"Digitally-built brands" have the potential to disrupt the online and offline retail sectors by taking control of the entire customer experience, the chief executive of Bonobos, the apparel group, has argued.
Andy Dunn, the ceo/co-founder/chairman of Bonobos, discussed the evolution of the retail category at a recent conference. One major shift, he suggested, is how operators with digital roots are now changing the game.
"The future is not only digital, but it is digitally-built brands," he said. (For more, including details of the other trends outlined by Dunn, read Warc's exclusive report: Three trends reshaping retail: insights from Bonobos.)
"And it is going to be a massive disruption to traditionally-built brands, and it's going to be a massive disruption to traditionally-built, third-party branded sellers."
Drilling down further into this proposition, he predicted that more online companies will become merchants, designers and "vertically-integrated firms" all in one – repeating a pattern previously seen in physical retail.
"We had seen this movie before," said Dunn. "Third-party branded selling moves to vertically-integrated selling in the same way that it did in the offline world."
As a demonstration, he pointed to chains like Gap, which in the 1980s kickstarted a transformation in retail by making clothes and selling them in its stores, giving it complete control over the customer experience.
This form of "vertical integration" also gave rise to fast-fashion experts Zara, Uniqlo and H&M, as well as furniture groups IKEA and West Elm, and Trader Joe's in the grocery sector.
"It occurred to me that the same thing that happened in brick-and-mortar retail was going to happen on the internet," Dunn said.
Zappos served as a forerunner of this shift in the digital arena by building a service-led online business for shoes, and has since been joined by players like eyewear specialist Warby Parker and male-grooming brand Harry's.
The success of these companies, Dunn maintained, helps support his views about the potential impact of digital-first enterprises.
"I feel more confident in this, because I see it happening," he said. "Everywhere I look … people are building brands with digital at the core. So I think this is the future."