It would be too easy to take the Allbirds news and the Sears news of the last week and declare that legacy retailers are dead and digitally native retailers are the future.
Too easy, and in fact, inaccurate. But that doesn’t mean there aren’t lessons to be learned from two of the biggest retail headlines in recent days.
First, the news: Allbirds, a four-year old company that sells comfy, eco-friendly shoes directly to consumers, reached a valuation of $1.4 billion, based on recent investments and some Wall Street math. Sears, a 125-year-old enterprise that was once America’s largest retailer, filed for chapter 11 bankruptcy, the latest development in a long and painful slide into oblivion.
The Sears story has been well-told. To boil it down, according to industry-watchers, hedge fund guy Eddie Lampert set down a path to profitability by cutting. Sears sold off its valuable real estate and brands. It neglected stores, until many offered a customer experience that could best be described as yuck. Lampert lashed together two failing retailers — Sears and Kmart — and tied an anchor of debt to them in the hopes that two sinking ships would equal one rising boat.
Sears’ plan was missing one thing: customers
What was missing from the plan was customers — and strategizing about how to please them to no end.
Now consider Allbirds. It’s obsessed with customers. It came up with a product — shoes made of wool and wood and sugarcane — that fascinated some consumers. It sold directly to consumers, gathering first-hand data about their likes and dislikes.
It doesn’t have thousands of stores to refresh, refurbish and stock with employees and other brands’ goods. It has two stores, which are actually more showrooms or marketing vehicles.
And it has a story.
Sears had a story that worked well in the 20th century: “We have pretty much everything, so come and get it. And the price is probably pretty good.” In the 21st century, consumers know “the internet” has everything and that the best price is just a few clicks or taps away.
Beyond that, consumers want more than product and price. They want an experience. They are willing to pay more for something that means more.
So, how does Allbirds do it?
Allbird’s story speaks to those sorts of desires and priorities. I had the chance to talk to Pano Anthos, founder of XRC Labs, about digitally native retailers in general and Allbirds specifically earlier this year. He shares some of his thoughts about Allbirds’ success in the video below.
Allbirds also no doubt owes some of its success to its mindset. The company behaves like a startup — testing, iterating, focusing on data and, of course, seeking venture capital. And Allbirds sees the world through the lens of customer experience.
When the Wall Street Journal talked to co-founder (subscription required) Joey Zwillinger about the company’s arrival in the unicorn club (companies valued at $1-billion-plus), he said, “We’ve never even thought of ourselves as a shoe company.” Instead, he told the Journal, Allbirds is “focused on delivering everyday comfort in a really elevated way.”
In some ways that is elevated thinking.
All that said, the very different trajectories of Sears and Allbirds don’t mean that all legacy retailers are dying and all digitally native — or digital first — retailers are soaring. Instead, it suggests that retailers of every stripe need to keep customers at the center of their strategies and that they need to aggressively pursue new ideas and the technologies that allow them to execute on those ideas.
Photo courtesy of Allbirds