2016 Retail Report: New Year Trends

The digital revolution has had a profound effect on the sale and distribution of physical adult items, resulting in a long list of websites that specialize in selling sex toys and pleasure products online. But adult e-commerce has not eliminated the need for brick-and-mortar adult stores. In fact, brick-and-mortar retail and online retail are complementing one another where pleasure products are concerned. And as 2016 progresses, brick-and-mortar adult stores will continue to evolve.

Many brick-and-mortar adult retailers have been undergoing a transformation in recent years: instead of emphasizing adult DVD sales and catering to a predominantly male clientele, their new business model caters to couples and relies heavily on the sale of pleasure products. And according to David Keegan, general manager of Adam & Eve’s franchise division, brick-and-mortar stores will continue to move in a couples-friendly direction in 2016.

Stores are now much more soft-goods predominant in appearance and feel, with storefronts up to 80 percent dedicated to lingerie, bachelor/bachelorette games, educational material, lubes and lotions. —David Keegan, Adam & Eve

Keegan told XBIZ, “The trend in 2016 will be a continuance of the last couple of years: adult stores have been evolving and moving toward a store that is very couple/female-friendly for shopping. Adam & Eve was a leader in this movement. As the preeminent marketer of adult-oriented materials for close to 50 years, we saw the need to create a clean, safe, well-lit store staffed by knowledgeable customer advisors and consultants where consumers felt comfortable exploring their exotic needs and desires. Stores are now much more soft-goods predominant in appearance and feel, with storefronts up to 80 percent dedicated to lingerie, bachelor/bachelorette games, educational material, lubes and lotions. At the same time, stores are reducing the amount of hardcore novelty products and expanding with non-realistic pleasure products that are more attractive to today’s customer. Stores are selling the entire romantic experience, not just the end result. It is for this reason that Adam & Eve has attracted many operators to our system.”

These days, many brick-and-mortar adult stores are expanding their reach via e-commerce. For example, Passional (a BDSM-friendly store in Philadelphia that is known for its wide selection of fetish attire) is using its website to sell items to customers who might live hundreds or thousands of miles from Philly. Passional, founded by former professional dominatrix Kali D. Morgan in 1996, has expanded its customer base via its website. So has The Leather Man, a BDSM-oriented, gay-friendly brick-and-mortar store that has been in business in New York City’s West Village since 1965.

In 2016, Keegan expects many brick-and-mortar adult stores to continue building their online presence. “Another trend that is carrying over is stores are doing their own e-commerce,” Keegan explained. “With all the social media now available, stores are marketing the ability to buy products online. This enables them to reach far beyond their own market.”

Nenna Joiner, owner of Feelmore Adult Gallery in Oakland, Calif. and author of the book “Never Let the Odds Stop You,” said that for brick-and-mortar adult stores, she expects to see “less investment in celebrity-branded products” in 2016. Joiner told XBIZ: “You have ownership, staff and consumers that may call into question the business’ judgment and pressure the company to either take down or not take down products associated with a celebrity that falls out of favor. Even if the consumer base is one that is not as informed on the politics of the adult industry, staff may suggest owners remove products. What do you do with product that can no longer be returned to distributors or films that make it hard to cut out a performer without losing money on the entire project?”

In 2016, Joiner predicted, some brick-and-mortar adult retailers will refrain from opening too many new outlets in order to avoid being perceived as overly corporate. “Opening too many locations may increase the perception of a big-box retailer, which local communities associate with being in poor taste even if you are a boutique-size retailer,” Joiner asserted. “Having multiple locations can be strategic, yet I think there is a point as well that it turns gaudy.”

Megan Swartz, general manager and buyer for Déjà Vu Love Boutique, noted that as brick-and-mortar adult stores continue to evolve in 2016, an emphasis on sexual health will be one of their top priorities. This year, Swartz told XBIZ, brick-and-mortar stores will “need to continue staff education through programs offered on sexual health and well-being.”

According to Swartz, the brick-and-mortar adult stores of 2016 also “need to improve merchandising tactics in order to present upscale adult retail, which is moving away from the seedy, dark feel and leaning more toward the boutique appeal.” And with that boutique-style environment, Swartz said, comes “the need to tailor stores to entertainers and young adults, embracing the trend of decreasing taboos surrounding these products and (showing) that they are fun and not simply for the older consumer.”

Adult stores, Swartz asserted, must also “liquidate lower quality stock in order to devote adequate space and displays for high-end products, which are increasing in popularity and crossing into the general consumer market.”

In 2016, Swartz added, mastering social media is essential for brick-and-mortar adult stores if they want to reach younger consumers. Stores, according to Swartz, “need to increase their presence on social media, as most Millennials use smart devices and provide the majority of shoppers.”

In the adult billing space, there has been much discussion of the effect that the implementation of EMV or chip-and-PIN technology for credit cards in the United States will have on adult entertainment sales. Adult billing experts have been warning that when EMV cards discourage credit card fraud for in-person transactions, criminals will likely increase their online fraud — and for U.S.-based adult retailers, that could mean less fraud in their brick-and-mortar stores but more problems with fraud when selling online. Swartz advised that for in-store transactions, brick-and-mortar stores need to be “EMV-compliant with credit card processing to prevent chargebacks and fraudulent purchases.”

Swartz noted that in 2016, brick-and-mortar stores should be “not so much focusing on cisgender.” Swartz explained: “While DVD sales continue to decrease — implying a decrease in male business — adult products of all varieties are used by all types of people.”