Modern values

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"Pile it high, sell it cheap" is typically what comes to mind when thinking of value retailers, but recent years have seen modernized concepts inspired by transformative ideas and technology.

We pick out four types of innovation which we think are particularly interesting:

Store concepts
The notion of experiential shopping is not lost on the value sector. Over the past few years, footwear retailer DSW has experimented with tech-focused stores and smaller formats. One of its Las Vegas locations, opened in August 2018, is half the size of a typical store but maintains a full footwear and accessories assortment. It transports customers to the sales floor through a video tunnel and features tablet ordering and automated product retrieval. "It’s essentially a giant shoe vending machine," stated CEO Roger Rawlins, "inspired by the assembly line-style mechanisms that we use to move product around our actual warehouse."

Dollar General has also bet on smaller format stores with its introduction of DGX, a convenience concept putting urban millennials, the typical grab-and-goers, at the center of their growth plans. Additionally, the company is rolling out in-store technology which includes scan-and-go and payment app ‘DG GO!’. The app highlights a checkout feature which allows customers to track spending and has been popular with those who carefully track their budget.

Further emphasizing the importance of the app with today’s shoppers, big-box retailer Target has invested in its app functionality to respond to customer pain-points. It uses interactive maps for in-store navigation and offers relevant promotions to what customers are browsing in-store using beacon technology.

Leveraging social media
A strong online presence and rich content is not just reserved for mid-market or luxury retail, particularly at a time when there is no longer a stigma around wearing a Forever 21 outfit with a Longchamp bag. At over 16 million followers, Forever 21 has put the customer in the spotlight by encouraging them to submit photos of their looks and then promoting them on official social media accounts. The campaign was unique in that Forever 21 made the posts shoppable, something that allowed customers to feel valued and to engage with the brand. As Instagram trials the function that allows shoppers to buy products directly from influencers’ posts, social media is increasingly poised to be a pillar of multichannel marketing strategies.

Delivery
Target has partnered with fulfilment provider Shipt to offer same-day delivery for core product categories in order to compete with the likes of Amazon. Target has also launched the subscription service Target Beauty Box, a combination of beauty products at the affordable $7 price-point, as well as Harry’s, a shaving kit subscription.

Championing sustainability
Affordable fast fashion brands such as H&M and Pretty Little Thing understand that the Millennial and Gen Z customer is becoming more environmentally conscious. In response, H&M now accepts unwanted clothes by any brand and in any condition at their stores, which will then be reused, re-worn or recycled with 0% going to landfills. Pretty Little Thing has partnered with clothes recycling app Regain which also allows users to donate unwanted clothes at pick-up points for reuse.

Being competitive on price alone is no longer enough for value retailers. Innovative offers and more relevant value propositions for the target customer are crucial not only to grow, but to survive.

Dan Stolarski
Managing Director
Pragma Consulting