It’s a challenging time for retailers. Do
digitally native brands have an advantage?
MARC LORE: I think that digitally native
brands are the future. Having that direct connection to the customer is very important.
Millennial shoppers want to not only buy the
product but know where the product’s made,
the environmental position of the company,
the social impact that the company’s making.
And then when you look at the margin structure where you can sell to the entire country
from one location, it becomes really powerful
financially. You need to do two, three, four
hundred million-ish [in revenue], and then
you start to generate an incredible profit margin. The problem is it takes a lot of capital to
get [there] as a single branded retailer. Once
the venture community starts to appreciate
that it’s a lot of capital up front but then huge
upside, you’re going to see a lot more money
being pumped into that area.
KATE HUDSON: Connection is everything. If
you have both the online and the physical retail,
[it creates] a two to three times more valuable
ML: Yes, we’re finding at Walmart that when
people shop both online and in-store, they shop
twice as much. When we get people who shop
only in-store to shop online, they actually buy
more in the store after that.
Kate, Fabletics has an unusual model in that
it’s membership-based, right?
KH: You can purchase at retail prices, or you
can be part of the flexible membership VIP
program, which offers lower prices and exclusive products.
Your clothing is only available through
Fabletics—no third parties. Why?
KH : Well, for one thing, it’s working. We’ve had
21% growth each year. And because we’re tech-focused, we’re able to know what our customers
want and create less waste. We’re able to place
our stores strategically. If people are taking a
sports bra into the dressing room but not buying it, or buying it and returning it, we realize
that they like it, but it’s not fitting right, so we’re
able to fix it right away. Knowledge allows you
to take more risks. We can create things and go,
“Let’s just see what happens with this.”
How is your use of data evolving?
ML: Voice will be the next big way to leverage
data. It will enable people to communicate
either in their car or home or on their device
and shop in a conversational way with a robot
in the way that they would with a specialist on
the showroom floor of a retailer. That robot will
know you as well as your mom and dad.
You don’t want to have a robot in your store?
KH: It makes me kind of sad. But we roll with
M L : In 10 years, you’ll be able to put on a pair of
glasses and be immersed into experiences that
display products in their native environment.
So you can just put on the glasses and say, “I’m
interested in going camping” and be transported to a campsite and be able to walk the site.
They’re doing holograms now inside of VR that
are super real. The quality of the imagery and
the experience would blow people’s minds. The
bandwidth isn’t there to commercialize it yet,
but in 10 years it’s going to change how people
shop. It’s going to completely change the game.
So we’ll go into Fabletics and put on our
KH: Yeah, I will be the hologram.
This vision is expensive to build. Does that
give larger incumbents like Walmart an
ML: Walmart wouldn’t be building the hardware. There are plenty of companies out there
building the hardware, and we’re thinking
about where the hardware is going to be in 5
or 10 years that intersects with the software.
We are about merchandising and creating
immersive shopping experiences. To date,
you’ve had to do it in very fixed and rigid ways
in a brick-and-mortar store, but in the future,
you’ll be able to create these really immersive,
dynamic, interactive shopping experiences
that are personalized to the individual. And it
won’t be that expensive because you’ll be able
to leverage the software across millions or tens
of millions of users.
KH: We’re in the business of wanting to please
our customer and know them. That’s how
we create loyalty. But you also want to excite
them and bring them things they haven’t
ML: We’ve got a lot of work to do on Walmart
.com with the basic experience, just making
sure you can find the product, the information’s
there, it’s priced right, and it’s delivered with a
great experience. I spend most of my time on
this kind of stuff, building the foundation. At
the same time, I’m focused on Store 8, which is
an incubator looking at the future of retail, like
As e-commerce continues
to show double-digit
year-over-year growth in
U.S. retail market, two
notable figures in the
space— Jet.com cofounder
and Walmart e-commerce
CEO Marc Lore and
Fabletics cofounder Kate
Fast Company’s Robert
Safian why being a
digitally native company
offers a leg up.