MULTICHANNEL SALES   |   5 minute read

The rise of digital-born, micro-brand retail companies

The way products are distributed and how they are sold by retailers has been largely unchallenged for many decades, which has left a handful of big players to dominate most industries. But, with the rise of digital-born, micro-brand retail companies, it’s becoming clear that the traditional way of doing business is beginning to face serious disruption.

It’s important to understand how changes in demographics, technology, and community are driving these seismic shifts in the retail market. These shifts are being felt across all retail categories, though certain industries, such as the beauty and cosmetics, books, and entertainment industries, are being impacted more than others, largely due to their nature as “discretionary spending” categories.

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Shifting demographics: The rise of millennials

The impact of millennial buyers is one of the greatest drivers of change in the retail industry. Millennials account for an increasing portion of the marketplace—a 2017 Deloitte study estimates they will represent about 30% of total global retail sales by 2020. And their digital-first attitude is influencing the buying habits of other demographics, too.


The parents and grandparents of millennials are following their digital-first lead. In fact, a KPMG report found that Gen Xers made an average of 18.6 online purchases (per year, per person), compared to the 15.6 online purchases made by millennials. Even Baby Boomers made an average of 15.1 online purchases in 2017.

Millennials are also taking over in the B2B space. A 2014 Google Consumer Insights Report found that 46% of B2B buyers are millennials—and that figure is steadily growing.

What’s more, millennials are more likely to engage with the latest technology tools during their buying journey. Many are using augmented reality apps to virtually try on clothing, makeup and even eyeglasses before deciding on a final purchase.

New technology: From bricks to clicks

More and more people are researching and purchasing new brands and products online. Even luxury brands, which have traditionally been insulated from changing buying habits, expect to see 40% of their sales move online by 2020.driving-digital-transformation-retail-industry-directory-thumbnails

Traditional marketing channels, such as magazine spreads and television ads, are being supplemented, or even replaced, by digital marketing channels including social media marketing and social influencers. In fact, the Instagram influencer market is already a billion-dollar industry, and Media Kix expects it to grow to $2.38 billion in 2019. That growth is especially exciting, considering a 2018 McKinsey study found that millennials are three times more likely than Baby Boomers to say they learn about new products or brands from social media.

Community matters: Finding trust online

Today’s millennials—your current and future buyers—aren’t as trusting of traditional media outlets as previous generations. A 2015 survey by Harvard University’s Institute of Politics found that 88% of millennials say they only “sometimes” or “never” trust the media. When it comes to their purchasing decisions, this generation is turning to social influencers to inform their buying decisions.

Millennials are seeking out people they can relate to online, and are holding the opinions of their online communities in high regard. A 2018 Fullscreen report found 37% of millennials said they’re more likely to trust a brand after seeing an influencer post about it.


What this means for your business

The traditional ways of doing business are under threat and consumers’ shifting behaviors might seem alarming, but they actually present an exciting opportunity. By diversifying your retail channels, embracing digital tools and analytics, and building a loyal community, brands can counter the negative effects of changing demographics, technology, and consumer behaviors—while maximizing the upside of this shift.

All it takes is a digital mindset to simplify traditionally manual processes. These tools are available to businesses of every size—it’s up to you to fearlessly transform your business into one that embraces automation and growth through digital transformation.

Your digital transformation starts with the right technology stack.

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