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Edition 1

The decline of advertising, disappearing stores and chatbottlenecks.

This is the first edition of Kaleidoscope, a monthly retail-focused newsletter from ThoughtWorks. 

Is traditional advertising losing its impact?

Yep. In many industries, like beauty and auto, the biggest advertisers are in decline - trumped by younger, quicker counterparts who reallocate the spend to new product innovation, search visibility and influencers.

In Advertise Less, Innovate More, we explore how winning brands like Zara, Domino’s and NYX grow by shunning traditional ads in favor of alternative ways to entice customers.

Adding to traditional advertising’s plight, ad-heavyweight Adidas will ditch TV ads completely to focus on reaching younger customers on mobile.

Let’s chat instead

How to grow in the challenging years ahead when trusty ol’ advertising no longer packs a punch? Realizing that savvy customers are “opting out” of adworld, brands are turning to messaging apps to sell more stuff.

Chatbottleneck: Not so conversational commerce

Instant messaging gives brands a rich opportunity for one-on-one comms and better customer service. One small problem - chatbots thus far kind of suck. Why? They’re hard to find and customers don’t understand what they can and can’t use them for. That said, the brands that find success on conversational interfaces connect customers with real-life, actual humans ( like Marriott, Net-a-Porter, and Glossier did) or define clear, narrow use cases (like Taco Bell and KLM did). Here are our favorite examples of brands experimenting with chat apps:

Glossier: The fast-growing, cult beauty brand invited its top 100 customers to a private Slack channel. These top spenders use it to trade over 1500 messages every week: dishing out style advice, product recommendations and more

KLM: The dutch airline sends passengers their boarding pass and updated flight information through Facebook Messenger

Net-a-Porter: The luxury fashion giant’s personal stylists already chat one-on-one with top customers. This month the brand announced formal plans to use WhatsApp to connect with their “Extremely Important Customers”

Hellmanns: Half of Hellmann’s site visitors in South America signed up for the mayonnaise brand’s ‘Whatscook' campaign. The campaign connected customers to real chefs to provide in-the-moment meal inspiration

Where did all the stores go?!

Four years ago, we made a prediction that the future of retail would involve less overall stores, with the remaining stores being higher quality and centered around convenience or enjoyment. This is increasingly true, according to Moody’s the number of distressed retailers shuttering stores has reached near recession levels. American Apparel, The Limited, Macy's and Walmart are but a few in a long list of retailers that have announced full or partial store closures in the last year. 3500 will disappear in the next few months according to Business Insider.

But it’s not all doom and gloom. Trader Joe's, Sephora, Primark, Aldi and Amazon are among the list of retailers successfully opening physical locations to enhance convenience and promote the brand. These thriving retailers demonstrate that shiny technologies and omnichannel tactics are not a silver bullet - the right flavor of digital looks very different for Burberry vs Dollar General, so retailers need to find their unique combination of technology-enabled products, platforms, and services to reinforce their core brand values.

Top 5 Reads of the Month:

Here's what happens to the athletic wear industry when China starts going to the gym. Link

Is American Retail at a Historic Tipping Point? Link

What Killed the Malls of the 70s and 80s? Newer, Better Malls, Not Amazon Link

A new generation of even faster fashion is leaving H&M and Zara in the dust Link

Taco Bell to offer test kitchen reservations on OpenTable Link

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