holiday season, other generations of consumers aren’t far behind. Nearly 47% of millennial respondents and 40% of Gen X respondents said that they plan to use BNPL to finance some of their holiday gifts this year. Only Baby Boomers bucked the trend, with 14% of respondents stating they intended to use BNPL for holiday spending.

Experience Driven Loyalty

In survey after survey, consumers consistently put “experience” at the top of their wants list when it comes to retail. And as retailers continue to refine their shopping experiences, they must empower customers to pay how much and when they choose. It’s the type of satisfaction that can drive repeat business.

Although the U.S. has been somewhat slower to adopt BNPL than retailers in Australia and Asia, it has certainly come in with a boom. In a recent podcast, Karen Strack, Senior Vice President of Transformation at Unibail-Rodamco-Westfield, explained how retailers can use BNPL as a positive differentiated experience that brings shoppers back.

“The powerful appeal of such payment configurations cannot be overlooked when it comes to reimagining the in-store shopping experience to provide consumers a better overall experience,” said Strack.

World Pay Head of Vertical Growth, Maria Prados, said in the podcast that the loyalty engendered by BNPL platforms was unexpected. “Buy-now-pay-later creates a lot of loyalty and community, which is very unusual for a payment method,” said Prados. “But 30% of shoppers won’t buy unless there’s a BNPL option. It’s the fastest-growing method globally.”

Strack also shared how BNPL can help consumers through the product lineup journey. “One of the observations that we have had is that a lot of the shoppers are graduating through that process. So, especially with a luxury client, they might actually just start with buying an accessory or a scarf. And then they start to really understand the value in that [they] can control their budget, and they’re graduating to handbags and higher-end prices. And from a retailer perspective, that’s creating lifetime value in your shopper. It’s a really big bonus.”

The Downsides

One of the biggest disadvantages for merchants is the fees associated with working with BNPL platforms. Some have fees as little as 1.5%, making this a great option for reducing credit card fees that they pay, which can be as much as 3.5%.

Another consideration is what the future holds for the BNPL industry. With a substantial increase in consumers taking advantage of this service, it has caught the eye of financial services regulators who are concerned about potential risks.

The Consumer Financial Protection Bureau (CFPB) warns that borrowers face inconsistent consumer protections—protections that are standard elsewhere in the marketplace. As more BNPL providers are creating digital profiles of users, the CFPB is also warning consumers about the risks that come with monetizing consumer data, including the threat to consumers’ privacy. As a merchant, it’s important that you work with credible third-party providers. It’s also likely you will need to stay on top of industry regulations to ensure you don’t play a role in any consumer protection violations.

Give Shoppers Control

Sure, the appeal of BNPL is the ability to spread out costs over time. But what BNPL really offers consumers is control, something consumers have been craving since the pandemic. Prados told Business of Fashion that the pandemic spurred retail five years ahead in innovation in a matter of months.

“While it will be painful for the industry and economy at scale, the situation allows for so much necessary innovation,” she said. “Payments can be an afterthought, but we are talking about the very end of your conversion funnel — it could not be more key.”

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