How Swedish Brands Are (Re)Shaping the Future of Retail

In the past, companies like Ikea and H&M have reshaped their respective fields in retail with vertical integration and radically altering customer expectations. Now we are in the midst of yet another retail revolution, this time a shift from first-generation e-commerce to newer mobile technologies in the home and in stores, along with a blurring of boundaries between different channels. Naturally Swedish companies are once again breaking new ground.

Sweden has long been at the forefront of retail: The first Swedish retail revolution is best represented by H&M and Ikea, both international giants in their fields, that trade on the democratic idea of good design for a broad range of tastes—good products at a good price point. Now Sweden finds itself at the forefront of reshaping retail yet again, this time with new technologies.

There is Tictail, which is bringing together up-and-coming small-scale designers with customers; There is Absolut Art, which does something similar for the mid-range art market; there is Spotify, which has completely changed the way we consume music by offering an alternative to the iTunes model; Finally there are companies like Klarna, which are changing the ways we pay and get paid when we shop online.

The most obvious change to our retail habits in the past decade or two is of course the shift to online stores and modes of payment. Mobile technology catalyzed a perhaps equally profound shift that is still underway. More recently, the lines between online and offline have begun to blur with the IOT (Internet Of Things): Dash buttons and intelligent personal assistants such as Amazon’s Echo and Alexa, and Google Home, bring stores into our home. On the flip side, companies such as Ikea and H&M are bringing AR (Augmented Reality) and other technologies into their stores; Ikea lets you ”try out” furniture in your home with their Ikea Place app and H&M solves one of the major brick-and-mortar disadvantages by letting customers scan and buy items via their mobile app, if they are not able to find their size in-store.

Then there is Amazon’s deal with Ikea in Sweden in anticipation of the online company’s launch there. What exactly this collaboration will look like at Ikea remains to be seen, but Ikea furniture is already on sale via Amazon, a historic departure for the furniture giant that has previously only used its own sales channels. A harbinger of things to come may be Amazon’s acquisition of Whole Foods Market, which provides the online giant with physical outlets, at Whole Foods this so far means special discounts for Amazon Prime members, staffed Amazon pop-up stores, as well as Amazon tech merchandize such as Echo and Kindle on sale in the Whole Foods aisles.

Another blurring of lines is that between online retail and social media. Tictail bills itself as the ”Tumblr of retail.” Amazon launched Spark, its social function, this past summer, and then there is the way social media seems predisposed to off-label retail uses. One example of the latter is the thriving market for second-hand designer clothes on Instagram. Big retailers have picked up on this too. For instance H&M North America encourages purchases with a tap-and-buy option via their Instagram page.

”We want to make things as omni-channel as possible, so that there is no feeling of difference between our physical stores and our online store. The two complement each other and make it so that no matter where you are in the United States you have access to all that we offer,” says Daniel Kulle, President of H&M North America.

Mobile technology has brought an expectation of instant gratification to all aspects of our lives, not least retail. Mobile also makes it easy for customers to comparison shop, which creates incentive for retailers to give their customers the easiest possible access to online shopping in-store, lest they miss out on a sales opportunity due to pricing or not having an item in stock.

”We are seeing a lot more interactive experiences in-store like smart mirrors, interactive screens, and iPads. These are all opportunities for retailers to create a more tailored and individual experience for the in-store shopper, while also giving shoppers the chance to see an even larger amount of stock and styles and buy directly online without even trying on. I anticipate this will continue to grow, especially with the amount of data we are seeing on shoppers browsing online prices simultaneously while in-store,” says Carl Waldencranz, CEO and Co-Founder of Tictail.

 

”We take inspiration from all over the world and look to various places like music festivals, street style, social media and vintage fairs when we design our upcoming collections.”
– Daniel Kulle

 

As for the future of the physical stores, they are increasingly becoming about an immersion in a brand experience that is harder to achieve online. From various traditional flagship stores in SoHo like Acne, Stutterheim, and Fjällräven; to Tictail’s East Village storefront location, shoppers can congregate, touch, try on, and share photos from their visit, completing the online-offline feedback loop. H&M too is beginning to offer more than just clothes at their stores, the launch of their new brand Arket, brings stores with a curated selection of clothes, lifestyle items for the home, but also a place to grab coffee and a sandwich.

”More and more, we are seeing how retailers use their stores to create an environment where customers want to stay for a longer time. Fashion stores with built in cafés or hang-out spaces—experiences that can be talked about and shared, and that doesn’t necessarily focus on sales,” says Waldencranz.

Is there a common denominator among these Swedish retail pioneers that help them succeed internationally? H&M was one of the first affordable European fashion brands to enter the United States when it launched here in 2000, paving the way for others such as TopShop and Zara, and changed American consumer habits when it comes to fashion. Part of the secret to H&M’s success was their groundbreaking vertical integration, which enables them to get the newest fashions into the stores in record time. ”We take inspiration from all over the world and look to various places like music festivals, street style, social media, and vintage fairs when we design our upcoming collections. We have an extremely efficient logistics system which is how we can cut down on lead times and deliver the latest items to the stores almost every single day,” says Kulle. Ikea of course is similarly vertically integrated and they too scoop up some of the most talented young Swedish designers to ensure attractive furniture at a competitive price point.

If there is a common thread here it is probably a—perhaps characteristically—Swedish enthusiasm for change and innovation. As Johan Jörgensen, Chairman at FundedByMe.com, said at the Chamber’s Sustainology Summit earlier this fall, ”Swedes are change-minded to the point of the absurd,” which may bring its own set of issues, but also a certain boldness when it comes to trying out new ways of operating that makes for the occasional sector-revolutionizing innovation.

Which current hot new innovations that will be a flash in the pan and which will be the Ikea or H&M of tomorrow is not always apparent in the moment, though it is safe to say that as we are going through what is probably the biggest change to consumer culture since the advent of mass-market production, new Swedish companies are at the forefront of this change and older Swedish companies are right there by their side.

 

Daniel Kulle
President,
H&M North America

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