1) McKinsey opened a brick-and-mortar store to test retail technology, but the simulation is far from reality.

WHAT HAPPENED: McKinsey opened a 3,000 square foot retail store named the Modern Retail Collective in the Mall of America. The year-long initiative will test a rotating slate of new technology from RetailNext, Zebra Technologies and Microsoft. The first brands the store will carry include Kendra Scott, ThirdLove, Type:A and Elevé Cosmetics.

WHY IT MATTERS

  • McKinsey isn’t implementing the right criteria to adequately assess consumer behavior. Modern Retail Collective features everything but the kitchen sink, which makes it challenging to understand consumer behavior. This setting will likely overwhelm shoppers and the numerous variables will cannibalize each other, which will taint the results. Conducting the same experiment with a more limited group of variables and a diverse range of retail locations across the country would provide better results.
  • Collaborating with one brand versus multiple would also improve the validity of the research. It would have been better for McKinsey to work with a single brand, which brings with it a refined customer base. This would allow it to focus on new technology and services for one audience, versus averaging many and diluting the results. With multiple brands under one roof, there are bound to be contrasting demographics who are looking for very different in-store experiences.

2) Instagram launched a product drop promotion feature, a positive for brands but making exclusive products more accessible risks defeating their very purpose.

WHAT HAPPENED: Instagram users can now receive notifications for upcoming product drops for twenty different brands. The reminders trigger the day before and fifteen minutes before the drop. Shoppers can then purchase the limited-edition product directly through Instagram’s app.

WHY IT MATTERS

  • Reminder notifications could enable brands to attract new customers who previously haven’t had the patience to participate in a drop. Part of the success of the drop is the patience and manic focus it takes to realize its potential, which brings hoards of shoppers in but also keeps many more away, whether online or in-store. Instagram’s feature will invite a broader user to participate in the process, but this also makes the art of the drop less special. Drops were designed to create hype, garner attention and cater to brand loyalists, if limited-edition product is easier to get, brand loyalists could become disillusioned.
  • Rather than make drops easier, Instagram should focus on making general shopping easier. Shopping on Instagram is constantly evolving, but there is a lot left to conquer. Instagram’s much-lauded Checkout feature is still only available through 20 brands, which is the result of Instagram rolling the feature out slowly and/or brands balking at relying on Instagram even more to drive their business. But at the same time, the product drop feature might mean that Instagram thinks it can have more of an impact shifting and broadening the structure of elements of shopping than trying to incrementally improve something as static as a checkout experience.

3) SoulCyle is morphing into a stand-alone fashion brand, but expanding in the crowded athleisure space might not be worth it despite the brand’s loyal following.

WHAT HAPPENED: Soul by SoulCyle is still available at Nordstrom, but the company’s production infrastructure has significantly grown as the brand transitions to an entirely direct-to-consumer model.

WHY IT MATTERS

  • Extending the product offering beyond SoulCyle’s loyal riders could backfire. SoulCyle gear has until recently been curated for specific cycling studios and sold in only SoulCyle’s online and offline properties. This made the product exclusive to SoulCyle riders, driven by the premise that riding and wearing the brand warrants participation in it, rather than it being one or the other. Broadening the product to be for everyone detracts from the cult-like nature of the brand, who associate the merchandise with their hardwork and dedication. This risks diluting the prestige behind the product, which will make it harder for SoulCyle to stand out from popular athleisure brands like Outdoor Voices, Alo or Bandier. Ironically, the paired-down and simple nature of SoulCyle’s products are what made them worth wearing, since it correlates directly to an experience, something different than every other activewear brand.
  • Rather than becoming its own athleisure brand, SoulCyle should enhance its brand collaborations and the in-studio product placement. SoulCyle had to dedicate a lot of time and energy to support this new business model. If the company took the energy that it dedicated to preparing the brand for a wide rollout it would be much better used serving its current customer-base. SoulCyle could enhance its product display area— which is mostly an afterthought in its studios. Brand collaborations have also been important and investing more in that arena could be more lucrative and impactful in the long run.

4) Best Buy hired a Chief Medical Officer, a move signaling its focus on in-home monitoring services as a new stream of revenue.

WHAT HAPPENED: Best Buy hired physician Daniel Grossman to head Best Buy Health, a healthcare initiative centered on remote health monitoring services. The retailer said that one million customers have signed up for the service and it hopes to expand it to five million customers in the next five years. Best Buy also acquired Great Call and Critical Signal Technologies to support this program.

WHY IT MATTERS

  • Best Buy’s electronics expertise positions the retailer to thrive in the healthcare space. Retailers like Walmart, CVS and Amazon continue to invest in healthcare offerings, but Best Buy has the opportunity to stand out with its technology-fueled, in-home care services. The retailer has both the technology capabilities and the physical store footprint to serve customers living far from healthcare facilities who need monitoring. Walmart is one of the only retailers equipt to service these suburban and rural communities, which leaves room for Best Buy to gain market share with a technology-driven approach.
  • These services will increase trust with consumers, which will drive more people to Best Buy’s stores and enable it to keep expanding its services. This marks the first time consumers will rely on Best Buy’s services for their very life, which, if it goes well, will make them long-term customers for more than just healthcare services. While Amazon’s electronics vertical took a lot of market share from Best Buy, customers who are looking for a humanized shopping experience can increasingly turn to Best Buy for their needs. These monitoring services will go a long way towards making this a reality.