Are Algorithms The New Brand In A Consumer-First Economy?

Reading Time: 4 minutes

Let us tell you a story of a shopper from the eighties. She would have been the first of her generation to buy clothes from a mall. Indeed, it didn’t matter which mall it was, or if it had a food court, or if it was trendy enough to be seen there by other people. The first shopping malls were developed as places for thrift shopping.

Cut to today, every mall is about branding. Everyone wants to tell a story. From VR’s Black Box concept to more traditional malls adding experiences to their ambiance, the story has changed. Why? The focus on the individual’s experience, of course.

This is not a story about retail, although it does track the history of retail in places. This is not a story of shopping vs. buying vs. brand preference. This is a story of how the individual finally came to be the centerpiece of the shopping experience. Enter, then, into the Wonderland of predictive analytics, AI and vast amounts of data that know enough about your style and personal preference to give your stylist a run for their money.

Why are we writing this story now? A series of tweet conversations on twitter set off a TweetStorm of sorts, which made us think about what it means to be a fashion retailer today. You can read the full thread, where she talks about emerging trends in fashion retail, especially in the context of the individual shopper. Join the conversation here.

Li Jin, partner at famed Venture Capital company, Andreessen Horowitz laid this out wonderfully as she spoke about the algorithm as the new brand.

Is Branding Even Relevant Anymore?

Would you buy SuperDry sneakers or Hunkemöller lingerie if they didn’t do what they were supposed to do? In other words, have we finally reached the era of function over fashion? Observations do indicate that that is indeed the case. Seen the shrinking size of the golden Zara emblazoned on your t-shirt, recently?

This isn’t to say that brands are done for. Instead, a brand today is built not by looking authoritative but by building authority through performance, through the technology platforms it chooses to distribute its products on.

Soon Enough, The Power To Influence Shifted Away From The Brand.

The first inkling of a shift towards individual preferences came with the introduction of social channels and the shopper’s influence through those channels. Retailers began to curate and design their online stores to mimic personalized experiences. The ‘Recommended For You’ widget is one such feature that is ubiquitous on every e-commerce site today. This feature depends heavily on algorithms that study the product you’re currently browsing and those you showed interest in historically, recommending similar categories, brands and more.

One reason why this feature is a hit with merchants is because it allows them to curate highly relevant products, thus making the likelihood of sale higher. When layered with image recognition algorithms, features such as these deliver personalization at a much more granular level, understanding each and every shopper’s visual style preferences like style of the dress, color, pattern and more.

Fashion was one of the first industries to wake up to the idea of individuals, perhaps because clothes are built with an individual in mind. Lookbooks are already ruling fashion retail, because of the way these perceived applications make people feel. A lookbook is a set of photographs displaying a fashion designer’s new collection, assembled for marketing purposes. For example, Mango’s lookbook takes the theme of the collection, such as animal prints, and creates a story of an experience around each piece. With the advent of personalized shopping, lookbooks can go even further. While these have been all the rage on social channels like Instagram and Snapchat, retailers are just beginning to catch up with these on their online stores. Imagine algorithms that allow you to click on a picture you see on an app and buy the look instantly!

Imagine seeing a lookbook customized to your tastes and preferences. As a customer, wouldn’t you just buy more, and again, from a brand that just gets you? If technology can help consumers feel that way, that’s a win-win situation for both the retailers and the consumer.

Bargain Hunters Still Exist

China, the world’s answer to manufacturing has a whole network of brands that sell cheaper versions of styles, for a fraction of the original’s price? Consignment retail and secondhand marketplaces are one of the fastest growing segments in retail.

ThredUp predicts resale industry growth to 34 billion dollars in 2022.

Post-recession, everyone’s looking for a bargain. The best way to give people what they want at a much cheaper price is to show them the cheaper offering that closely matches their choice. Today, with image recognition software, that is possible.

Understanding Cohorts And Designing For Patterns

Some shoppers do just fine with unbranded products, they’re value shoppers for whom price is a key player. Others want to cash in on trends without spending too much. A third group wants the experience of shopping, much-like the erstwhile window shopping. There are relentless bargain hunters, Lulu Lemon loyalists, the keto-athleisure cult and more!

The best way to cater to all of these customers is to take a holistic approach to personalizing for cohorts, their intent when on your site. Using multiple layers of personalization networks that crack the user’s cohort real-time can be a rewarding multi-channel growth loop. Encourage your e-commerce teams to tease apart brand, category, price, visual style preferences to personalize to each cohort real-time.

The ‘unbranding’ of retail brands does not spell certain doom, but instead opens up opportunities to cater to the needs of every customer segment. Companies that can do this through personalization, accurate suggestions and most importantly, a sense of knowing the customer, have a lot to gain from this trend. Take Lulu Lemon for instance, the company just beat sales expectations, making share prices soar today!

At the end of the day, as Li Jin says, we should all remember that we’re in the age of ‘Algorithms as the brand’. Are you ready to look at every single customer of yours? To really look, and give them what they want and be a mirror to who they are. Personalize!