7 Ways Brands and Retailers Are Adapting to the Changing Retail Environment

Gone are the days when brands and retailers were able to turn profit simply by introducing a new product to a store or opening an outpost in an untapped market. The retail environment is more dynamic and competitive than ever, with the growth of social media, reduction in foot traffic and rapid expansion of major e-commerce players like Amazon.

In order to survive and thrive in the industry, brands and retailers are going beyond merging their physical and digital businesses, employing tactics that will not only provide better experiences for repeat customers, but also entice potential ones to come through their doors, whether real or virtual.

Here, the different ways companies are adapting to the changing retail landscape.


1. Experiential Retail

From launching pop-up shops and setting up interactive storefronts to staging live product demonstrations, brands are experimenting with experiential retail to provide customers with holistic, engaging and more personalized experiences beyond the traditional purchasing process. Adidas prereleased its Deerupt sneaker via augmented reality before its physical launch, for instance, while rival sportswear brand Nike debuted a customization service combining AR and video-mapping techniques in its Paris flagship. Some companies take it even further by investing in tech incubators or employing chief experience officers, a growing role that’s centered on visualizing new products or services to further engage consumers and potentially acquire new ones.

2. Brick-and-Mortar Restructuring

The recent years have been tough on brick-and-mortars, as an increasing number of legacy retailers including Macy’s, Bon-Ton, JCPenney and Sears shutter the doors to their underperforming stores, some of which include anchor locations at longstanding malls. (Some retailers are also downsizing in favor of small-format stores.)

The latest department store chain to see closings? Lord & Taylor, which announced this month via parent company Hudson’s Bay Co. that it was turning over its flagship store on Fifth Avenue to co-working real estate firm WeWork. However, not all is lost: The move is often part of a company’s bigger effort to shift resources to online businesses — and, as Hudson’s Bay CEO Helena Foulkes explains, retail restructuring would allow the company to “take advantage of having a smaller footprint to rethink the model and focus on our digital opportunities.”

3. Mobile-First Strategies

By extension, retailers are making significant investments in the e-commerce space, with Walmart’s rollout of the Lord & Taylor flagship on its website being a prime example. The new Walmart.com seeks to court high-income shoppers with new offerings from upscale brands offered by the luxury department store chain.

Separately, retail mobile app developer GPShopper uses a comprehensive tool set to help brands create personalized omnichannel experiences for customers, functioning as a middleman between clients like Foot Locker, Stadium Goods and Steve Madden and the brands’ mobile-savvy shoppers.

4. Mergers & Acquistions

Last year, Tapestry Inc. (formerly Coach Inc.) snapped up Kate Spade & Co. In February, Michael Kors Holdings Ltd. completed its takeover of Jimmy Choo. And just last month, Macy’s took in New York City-based concept shop Story.

The above are only three examples of notable mergers and acquisitions in the retail space in the past year. The threat of e-commerce coupled with shifting consumer preferences has prompted a wave of unions among big brands, including the amalgamation of super groups like luxury conglomerate LVMH. (The multinational entity now controls more than 60 subsidiaries in a variety of industries, including Louis Vuitton, Christian Dior and Givenchy within the apparel and accessories sector.)

Through consolidation, these companies not only gain more market power, but also potentially attract new customers in a lower-risk move that can have them poised to compete with e-commerce pure-plays.

5. Customer Loyalty Programs

More and more retailers are recognizing that effective loyalty programs can help them build long-term connections with consumers. Target became the latest big-box name to put extra money behind a revamped rewards system, with Macy’s, Vans and DSW launching their own offerings that focus on “unexpected” and “emotional” experiences like access to members-only events and points for donating shoes to a charity partner (as promoted by the latter two companies, respectively). Nowadays, companies are banking on more than just the one-time trade-off, and fostering these personalized relationships with customers helps them stay one step ahead in the age of digital disruption.

6. Collaborations

Brands and retailers have long joined forces with designers, celebrities or influencers to double their exposure, encourage existing customers to shop more and even break into previously uncharted consumer territory. Storied names like Nike, Target and Barneys New York regularly capitalize on collaborations to bring about collections that not only allow them to experiment with new creations that further their personal aesthetics, but also generate enough publicity to compete with even the most viral online-only exclusives.

7. Direct-to-Consumer Sales

Reorganizing her business to exit Chapter 11 bankruptcy, Tamara Mellon eschewed the traditional retail format, relaunching her namesake shoe brand in 2016 to her own online audience instead of selling through department store and boutiques.

But the footwear designer isn’t alone. On one hand are buzzy brands like M.Gemi, Everlane and Outdoor Voices that were born via e-commerce, and on the other are designers such as Bill Blass, Misha Nonoo and Public School that are now offering their lines through direct channels. Through the DTC model, brands are able to control their own inventory, markdowns and business model, allowing them to tell their own, personal brand stories — a strategy that isn’t afforded to them through a multi-brand chain.

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