How Legacy Retailers Can Evolve to Compete against D2C Disruptors 

Skeptics have been predicting the end of retail as we know it for nearly a decade now. We’ve all seen the headlines announcing the closing of old-school, once-beloved retailers. Stealing the spotlight are modern-day, direct-to-consumer (D2C) brands like Amazon, Warby Parker, and Everlane. These brands have mastered relevance among today’s digitally-savvy consumers who demand immediacy and instant gratification. According to eMarketer, from 2017 to 2018 alone aggregate time spent on D2C sites nearly doubled.

But while Millennials and Gen Z are the sharp-shiny objects most brands are courting, legacy retailers need to tread a fine line between acquiring the next generation of consumers while avoiding alienation of their core, traditional customers who are the bulk of current revenue.

D2C-born brands also have a competitive edge because their operations and infrastructure are built and tailored to accommodate the modern customer. Legacy retailers don’t have the liberty of fully overturning their current model; the shift would make stakeholders uneasy and put existing customers at risk.

Adapt, adapt, adapt.

These factors pose a sticky situation for legacy retailers and lead to the (multi)million dollar question: How does a legacy retailer adapt to thrive in the modern economy while not jeopardizing the things that have kept it sustainable?

Below are four strategies to help legacy retail brands survive–and even thrive–in today’s climate:

1. Create a social media-friendly in-store experience

In order for a physical space to merit a visit from a millennial customer, it needs to be experience-worthy. Brands who have nailed it have gone beyond infrastructure fixes (like ambient lighting and new furnishings) to make the in-store experience “Instagrammable”, e.g., a space that is artful and brag-worthy. Pop-ups like Refinery29’s 29Rooms & the Museum of Ice Cream have mastered the art of luring in the millennial consumer. Old-school retailers can take a page from their book.

2. Ensure a friction-less path-to-purchase

Many legacy retailers continue to have standard check-out lines, slower service, and difficult return policies. According to an eMarketer study, 57% of respondents stated their top preference for a large national retail chain was to have a wide range of digital payment options – both online and offline. Apple was a trailblazer in this space by providing on-the-floor iPads throughout the store to allow seamless check-out. Similarly, Sephora allows customers to purchase products right after they’ve had a consultation with a makeup stylist. Not only does it benefit the customer with time-saved, it benefits the brand by eliminating lag time during which a customer might rethink their purchases and back out of them by the time they hit checkout.

3. Leverage technology to drive trust & personalization

Trust is earned when consumers feel understood and backed by a brand, ultimately leading to stronger loyalty and more transactions. Although there are mixed opinions and controversy around data privacy, when used securely and effectively, the proper use of data can fortify trust and familiarity between a consumer and brand. Customers are seeking personalized merchandise and experiences that are tailored to them (e.g. name featured or remembered preferences). Select brands have begun testing the waters via predictive analytics, artificial intelligence, and highly-localized data. Legacy retailers can gain an edge over D2C brands by leveraging tech to predict fashion trends through ongoing patterns – ultimately identifying the latest textures, colors, fabrics, patterns, etc. that customers will want. Collected data could also be used to help optimize store layouts and ensure that products are placed together in the right location by historic patterns (corresponding locations to increase basket sizes).

4. Demonstrate core brand values and make brand mission clear 

Younger consumers want brands to have good intentions, clear values, and corporate missions that align with their personal social values. According to research from Digitas and Insider Inc., 95% of “Transformists”–a newly-identified cohort of 38 million who defy demographics and are united by a proactive, ambitious mindset–expect companies to conduct business in an ethical manner, like Sephora, Patagonia, and Nike, to name a few. Sephora recently supported the LGBTQ+ community by holding in-store training sessions for trans individuals who wanted to learn tips on applying makeup. Patagonia overhauled its digital presence to boldly defy Trump’s decision to roll back protections on two national monuments. Nike made headlines by taking a political stance via its Colin Kaepernick ad. Legacy retailers have an opportunity to step out of the sidelines and stand up for causes they believe in.

The bottom line

Retail as we know it isn’t dead – just evolving. It’s entering an era that demands reinvention and adaptation to rapidly-changing consumer behavior. The aforementioned strategies can help struggling brands by reinfusing fresh energy into operations, infrastructure, and marketing. By reassessing a brand mission and letting that mission walk and talk through all of its omnichannel actions, it can remain relevant and top-of-mind with the next generation of consumers.

Read more insights from Digitas here.

Author:  Trevor Davis, Associate Director, Social Strategy, Digitas