When COVID-19 lockdowns shuttered brick-and-mortar stores, people flocked to e-commerce like never before: IBM estimates that the pandemic accelerated the consumer shift from shopping in person to shopping online by five years. Many of the companies that stood out in this environment innovated to create a seamless experience between physical and digital spaces, building communities as well as customer bases. Nike made its Training Club app free and built a loyal following. Ulta enabled customers to try on makeup with AR and experiment with beauty products, even while on lockdown. Canada Goose created special cold rooms in its physical stores so that customers can see feel how its jackets really perform. And Shopify empowered retailers both small and large to reach customers wherever they may be, from TikTok to Main Street. In the brave new world of retail, consumers expect immersive, seamless experiences however they choose to connect with a brand.
For giving small shops a lifeline
When the pandemic lockdowns began, small brick-and-mortar retailers on Main Street suffered greatly because they relied entirely on foot traffic. Shopify quickly stepped in with tools that allowed these businesses to launch online operations overnight by converting their points-of-sale terminals into e-commerce stores. Shopify then highlighted these local stores in its Shop app, which would allow users who typically shop online to support their local economy. It closed out the year with a partnership that allows stores to accept payments through Alipay and a plugin that will allow them to create shoppable ads on TikTok. Gross merchandise value on Shopify was was $41.1 billion in the fourth quarter, up 99% year over year, and the company’s 2020 revenue increased 86% to $2.93 billion.
For reclaiming its relationship with its customers
The 55-year-old activewear giant has decided to take a page from the playbook of younger upstarts by becoming a direct-to-consumer brand. In 2016, it began cutting its relationship with wholesale retailers, including Belk, Dillard’s and Zappos, in an effort to engage directly with customers, while also increasing its profit margins by cutting out the middleman markup. This was a smart move: Sales through its own stores and website have been growing by double digits every year, including an 83% spike in digital sales of Nike apparel in 2020. During the pandemic, Nike worked to connect with customers digitally through free training videos on YouTube. It made its Training Club app free, acquiring 25 million new members in the fiscal fourth quarter. And for those craving connection, it launched Nike Experience on the app, which connected members in some cities for weekly activities, such as in-store workshops and events hosted by local athletes and sports influencers.
For simplifying on-demand manufacturing
The fashion industry generates a lot of waste because brands design garments months in advance then estimate how many of each item to manufacture, expecting some inventory not to sell. Making products on demand, after a customer has placed the order, is one way to avoid this waste, but creating this infrastructure can be daunting. Resonance has created a made-to-order manufacturing system that brands and designers can easily plug into. It owns a factory in the Dominican Republic, stocked with a range of eco-friendly fabrics. As soon a brand places an order, it goes through Resonance’s automated supply chain, then gets shipped directly to the customer. Direct-to-consumer brands can sell products on their websites, without worrying about items selling out or discounting items that aren’t moving. This summer, it launched an accelerator that allowed 11 Black designers to launch brands within eight weeks, using the Resonance platform. For more on why Resonance is a Most Innovative Company in 2021, click here.
For cultivating the next generation of sustainable designers
Depop has become the standout resale marketplace for GenZ, who make up 90% of the platform’s 21 million global users. The platform attracts these consumers because of its interface, which feels like a social networking platform: Users can follow specific shops on their main feed, then interact with other users by commenting and liking their posts. The direct connection between buyer and seller creates an instant feedback, which increases the speed of a transaction and also allows sellers to customize products for their buyers. Depop also caters to younger consumers thanks to the price point of goods on the site. Designers such as Anna Sui, Rodarte, Christopher Raeburn, and Richard Quinn are actively jumping on the platform to sell and interact with Gen Z consumers. During the pandemic, the platform saw triple-digit growth, as sellers had more time to market their products and buyers wanted to save money by buying secondhand goods. At any given moment, there are more than 25 million items on the app, and Depop takes a 10% cut of sales transactions.
5. The Citizenry
For recognizing artisans as designers
Consumers can buy Fair Trade goods from artisans around the world at bazaars and mass market retailers, but the Citizenry elevates these carefully crafted products into luxurious designer products. The brand’s buyers travel the globe, finding high-quality products made by craftspeople from around the world and then curating a selection of items that will look beautiful in a modern home. This year, the Citizenry quickly responded to the needs of its makers during the pandemic. It offered health and safety resources to its partners in 22 countries to ensure they could continue working safely during the pandemic; this was particularly helpful in India, Peru, and Morocco, which were behind the global curve. It also ramped up payments to allow artisans to buy materials and tools so they could work from home. Despite these supply chain disruptions, sales were up 50% during the pandemic compared to 2019, and 40% of purchases were by repeat customers. It’s a testament to the brand’s efforts to cultivate a base of loyal customers who are drawn to the brand’s values.
6. Ulta Beauty
For scaling virtual makeup try-ons when we needed it most
When COVID-19 hit, making it impossible for customers to try on products in store, Ulta Beauty scaled GLAMlab, the virtual try-on experience in its app, accomplishing in three months what would have ordinarily taken three years and deploying 80 in-store beauty advisors to support the digital innovation team. It added a skin analysis tool, AI-powered try-ons for hair, eyelashes, foundation matching, and more. While individual make-up brands have virtual makeover tools, Ulta’s app extends across the many brands in its store, spanning 7,000 products, with 500 new ones added each week. The brand says usage spiked by 9x during the pandemic, and after stores reopened, rates stabilized at 7x last year’s usage. Now, GLAMlab users have a 10% higher average order value than other Ulta customers.
For democratizing luxury craftsmanship
For the past decade, direct-to-consumer brands tried to make quality more accessible by cutting out middleman markups. Startup Italic takes this concept to its logical conclusion: The brand goes directly to factories that make products for luxury brands across many categories, including Chanel, Frette, and All-Clad, and creates label-free versions that are identical in quality. This year, Italic launched a membership model that allows members to purchase items at cost for an annual $120 fee. The platform has been a boon to factories at a time when many luxury brands cut orders because their customers were shopping less. Italic has been revving up its selection, offering 800 products across fashion and home goods, and plans to offer fitness, pet and jewelry items in the next two years.
For building the Amazon of home health products
There are some 53 million unpaid family caregivers in the United States—20% of the population—tending to the needs of people managing chronic conditions, recovering from surgery, and more. These caregivers are often thrust into this work without training and struggle to find specialized products for their loved ones. Carewell has stepped in to meet their needs. It’s a marketplace that curates and vets everything from crutches and wheelchairs to personal hygiene items. Its customer support team is available to help people understand how products work and creates videos about tasks like feeding someone with dementia. In a year when Americans faced a surge in health crises, Carewell’s value proposition was more relevant than ever.
For creating the Kelley Blue Book for luxury handbags
In 2020, luxury resale site Rebag had its best year since it launched in 2014, and expanded beyond handbags to watches and other accessories. The brand sets itself apart in the busy resale market because it buys directly from sellers and owns all the inventory on the site, an approach that creates a more seamless shopping experience for customers. It also has a program where customers can quickly refresh their closet: After a buying a handbag, they can keep it for 3 to 12 months and then exchange it for a new one, receiving a credit of between 70% and 80% of what they paid for it. Rebag spent five years building Clair, an index that allows anybody to quickly appraise the market value of their bag, effectively serving as the Kelly Blue Book for luxury handbags. The company also unveiled an AI-powered version of the system, which allows users to take a picture of a handbag and instantly identify its market value. Every year, the brand crunches Clair data to offer a report about the state of the handbag market. In May 2020, Rebag received a $15 million Series D infusion of capital to continue its growth. While stores were shuttering across the country, Rebag opened its seventh standalone store in December in Columbus Circle.
10. Canada Goose
For reimagining storefronts as museums
In the past year, Canada Goose has perfected the art of the immersive retail experience by taking a page from museums and amusement parks. Stores are outfitted with Cold Rooms, where customers can test coats in a small glass box surrounded by ice sculptures. Temperatures dip to -27 degrees Fahrenheit and there are occasional gusts of wind and snow. For customers, it’s fun experiencing conditions similar to the coldest places on Earth, but it’s also very useful to put the brand’s highest-performing coats to the test, particularly in the summer months, when the store may be warmer. Canada Goose has even transformed some outposts into museums—entirely free of inventory—where customers can learn about Arctic scientists and explorers and how the First Nations people of Canada developed the concept of the parka, and see deconstructed versions of Canada Goose coats. By keeping stores focused on storytelling and immersion, the brand has deepened its customer loyalty: In 2020, its revenues increased 15.4% from the year before, in spite of months store closures due to the lockdowns.