Retail Lab: the diversification of Netflix
As Netflix expands in to retail, I take a look at why it’s worth the investment, what they want to achieve, and how it demonstrates the power of retail to build community and fuel spending.
Across industries, companies are diversifying; standing still no longer pays as customers expect companies they engage with to go above and beyond at every touchpoint.
Branded merchandise is nothing new, but as Netflix prepares to roll out two Netflix House locations in the US in 2025, this seems like a good time to take a closer look at why the streaming giant is looking to blend its core offering with real life experiences, dining, and especially retail.
Why is retail expansion worth the investment?
Netflix’s profit woes in recent years have been well-documented, and this move represents the start of a new era as it looks to create a multi-faceted destination that seamlessly blends entertainment, retail and dining with the trial of Netflix House, set to open in two US locations in 2025. With immersion and real-life experiences like themed dining and branded merchandise on offer, this project will enable the business to move beyond subscription fees and viewing times and capture the imagination of shoppers and audiences in real time.
This move in to retail in particular is the perfect example of going where the customer is and giving them what they want. Netflix.shop first opened in June 2021, but in recent months, it’s become a key focus for Netflix as they look to cater to the fans scouring the internet for non-official show-related merchandise.
💡 Takeaway: creating branded products is the perfect way to create a cult following, cultivate a community and build brand loyalty.
What does Netflix want to achieve with retail?
Branded merchandise isn’t a new concept; Disney has been selling character merchandise for decades, but Netflix is targeting adults with disposable income.
Here’s what Netflix is trying to achieve :
A merger of the digital and physical worlds to increase revenue;
Capitalise on the buzz of shows and trends to drive viewing figures;
Gain creative control over merchandise and promote the Netflix brand at every opportunity;
Move away from the reliance on subscription fees as the main revenue driver;
Build a community of loyal fans through branding so they feel they’re a part of the Netflix ecosystem;
Spread the word about Netflix and its best shows because branded merchandise can be a great conversation starter.
💡Takeaway: a fully-fledged retail arm has the potential to build community, spark spending and bring the digital world to life.
What opportunities are there for Netflix in retail?
Movie and show merchandise has always been a multi-billion dollar money-spinner. Some recent examples of successes include Harry Potter, Barbie, and Wicked, proving that the appetite for such products is ripe.
If Netflix plays its cards right, it could tap in to the branded merchandise market in a unique way because of the breadth of its shows and the largely adult audience it caters to.
Some of my ideas include:
Exclusive location-specific products;
Limited edition ranges to create a buzz;
Fancy dress costumes to capitalise on seasonal sales;
Using retail merchandise for PR and marketing;
Creating opportunities for personalisation;
Creating collectors items for their biggest hit shows like Bridgerton and Squid Game.
What can retailers learn from Netflix?
Innovation is a key part of retail, so gather customer feedback and always look to improve their experience.
The explosion of digital content and shopping has made real-life experiences matter more than ever; if customers want more, you must find a way to deliver it
Merging industries can be a clever way to innovate so always do the expected and add in a touch of the unexpected to get customers excited
Netflix House is being tested with pop ups; trials are always a good idea before going all-in on an investment
📌 Top takeaways
Let’s wrap things up
Netflix is capitalising on the trend for customers wanting to create and be a part of “cultural moments”.
Having Netflix-branded merchandise boosts marketing for shows and prevents unofficial products from capitalising on demand.
Netflix is tapping in to the emotional aspect of shopping, something Disney have perfected.
We’re reminded that storytelling and shopping are intrinsically linked. Other brands that do this well are Nike, Coca Cola, Apple, Mastercard.
Association sells merchandise.
People want their purchases to say something about them.
Immersion breeds loyalty.
The domino effect is real because the malls Netflix House open in will surely see an increase in footfall and sales
Want even more?
Here are some suggestions
This story in the LA Times is definitely worth a read
Here’s a link to the Netflix Shop