The rise of digitally native brands has accelerated the growth of retail business models such as recommerce, subscription and rentals, but standing out in these newly crowded areas is proving increasingly difficult. The companies that succeed ultimately manage to get out in front of customer trends and pivot their experiences toward them. At the NRF Big Show, leaders of disruptors including StockX, Poshmark and Le Tote revealed how they have broken the mold in their respective sectors by embracing several new consumer attitudes, including: conscious, sustainability-driven consumption; shoppers’ need for immediate product access; and the longing for physical connection.
Panelists in the NRF session included:
- Scott Cutler, CEO of StockX;
- Tracy Sun, Co-Founder, SVP of New Markets of Poshmark;
- Rakesh Tondon, CEO and Co-Founder of Le Tote; and
- Moderator Phil Wahba, Senior Retail Writer at Fortune.
When Wahba posed the question “What’s real and what’s not?” in relation to the growth of rental and recommerce platforms, Tondon noted that today’s consumer is simply more educated about their consumption habits, which has helped brands focused on sustainability.
“Conscious consumption is the new luxury in a lot of ways,” Tondon said. “The recommerce trends are benefiting from that customer that thinks about sustainability and is a lot more conscious about what he or she consumes. If you look at global numbers, handbag sales have gone down over the past five years. Apparel sales are slowing down. These are real trends. These are not fads.”
Keeping up with consumer trends, particularly the desire for “immediacy of access,” has been a key driver of StockX’s success. The online footwear and streetwear resale marketplace bills itself as a “stock market” in terms of pricing. Shoppers can “bid” on merchandise, giving them flexible, dynamic pricing options they won’t have at other retailers.
“You want access to that product,” Cutler said. “The reality for consumers is that there is not always a way to get that immediately in most traditional methods. You can’t get that from the brand because it’s already sold out, it may not be available at the retailer or at the price the consumer is willing to pay, but the consumer expects that immediacy of access. We think dynamic pricing is a real key unlock to demand, because the traditional model is ‘I’m here to sell you something on a shelf and if you’re not willing to buy it for the standard price, wait until we mark it down.’”
This drive for product access may be even more important than ownership, according to Poshmark’s Sun.
“We’ve seen this coming for a while — consumers have a lot of power, but they want even more,” said Sun. “When asking the question, ‘How do we stay relevant?’, we focus on what will not change and build for that. Respect the trend, but don’t build for the trend because we’ll be behind before we’re even there.”
Le Tote May Take Lord + Taylor Global, While Poshmark Doesn’t Rule Out Brick-And-Mortar
Brick-and-mortar retail also was a major discussion point for the digital brands. Despite Le Tote’s e-Commerce roots, the company has most recently made the news with its acquisition of Lord + Taylor for approximately $100 million. The purchase was an unconventional move for a digital native brand, especially considering Lord + Taylor had a 38-store physical presence in addition to 100 years of lineage.
However, Tondon has plans for the department store chain that expand it beyond its current roots: “Le Tote will be available in Lord + Taylor stores in the near future,” Tondon said. “The goal is to grow the Lord + Taylor franchise from a regional brand to more of a national footprint — and potentially grow internationally as well.” Tondon expects Lord + Taylor will operate as many as 50 stores within the next three or four years.
“Instead of investing money in Facebook, Instagram and Google, the retail locations act as a great interaction point with the customer and inform them in a market where we may or may not have a deep presence,” Tondon said. “When they see the brand day in and day out, we think customer acquisition costs can go down dramatically. We have some pop-ups that are driving fairly significant traction to the web site, and at significantly lower acquisition costs than we’d pay Facebook or Instagram for.”
A Physical Presence Doesn’t Necessarily Mean A Traditional Store
Poshmark and StockX have different physical strategies from Le Tote. The former hosts a three-day annual conference to form human connections among top sellers, which in turn inspires these top sellers to host their own events locally, ideally helping them further expand their own businesses.
“We use this physical strategy as a community-building device, which then leads to the deep engagement they bring online,” Sun said. “Poshmark sellers are on our mobile app an average of 25 minutes per day, and while a lot of that comes from some cool product features we built, it’s also about the investment we make in human connections, which are gold for people regardless of commerce channel.”
Sun noted that while Poshmark does not have a brick-and-mortar presence, it’s “not out of the question” that the company would develop one in the future.
StockX has one permanent physical location in New York City, but it serves as a “drop off” site for consumers who have already completed a sale online. Associates will authenticate the merchandise within the store and pay the consumer immediately upon completion.
“People are waiting in line at other retailers close by to get that scarce product that they can’t find anywhere else, going on the StockX app to see what it’s actually worth, buying it in that other retail location and selling it along the way. We look at our physical location as a supply acquisition portal.”