The 5 Emerging Retailers That Matter in 2019

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The 5 Emerging Retailers That Matter in 2019

By Jordan Speer - 09/27/2019

Despite a highly competitive and saturated marketplace, the five emerging retailers chosen for this annual feature stand out from the crowd by inspiring the customer not only with great product but with messages and actions that create a sense of meaning and purpose for the individual and for the communities in which they live, online and off.

To make their visions come to life, they are embracing technology across their supply chains and into their online and brick-and-mortar stores, keeping the customer experience in the center of it all.

Congratulations to Reformation, Rothy’s, Glossier, Boxed and Outdoor Voices for being named the five emerging retailers that matter.

Reformation: Cheeky with a bold and sustainable vision

The first time I encountered Reformation I was caught by the tag line. “Being naked is the #1 most sustainable option. We’re #2.” It was bold and funny and transmitted the essence of the brand in just a few words.

A more recent visit: The brand’s cheekiness (pun intended) is on full display, with the top of the thereformation.com home page featuring a video clip focusing on the bottom region of a female model. Overlaying the video are the words: “My butt is down here.”

Where that subversion of “my eyes are up here” sits along the spectrum of feminist thought I have no intention of debating here, but the retailer’s irreverence is fun and the clothes are fantastic. If you don’t believe me, just ask high-profile Reformation fans such as musical artists Taylor Swift or Rihanna.

That, we should keep in mind, is the core of any successful business: great product or service. Without an excellent product that speaks to the consumer, no amount of same-day delivery, or innovative technology or attentive customer service is going to cut it.

But once you bake the cake, the icing sure adds sweetness, and Reformation has that in spades, too. For one thing, it has other missions besides keeping you from walking around with all of your information hanging out: “We make killer clothes that don’t kill the environment.” In other words, the brand was built from the ground up on sustainable principles such as using dead stock fabric, focusing on lowering water and carbon footprints and providing clothing labels that instruct customers how to send in their apparel for repurposing. Reformation focuses on sustainability in sourcing of materials, dyeing fabrics, manufacturing, packaging and shipping, and shares its carbon, water and waste footprint online.

If you think of sustainability in all of its forms: lean operations, clean lines and conservation of movement and offering service and experience that keeps your customers coming back again and again — all of which makes your business sustainable in the long-term, you might say on that score Reformation has tacked a few theses about the customer experience to its dressing room door.

The online retailer made a splash when it started opening chic, high-tech stores (now numbering 14), where it is melding all of the ease people love about online shopping with the best of the touch-and-feel brick-and-mortar experience.

Designed to look much like showrooms, Restoration stores welcome with big open spaces and just one of each item in one size on the retail floor. Consumers may browse the clothes, touch and feel and discover what they like, and then select the items they'd like to try on and in what sizes via touchscreens located around the store. Because there is just one of each item, the stores stay clean and organized and are visually attractive.

Next up comes the unique Reformation dressing room experience, which is a bit like a real-life version of the wardrobe scene in The Lion, The Witch and the Wardrobe, but instead of opening into a land of mythical creatures, it’s a Narnia of fashion delights. This is how it works: After selecting your items, you’re called to your dressing room when your clothes are ready for you. Each room is equipped with an entrance as well as a back door that opens into your own personalized wardrobe. Should you want to try other items or sizes, well, you are free to stay in your state of undress, because there, inside the dressing room, another touchscreen is there for you to make further selections, which will be,  magically it seems, placed in your wardrobe. By on-screen alert, you’ll be notified your items are there and also that the back doors to the back doors have been closed so that you may retrieve them in privacy.

Essentially, the Reformation experience is like shopping online from your own bedroom, but with the added perk of being able to try on the clothes immediately before you buy them.  It doesn’t get much better than that.

Rothy’s: Kicking waste out of the supply chain

Have you ever watched a shoe or an item of clothing being manufactured? What you’ll often see, to varying degree, is a lot of fabric or leather waste. Imagine a pattern or a marker laid atop a piece of fabric or leather. The piece is cut, by hand or machine, and what’s left over? A piece of fabric with a shirt-shaped or shoe-upper-spaced hole. What happens to that piece of fabric? It’s waste. It may be recycled or repurposed, but much of it winds up in landfills.

Technology in the form of large high-tech cutting machines and AI-driven marker making solutions that maximize fabric use have significantly reduced the amount of waste (and cost) from the process for companies that can afford that equipment, but they’ve not eliminated it by any means.

Enter Rothy’s. The footwear retailer, which produces flats and sneakers, tackles waste from both sides. It uses yarns made from recycled water bottles, and then it constructs them using a 3D knitting process that uses just the amount of material needed to make the shoe. What’s more, that knit process creates a unique looking shoe that sets Rothy’s apart from the competition.

The $140-million San Francisco-based sustainability-focused alternative shoe retailer has taken its high-tech practices beyond production into its entire enterprise, from the warehouse to e-commerce. For example, it built an e-commerce structure on top of Shopify Plus, with a completely responsive e-commerce experience, and completed a supply chain and warehouse overhaul that allowed the retailer to hit  99.99% inventory availability .

It has further improved the online customer experience by automating and scaling its communications, moving from a batch-and-blast email strategy to an AI-driven platform from ReSci that can adapt to microscopic changes in consumer behavior. Now, it can personalize to consumers using information beyond simple triggers, such as high vs. low purchasing intent, tailoring communication based on each customer’s unique interaction with the business.

Another assist in its efforts toward personalization comes from Google, which is helping Rothy’s to implement marketing strategies that capture the “full funnel” and to understand how to craft messaging that works in the context of where people are, what they need and what channel they are using, says Matt Gerhing, Rothy’s vice president of growth.   

For example, if a shopper is just learning about Rothy’s, we rely on Google Search to focus on top-of-funnel results, like brand awareness, and center our strategy around engaging graphics, such as images of plastic water bottles or shoes spinning in a washing machine, that visually introduce us to her and tell our brand story,” he says.

Among many other initiatives, it is also using Google to analyze customer segments where knowledge of Rothy’s may be low but interest in sustainability is high, to better develop its Google Search campaigns.

Glossier: The beauty of putting customers first

This self-described beauty ecosystem has tapped into the zeitgeist of what I’ll call Democratization of Everything (DoE), putting you in charge of your own face and wresting that control from “beauty experts” who tell you what you should or shouldn’t be using on your face. That’s a message that couldn’t be more on point or powerful in this age of personal choice and girl power, and it’s wresting market share from the $250 billion dollar beauty industry.

The company is the brainchild of Emily Weiss, NYU graduate and former Teen Vogue intern who also had a brief career as an actress on The Hills. In 2010, she launched a blog, Into the Gloss, a website that “explores the routines of inspiring women,” talking about beauty products and what beauty means, sharing their own beauty regimens and products, and generally bringing real women and experiences to life, turning the beauty industry’s traditional focus on the illusion of perfection on its head. That blog became incredibly popular, one thing led to another, and voila! Glossier was born.

With its roots in editorial, it came to the race with strong chops in messaging, sharing a positive message of uniqueness and diversity that it’s amplified through smart use of social media, including, for example, a Slack channel with 100 of its top customers, where they exchange more than 1,100 messages weekly. The brand puts customers first, truly listening to them and integrating their feedback to improve the business. That behavior has built a loyal customer following; thousands of tagged #Glossier photos are posted each day on Instagram (where it has 2.2 million followers), Facebook (289,000 followers), Twitter (93,700 followers) and other sites, further spreading the Glossier Gospel.  

In November 2018, Glossier’s popular products and messaging expanded from its online home into a flagship store where it implemented its own proprietary POS system to deliver the experience it wanted. The customer-centric solution includes real-time order synch, allowing customer to start an order in store and finish it online, for example. It also provides tools that sales reps need to engage and enhance the in-store buying experience. More recently, the company has been launching temporary pop-up experiences, including its third, in Boston, at a pop-up village, The Current at the Seaport, where customers can test products and shop IRL.

Boxed: The solution for the 2-2-2s.

You’ve probably heard at least one friend gush about the amazing giant wheel of cheese they bought at Costco but you’ve also probably heard about that game of car chicken in the parking lot as one single spot opened up. That’s if you heard from them at all, because going to Costco, from what I can tell, is typically a half-day affair, especially when the Costco is on the other side of town from where you live, so they’re busy. That’s where Boxed comes in. This online bulk business has filled a gap in the marketplace for people who don’t want to use up their valuable weekend (or week) time driving to a bulk membership club, searching for a parking spot, roaming the vast stores and schlepping products to their cars and back home. Plus, there’s no membership fee. Delivery services like Boxed are meeting the demands of what Jose Vicente Aguerrevere, chairman and CEO of Takeoff Technologies, calls the 2-2-2s. “It’s to jobs, two kids, too little time.”

Boxed has made a name for itself by offering a wide range of products and delivering them quickly and efficiently from its four fulfillment centers. In 2017, Boxed took that efficiency into hyperdrive when it totally automated one of its centers, says Will Fong, CTO of Boxed. Robots now serve as “pickers” as part of a multi-million dollar installment in its N.J.-based fulfillment center, where an impressive array of robotics, pick towers and spiral conveyors picks product and conveys it to packing station, where humans prepare goods for shipping. The automation opens up the opportunity for the company to scale dramatically.

Boxed also built autonomous guided vehicles (AGVs), which are essentially rolling two-level carts operated by software, that move goods to human packers. Moving goods to people — instead of the reverse, where people have to walk miles and miles each day through a warehouse to pick goods — “allows a trained staff to be at a specific location and not need to move too far from it, so it minimized travel, and it makes the whole process much more efficient, and the throughput higher,” says Fong.

Even so, Boxed did not lay off any of its 100 pickers employed at the center, and instead trained them for other positions at the company.

Despite the rise in automation, Fong envisions people always involved. “I believe tech and AI and a lot of these things we’re doing are meant to make humans more efficient and smarter,” he says.

And even though robots are running part of the business, the company has not lost sight of the small human touches that give the experience of online shopping an intimate, friendly touch. Every box is delivered with a handwritten note, and sometimes surprise gifts. Another fun and helpful perk: when your box is ready to go, a photo of your order is automatically taken and sent to you to let you know your Boxed box is on the way.

 

Outdoor Voices: Going out and doing things

As you might guess from its name, Outdoor Voices is about flouting the rules, running free, making friends and generally celebrating doing things outside. Founder Tyler Haney started the activewear apparel company with the recreational enthusiast in mind, rather than the  competitor. “It’s less ‘bigger, faster, stronger’ and more about getting out and being active with your friends your community. It’s really a way of life,” says Kevin Harwood, vice president of technology.

That message resonated far and wide, leading to rapid growth. From 2016 to 2017, for example, the Austin, Texas-based company grew revenues by 400 percent. Like many an online startup, Outdoor Voices also expanded from pure digital into the real-life world, opening brick-and-mortar stores — each one unique, reflecting and helping to create the character of the community — in Austin and Dallas in Texas; New York City; Los Angeles; San Francisco; Nashville, Tenn.; Washington, DC; and Chicago — so far.

The stores serve as community hubs as well as retail centers. Its Blanco Street location in Austin, a bungalow tucked into the Clarksville neighborhood, hosts local events, while its adorable 12 South Nashville location, another former home, takes customers through an immersive journey inspired by the personal spaces of music legends including Dolly Parton, Patsy Cline and Elvis. While you’re there, you can take a spin on its indoor bike or take a class on the front lawn.

Like any business with a strong upward trajectory, managing that growth was a struggle, involving manual processes that could not scale. Often Outdoor Voices systems’ were out of commission for days at a time. Knowing it couldn’t grow without technology to support it, the company implemented Oracle NetSuite to serve as 1) its inventory master across its retail stores and warehouse; 2) the financial system of record; 3) the item master; and 4) for logistics, to track packages shipped to customers, inbound from warehouses, transfers between warehouse and stores, and other product moves.

That technology freed up time to focus on its customer, and those customer experiences that are integral to the Outdoor Voices name. This summer, it started an integration with a retail platform, NewStore, to bring buy online pick up in-store (BOPIS) to its stores. It’s also focused on mobile — experimenting with augmented reality (AR) “as a way to encourage people to get off the trail,” Harwood says — and personalization. As a younger brand, he says, it has the advantage of being able to roll out new, agile technologies without being hampered by years’ of build-up of legacy technology. In its interactions with customers, the company uses information such as past-purchase history to automatically display the same sizes or similar colors and fabrics on the site.

Still, he says, it’s important not to get too caught up in personalization or you risk becoming robotic in your behavior, instead of inspiring. “We’re not just trying to be an Amazon that’s 100% optimized to show the things that you’re probably going to buy,” says Harwood. “Our founder Tyler Haney describes it as ‘we want to be the friend that brings the orange slices on a hike.’ And you can’t just personalize all the way through that process, you’ve got to have more of a human connection and a human interaction to drive that home.”

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