How Three Innovative Direct-to-Consumer Brands are Defining the Store of the Future
Direct-to-consumer brands are one of the fastest growing segments of eCommerce. The best direct-to-consumer brands tend to be found in the apparel, beauty and home furnishing categories. When you think about brands like Warby Parker the word innovation likely comes to mind. Without street and mall walk-in traffic when direct-to-consumer brands first launch they have to think differently in order to attract customers.
Successful direct to consumer brands are not only innovating in how they interact with customers (think ThirdLove and how they use a FitFinder quiz to provide more personalized service to customers), they are also innovating when they decide to shift from a pure online model to opening stores. From using a different store model (showrooms) to creating stores that could only be born out of the Instagram generation to using technology more effectively, ModCloth, Glossier and Rent the Runway are three digitally native brands that are providing compelling insight into the store of the future.
1. Launched in 2002, digital native clothing brand ModCloth sells vintage inspired clothing for women. The popularity and growth of the brand caught the attention of Walmart which acquired the company in 2017 for between $50 million to $75 million as a way to tap into higher income consumers as well as millennials.
ModCloth opened its first permanent store location in 2016. It calls its stores FitShops which are essentially merchandise showrooms that only carry sample sizes. Customers shopping at one of ModCloth’s FitShops browse the store and can try on merchandise. The majority of clothing in a ModCloth store is not available for a customer to purchase and take home on the day of the purchase. Instead merchandise is shipped to the customer’s desired location free of charge with expedited shipping. This allows ModCloth to only carry sample sizes on site instead of carrying the same amount of inventory as a traditional store. Clothing samples are available in sizes XXS to 4X. Having a FitShop allows customers to try on items to see if they like them before ordering the merchandise. Once customers decide which items they like they can order them in-store at a concierge station.
Since the stores are not dependent on high levels of inventory the company can open smaller stores. For example, ModCloth has a 2,000 sq. ft store in New York City. Speaking about its store concept, ModCloth CEO, Antonio Nieves, said: “other brands’ store associates are more like stock associates.” “But our associates are stylists; their role is not about managing inventory.” ModCloth only carries the best of the best of its assortment in FitShops, providing customers with an expertly curated shopping experience. Since this model reduces the need to manage back of the house inventory it is easier to turn merchandise on the floor quickly.
ModCloth is also a brand that has long embraced body inclusivity. A study conducted by ModCloth found that 60% of respondents are embarrassed by shopping in a separate part of the store reserved for plus sized merchandise. The study also found that 65% of respondents prefer to have larger sizes included in the same section as smaller sizes. As a result, within its FitShops, unlike many retailers, clothing of all sizes are displayed in one area instead of for example, having a separate area for plus sized clothing. FitShops stock sizes from XXS – 4X making it easy for any customer to try on her size.
In addition to browsing the store customers can also book a one-on-one hour long styling appointment. Personal stylists help customers ascertain their size, best fit, and perfect style. ModCloth also offers 1.5 hour group styling appointments so that a group of friends can shop and get styled together.
2. Glossier was born out of CEO Emily Weiss’ blog, Into the Gloss in 2014. The fast-growing beauty brand reached unicorn status earlier this year after a round of funding valued the company at $1.2 billion. The brand has a cult like millennial following and has effectively redefined the in-store experience. Glossier’s New York City (NYC) flagship store which opened last fall is the definition of when Instagram meets real life. With millennial pink everywhere from the walls to couches to makeup counters the store feels more like a status symbol. The atmosphere of the store encourages customers to hangout, try on products and of course document the experience on Instagram.
There is even a room in the flagship store called the “wet bar” with kitchen sinks and mirrors where customers can easily wash off the make-up they have tried on. The space is not optimized to have product everywhere instead it is a free-flowing space that is more about having a great experience. Products are showcased on communal tables with clear lines of sight, built to make it easy to converse with friends while trying on product. According to the New York Times, Glossier’s NYC flagship store “offers what are quickly becoming the three Cs of the digital era: community, conversation and content.”
Speaking about Glossier’s NYC flagship store Weiss said: “we’re not focused on selling you stuff”. “We don’t have people working on commission. When you’re in such a transactional time — a time of Amazon having engineers working on cross-selling and upselling and better and better algorithms to get you to buy stuff — it’s really important to create spaces and experiences that help you feel things.” Weiss also said that her vision for the store is to create a “landmark-to-be”. “I’m going to the Statue of Liberty, I’m going to Central Park, and I’m going to Glossier”. Glossier’s store, like a tourist attraction is getting customers out of the comfort of their homes, and into her store. Instagramable popup brand experiences are on the rise as brands try to create a new type of customer experience that focuses more on novelty than simply selling products.
Weiss has said that her company looked to Apple for inspiration when designing its space and thinking about what type of customer experience they wanted to deliver.
3. Rent the Runway is a digitally native women’s clothing retailer that allows customers to rent clothing that ranges from casual items to designer gowns. The brand launched online in 2009 and it opened its first free-standing store in 2014. Earlier this year, after a round of funding Rent the Runway was valued at $1 billion.
The company has designed its stores to leverage technology to prove a better customer experience. One of the rental plans the company offers customers is a subscription plan for $159 per month that allows customers to have unlimited rentals. Since it offers this service it was important for Rent the Runway to offer subscribers an easy way to return items. For in-store returns, customers can start the return process using a self- service iPad where they scan the barcode of the item they are returning and then drop the item into a return bin. This process is easy and can be done without the assistance of a store associate.
Another way Rent-the-Runway effectively leverages technology in stores is related to the process of trying on clothing. If customers are waiting in line to try on merchandise, they can opt to receive a notification when their fitting room is ready. This is a practice that many restaurants that tend to have long line ups use to ensure that customers make the best use of their time while they are waiting.
Of the over 200,000 items Rent the Runway has on its website approximately 4,000 of those items are on-site at a store. Using touch screen customers can browse through the company’s full catalogue of merchandise to see what they want to purchase. If something is not available the store will courier the merchandise to the customer’s house. Stores also have scanners that allow customers to scan merchandise tags to see if an item is available to be rented that day. Customers can also use the company’s shopping app to request in advance that their favourite items are brought out and are ready for them to try on when they arrive in the store.
Similar to ModCloth, Rent the Runway is following the personalization trend by offering customers the service of a personal stylist who can provide one-one-one personalized advice.
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