Jeweller - November 2021

Business Strategy
radical level of integration into the lives of
its customers, offering brands access to the
world’s largest single market of shoppers.
In order to survive, all retailers must create
similarly radical levels of value.
It starts with creating radical value for
customers. Retailers can and must create
radical value in one or more of four areas:
• Cultural value – Outdoor clothing
retailer Patagonia creates radical cultural
value through its single-minded focus on
environmental stewardship, placing this
imperative at the core of everything the
business does including its financial model.
This makes Patagonia as much a social
movement as a retailer; the commitment to
the environment acts as a lightning rod for
like-minded customers and staff.
All organisational objectives,
communications and initiatives ‘ladder’
back up to environmental protection,
making Patagonia a ‘tribal ‘outpost for
customers who share its values.
• Entertainment value – Retailers can also
create customer value with entertainment;
UK department store Selfridges creates
radical entertainment value through an
intense focus on experience.
From streetwear departments with skate
bowls to creative pop-ups and unique food
and beverage installations, the experience
at Selfridges has, to a great extent, become
the product itself.
The years leading up to the pandemic saw
the retailer make huge investments in what
managing director Andrew Keith recently
called “all the magic that goes on in the
store”.
• Expertise value – New York’s Allure Store,
a partnership between Allure magazine
publisher Condé Nast and retail platform
Stour, delivers radical expertise value in
its category – beauty products – through
authority. This authority is established via
the staff.
The Allure beauty store – to which I am an
advisor – does not hire retail workers but
instead beauty influencers.
The result is a dynamic team of influential
beauty experts, all of whom speak with
authority from personal and professional
experience. They do so both in-store and
through social media content shared to the
retailer’s growing legion of followers.
• Product/channel value – Finally, there are
retailers that bring radical levels of product
design, channel control or consolidation to
the table.
Luxottica, for example, is estimated to
control 40–60 percent of the global eyewear
market, making it almost impossible to do
business in the optical category without
doing business with Luxottica.
Retailers that so thoroughly control access
and distribution within a category carry
obvious value to consumers as a go-to
destination.
Other retailers create products that become
so dominant in their categories that they
become a magnet for associated products.
Apple is an obvious example; if you
manufacture iPhone cases or any other
tech accessory, chances are you’d clamour
to obtain space in an Apple store because
Apple contributes radical levels of design to
both its products and its stores.
Value creation for retailers
What’s particularly interesting is that, in
most cases, the same retailers that create
radical value for consumers also tend to
create equally radical levels of value for the
brands they stock.
In becoming a cultural flagbearer for
the environment, Patagonia brings to
its ‘brand partners’ an army of loyal and
highly-engaged customers to whom they
otherwise wouldn’t have such easy access.
Another example is the US retailer Camp,
which sells children’s toys, activity sets,
books, and more.
Camp creates in-store theatre and events
for parents and children, marketing itself as
a ‘family experience company’.
In doing so, the business provides handson
and contextual opportunities for
children to engage with brands’ products;
opportunities that simply can’t be delivered
online or in other more conventional toy
stores.
ADDED
VALUE
Understand
your offer
It is imperative
that retailers
understand their
role in the 'value
equation'
Delight your
customers
Develop
new ways of
attracting and
fascinating
shoppers
Boost your
brands
Strategise how
to make the
most of branded
products and
develop close
relationships
with suppliers
The retail technology start-up B8TA is
another intriguing example. Not only
does the business attract a particularly
passionate segment of the market, but
its model is based on in-store product
demonstrations and presentations.
Manufacturers pay to rent out space for
their product to be displayed inside B8TA’s
retail locations, along with a tablet that each
brand customises with software.
This model offers the manufacturers
access to robust data, providing them with
consumer intelligence and insights they
wouldn’t otherwise access.
Similarly, the Allure Store, mentioned
previously, also acts as a marketing ‘flywheel’
for brands, producing compelling
product content and in-store activations,
all of which would carry significant cost if
brands were to produce it themselves.
The common thread here is that these
retailers are fundamentally changing the
conversation they’re having with brands.
For too long, we’ve assumed the
retailer-brand relationship to be
transactional – purely based on volume,
margin, and incentives.
But brands today are asking for more; they
want market intelligence, they want – at the
very least – ‘co-ownership’ of the customer
relationship where loyalty is shared, they
want their unique ‘brand story’ articulated
and animated with excellence, and they want
their prices treated with integrity.
Retailers that appreciate this shift and
deliver radical value back to brands will
perform better in the long-term than those
retailers who do nothing but extract value
from the relationship.
Because, in the end, retailers that do not
become a source of radical value for brands
will awaken one day to find their sales floors
empty of branded goods.
DOUG STEPHENS is founder and CEO
of Retail Prophet and the author of three
books on the future of retail, including
the recently released ‘Resurrecting
Retail: The Future of Business in a Post-
Pandemic World.’ Visit: retailprophet.com
November 2021 | 75