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Creating the Right Experience Key to Engaging Customers

Whether we’re facing a near-term recession or not, U.S. retail sales for department stores have been on the decline and apparel traffic seems to be fading, too.

So if consumers aren’t spending as much on apparel, where are those discretionary dollars going?

According to Walter Loeb, former retail analyst and now consultant, consumers are still very much focused on experiences “whether on a vacation or even at their local retail store,” he said.

Experience has become a huge component of what consumers perceive as value in a purchase. That means a brand can garner loyalists because of a community-based activity, as Lululemon did with yoga, or a brand can resonate with consumers because its sustainability profile attracts shoppers who want the experience of playing a role in bettering the environment.

As such, newer businesses are making experience a key ingredient in their DNA, and investors are taking note.


Investment banking boutique firm Consensus Advisors on Wednesday hosted its 9th Annual Great Brands Show, which brings forward-thinking companies, like 10Tree, together.

Co-founded by Kalen Emsley, the Canadian outdoor lifestyle and apparel brand is focused on sustainable and ethically made clothing. The product range for apparel includes pants, T-shirts, jackets and a backpack made from algae and recycled bottles. 10Tree uses sustainable fabrics for its products, focusing on Tencel, recycled polyester, organic cotton and hemp, with eco-friendly trims ranging from cork to coconut.

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Most consumers, according to Emsley, think being an environmentalist means an “all or nothing” approach. For 10Tree, the idea of planting 10 trees for each apparel purchase represents a tangible give-back to society in “small, meaningful actions.”

Brand loyalists get outdoors, become engaged in nature, and help reduce emissions by supporting the environment with their purchases, the 10Tree co-founder said.

When an apparel purchase is made, the consumer can scan the code that’s attached to the item to find out where the trees are planted. Storytelling is a key component of the experience 10Tree provides consumers. When the company included the Golden Spruce–a revered mutant Sitka spruce tree in British Columbia that was the subject of an act of ecoterrorism–as an arc in a storytelling capsule, Emsley said the collection sold out in 24 hours.

So far, 10Tree has planted more than 35 million trees globally, and its goal is to plant upward of 150 million over the next few years, fueling that growth by opening retail doors and expanding its e-commerce offering.

10Tree’s first retail flagship will open in 2020, with two more to follow in 2021. On the direct-to-consumer side, the e-commerce business represents 56 percent of total sales, up from 25 percent three years ago, and that number is expected to grow by more than 50 percent on an annual basis. Physical stores will become a more meaningful component of the business over time, and the company will also retain its wholesale business.


StockX is another company breathing new life into the experience of acquiring in-demand sneakers.

At the Evolving E Summit on Tuesday, co-hosted by GGV Capital and Max Ventures, StockX CEO Scott Cutler, said the experience at StockX is about “interacting with our customers in a stock market [type of format] where there is a bid, ask, buy and sell all in real time.”

While the company, started by co-founder and former CEO Josh Luber, was founded as a marketplace for sneakerheads, it has since expanded into streetwear, watches, handbags and other collectibles, with baseball cards and art next on the horizon, Luber shared at the WWD Digital Forum. The offerings are highly sought-after status items collectibles that many consumers buy and keep as investments. The company, which bills itself as the “stock market of things,” is now valued at $1 billion following its Series C funding round earlier this year.

Cutler believes StockX has “created the platform that revolutionizes the next wave of commerce.”

The company has a team that authenticates items before a transaction can be completed, which helps provide trust in its marketplace platform. And while it serves as a way to resell product, Cutler said StockX garners consumer receptivity because the model builds in an element of discovery, which keeps things interesting. StockX also creates excitement for new releases through “initial public offerings” of product for trading, like the IPO for a pair of slides in collaboration with rapper Ben Bolich.

“More and more brands, as their distribution channel is disrupted, come and release product on our platform,” Cutler said, adding that there are three “big IPOs” coming up. Luber alluded to “a half dozen scheduled for the next six months, including two with two of the larger sneaker companies.”

New for StockX is its presence in Europe, where the focus is on local selling. The European buyer can now buy in the region and avoid paying for shipping costs for items sent from the U.S. Beyond Europe, the platform has been “growing rapidly in Asia,” according to Cutler.

Traditional models of retail simply aren’t working for many modern consumers, particularly when it comes to how price is determined, according to Cutler.

“Stores no longer can dictate [price],” he said. “Consumers are now telling stores what price they are willing to pay.”

The retail environment today

A quick survey of retail sales data suggests most retailers aren’t moving fast enough when it comes to innovating the store and shopping experience.

According to a recent Cowen & Company report, apparel traffic for the fourth week of September saw total U.S. retail traffic decline 4.3 percent year-over-year versus a 1.9 percent decrease a week ago. On a two-year basis, the fourth-week traffic decrease was 6.9 percent versus 4.4 percent in the prior week. Apparel traffic saw a higher decline, down 6.5 percent year-over-year versus down 2.4 percent a week ago. The Cowen retail team is forecasting a 4 percent to 5 percent decline for week five in September, compared with down 0.3 percent in the year-ago period.

Citing data from RetailNext, Cowen said August traffic deteriorated sequentially to down 4.7 percent from down 3.8 percent in July.

As for retail sales in general, the August U.S. retail sales report rose 0.4 percent from July’s revised numbers. Excluding automobile dealers, gasoline stations and restaurants, retail trade sales rose 0.4 percent from July and were up 4.6 percent year-over-year. And while apparel and accessories store sales rose 2.3 percent year-over-year, the category saw sales slip 0.9 percent on a seasonally adjusted basis. On a year-over year basis, furniture and home furnishing stores dipped 0.1 percent, while electronics and appliance stores fell 2.9 percent. The biggest losers were department stores, which fell 4.8 percent.