3 Ways to Rewrite the Retail Playbook
At a recent CommerceNext conference in New York City, retailers shared ideas and insights on how they’re changing their playbook to meet the needs of today’s customer. Here are three trends and takeaways that other retailers should add to their own strategies.
1. Customer insights are the new barrier to entry
It’s not a secret that customer data is important to a company’s success. But as the five-year-old lingerie company ThirdLove demonstrated, data insights are critical to gain a competitive edge. By asking consumers to fill out a profile about their body type, style preference, bra history, etc., the company has amassed more than 600 million data points about its customers.
Armed with this data, ThirdLove is able to offer more choices—the company carries more than 70 different bra sizes while the industry average is about 30—in addition to making astute decisions. ThirdLove knows exactly how many women have requested bras in a certain size and style, which helps reduce excess inventory. And in an industry where even a slight improvement in efficiency makes a difference, “being able to plan our inventory in a smart way that mitigates our risk is key,” said Ra’el Cohen, chief creative officer at ThirdLove.
Takeaway: Retail merchandising has always been a mix of art and science, but savvy retailers are bolstering the creative side with robust customer analytics and insights, making it harder for competitors with bloated inventories and disorganized supply chains to keep up.
2. Make Amazon work for you
For many brands, selling on the Amazon Marketplace is a must, but companies should carefully assess their reasons for partnering with the e-commerce giant. For the women’s apparel company Chico’s, maintaining IP control was one of the reasons the organization ultimately decided to sell on Amazon.
“It’s easier to work with Amazon on combatting counterfeiters if you’re a partner on their platform,” said George Nahra, SVP of business development at Chico’s FAS, Inc. It’s also important to integrate Amazon into the customer journey. For instance, allowing customers to return Chico’s merchandise purchased on Amazon at their stores helps maintain a relationship with the customer, Nahra added.
However, Amazon isn’t for everyone. It can be easy for a young company to get lost in the mix, noted Cheryl Kaplan, president at M.Gemi, which sells handmade Italian leather shoes. “We’re still telling our brand story,” she said. M.Gemi has resisted Amazon’s sprawling marketplace for the time being, she added, “because we want to maintain control over the customer relationship from beginning to end.”
Takeaway: The reasons to partner with any company are not static, especially one as influential as Amazon. Factors and goals could change and it behooves retailers to regularly reassess their acquisition strategy. As Nahra put it, “it comes down to, what are you trying to achieve, and can Amazon help you achieve that?”
3. Targeting vs. personalization
There’s a distinction between just adding someone’s name to a generic email and personalizing a message so that it resonates with an individual. Consumers can immediately tell the difference, said Joanna O’Connell, VP and principal analyst at Forrester.
“If you’re advertising to cookies, you’re getting it wrong,” she said. Marketing automation isn’t enough, O’Connell continued. Retailers need to take a holistic approach to communicating with customers and connect as many relevant data points as possible to “serve customers the way they want to be served.”
Takeaway: Technology enables retailers to reach customers anytime, anywhere, but it can also be a crutch. Nothing replaces taking the time to understanding who your customers are and tailoring your communications according to their expectations and preferences.
Retailers want nothing more than to move the conversation away from the so-called apocalypse. Those that build a foundation on customer insights and integrate those insights into everything from merchandising to third-party partnerships are in the best position to do so while others remain mired in sluggish sales—or worse.