The Great Reset for Retailers

Andrew Goodman (00:00):

Welcome to Recession Retail. We are live from my basement in Denver, Colorado. My name is Andrew Goodman. I am the head of marketing at Convictional. We are the supplier enablement platform that helps retailers onboard vendors in just minutes. It has been 13 years since the end of the great recession in June of 2009. 13 years of retail growth, 13 years of e-commerce evolution, and unfortunately 13 years of muscle memory loss for operating in environments when cash is tight. In this series, we are chatting with retail experts like Rick Watson, Lisa Amani, Neil Saunders, Jason Goldberg, and Brian Lange about navigating the current state of retail. Our guest today is Brian. He is the co-founder of Future Commerce where they research and provide coverage on DTC, retail, marketplaces, consumerism, capital, and much more on really every content medium you could imagine: podcast, newsletter, guides, research. Really interesting and innovative stuff. For my audience today, my colleague, Nikhil, is keeping an eye on the chat. Please use that chat generously. We would love your participation. Great to have you here today, Brian. Really appreciate you coming on the show.

Brian Lange (01:07):

Thank you so much for having me. It's a pleasure to be here.

‍

Andrew Goodman (01:10):

Great. So today we're going to be talking about hitting the reset button. And of course, right now, there's a lot of arguments back and forth about whether we're in a recession or not, but let's just assume we are for the purposes of this show today. During a recession, why is mid-recession a good time for retailers to rethink about their strategy, brand promises, and more?

‍

Brian Lange (01:34):

Well, it's not really a good time to do that, but it's a time when they have to do that. I would argue that when times are good, that's the best time to be rethinking those things. Reinvent at the top of your game, not the bottom. When you're forced to rethink things, the consequences of rethinking them can be a lot more dire than when you're at the top of your game. So I promote taking risks when times are good, and of course you have to take risks when times are bad, so get ahead of it. I think there's a lot of brands that rode the wave of 13 years of good times. And I mean, rode the wave is probably a little bit of an exaggeration. A lot of brands put in a lot of work to get to where they were or where they are. I think that it's hard to rethink when you're building so quickly, and so I understand the challenges, but if you only rethink when times are bad, one of those times things aren't going to work out.

‍

Andrew Goodman (02:51):

Yep, absolutely. Let's talk about a retailer who's experiencing good times right now. So they have an evergreen brand promise. It's still resonating. Who comes to mind in this period right now of a retailer that perhaps can think about reinventing but is still riding the wave?

‍

Brian Lange (03:13):

I think Tracksmith is a great example of a brand that absolutely nails their brand promises. They're for the amateur, and they really focus on what it means to run for the love of running. I love this concept in general. I think amateurs change the world, and so I think this is a great promise to have. Tracksmith launched during good times, and I think they've built something really special, and I think they're continuing to expand on that. They just launched a shoe that's beautiful shoe. And they did not release that shoe probably when they could have. If you go look at some of the stuff that Matt Taylor's put out, they'd always planned, and it had been a big part of their plan, to release the shoe earlier. They spent four years thinking through this shoe to get it right, and I appreciate their focus on something of quality, something that really resonates with who's engaged with their brand. And I think Matt's a good example of someone that really does focus on fulfilling his promises. It's not growth at all costs. It's growth in the right way, and I love that.

‍

Andrew Goodman (04:45):

Absolutely, and it's perhaps a differentiated brand promise that they're starting off with when so many shoe companies are focusing on celebrity endorsement-

‍

Brian Lange (04:53):

Elite athletes.

‍

Andrew Goodman (04:54):

Elite athletes, huge influencers. They're really taking the approach where it's an every man's game.

‍

Brian Lange (05:02):

Yeah, well, and pulling people into that community. I was saying, I think it was on the Future Commerce podcast, people that wear Tracksmith, they're runners that are very good, but they're still amateurs. And I was at a half marathon a few weeks ago because one of my health commitments is to run four half marathons a year, and I hit it this year. There was a group of people that all were wearing matching Tracksmith, which felt clubby. It was a little bit exclusive.

‍

Andrew Goodman (05:48):

I mean, it's the dream of every retailer to develop a community like that where those events warm organically.

‍

Brian Lange (05:53):

Yeah, totally. And they were all very fast. They were very, very fast. So yes. Yeah. Mark just said, "I know someone's fast when I see them wearing Tracksmith." That is generally true, unless I'm wearing Tracksmith. Mark, you should see me run. I'm not very fast.

‍

Andrew Goodman (06:14):

Excellent. I wanted to flip the question. Who has strayed too far from their brand promise? So who's had a brand promise out there for a while and their experiments are just taking them in directions that really just aren't serving the brand?

‍

Brian Lange (06:29):

Well, I think looking ahead at our agenda, there's a lot of brands that maybe have pushed the boundaries too far of their brand promise. Abercrombie and Fitch maybe is a good example of that. And we were going to talk about their new order pickup at FedEx.

‍

Andrew Goodman (06:49):

Yeah, maybe let's talk about it.

‍

Brian Lange (06:52):

Yeah. I mean, I think Abercrombie maybe... And this is what I really want to get to on the session.

‍

Andrew Goodman (07:00):

Yeah, let's do it.

‍

Brian Lange (07:02):

Sometimes brand promises, they need to be reevaluated. And Abercrombie did have a brand promise back in the nineties, and it really resonated back then. Maybe it's re-resonating in a totally different way right now with a very specific set of consumers. But I wrote an article a while back called, "The Existential Brands", actually it was a two-part series, and the thesis of the article is that brands need to be able to rethink their brand promises and who they are. And honestly, if a brand doesn't have the ability to rethink who they are, then maybe they shouldn't exist. Sometimes brands outlive their initial thought processes and their initial vision, and that might be even happening at a more speedy scale now than it ever has. And so it used to be if you can't see your brand vision last thing 20 years, then it's not a brand vision. And I think that-

‍

Andrew Goodman (08:26):

Today's strategy or tomorrow's strategy, but it's not a vision.

‍

Brian Lange (08:29):

Right, then it's not a vision. I think that there's some truth to that. There's still some truth to that, but things are changing more quickly than they ever have before. And also we have this concept of future commerce that we put out in our Visions 2022 report called the Plurality of Identity and how that's a trend that's happening right now. You can be more than one thing. There's a men's nail polished brand called Faculty, well, it's men's grooming company really. but the thing is there's a huge mutability, openness to their identity, and they have seven approved brand identities that they could insert into different contexts. And so actually we work with Alex Greifeld over at No Best Practices on a piece called, "Dork Mode", and this idea that there's opportunity to be more than one thing to your consumers, and address different markets with fully different brand identities. And so you look at Abercrombie, and so is this an example of them... Is this pickup strategy-

‍

Andrew Goodman (09:57):

Yeah. Let's lay out what's happening for the audience today. So Abercrombie, in perhaps a brand new omnichannel strategy, is offering pickup at FedEx, at Office Depot, and at Walgreens. Now, if you think about it, if you've ever been into an Abercrombie and Fitch store, I couldn't imagine a more different environment than FedEx, when you compare it to an Abercrombie and Fitch store. So the question is where does the brand experience and the brand identity start and stop? Obviously you walk into an Abercrombie store, you're on Abercrombie's website, you're going to have the full Abercrombie experience. But if you're picking up an order at FedEx or Walgreens, that is not the Abercrombie experience. And if something goes wrong there, something doesn't work out, you are still associating that pickup with Abercrombie in some way, shape, or form. So I'm just curious. It feels like a brand experience violation. I want to make the parallel to the men's grooming company you were just speaking to. How truly different are each of the individual identities that brand is putting forth? Is it that stark?

‍

Brian Lange (11:12):

It is pretty stark, yeah. At least I felt like it was. I mean, you can go check out some of their stuff. You can see them across different places. It's pretty unique. I do think it's interesting. This is actually the same question about selling on Amazon. You're handing over your brand experience to the behemoth, and all of a sudden you're competing with the different type of brands. I saw Banana Republic in Costco recently. What is that? That's a completely different experience. It actually was almost jarring to see the Banana Republic brand in Costco. And I think it really depends on what your strategy is. Does it make sense to hand over that brand experience to Office Depot for the sake of convenience, basically? We're talking about convenience right now. We're talking about giving options to consumers.

‍

Andrew Goodman (12:26):

Yeah, absolutely. When I think about A and F, convenience is just about the last brand value that comes to mind. It's exclusivity. It's youth fits. It's not pick this up anywhere and everywhere.

‍

Brian Lange (12:40):

Right. So the brand erosion can happen there. I think you're right. And there's an element of do consumers even care about that type of a pickup situation with Abercrombie and Fitch? How quickly do you need your Abercrombie and Fitch? How convenient do you need it to be for you? I can say that, for me, when I order, let's just take a my generation brand versus... I guess technically Amber Abercrombie is from my generation, but for me, I am willing to wait for Tracksmith, right? I am passionate about the brand. I think it's a cool brand. If I did order the shoes, and actually my co-founder Phillip did. I did not, because I have a little bit of a moratorium on shoe buying right now. I certainly wouldn't have cared when they showed up. I just want to get them. I feel lucky to get a pair. You know what I mean?

‍

Andrew Goodman (13:50):

Absolutely. So there are-

‍

Brian Lange (13:52):

So is Abercrombie at the point now where people, they just want clothes? If they just want clothes, then the brand might be dead. I know that Abercrombie's picked up some steam with younger generations. I wonder if this is a desperation play. I don't really know.

‍

Andrew Goodman (14:14):

It seems to be hopping on a trend where convenience is placed above all else, and it could really cause brand erosion. Wanted to talk about a different retailer that is really trying to differentiate, not necessarily on convenience, but really on their assortment. Lots of different examples of very innovative partnerships here, but Circle K, a gas station chain, if you've ever been to it. They recently, maybe three or four weeks ago, announced an adjacent store partnership with a marijuana dispensary called RISE Express. So gas stations, pot, seems like a pretty good mix. Doesn't feel like it's going to erode their brand. And it seems like a very high potential from a revenue standpoint way to differentiate. I'm curious, in your opinion, what opportunities are out there for retailers right now in terms of their assortment that the forgoing in fear of brand erosion, in fear of associating themselves with perhaps the wrong brand experience?

‍

Brian Lange (15:26):

Strange things are afoot at the Circle K. That does feel like a good connection point for them. So just to restate your question, you're asking why are some retailers holding back on some of these partnerships?

‍

Andrew Goodman (15:45):

Exactly.

‍

Brian Lange (15:48):

A lot of it's execution ability. I think in order to add assortment, or to do this in the right way, you've got to be able to have a team that can manage and execute on this and make sure that it's done right. You also have to trust the other side, so there's got to be a lot of trust and a lot of ability to manage something like this. A lot of brands don't have the ability to do that, just from a staffing and resourcing perspective. Brands run on tight, tight, tight, budgets, a lot of them do. And then you look at the larger ones and they are doing massive collabs. Collabs are actually a good example of what you're talking about.

‍

Andrew Goodman (16:36):

Yeah. This is a great example.

‍

Brian Lange (16:39):

Yeah. And we are in collab overload, and we have been for a while, but it's an easy way to reach into another company's customer base. It's an audience play, it's an attention play, and it's almost a sampling play as well. But it also caters to the deep fan set, you're quite hot center type people. I'm a big fan of collabs in general. I don't think that every collab is good, but oftentimes they spark energy, and so I understand why collabs are on the rise. Can you give some examples of retailers that you feel like are not reaching into this bucket? Because I feel like a lot of brands are trying to.

‍

Andrew Goodman (17:32):

Yeah, absolutely. I think it speaks to what you were saying before where it's really resource constraints that seem to be the limiter for perhaps the mid-market retailers out there. You see a lot of collabs, and perhaps we're in brand collab overload at the enterprise level. Lots of collabs in the top 50, top 100 retailers out there, but perhaps not as many collabs or exclusives or private la... Not necessarily private label, but private brand opportunities that I'm seeing in the more mid-market space.

‍

Brian Lange (18:11):

Yeah, I think I would argue that we are seeing a lot, even at the lower level, in a really limited basis. Stuff sells out really quickly, both mid-market and smaller brands. You look at brands like Recess, they've done a ton of collabs. You look at mid-market brands, even old school ones like Clarks. Clarks is crushing those collabs, and maybe even revitalized their brand through collabs. I would argue that there's been a lot of really, really smart plays that have happened recently there.

‍

Andrew Goodman (18:54):

Absolutely. Specifically in food, one I can think of is the Truff and Taco Bell collab.

‍

Brian Lange (18:57):

Yeah, Truff's a great one.

‍

Andrew Goodman (18:59):

Yeah, so they've been really crushing

‍

Brian Lange (19:01):

Small and medium size brands. And mid-market, I actually see a lot of collabs going on there too. Yeah.

‍

Andrew Goodman (19:09):

Absolutely. Curious if you see the marketplace or dropship model playing in there? So rather than experimenting and taking really the time to develop an exclusive collaboration, what about multi-brand retailers specifically just adding new brands to their website, seeing what works, seeing what doesn't? Is that a valid testing model for you?

‍

Brian Lange (19:36):

Yeah, I mean, I think it really depends on, again, who you are. I think without going full marketplace, you can actually pull in... It's actually a similar play to a collab. You can pull in key partners and cross sell. I think we had co-op commerce on Future Commerce a while back. You can do some really cool co-sell type opportunities without being a true marketplace. Marketplaces are a lot to manage. Again, it's a resource issue. Managing an open marketplace is so much more work than people realize. It's such a big effort. But I have seen niche marketplaces, like the W marketplace, a local brand here in the Seattle area, is absolutely crushing it I feel like with women-owned, women-led brands that are sustainably produced. And it's not a huge team. They've done a really great job with content and curation, but again, it's not really an open marketplace.

‍

Andrew Goodman (20:49):

Sure. It's highly curated.

‍

Brian Lange (20:50):

Yes. Highly curated. Exactly. So if you're going to do something as a smaller mid-market player, be really, really thoughtful about how much you can manage and who you want to bring into your house, because, yes, it is.

‍

Andrew Goodman (21:02):

Absolutely. It feels almost like a single category test or a single set of brands tests that you want to try out. Speaking of testing, I want to talk about a retailer who's really walking the brand highwire in terms of testing right now, which is Ralph Lauren. So right now they're offering digital sportswear on Roblox, and they're doing it from their '90s collection, so a little bit of future, a little bit of past there. On Fortnite, they went full tilt into the future, and for the first time in 50 years, they are modifying the polo rider on the polo into a very Fortnite aligned brand approach, which is the polo rider is now riding a pinata lama, so not a polo pony anymore. What are they trying to get at here? What are they experimenting with? I know Future Commerce does a lot of research and writing on Metaverse. What are they experimenting with? Are they doing it right?

‍

Brian Lange (22:09):

Yeah, so this is the content play in my opinion. Alex Greifeld wrote for us a while back on innovation versus innovation. I see this as content in a specific medium, and it does get back to that mutability of brand. I think there is opportunity to tailor your brand to the channel that you're in. I've got some really interesting thoughts coming up on this idea of quantum content, which I will not get into, but it's little teaser.

‍

Andrew Goodman (22:53):

I am very excited for it.

‍

Brian Lange (22:54):

Go subscribe to futurecommerce.fm. I just butchered that little self-promotion there.

‍

Andrew Goodman (23:02):

It's all good. No worries.

‍

Brian Lange (23:03):

Futurecommerce.fm. Subscribe to get our newsletter, the Senses, and also Insiders. And Insiders is our long form pieces that we put out. And I will be releasing a piece here in a couple weeks called, "Quantum Yeet: Entering the Quantum Age", and so I would highly recommend checking that out. So content can be flexible and changeable. I think, again, a lot of stuff we're seeing in the Metaverse right now is not actually innovation. It's not actually steps towards using the blockchain to actually do anything of significance. It's content for a specific market. And if you look at what they did with Roblox and even with Fortnite, in my opinion, I mean, Roblox is just one giant McDonald's play place and McDonald's Happy Meal toys. They're grooming the next generation, or they're trying to groom the next generation to be interested in the RL brand. I think changing it from a pony to a llama actually falls squarely in that, and llamas are hot right now. Yeah. I don't know what's going on. I used to work for a company called Classy Llama. Ahead of their time, I guess. The Llama is is killing it.

‍

Andrew Goodman (24:34):

Absolutely. So obviously Ralph Lauren is taking steps to jump into the future and really communicating content through many channels. This is just one of them. A couple of months back you wrote a very interesting article about eCommerce's fiction, and one of the things that you mentioned was that if a brand is communicating in just one channel, and typically that channel is just through their website, the brand is fiction. What do you mean by that, and how can e-commerce really only brands make themselves more tangible, non-fiction that is?

‍

Brian Lange (25:12):

Yeah, totally. So interesting, the whole thought process here. Language and images are inherently limiting, and if you are only communicating through language and images, you're inherently going to be limited in what you can communicate about: who you are and what you're selling. The idea was asynchronous fiction, and I think that most asynchronous communication is in some ways fiction because it oftentimes misses all of the cues that we normally have to communicate exactly what we mean. Get into Wittgenstein's theories, who is a philosopher from the 20th century, about how language works. What I mean by this is you're building an image and a projection of what you actually are when you go to market with e-com. If you have chat on your site or you have a number you can call, that gets you one step closer to actually communicating with the real questions being asked, the real things that the customer wants to know. And in-person gets you even closer to that. Having well-trained brand representatives that understand your brand and actually know who you are is another step closer to that.

‍

(26:41):

And so I think the idea that we can just grow through a single channel and have that be our only way to communicate with our customers, I think puts us at a little bit of a disadvantage to those that are able to communicate at a true level.Another thing that I think is really interesting, and I wrote another article called "A Marketer's Guide to a Multiverse of Madness". I think right now, with the speed of change and the amount of data that we're having to absorb and the fact that everything feels possible right now, the possibilities of the future feel more real than the present does. So the reality of the present is actually not as real to us as the possibilities of the future because things are hitting us so quickly, and Elon Musk just fired the entire board of Twitter. Who knew that was-

‍

Andrew Goodman (27:53):

Things are happening fast. I think, to a certain extent, it changes consumer expectations, because when they walk around and they engage with retailers perhaps on a single channel, they might wonder why these five or six futuristic fulfillment models or pickup models or engagement models aren't being offered because it's all over the news. They've seen it everywhere. To your point, we're living more in the future than we are in the present at this point.

‍

Brian Lange (28:19):

Yeah, exactly. And so I think that actually plays into this idea that e-com is fiction. It is the purchasing channel of the future, in some ways. You need to be good at writing and producing fiction if your flagship is e-com. And it is. You're touching the most people with e-com. Even if you're buying in store, they're almost certainly looking at your website first or interacting with your website in some way on the front or back end of that purchasing process. So it is a first touch. If you aren't good at producing fiction, you're not good at e-com.

‍

Andrew Goodman (29:07):

Absolutely. Brian, we have about one minute left, so I just wanted to touch on one more topic before we close out here. Dropshipping right now is trending among many retailers, and one of the reasons for that is because there's a lot of fear around buying additional inventory. The inventory glut in retail is very present right now. I'd say it's one of the more prominent current time versus future things that every retailer is thinking about right now. Dropshipping fulfillment like Abercrombie is working on. How can retailers, as they think about creating a fiction around them and expanding their brand presence, keep the experience not necessarily consistent, but keep the experience up to par with what their consumers are expecting?

‍

Brian Lange (29:58):

You need some serious operational people on your team. I think team is key here, because, let me tell you this, I have seen this with retailers recently. If you have items that are breakable or you have items that need care in shipping, right now, last mile logistics are a nightmare. Your stuff might get thrown in a truck with dog food and treated like dog food as it goes out. If you're selling dog food, then no big deal, but if you're not selling dog food. You might not even be able to ship to certain regions if you aren't using the right partners without 10% of your items breaking. I'm talking about real world scenario right now.

‍

(30:40):

So you better have the relationships and operational understanding to be able to know which fulfillment networks you can trust. Same with the wholesalers that you're buying from and brands that you're having shipped out. You better be able to trust them and know that they have operational excellence to be able to do this if you don't want to end up with a bad brand experience on the other end. So operations, operations, operations. Hire talent and make sure you do a really good job vetting your partners.

‍

Andrew Goodman (31:10):

Absolutely. I think the advice here summed up is as you consider expanding into other channels and really operating with multiple fulfillment models, it's operational excellence. You need the right team. All right, everyone. Well, thank you for joining today. We are just about out of time. Do yourself a favor. Go listen to the Future Commerce podcast, subscribe to the Insiders Newsletter. This has been the fifth episode of Recession Retail, and thank you everyone for joining us. And special shout out to Brian.