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THE SHAPE OF TOMORROW

Five retail experts—from Nike, Athleta, and more—on how stores and brands can survive the COVID-19 era

The retail Armageddon may have finally arrived. Here’s what top executives think it’ll take for stores and brands to make it through.

Five retail experts—from Nike, Athleta, and more—on how stores and brands can survive the COVID-19 era

[Source Images: Oleksii Glushenkov/iStock, doomu/iStock]

BY Elizabeth Segran10 minute read

For Fast Company’s Shape of Tomorrow series, we’re asking business leaders to share their inside perspective on how the COVID-19 era is transforming their industries. Here’s what’s been lost—and what could be gained—in the new world order.


Heidi O’Neill, president of consumer and marketplace, Nike

When COVID-19 hit, we accelerated our digital capabilities and focused on what matters most to consumers now. At the very core of that is working out from home. So we made our NTC—Nike Training Club—premium subscription service available for free for everyone in the United States. We started showcasing and even building the kind of workouts that people need, like yoga and mindfulness, and we’re adjusting big workouts for small spaces. Then we adapted our Nike Run Club and our audio guided runs feature to a treadmill experience. I was just looking at some of our consumer feedback. The runners are saying that the audio guided runs are a way to run alone—but not really feel alone.

We had launched [a] buy-online, pick-up-in-store [feature], but we are now accelerating that. We had launched self-checkout and scan-to-try services [in stores]. Those were cool in a pre-COVID world, but post-COVID, those two things become contactless [features].

One service that we’re launching this summer was already on the road map, but we’re accelerating it. It’s Nike Fit on your Nike app, which allows you to scan your foot at home and know your exact size. That information will be threaded through your shopping experience.

We’re thinking a lot about the reopening of stores and how we create safe environments. But we flipped it and we’re not saying, Okay, here’s what we have to do. We’re asking, What are ways that can make the consumer experience better now—that might be better forever?


Gregg Renfrew, founder and CEO, Beautycounter

I’ve spent an inordinate amount of time over the past four weeks trying to figure out where the opportunities are and where this pandemic is going to take us. I’ve known that our clients have depended on us for quite some time for safer, high-performing products. But I also have the 50,000 families [of Beautycounter’s at-home salespeople] who rely on this income. Other brands may lose revenue [because of COVID-19], but people may not be depending on them the way that our consultant community is depending on us.

I think traditional distribution in our industry, products through department stores and specialty stores, is over.”

Gregg Renfrew, Beautycounter

When I think about things that are going to stay the same, I believe they’ll be the most basic elements of being a human being. We’re still going to go to the grocery store. We’re still going to go to the pharmacy. We’re still going to purchase gas if we drive in a car. We’re still going to need public transportation. We’re certainly going to continue to need to put certain products on our bodies. There are stable elements to people’s day-to-day routines. Those rituals and necessities will not go away.

Conversely, I’ve tried to understand what will be different. And I think—I’ve been saying since the inception of Beautycounter in late 2010—that traditional distribution in our industry, products through department stores and specialty stores, is over. And this will be true of many more industries.

I don’t believe that retail will completely evaporate overnight. But certain retailers will morph their businesses into a new type of experience for their clients. Now more than ever, the focus is going to be on relationships between the brands and the consumers in a far more intimate and digitally enhanced way.


Mary Beth Laughton, CEO of Athleta

On the product side, we’ve been focused on making our customer feel great as she works from home, does home school, or squeezes in a quick workout. And we’ve also introduced some things that can help her during COVID, like our first non-medical-grade masks. In addition, part of our Athleta mission is helping women support each other through community. So we introduced virtual workout classes. Our customers can now come to our Instagram or the community hub on our site for live classes.

Retail was already changing, and COVID is just accelerating it. Stores will continue to play a critical role, but that role will change since most transactions will happen on a mobile phone or through social media. Retailers are going to have to think of that full journey a customer will have through their mobile device. I think about it as likely starting on a social post or some other marketing touchpoint, and then maybe she gets a geo-targeted mobile push message from us when she’s outside of the store, and that gets her in the store. And then she uses her mobile app to shop and navigate, check out past purchases, so she knows what size to look at. She looks at product recommendations that we’ve personalized for her. She can access loyalty points. Maybe she even reaches out to her friends and community when she’s in a dressing room to get their opinion. Then for checkout, something like contactless payment will become really important.

Stores of the future are going to be centered on a few key things. One is convenience and choice: things like curbside pickup or buy online, pick up in-store; easy mobile checkout; easy returns; online returns [processed] in physical stores. Stores will also be more focused on community and connection. The reason someone would get off her couch will be for the personal interaction with store associates, as well as being able to meet up with other customers.


Harley Finkelstein, chief operating officer of Shopify

Shopify is well known as being a leader for e-commerce, but we also have thousands and thousands of brick-and-mortar stores that use our point-of-sale [system] in their physical location. We realized that as their stores were shutting down. We thought, could we convert every point-of-sale terminal into an online store and allow for curbside pickup and local delivery? That happened in three days.

We also realized that, for a lot of services businesses that we have stayed away from—restaurants, yoga studios, dry cleaners, salons—cash flow is really important. So we thought, what if we were able to create a very simple feature on Shopify where anyone, even if they don’t sell any physical product, can set up a store with us and sell a single product—a gift card. We also deployed an extra $200 million of capital for small businesses, and we expanded those loans and cash advances beyond the U.S., to Canada and the U.K. That all happened in about two weeks after the crisis hit. The result was a 62% increase in new store creations between March 13th and April 24th, relative to the previous six weeks.

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Though we talk about how big e-commerce is, it’s still less than a fifth of total retail. COVID is acting as a flywheel to increase the speed of digitalization for retail.”

Harley Finkelstein, Shopify

The resiliency that some brands are showing is incredible. A lot of the small businesses are pivoting. There’s the restaurant that’s now doing wine delivery or the kombucha store that turned into a farmer’s market. Literally, it’s called Buchipop: It went from selling kombucha to actually helping all the little producers in the community create an online market. There was a farmer who called us from the Midwest who went from having a farm [that] sold to grocery chains to now selling direct-to-consumer.

And then you have this whole other category, brands like Heinz Ketchup or Lindt Chocolate, which both signed up for Shopify recently. That is fascinating because these are brands that never sold direct-to-consumer. In fact, they would never want to compete with their wholesale channels. They would never want to have that relationship with the end consumer, and now they do. Now, if you’re in the U.K. and you need condiments, going to the Heinz At Home Shop is really great, because you get everything you want delivered to you in a couple days. And it allows Heinz to control their own destiny and not rent customers from the retailers.

15% or so of total retail sales are done online. So, though we talk about how big e-commerce is, it’s still less than a fifth of total retail. COVID is acting as a flywheel to increase the speed of digitalization for retail. The issue is that each small business, on its own, is never going to be able to get the shipping rates that Walmart gets. It’s never going to be able to access the capital that Amazon can in the equity market. It’s never going to be able to do fulfillment at the same pace as Best Buy, because it doesn’t have the scale. One of the things that we realized is that if we were to aggregate all of our stores and pretend for a moment that we were one retailer—with hundreds of thousands of brands underneath—we’d actually be the second-largest online retailer in America. It’d be Amazon, then Shopify.

That gives us all these opportunities for economies of scale. We can go to shipping companies and say, “Give us the rate you’d only give Walmart.” And we can go to banks and say, “Give us these payment terms.” We can set up our own fulfillment networks. Instead of keeping the economies of scale for ourselves in the way that Walmart would or Amazon does, we can actually distribute the economies of scale to the small businesses and allow them to level the playing field.


Rebecca Minkoff, founder and chief brand officer of Rebecca Minkoff

We’re adapting by producing smaller collections. We are planning to be really focused as a direct-to-consumer brand coming out of this. If wholesale comes back, and they want to participate, great, but it’ll be on different terms. It will be on different terms. We’re also looking into showing products that we can ship in real time, not in three to four months. And we’re looking into made-to-order, so that a product ships when a customer orders it, which eliminates as much waste as possible.

I’m going to be designing a lot more Zoom-appropriate clothes.”

Rebecca Minkoff

We are still selling a healthy amount of handbags and loungewear. We’re also selling a healthy amount of jewelry. I think people are buying things for their Zoom meetings, and we’re giving that to them with our puff sleeve sweatshirts and our statement jewelry. I’m going to be designing a lot more Zoom-appropriate clothes.

Before this, I was anti people working from home. We had a policy with a previous president of ours where she would let her sales team work from home whenever they felt like it, and that made me so angry. When she departed, I was just like, “They’re probably just fucking off all day.” I just assumed that that’s what it was. When our new chief commercial officer came in and was like, “Working from home is canceled,” I was like, “Yes. Everyone’s at the office. We’re all together.” But there is no question in my mind that everyone is now working like dogs because we’re fighting to survive. So I have full faith in working from home now.

[Going forward], we’ll probably have different policies and maybe different days of the week or different situations where people can work from home. We’re a product company, and you can only do so much [remotely]. If my two designers and I are trying to work on a bag and a sample, you can’t achieve the same effect with one person having a sample and someone else making comments. Some companies could probably do this, but I think we need to touch and feel and see the product, and put it up on a wall.


More from Fast Company’s Shape of Tomorrow series:

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ABOUT THE AUTHOR

Elizabeth Segran, Ph.D., is a senior staff writer at Fast Company. She lives in Cambridge, Massachusetts More


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