It’s easy to gloss over the timeworn Amazon headlines, but media coverage of the e-commerce titan’s recent physical retail strategies incited us to dig a little deeper to share some key learnings for you today:
1). First, Amazon’s partnership with Good Housekeeping magazine to create a new pop-up shop and digital boutique, GH Lab, at the Mall of America beckons a unique approach to the physical shopping experience using technology and a thoughtfully crafted, limited assortment.
2). Secondly, the opening of Amazon 4-Star — a new physical store where everything for sale is rated 4 stars and above, is a top seller, or is new and trending on Amazon.com— signals a new level of data-driven curation and transparency that only seemed possible online.
3). Lastly, the introduction of Amazon’s first fashion-focused pop-up shop in London further affirms the 'brick-to-clicks' phenomenon driving many digitally-native brands to embrace offline despite the 1,773 store closures so far in 2018.
Amazon has been dabbling in physical retail since its acquisition of Whole Foods in 2017, but its bold experimentation with these new store models clearly reveal the company’s ambitions across multiple physical retail verticals – from fashion to furniture to wellness and more.
These moves signal a future in retail where the power of data drives curated assortments, transparency, and more pleasant, stress-free shopping experiences.
Retailers, take note!
Amazon’s GH LAB: A ‘Less is More’ Approach
Fewer, better choices.
^ This idea that “less is more” rings true across Amazon’s new store models, where providing a limited product assortment seems to be a unifying theme.
For example, Amazon and Good Housekeeping magazine’s GH Lab features products tested in the “GH Institute’s state-of-the-art labs” by top scientists, chemists, engineers and tech experts — presenting a curated assortment of only the best, most innovative products across wellness, beauty, lifestyle, smart home, kitchen, toys and more:
“Each day, our expert scientists test hundreds of products to ensure they perform as promised and the GH Lab helps take the guesswork out of shopping. This innovative store showcases a genius selection of products for the home, new technologies and inspired holiday gifts. Everything in the store has been carefully curated and vetted by GH experts—so shoppers will not only be excited by the fabulous finds but leave with confidence in their purchases.” - Jane Francisco, editor-in-chief of Good Housekeeping
The space is formatted as a shoppable showroom with only one item per product category (tested and recommended by the GH Institute) available for customers to interact with or try before purchasing. Not only that, the unique concept also offers a shopping experience completely divorced from buying – the “hallmark characteristic of New Retail”— as visitors can make cashless transactions via Amazon’s SmileCode technology to decide how and when Amazon should fulfill the product.
Amazon 4-Star Store: A Data-Driven Assortment
Similar to the GH Lab, Amazon 4-Star introduces, yet again, another level of curation and innovativeness to its new physical store concept. Located in NYC, Amazon 4-Star store reflects the company’s latest strategy to introduce the ultimate data-driven store filled with only the best of the best — products with an Amazon.com 4-star review rating or better.
In addition, the store also features:
- New and trending products popular in the NYC market (plus those on wish lists)
- Price tags that reflect the digital price (as well as a discounted price for Prime members)
- Real-time tracking to alert customers of new products the store will be cycling through
The novelty of this new physical store concept lies in how Amazon powers it’s assortment:
“The “merchants,” or whatever Amazon may call them, do not just arbitrarily pick a bunch of its 4-star products to be presented in the store (games, kitchen appliances, electronics, toys and books and an assortment of Echo and Fire products). The merchants are AI and the products are selected by analytical popular demand, validated by interest and sales. Amazon curates its roughly 1,800 products according to the star rating system, customer reviews and its human intuition. But the real merchandising is dictated by their data that measures everything that has sold within a market radius around the New York location, identifying precisely who bought what and when. This physical retail model is the aggregated curation of products that are trending in NYC as well as those on wish lists.” - Robin Lewis, The Robin Report
Amazon, once again, proves how data can impact a retailer’s product offerings to give exactly what customers want, a clear signal to the data-driven transformation impacting retail today. By creating a physical space and assortment curated from shared user reviews, Amazon delivers validation among a community of consumers in a way that only seemed possible online.
Amazon’s First Fashion Pop-Up Shop: Finding a Middle Ground
Amazon’s foray into fashion is finally getting physical.
Currently ranked as one of the biggest clothing retailers in the US (based on merchandise volume), Amazon is making a pivotal move into brick-and-mortar apparel by opening its first fashion pop-up shop in London this week.
The shopping experience will revolve around a different theme each day, accompanied by a new assortment and activity:
"From October 23 – 27, Londoners will be able to purchase a revolving edit of women’s and menswear pieces. Autumn/winter 2018 trends will be the priority for the first two days, followed by fitness gear on the third, and street and partywear on the final days. Events including a beauty trends panel discussion hosted by Vogue beauty and lifestyle director Jessica Diner, a yoga session with Deliciously Ella founder Ella Mills, and Pepe Jeans denim customisation will also be peppered throughout the schedule, along with DJ and acoustic music sets. In short, if you stop by there will be something fabulous going on." - Vogue
The store will be stocked with clothing from Amazon’s mainstream brand partners like Calvin Klein, Tommy Hilfiger, and Aldo, as well as its own brands, including Find, Truth & Fable, and Meraki. Amazon fashion stylists will be available on-site to offer their styling expertise, plus shoppers also have ability to purchase items in store or virtually using Amazon's SmileCode scanning technology.
Similarly, many digitally native brands are expanding their physical presence as research shows that opening a new physical store leads to a 37% average increase in overall web traffic. Many online brands, especially among home goods and apparel, understand the need to embrace the physical:
“It makes sense that e-commerce retailers that sell apparel and home goods are looking to move into physical stores, since their products are the type consumers like to inspect in person. As these e-commerce brands mature we believe based on our research that those in the apparel and home good segments will continue making the transition to a clicks-to-bricks retail format.” - WWD
Finding this middle ground between the digital and physical world is a crucial move among retailers as channels for purchase continue to blur among modern consumers.
The Intersection of Online and Brick-and-Mortar Shopping
Amazon has leveraged every bit of information about shoppers to strategize its next moves, from innovative offerings to an extensive fulfillment network to major acquisitions to “whatever else its data says is going to serve its customers best.” Every business decision is driven by data, all in an effort to offer the consistently valuable end-to-end experience it’s known for, both online and offline.
If we’ve learned anything from past experience, then we know these new store concepts are no different. Amazon's experimentations showcase the power behind data analytics and technology to provide highly curated inventory assortments, ultimately facilitating a blend between the offline and online shopping experience. Leveraging data to inform merchandise decisions will ultimately set retailers apart because the benefits of doing so extend beyond the traditional retail experience.