Why fashion retailers need to think more like TikTok than Topshop
Topshop founder Ralph Halpern's recent death triggered nostalgic memories of the retail brand's staggering early success. Within two years of bursting onto the dowdy UK high street, TopShop generated £1 million in profit, ultimately attracting partnerships with Kate Moss and Beyonce. But failure to invest in digital retail channels and a non-agile supply chain saw its market share cannibalised by young upstarts like Boohoo.
An inability to get ahead of the curve explains why we now see such huge attrition rates on the high street. With the rise of social commerce and embedded finance, retail brands no longer have the luxury of busking their way towards a solution.
One way retailers can survive is to embrace the agile and disruptive mindset that drives tech companies like TikTok. With 142% YoY revenue growth and a predicted 1.8 billion monthly audience by the close of 2022, TikTok is one of the biggest success stories of the social age. The video platform's prized algorithm means it is now as much a shopping destination as a source of viral entertainment – with its seamless overlap between tech, content and commerce creating a masterclass for retailers at large.
As the app heads towards a “next chapter of commerce” with a series of new community-driven shopping experiences, here’s what retail players can take away from TikTok’s data-driven, fun and inherently usable playbook.
- Launch intelligent inventory:
On the surface, TikTok is just another video-sharing/entertainment platform. It entered an already crowded video space, but because it's primarily an AI/machine learning business, it was able to make its inventory intelligent.
TikTok’s “organic discoverability” is a key facet of its success, with 49% of its users (over 490 million people) discovering something new on the app each month, over 1.7x higher than other social platforms. Pushing these figures is an exceptional recommendation system that deploys data such as user interactions, or whether a user watches a video from start to finish, to create a highly tailored "For You" feed serving content based on what a particular person likes, watches and shares.
While the sheer volume of data being used has landed TikTok in trouble, retail brands nevertheless have a lot to learn from its approach. With 63% of smartphone users more likely to purchase from sites with relevant product recommendations and 49% of consumers buying something they did not intend after receiving a personalised product recommendation, intelligent inventory is e-commerce’s most lucrative currency.
This includes making sense of all the metadata around inventory, along with customer data, to optimise navigation, search, new product designs and recommendations. Newly personalised shopping experience Freestyle is a pioneer in this regard, using plentiful data from its parent company StitchFix to create looks from various brands based on a person’s style, body shape and budget. Rapidly growing Chinese retailer Shein, meanwhile, is putting data ahead of branding to iterate designs quickly based on customer feedback.
- Follow the eyeballs:
TikTok has always been governed by its ability to engage with audiences wherever they choose to be, with the launch of features including Share To TikTok, TikTok Jump, and most recently, a mobile gaming pilot, enabling integration with third-party apps and services.
Similarly, the huge popularity of online marketplaces further proves that brand-agnostic shoppers are searching for products when and where they want and at a price that suits them. In contrast to yesterday’s carefully controlled brand approach, retailers must diversify their strategies in line with this on-demand consumer mindset.
Trailblazers to watch here include the beauty brand bareMinerals, which has seen a 40%+ share of new customers from immersive experiences such as live stream events, influencer tutorials and virtual try-ons. "Ultimately, our goal is just to try and meet the consumer wherever they are at that moment," says e-commerce VP Whitney Goldman. "Convenience and optionality are always going to be top of mind."
Eyes should also be on clothing label Reformation, which recently unveiled “magic wardrobes” that augment the brand’s “optimal” omnichannel experience. Elsewhere, luxury department chain Nordstrom is delivering healthy profits amid a marked increase in next-day and affiliated in-store pickups, where customers “spend three and a half times more” than those who shop exclusively in Nordstrom’s stores.
- Share your shop front:
To follow the eyeballs and be where consumers are, retailers need to be prepared to share their shop front: in other words, to open up their inventory to any business that has the opportunity to sell it.
From a technology standpoint, this involves platforming their business and embracing sharing technology such as open source and APIs. Again, TikTok is a good example here: the platform provides tools for developerswhich make it easy to share content from their own channels to TikTok and vice versa, spreading the brand's benefits. The likes of Next and Ocado are in the vanguard of this paradigm shift.
- The entertainment factor:
Just as TikTok is an entertainment platform, retail brands in the fast-growing experience economy need storytelling as a central pillar of engagement. Partly, this is about emotional resonance, as demonstrated by TikTok’s Made By Mitchell. The British make-up artist’s inclusive, authentic videos feel like “chatting with a friend”, driving hundreds of thousands of likes alongside viral product sales.
Online retail channels should also be highly compelling and topical, in the vein of Asos’ smash-hit "Outfits Inspired in Phoebe Buffay" TikTok or GoPro's compulsively watchable GoPro Awards for user-generated content on YouTube.
A blueprint for the future
High street retailers have a track record of struggling to keep pace with tech trends.
In 1999, a year before M&S started accepting credit cards for the first time, Amazon was already shipping 20 million items to 150 countries worldwide. The pattern has repeated with retailers slow to grasp omnichannel, mobile payments and the role of AI in supply chains.
A tech-first mentality – covering everything from intelligent inventory to open APIs, omnichannel partnerships, interactive content and experiential events – is critical to giving consumers exactly what they want, where and when they want it.
Main image: Models on the catwalk at the Labrum London show at London Fashion Week September 2021 held at the TikTok Space.
Leon Gauhman is Founder & Chief Product and Strategy Officer of digital product consultancy Elsewhen.