This is the second edition of Kaleidoscope, a monthly retail-focused newsletter from ThoughtWorks. Sign up here.
The platform-enabled retailer
What do YouTube, Airbnb, eBay, Square, and Instagram have in common? Each is a platform-enabled business. What’s that? In contrast to their linear counterparts, platform businesses are characterized by two-sided marketplaces, not owning inventory and APIs that allow other businesses to ‘plug-and-play’ or connect their business with yours to co-create value.
Businesses with a platform model can reach significantly higher market capitalization with fewer employees than their linear counterparts (think Instagram v Kodak, Airbnb v Marriott). Becoming a platform-enabled retailer explores what this model means for retail.
Amazon’s NYC bookstore
Speaking of platform-enabled retailers, Amazon opened its first real-life New York City bookstore. Despite being slammed by the New Yorker as a store for people who don’t actually read, the company’s 4,000 sq ft space is an inspiring example of meshing online and offline shopping experiences. It’s also a genius vehicle to spur Prime membership. The cashless store uses data from the site to curate its 3,000 titles in interesting ways - section banners include 'rated 4.8 stars or above’ or 'books Kindle readers finish in 3 days or less’. No prices on display here, customers use their phone or a scanner in store to check the current price. Prime members are treated to a special price where non-Prime members pay RRP.
Glossy has some tips on what retailers can learn from Amazon’s approach to brick and mortar. Hint: Build your store on the assumption that people are drowning in an abundance of stuff, and help them choose wisely with reviews and curated selections based on what’s trending.
Oh, in case you didn’t hear, Amazon also announced that it will buy Whole Foods for $13.7B. Kroger, Walmart, and Target stocks shuddered.
Malls: Now with reduced apparel
Hit by what’s been dubbed as a ‘retail apocalypse’, malls are shifting away from apparel retail to lower vacancy rates and increase foot traffic. What’s taking its place? Restaurants, theaters, wellness centers, and office space.
As customers increasingly opt to spend their money on eating, entertainment and wellness, department stores from Macy’s to Nordstrom to Selfridges are adopting a similar strategy, reducing reliance on apparel in favor of food and services. Macy’s with the addition of Blue Mercury to remodeled stores, Nordstrom with their Goop collaboration and Selfridges with their largest ever department - Body Studio.
Top 5: What we’re reading
Ikea plans to sell its furniture through third party sites like Amazon. Link
How brands are using personalized AI to attract millennials. Link
Where top retail real estate companies are investing. Link
Saks is an early adopter of iMessage. Link
H&M unveils plan for 2nd Arket store in London. Link