The Digital Ecosystem: Connecting Before, During and After the Sale

By Ken Nisch



The evolution of shopping based on the consumer mindset that is reflective of the past and targeted for the future can be described as a “Digital Ecosystem.” Much like the proverbial iceberg, this ecosystem has most of the system existing before the consumer “waterline.” Above this waterline exist the elements for which we are most accepting; such as mobile and tablet interface, kiosks across applications ranging from the ATM, to the calling of an Uber cab street side.



Below the waterline exists the logistics, the metadata, the algorithms that inform us of what, how, and when to push offers and products to consumers. And still deeper, the ecosystem allows us to track consumers’ purchases, order products on an unaided basis to fill their refrigerators, and increasingly making it full circle; the customer is driving the manufacturing through micro production and customization, circumventing the traditional wholesale and retail distribution channels by dealing directly with the manufacturer.



In today’s world of “faux manufacturing,” consumers can go directly to the source for either branded and/or unbranded goods at lower prices, and often with current and increasingly premarket accessibility from the traditional wholesale distribution channel. This has greatly impacted the retail market as we know it today. So what is the future impact on retail in this Digital Ecosystem?



Creating New Concepts

They can move, morph and reinvent – not only because of the access that the Ecosystem gives to products and innovators, but as well to a target group of consumers through social media, giving them the ability to market at a low cost and create an audience that can be enthusiastically drawn to every target concept. And they can secure real estate that is different than the traditional “location, location, location” mantra of the past. Now real estate is acquired by moments of time – in terms of years, days and even hours – as the next generation of pop-ups become the “permanent temporary.”



The Store of the Mind

Expectations around the “endless shelf” (where the store inventory does not have a physical definition), or a “store without walls” becomes viable. Being a “store of the mind” might be equally shopped from one’s living room, on an airplane, while waiting in line at another store, or in the store itself. The flip of consumers using stores to showroom for later web shopping –– to the majority of the consumers now browsing online and using the store as an affirmation, confirmation or distribution point, has changed radically within the last year.



Increasingly, consumers are deciding what they would like before they go shopping, often ordering online and picking up in-store; and then using the store visit to enhance or enrich that preplanned shopping experience. Therefore, stores need to think about ways to make that “pick-up” part of the purchase pleasurable, as one that enriches the visit with services and activities – whether social, product enriched, or lifestyle-focused; making the visit worth the trip.



Expansion Strategies

Begin to think about how consumers plan their shopping visits – from those that are primarily pleasurable and experiential, to others that are mainly efficient and logistically-focused. Retailers need to consider the creation of not a chain of equals, but a collection of “uniques.” And within that collection of “uniques,” a clearer understanding of a “hub and spoke” strategy within the marketplace is important.



This will further evolve the growth and/or decline of certain shopping centers within markets; some being focused primarily on those retailers and brands that are socially or intellectually satisfying, versus others purely serving a logistical purpose.



And as stores become either highly experiential or primarily focused on logistics, a new group of concepts will pop up. Customers will either be looking for stores to come to them through personal sales, store trucks (think how food trucks changed the fast casual industry), or other types of augmented reality or visualization technologies. Even micro-manufacturing technologies like 3D printing can turn that spare room into a space that will allow consumers to serve the needs of others; becoming both manufacturer and supplier.



What’s Next for Brands

This fragmentation of the traditional manufacturing and retail cycle will put additional pressure on what have become “retail brands.” Even those brands whose ability to access a distant sourcing become the experts in logistics, but have done so from a mono-brand perspective, will begin to feel additional pressure. Brands already have created alliances and/or invited third party brands into their environment (think J. Crew, H&M). And the future will see an increasing amount of this, with the vertical brands in some ways going back to the retail specialty store format of the 50’s and 60’s, where curators, buyers and wholesale markets created a much broader diversity of consumer options and merchandising formats than today’s “Me-3’s” – the “good, better, best” of each category.



Growth of successful midsize regional chains will become typical. They are the ones who are close to the customer, understand their shopper’s uniqueness from a neighborhood, city or region’s perspective and can respond with a faster pace of fashion and a greater sense of marketplace than the mega chains currently do.



There will be increasing commoditization of the operational and functional elements of stores you do not see (the basic hardware and infrastructure) and a decrease in commoditization of the elements that you do see. Leaders will take advantage of the growth of a creative workforce whose talents range from execution to creativity – and they will be leveraged by emerging “omni-platforms” (as the term “channel” is increasingly obsolete) to source talent, vendors, and suppliers to run these new retail concepts.



What will evolve are the principles of consumer experience, reinvention, and the power of creativity to communicate and differentiate the next generation’s retail enterprises.

Kenneth Nisch is chairman of JGA, a retail design and brand strategy firm in Southfield, Mich. Nisch applies his knowledge and entrepreneurial insight to create concept and prototype development and brand image positioning. He can be reached at [email protected] or jga.com.