Retail Innovation Tracker: DTC Brands Challenge Majority Of Legacy Players
PSFK survey suggests that only a handful of legacy leaders get retail innovation right but most are at risk from next-gen DTC brands
A handful of legacy leaders get innovation right, a few legacy brands and retailers are playing catch up, but most are getting left behind and are a at high risk of get displaced by new DTC brands.
Our latest survey of the PSFK’s Purple Panel provides insights into the contrasting fortunes of legacy brands and retailers and the industry sectors the operate within. The PSFK Retail Innovation Tracker survey is conducted with over 500 PSFK members every month (many of whom are senior brand and retail executives) and the respondents have been asked to judge the innovativeness of specific companies when it comes to retail.
For what will be unsurprising for many PSFK member is the fact that Amazon leads the pack with a top score of 90 out of 100. No doubt, this grade reflects its vastness, scope and ability to experiment and iterate.
A Few Lonely Legacy Leaders
A few legacy brands follow including Nike, Apple, IKEA and Uniqlo. With the possible exception of the Cupertino-based tech company, this group is aggressive when it comes to experimentation and iteration. Nike, in particular, has been spending much time working on how it can fuse its digital and online experiences to drive new and repeat sales.
New DTC Aligning Well
Below the leaders is a strata where a new crop of direct to consumer (DTC) brands sit. And while they are a step behind the top scorers in the rank, they are way above the rest of the pack – especially in apparel, grocery, department store, luxury and retail sectors.
Could this new crop of DTC brands disrupt the lesser players in their markets more than the leaders? Instead of biting the heels of Nike, will Allbirds instead be taking chunks out of Reebok? Rather than siphon sales so much from Tumi, will Away steal customers from Samsonite?
How will the retail sector develop? The early data suggests:
- One market leader – a legacy company that has invested considerably in their future.
- 3 to 4 new and disruptive companies as major players in their industry sector.
- 2 to 3 existing brands who will compete alongside the new disruptors, forever spending time to keep up.
- A dwindling collection of smaller legacy brands that failed to invest in their futures in time and will now get picked off (or bought) by the groups above.
What should you do if you work for one of those smaller brands? Maybe there’s something to learn from the retail-first brands Kith and Supreme – something about engaging consumers, making them feel special and celebrating retail. We'll explore this more next month.