Retail disruption: How STORY changes everything
An inside look at how New York’s STORY is turning the traditional brick-and-mortar paradigm on its head.
Kim Rescigno | November 19, 2015
Brick-and-mortar stores must come up with a way to attract customers and wallet share against the variety and convenience of online retailers or omnichannel giants. Millennial customers, in particular, represent a finicky yet lucrative customer base that wields an estimated $200 billion in annual buying power. These digital-savvy customers have high expectations of value and service, but also enjoy an element of fun and surprise.
A few of us from Slalom New York’s retail team paid a visit to STORY, a groundbreaking retail concept in Manhattan that completely reinvents itself every 4–8 weeks. As described on the retailer’s website, STORY “takes the point of view of a magazine, changes like a gallery, and sells things like a store.” We jumped at the chance to visit this store that was shaking up the brick-and-mortar paradigm. Was this the future of retail?
Some of the themes that STORY has explored include New York, wellness, and love. Over 90% of the inventory is completely new for each story and curated based on its connection to the theme. During Wellness STORY, for example, customers could purchase gourmet loose teas; during Made in America STORY, they could find nautically inspired dog leashes.
STORY’s constant reinvention and eclectic collections keep customers coming back for more. The rapid and drastic change-ups have seemed to capture the curiosity of customers and accolades from the industry at large, garnering recognition for STORY founder Rachel Shechtman from the likes of The New York Times, Fast Company, and Fortune.
At the time of our store visit, the theme was Donald STORY!, based on creative director and illustrator Donald Robertson. Donald STORY! was the first in-store theme that revolved around a person, as well as the first to feature cobranded products. Indeed, it seemed that the nature of Robertson’s illustrations were easily translated into cobranded opportunities, with items ranging from cell phone cases with Robertson’s signature lip motif to a Rolex watch decorated with Mitford the Giraffe. Though actual store sales were not shared with us, we learned that a small batch of the cobranded products sold out completely when made available on a manufacturer’s website.
A section of the store dedicated to Robertson’s character Mitford, a fashion mogul who happens to be a giraffe.
STORY has been able to grow (and profit from) its atypical rolling theme by adopting some of the following business practices:
- Inventory purchased on consignment: This is a trade agreement where the supplier provides goods to a retailer and still owns those good until the retailer sells them to the end customer. After a period of time, the supplier will take back the unsold inventory. This arrangement seems to be expected for a business that changes what it sells every couple of months and allows STORY to take on less risk.
- Reliance on major sponsorships for each theme: After hearing about STORY’s groundbreaking concept, big-name brands came running to be a part of the movement. Major partners are key to the success of STORY, offering sponsorship dollars and sometimes installations to past and future stories. For example, Style.Tech STORY was sponsored by Intel, and Cool STORY featured an energy-efficient “smart” air conditioner backed by General Electric. Whether it’s a luxury watchmaker or a mattress manufacturer, brands of all kinds are lining up to get in on the action (in fact, future stories are already planned for around a year out).
- Experimenting with cobranded products: Donald STORY! was the first story to introduce cobranded products with the STORY brand. Some examples include S’well water bottles, special Coca-Cola glass bottles, and Smashbox cosmetics. As STORY itself becomes more of the actual story, we would expect these types of products will continue to increase in popularity.
Customers can create their own blend of lipgloss using Smashbox pigments for a custom product and experience.
- Something for everyone: Even though STORY reinvents itself with each theme, there are still traditional categories (e.g., women, men, baby, and pet) to guide the consumer’s shopping experience. There's even a New York corner that seems to remain fairly consistent for tourists, which often showcases items from local artisans.
So is this trend of hyper-change and constant reinvention really the wave of the future? (Because frankly, it sounds exhausting.) Luckily, retailers can take a page from STORY and use a hybrid approach to attract and hold the attention of millennials.
Larger, more established brands can consider smaller pop-up store concepts to increase spontaneity and excite shoppers while still representing the original core brand. These smaller format, temporary stores often deliver convenience and fast fulfillment, critical to the millennial shopper. Store-within-a-store concepts allow retailers to have the perception of a diverse and exciting product mix by simply renting out prime retail space to in-demand manufacturers. Additionally, customer analytics and segmentation can help a retailer understand the demographic and psychographic makeup of its core customers to make more informed marketing and merchandising decisions.
Kimberly Rescigno is an analytics consultant in Slalom’s New York Information Management & Analytics practice. She is co-lead of the retail industry community for the New York market and is passionate about enabling data-driven decision making for luxury brands. Follow Kim on Twitter: @AnalyticsKim.