1) Big toy retailers like Hasbro and Mattel and independent toy stores hope to gain market share from Toys R Us’ bankruptcy, but Amazon and its competitors may beat them to it.

What happened

  • In the wake of Toys R Us’ bankruptcy, toy manufacturers Mattel and Hasbro saw their shares slump—the latter’s Q1 2018 revenues decreased 16% to $716.3 million. Hasbro wants to boost its ecommerce and brick-and-mortar operations, and like other mass retailers, may diversify its product selection to fill the void left by Toys R Us.
  • But the industry trade association that represents toy retailers believes that the bankruptcy will pave the way for independent toy retailers to capture more of the market, with a predicted 20% increase in 2018 revenues.

Why it matters

  • Since Toys R Us declared bankruptcy, big box toy retailers are trying to capture its market share. But the continued struggle of other large toy companies like Hasbro and Mattel suggests that Toys R Us’ defeat was inextricably linked to the rise of mass retailers like Amazon, Target and Walmart. Amazon, for example, keeps toy prices low and takes losses on the vertical for the bulk of the year, making up for it during the holiday season boom. This way, Amazon steals market share from big toy retailers—something that contributed to Toys R Us’ downfall, and that could irreparably harm Hasbro and Mattel moving forward.
  • Independent toy retailers still have an edge against the Amazon and its competitors as points of discovery, but after years of falling victim to Toys R Us and other big toy retailers, they will have to continue fighting in order to remain relevant. In the meantime, mass retailers will continue their quest to satisfy their renewed thirst for toys.

2) Retailers are increasingly using fraud-detecting companies to vet online purchases, but are alienating customers in the process.

What happened

  • A growing number of retailers and banks—including Macy’s and Visa, Inc.—are employing third-party scoring firms to vet shoppers for ecommerce fraud. These firms—Riskified, Finish Line, CyberSource, Accertify and others—use big data and machine learning to determine whether or not an online purchase may be fraudulent and then issue approval or denial for a purchase.
  • Riskified, which works with more than 1,000 companies, may redflag a shopper who makes a purchase without checking the return policy, pays for the fastest shipping option, or whose email address doesn’t mirror the name on her Facebook profile.

Why it matters

  • New technologies including the credit card chip have helped lower the number of fraudulent in-store purchases, but since 2015, one-third of the 50 largest retailers in the U.S. claim that ecommerce fraud has increased approximately 30%—around the time that the chip became popularized. Many retailers have adjusted their return policies, including L. L. Bean, which recently terminated its lifetime product guarantee in light of abuse. Though credit card companies pay back shoppers when their cards are used to make fraudulent in-store purchases, the retailer bears the brunt of repaying customers for fraudulent online purchases—both the price of the product and the shipping become sunk costs.
  • But retailers also risk losing customers altogether. Scoring firms can help to reduce fraud, but can also issue false positives—though retailers can veto these decisions, a customer doesn’t necessarily receive a notification that her purchase has been denied, or an explanation for the verdict. It’s up to the retailer to give insight into the vetting process to maintain a healthy relationship with customers—communicating about why a purchase was denied and streamlining a re-purchase if a scoring firm denies a legitimate purchase will make a customer feel valued and build loyalty, instead of leaving her in the dark.

3) The Wing’s female-designed club ushers in a new era of retail real estate built for specific consumers.

What happened

  • The architect Alda Ly, designer of the flagship space for The Wing, a women’s-only club, took women’s interests and needs into consideration from the blueprint to the last-minute minutiae. Now Ly is working with The Wing to bring the club to more cities, and with Bulletin, for its flagship New York store that will sell products exclusively from female-owned brands.

Why it matters

  • While Ly is heralded for her work on The Wing—and its unabashed female-centric design in terms of both aesthetics (pink, curved couches and staircases) and function (pumping stations and primping rooms)—her vision serves a higher purpose. Light pink is likely a passing trend, but her aspiration to create spaces where women feel comfortable and where they enjoy agency over their use of the space will have a lasting effect.
  • As brick-and-mortar retail space continues to shutter, players in the consumer industry from architects to real estate professionals should take heed of Ly’s strategy behind the Wing. Ly snubs Pinterest as an “echo chamber” and designed The Wing from scratch. This is in large part because no other female-only space existed beforehand, but it is also a good lesson: retail space (and experiential retail space) should be lived in, and approaching design as an origin story is a way to tailor the space more effectively to consumers and visitors.

4) Beauty buffs and sneakerheads are forming their own social channels to discuss products, and brands should meet them there.

What happened

  • With the beauty industry expected to reach $430 billion by 2022, and the sneaker resale market alone already valued at more than $1 billion, more consumers are forging communities to discuss products—asking questions, offering recommendations and reviews and warning about scams.
  • Sneakerheads now have a new outlet in Nike alumna Tiffany Beers, who recently began preaching her vast sneaker design knowledge on her YouTube channel. In the cosmetics sphere, beauty consumers are flocking to skincare-related Slack channels and subreddits to discuss everything from moisturizers and creams to the more opaquely named “elixirs,” “salves” and “serums.”

Why it matters

  • While other sneaker reviewers create “unboxing” videos and gauge the “coolness” of a new design, Beers shares bona fide expertise on function, design and manufacturing. The accessibility and authenticity of her YouTube channel provides consumers a chance to gain real insight into the products from her 13 years as Nike’s “senior innovator”—a position she left in August 2017.
  • Similarly, the skincare Slack and Reddit channels crowdsource information from consumers, chemists and beauty bloggers to decipher an industry whose surplus of products is daunting and whose terminology and benefits remain obscure. These forums, like the subreddit /r/SkincareAddiction that attracts more than 450,000 unique visitors, help to interpret the benefits of beauty products like Goop’s so-called NASA-healing stickers and the new cannabidiol craze.
  • Today’s consumers want to know the ins and outs of what they buy more than ever, but they don’t always receive useful information from the brands themselves. Lines of communication like subreddits and YouTube channels are highly advantageous for consumers, but they also run a risk for brands that favor using elusive language and PR jargon to market their products. As more consumers take it upon themselves to review products online—and particularly as former employees like Beers share their input—brands need to step up to take responsibility for what they produce and sell, even if it’s just a live Instagram video that outlines a new product’s design. Doing so will both protect and enhance brand equity—and can also buffer a company from incidents that have the potential to unravel years of work.