The pace of change in retail – as in every other industry – is constantly increasing. Internationally, we’re seeing closures of those stalwart bricks and mortar stores that were previously thought immune to just about everything. Locally we’re seeing ‘right-sizing’ – not quite closures but not a sign of booming in-store sales.
But we’re seeing retailers thrive as well – those that are on-board with, and at times leading, the megatrends and delivering differentiated experiences. Look at Patagonia syncing with millennial values – the retail behemoth closed on Black Friday in a move that aligned with a shared value of reducing waste, and posted a 30% increase in YoY revenue compared to the prior year’s Black Friday.
Look at the retailers, instore or online that are accelerating mobile payments, evolving experiences by treating them as equal in importance to product, providing for the upcoming generation of voice search natives, recognising that their customers are increasingly viewing checkout as a legacy concept.
Or the new crop of industry disruptors – recommerce brands such as threadUp, recommerce providers that partner with retailers to create branded marketplaces, and clothing rental and ‘rentail’ hybrids.
At last months Connections to You Sydney, I caught up with a panel of retail leaders to discuss a few big trends and gauge their take on the longevity of each. APG&Co’s Carina Ton Micheal, Showpo’s Mitul Lakhani and Super Retail Group’s Brian Townshend cast their votes – ‘vogue’ or ‘rogue’. Here’s how it played out (with a reminder that each panelist wasn't necessarily sharing the views of their company, apart from Brian’s very on-brand suggestion that we all go boating).
Perhaps there’s no escaping this one – again, look at the Patagonia example.
Carina and Mitul voted vogue. “For our brands, values are part of quality messaging, down to the supply chain,” Carina explained. Mitul’s reasoning differed slightly, shaped around the what, how and why of retailing.
“Every organisation knows what they sell, and most of them know how they do this – this is what sets them apart from their competition or makes them special,” he said. “But very few know the why – it’s not about making money.”
Then, to Brian (we didn’t realise this early on that he’d really embody ‘rogue’), casting a lone vote for rogue, “with a caveat”.
For those brands that have been purpose-led a long time, it's vogue because it's authentic, he explained. “But I see a lot of values campaigns that aren't authentic – the brand is measuring ROI on them.”
The audience, without the luxury of caveats, voted overwhelmingly for ‘vogue’ – looks like this one, done well, is here to stay.
Every season is sale season. “You have to participate to some extent,” Mitul said. “You take every opportunity you have to be in front of your customers – vogue.”
True to form, Brian disagreed. “Rogue. They're critical at the moment but many retailers regret the concept started,” he explained. “Customers are savvy, it impacts sales before the event and after the event because naturally customers buy what they want when on sale.”
One way to manage this, Brian believes, is using marginalised product in volume for key sale events and enticing buyers with new products – making sale events a core part of product strategy.
“They started when we were trying to clear holiday stock but it's really become something else now,” said Carina, casting her vote on the ‘rogue’ side. “And sale events just aren't what we want for our customers either – we want them to be able to buy year-round. I'd like to see it more spread out.”
Final call from the audience – a small margin to rogue. We’re not likely to see the end of sale events soon, but retailers would do well to manage investment in them and consider, as Carina mentioned, the customer’s desire for year-round consistency in experience.
Are we really likely to stop using social media for commerce? Not likely – our latest State of Marketing research found that social is in the top three channels by revenue for every stage of the lifecycle of a customer: brand-building, lead generation, acquisition, upselling, retention and advocacy. High performing marketing teams are more than a third more likely than underperformers to have linked their commerce systems with social media marketing.
Brian disagreed: “Enough is enough - put your phone down,” he said. “Maybe ... do some boating. Maybe some camping?” Jokes aside, Brian says social platforms will be used for one-to-one communication by data-shy consumers who are worried about how their personal data is used.
Carina disagreed. “Rogue – customers demand personalised service, and that can only be achieved with data,” she said. “Fear over misuse of data comes with a lack of transparency.”
I have to agree – and the majority of the 8000+ customers we spoke to for our latest State of the Connected Customer report do too, with only 17% saying they’re uncomfortable with relevant personal information being used in a transparent and beneficial manner.
For Mitul, social is a no-brainer – Showpo was built on the back of social, and it will continue to be a part of the retailer’s success.
Rewards = loyalty is a pretty easy sell – all three panellists and the entire audience bar one person voted vogue.
“But even though it’s easy to benchmark against the Qantas Frequent Flyer program, it’s important to recognise that not everyone can achieve that [level of loyalty program],” Carina said. She suggested that retailers and brands need to consider instead what their customers actually want from them and match that up with what they can achieve.
“The key is relevance, quality, how you can surprise and delight,” Brian said. “Four years ago we did BCF beer – we but our brand on bottles and sent them to our high-value customers. People still talk about it.”
How many options do we really need? The panel was split.
“Vogue – 25% of all online fashion shopping is through Afterpay,” Mitul said, also noting that he questions why consumers use buy now pay later options.
“Rogue,” said Carina. “But we want to make sure that however customers want to pay, that's available for them.”
Brian, not to be out-rogued, was also split: “Vogue based on volume, but I expect market consolidation within two-to-three years – rogue.”
The audience wasn’t much more decisive, with a slim margin to rogue.
On the vogue side, Mitul: “Define why you are there,” he said. “Know where your customers are and be in the right marketplace.”
And on the rogue side, Brian: “Marketplaces are mainly for replenishment shoppers,” he said, using the example of a packet of batteries to talk ROI. “You pay to be there, you pay for ads for your batteries. But then the customer reaches the marketplace and the marketplace puts their own brand in front of them.”
Of course, this means they are a bad deal for the retailer, but not for the consumer chasing the best bargain – so it may not spell the death of the marketplace at all, just brands’ dislike of a new reality, much like the neverending sale event.
Carina was on the fence. “Sort of vogue,” she said, agreeing with Mitul’s advice to go where your customers want you to be. “There's opportunity for growth with new audiences but you lose control of your brand and the experience.”
The audience? 50/50.
As change becomes the new normal, the skills we need in the workforce change too. Should retailers and brands be hiring ‘digital unicorns’ to gain new skills, or developing new digital skills in their existing teams? It turns out, both.
“The challenge is the pace,” Carina said. “The digital trends, tools and skills needed change so quickly, so from time to time you bring in the external expertise.”
Mitul agreed, with an eye to the unknown future: “The skills we will need, we don't know yet. Do both – a few unicorns will turn your raw talent into unicorns too.”
“Investing in all of our team members’ digital talents is absolutely essential,” Brian said. “But I need a GA gun and they don't organically grow. The blend is key.”
The audience was clear – 100% on the side of developing talent in-house. And it’s a strong argument – take a known employee with passion for the brand, deep knowledge of the company, the right mindset of curiosity and hunger to learn, layer on the skills – unicorn!
One of the last great hurdles, perhaps, for online experience matching bricks and mortar – a product in the consumers’ hands by end of day.
Showpo offers this because, Mitul says, there’s demand for it. And really – what’s fast fashion without ‘fast’? APG&Co, meanwhile, values transparency over speed.
“Say when it will arrive and deliver on that,” Carina said. “Maybe that's a demographic difference.”
Brian, of course, agreed and disagreed with both Mitul and Carina. “Keeping your promise is key, but customers keep wanting the timeframe you promise getting shorter and shorter,” he said.
Brain also offered up an alternative to consider if the operational aspects are too difficult – click and collect, which he’s seen high demand for.
“Operationally there's a lot to get right,” he said about getting products into customers hands as quickly as possible. “But there's demand there. Retailers could learn a lot from Dominoes.”
The audience, a reminder that everyone is, ultimately, a consumer, voted vogue on last-mile delivery.
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