Our work in... Retail
We’ve done a lot of work across the retail landscape over the past 7 or so years. From idea to adoption, our engagements have spanned various retail sectors, addressing the unique challenges and opportunities that the shifting behaviours of shoppers have presented. Here’s an overview of what we’ve seen, what we’ve done, and the questions we’ve helped answer in the retail industry.
What we’ve seen
The retail industry has experienced waves of change, influenced by digital transformation and evolving consumer expectations. Initially, there was a significant focus on big fat “Digital Transformation” programmes, often leading to an underappreciation of the role physical stores play. However, it soon became clear that stores are not just distribution channels but crucial touchpoints for brand visibility and a means for creating deeper, more meaningful relationships with customers. At present the relationship between physical and digital appears to have levelled, despite the promise of omnichannel having never quite materialised. Let’s take a look at what's happened over the years:
The shift to digital, accelerated by COVID-19, has had a profound impact. Traditional retailers who underinvested in digital struggled, while e-commerce brands began seeking physical presence to complement their online strategies. Despite these shifts, no retailer has fully perfected the omnichannel experience, which remains a complex challenge due to the separation of digital and physical sales teams. It’s telling that when retailers underinvest in or close down stores, sales across all channels go down. Stores play a crucial marketing role, ensuring that brands are not just physically available, but mentally available too. The only reason people ever think of WHSmith’s is probably because they saw six of them last time they went on an aeroplane!
While some experience-led initiatives, like Apple’s community-focused store designs and, more recently, END’s event-driven store exclusives, have shown tangible benefits in terms of bottom-line impact, many of these Instagrammable flower walls (or similar) are just gimmicks. They create a buzz internally but don’t necessarily translate to sales externally. To find true ‘experience-led’ initiatives with lasting impact, you have to look further back. The old IKEA ball pit wasn’t a gimmick; the smart Swedes recognised a need—an inconvenience, to be precise—that busy parents who needed to drag their kids along on a shopping trip to a destination store like IKEA needed something to get the kids excited and somewhere for them to keep themselves entertained while they shopped. I remember my little brothers finding at least a fiver in coins at the bottom of those every time we visited. Maybe understanding shoppers and their actual needs is what we need to go back to on the experience-led front, hey?
Amazon has nailed it, and that’s a big problem for everyone else. Their, to be frank, underwhelming user interface is made up for by their recommendation algorithms and unbeatable logistics infrastructure. This has completely redefined what customers expect from retailers. Their operational and last-mile delivery prowess has set consumer expectations sky-high, a tough act for anyone to follow. Imagine 15 years ago being able to search for, find and order a Slip n’ Slide at 10pm at night and get it hand delivered by 10 am the next morning. And imagine the smiles it created on my kids faces on a sunny Sunday afternoon (and the smiles on my mates faces on the stag do the day before).
The term “omnichannel” was all the rage a decade ago, but few retailers have truly delivered on this promise. Internal competition between digital and physical sales teams, and the complexity of sales attribution, remain significant barriers. The pandemic, ironically, spurred some real innovation, such as M&S’s Scan&Shop, demonstrating the potential of seamless physical-digital integration. And QR codes finally found a use case. However, achieving true omnichannel harmony is no small feat. “Your customers can feel your silos” is a phrase we still use at Class35 and retailers need to break down these silos and rethink how they measure success. Sales attribution, for example, is a tangled mess. How do you accurately account for a sale that started online but finished in-store, or vice versa? Many retailers still measure these channels separately, leading to internal competition rather than collaboration. It’s like trying to win a relay race by focusing solely on individual lap times rather than the baton pass and total team effort.
The internet is broken. The re-rise of apps is upon us. With the internet experience becoming increasingly cluttered with pop-ups, ads, and annoying newsletter sign-ups, many retailers are refocusing on apps. Apps offer a cleaner, more controlled shopping environment, fostering higher engagement and deeper relationships with customers. This resurgence might well be driven by the ‘super-app’ concept, which bundles multiple services into a single platform. An investment in service design could mean these super-apps are finally here, potentially revolutionising how retailers interact with their customers. However, the rise of apps might simply be down to a consumer reaction to the horrendous experience of mainstream internet shopping—an endless barrage of distractions that makes finding and buying products a frustrating endeavour.
Sustainability concerns are driving the growth of re-commerce, with the resale market growing 16 times faster than traditional retail. Consumers are becoming more mindful of their purchases' environmental impact, pushing for more sustainable options like secondhand shopping. However, the cost of living crisis has stalled this movement. A recent poll found that over half of consumers who purchased sustainable products had already or intended to switch to non-sustainable brands as a result of rising costs. Given the choice, consumers are more likely to opt for price over planet, as financial constraints take precedence over sustainability concerns. Perhaps the rise of platforms like Vinted is about more than sustainability. These platforms offer consumers a way to get more for less and even recuperate some cash from items they may have otherwise thrown or given away. It’s good for both cash flow and conscience.
Social commerce has driven a fascinating trend where retailers have had to loosen the reins on their brand identities. The virality potential of social networks has almost forced brands to relax their traditionally strict brand guidelines. The ‘logocops’ of the past have had to open themselves up, release the shackles of the brand police, and become more experimental. It’s been thrilling to see brands hand over the keys to their identity to Gen Z influencers in their bedrooms to shift products. There are numerous examples of small brands skyrocketing to fame by creating or nailing a trend. Conversely, we’ve also seen plenty of PR disasters as big brands attempt to ‘dad dance’ their way to social media fame, only to end up with brand-damaging initiatives. This knife-edge balance between leveraging social for brand growth and the potential pitfalls makes it a popcorn-worthy area of retail innovation.
The market has been flooded with AI as it tops most CEOs’ strategic agendas. Terrified of falling behind after potentially missing the boat on previous innovations, companies have thrown AI at everything. The MVP nature of product delivery means many of these AI solutions aren’t solving real problems and sometimes even create new ones. AI is here to stay, though, and its value will be in smaller moments—like IKEA’s ball pit—that address specific needs and eliminate inconveniences. The most valuable initial applications are likely in Customer Service Centers (CSCs), solving customer queries before they require human intervention. We’ve worked with major retailers to enhance their online Help & Support, observing how customer struggles with self-serve options lead to increased CSC contacts. By quantifying this “waste” in advisor time and cost, retailers can build strong cases for investing in improved online self-serve journeys.
What we’ve done
Class35 has completed numerous projects across the retail sector, each tailored to address specific challenges and drive commercial success. Here are some key examples:
- Reimagining the role of stores (and colleagues) for an iconic British retailer in a digitally powered future, aligning with the brand’s heritage and digital aspirations.
- Defining and validating a vision for a closed-loop payments system in a central digital wallet for a high-street retailer, offering a seamless payment experience.
- Researching customer appetite for self-serve returns, leading to the mapping of an omnichannel service journey piloted in various stores.
- Redefining the online Help & Support proposition for a FTSE 100 retailer, delivering foundational service recommendations to optimise and enhance their customer support offer.
- Transforming the retail store experience with digital innovations for a global fashion brand’s flagship store, enhancing customer engagement and sales.
- Creating the brand and proposition and product marketing strategies for a retail challenger, helping the founding team secure £500k in angel funding.
- Redefining the brand positioning and digital experience for a classic car auctioneer, enabling global growth.
- Building an e-commerce website and back office for a popular vegan brand using no-code tools, accelerating time-to-market.
- Developing a connected retail selling platform for a multi-category retailer, optimising the payment experience for shoppers and their diverse shopping missions.
The questions we can help to answer
Proposition
Is your proposition compelling to your target customers? Are you able to deliver a competitive advantage? What tangential propositions can you create to build on or complement your current offer?
Product Marketing
Do your customer-facing channels deliver the right messages and impressions?
Product / Customer Experience
Do your stores meet customers' expectations? Do your digital channels meet customers' expectations? Do your physical and digital channels seamlessly support and guide customers’ through the optimal journeys, for them and for you?
Voice of the Customer
Do you have a reliable and serviceable understanding of what customers expect? Do you have a process to reliably cultivate and act on customer sentiment?
Product / Programme Audit
Are your current initiatives, partnerships, and/or programs delivering the desired value? How might they improve?
Growth Strategy
What growth opportunities exist within the wider retail market? (e.g. BOPIS, CSC transformation, subscription models, community partnerships, etc.)
Threat Scanning
What market or competitive forces might undermine the current strategy of record and customer base? (e.g. Amazon’s expansion, new market entrants, cost of living, regulatory changes, rising operational costs, etc.)
Acquisition Strategy / Sales Model
What new routes to market might you consider to better access identified growth areas? (e.g. D2C, partnerships, marketplaces, franchising, dropshipping, social commerce, new store formats, etc.)
Actionable Vision / “North Star”
Where can the business go? What might this evolution need to look like? What would need to be true for it to be successful?