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Digital natives in retail aren’t slam dunk successes

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No question “digitally native retailers” are the darlings of the retail set.

This relatively new breed of store — born on the internet, with a strong community of customers and a lean operational organization that encourages agility — is frequently pointed to as the way to do retail in 2018.

And while digital natives have certain advantages over legacy enterprises, Cathy Halligan, an independent director at beauty retailer Ulta, says in the video interview below that the model comes with some challenges and takes creative thinking to keep moving forward.

Clearly, there is something to this digital native trend. Some that wear the label — Warby Parker, Bonobos, AllBirds, Rad Power Bikes, Stance — are becoming household names, certainly in many households.

And they are finding business success. Kylie Cosmetics was able to realize the sales that Halligan mentioned and a market value of nearly $800 million with only seven full-time employees. Kylie does that by relying on an ecommerce tech stack consisting of trusted partners that handle many of the operational tasks, as the Forbes piece points out.

Maybe there is something to this whole brick-and-mortar thing for digital natives, as well. As Halligan noted, physical stores have been a key growth avenue for some retailers who started online only — even some of those who never planned to go old school or old store.

Warby Parker, Bonobos, AllBirds Rad Power Bikes and Stance, for instance, have all opened physical stores.

Even when making the move from virtual store to real world, though, some digital natives turn to partners who’ve already shown they’ve cracked the code on physical stores and omnichannel sales.

Digital natives are diversifying sales channels

Halligan talked about Madison Reed, a digital first hair color company that built a compelling story around natural ingredients — eschewing ammonia, parabens, resorcinol and other ingredients that are both hard to say and potentially hard on hair.  And while Madison Reed has indeed opened physical Color Bar boutiques, it also sells its products through Ulta stores, Halligan explained.

“The consumer loves brands and loves great product,” she said, “and there have been multiple ways to access those, both digitally and physically.”

In an upcoming Signifyd Ideas video post, Halligan will talk about what legacy retailers can learn from the digital natives as long-time retail players contemplate their own digital transformations.

In the end, it could just be that the answer to doing retail right in the 21st century will emerge from a mixture of the methods of the new school and the old school.

Photo by iStock

Contact Mike Cassidy at [email protected]; follow him on Twitter at @mikecassidy.

Mike Cassidy

Mike Cassidy

Mike is the head of storytelling at Signifyd. A former journalist and a retail geek, he covers ecommerce and the way technology is transforming digital commerce. Contact him at [email protected].