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What Do Nike, Patagonia and Costco Have in Common? Purposeful Positioning

As e-commerce giants increasingly dominate the Covid era’s digital-centric retail environment, brands can no longer rely on price or convenience to compete.

During a keynote address at the Sourcing Journal Summit 2020, R/Evolution: Overhauling Fashion’s Outmoded Supply Chain on Oct. 14, Retail Prophet founder and futurist Doug Stephens challenged retailers to branch out from traditional positioning strategies to flourish in the face of companies such as Amazon and Alibaba.

Per Stephens, mega marketplaces have morphed from retailers’ competitors into “apex predators” whose only competition is their peers. Beyond dominating in selling goods, they are branching out into other revenue streams with ventures in education, healthcare and financial services, making consumers even more reliant upon them. Some large national retailers such as Target and Kroger are taking on the pure-play e-tailers with marketplaces of their own. But while smaller retailers might not be able to go head-to-head with apex predators, they can still be successful.

According to the futurist, brands should focus first on their purpose, or what specific consumer demand they meet, to draw shoppers to their products and stores over others.

“Purpose is the new positioning,” Stephens said. “If your brand is an answer to something, what’s the question?”

If companies don’t already understand who their best customers are and what makes them tick, they should start there. Stephens also suggested engaging shoppers in a dialogue, listening to what their needs actually are.

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There are four axes on which companies can compete: culture, entertainment, expertise or product. Rather than trying to excel at all four, brands should focus on one main differentiator, and then complement it with additional activities in two other areas.

With these competitive advantages in mind, Retail Prophet identified 10 archetypes that can perform well under this pressure from apex predators.

For instance, Nike is an example of a “storyteller brand” since it aligns its products with tales of perseverance and justice to inspire shoppers.

Meanwhile, Patagonia offers shoppers a chance to connect over shared values. The “activist brand” pledges a portion of proceeds to conservation causes, offers services to repair consumers’ goods and pays employees’ bail if they were arrested while protesting for the environment.

Passion also comes into play for “oracle brands” like Hodinkee. The watch blog has translated its expertise into a trusted e-commerce destination for timepiece enthusiasts.

“Clairvoyant brands” anticipate consumers’ needs by using technology such as artificial intelligence, while “engineer brands” such as Away and Tesla put the focus on product design. “Tastemaker brands” like Neighborhood Goods also take a product-centric positioning strategy by creatively curating assortments.

“Gatekeeper brands” hold a dominating position in their category. An example is Luxottica, which has a 40 to 60 percent share of the eyewear market. While gatekeepers command a competitive advantage, they are at risk of disruptions from “renegade brands.” In eyewear, startup Warby Parker arrived with a direct-to-consumer approach that offered consumers an alternative to traditional optical retail.

Service can also be a differentiating factor. For instance, Nordstrom is a “concierge brand” due to its high-touch help. Costco also fits the mold because its stores are designed for consumers’ ease, allowing them to find what they are looking for without needing assistance from a sales associate.

Experience is another potential positioning platform. As an “artist brand,” toy store Camp takes this to a greater extent by hosting family-friendly theatrical performances. Only a quarter of Camp’s revenues actually come from toy sales.

Even if a brand doesn’t want to follow Camp’s entertainment-first approach, brick-and-mortar experiences are a key weapon in traditional retail’s arsenal. Beyond the opportunity for engagement, physical stores have a positive effect on local e-commerce, lifting online sales in the market between 27 and 35 percent. While brick-and-mortar has been somewhat limited during Covid-19, Stephens foresees a “hunger” for physical retail once consumers feel safe again.

The rise of e-commerce and endless aisle innovations are enabling stores to operate with less physical inventory. But rather than revamping store fleets and shrinking square footage, Stephens made the case for maintaining larger sales floors to do more than sell.

“Don’t make the store smaller,” Stephens said. “Make the experience larger. As you require fewer products in the physical space, replace those products with opportunities for experiences.”

Stephens advised retailers to make their stores “clickable,” creating chances for consumers to interact and find out more information. This connectivity also serves as a data gathering tool for the retailer. As long as customers are receiving a valuable experience in exchange for their information, they are willing to share their data.

The physical stores can also feed content to the online channels, such as live-streamed events. As the store becomes a media channel, so too should media channels become stores. Consumers today expect everything to be shoppable, whether it is a social media post or an advertisement.

“What we want to try to create is a media ecosystem where all of these opportunities for buying are presented to consumers, but not through advertising, through incredibly dynamic, well designed, and engaging content,” Stephens said.

All the sessions from this year’s Sourcing Journal Summit, R/Evolution, are available on-demand for the first time. Follow this link for more information.