In the hallways and ballrooms at Shoptalk, there has been plenty of talk about digital disruption, the digital transformation and the need for speed, but it can be a little hard to get a grasp on exactly what all that means in the real world.
Sure, everyone agrees it’s happening, whatever it is. But what does this disruption look like?
Sometimes it helps to follow the money. In a session called “The Investment Perspective: Trends Shaping the Future of Retail,” David IbnAle, founding and managing partner of Advance Venture Partners, offered up an example worthy of an “aha moment.”
IbnAle and his firm were fortunate enough to invest in Rent the Runway, the innovative retail site that lets women rent, rather than buy, high fashion. In explaining how he thinks about investing in an era of retail disruption, IbnAle says he thinks about Rent the Runway as the 21st century version of Vogue magazine.
What’s old becomes new in new forms
“The biggest way to think about the Runway is, it has the potential to be what Vogue is now, further down the road,” he told a full room at Shoptalk on Monday. “It is the source of inspiration or aspiration for someone who is for the first time seeing Carolina Herrera — or pick your designer.”
For generations, Vogue readers would see those elegant designs on the magazine’s glossy pages “and you got to look forward to being able to afford that dress in 10 years,” IbnAle said. “What it does is, it brings forward by 10 years that time that reader can actually wear the dress and she develops a relationship with Carolina Herrera. She knows it fits her; she knows what she likes.”
The answer to the disruption in retail is to create something that is not a store. The answer is build experiences and sites and spaces that become woven into the lives of customers. Becoming what magazines once were certainly isn’t the answer for every retailer. But the mindset that transforms an organization built on transactions to an organization built on experience and education and communication is one of the things it will take for retailers to be successful in the age of disruption.
That kind of mentality is one of the things panelist Erik Oken, of JP Morgan, looks for when he thinks about retail investment. In particular, he keeps an eye out for “technology-driven disruption.”
“Everyone in this room knows that companies we work with have had to change dramatically in the last five to 10 years” he said. Everything is different — including how you succeed. Therefore, Oken said, he keeps an eye out for companies that are helping to drive the needed change or who are engineering their own transformations.
As fast-twitch as retail’s evolution can be, Tricia Patrick, a panelist and a managing director at Advent International, said investing in growth is a long-term bet.
Growth needs to be about the long haul
“If you’re growth oriented, you need to think that you can grow for a long period of time,” she said. And so, she pays close attention to how much freedom she has when investing — freedom to expand, pivot, head in a new direction.
“We’re in a time period in this sector where things are changing much more rapidly than they did historically,” Patrick said. “So for any given CEO, management team, business, that we’re partnering with and backing, we want to believe that they have many different levers to pull, that there is an asset in the company that is not just a single product for a single time and place, but that there’s a real capability that we can both help support and make better, better, better, but that can live to fight another day as the world changes.”
And that’s just it, isn’t it? In an age of retail disruption, it might be that those who are going to succeed don’t even know for sure what they will succeed at. Or at least in what form they will find that success.
Contact Mike Cassidy at m[email protected]; follow him on Twitter at @mikecassidy.