What have we learned from Zara, Lulu Lemon, and Costco?

These are three retailer play in different parts of the retail market but do share some very good qualities that help them to thrive in this era of ecommerce and rapid commoditization.

1) private label – you get it here only, high quality

2) happy places, emotional connections – shopping at a store is no longer a necessity, make me want to be there

3) curated content / selection – expertise

4) size or speed – Costco or Zara

Contrary to the (finally) growing sentiment that ecommerce will completely wipe out retail, we feel it is going to force retail to improve to the point that the experience of shopping will improve and people will continue buying from retail.  That said, the in store experience will need to dramatically change in some cases.

Competing with endless inventory is difficult and we see three options;  a) make it obsolete, b) make it too differentiated (or proprietary), c) make it emotional or experiential.

We will dive into this topic at a later date – but as we watch the likes of JC Penny, Sears, Best Busy and Radio Shack fall apart -it is important to understand not that the low prices of ecommerce drove them out of business but that the low prices of ecommerce drove a change in the behavior of consumers – what we were willing to tolerate, what we realized we wanted, and what new trade offs were available.    For an existing retailer, the future is not just about have an ecommerce presence… like having just a website wasn’t enough ten years ago.  You need to use that platform to drive connections. Leverage the platform to improve your offerings.  Examples are popping up already in terms of build your own nutrition bars to to a jean store with a massive selection and no inventory.  Retail is far from dead…it’s more that the consumer finally woke up and left the cave.