Sitting Shiva For Retail
How the supposed retail apocalypse is self-inflicted destruction
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Most network/cocktail event openers center on the unavoidable question; “what do you do?” Being in ecommerce and explaining what I do on a daily basis, in simple terms, has become somewhat of a skill. And after the initial intrigue, the conversation flows to the reality of the retail industry; “retail is dead.”
So after a depressing 5 minutes of small talk and how I might soon be out of a job I decide to calm my nerve and reach for another whiskey; Sobriety always helps right? Retail is dead, a statement that is tough to defend considering in the last year numerous Goliaths such as Mexx, Target and Smartset have failed. After basically gulping down my Glenlivet my nerve starts to calm. True the industry isn’t what it was but you have moguls such as Frank and Oak who recently raised $15M and have over 500,000 members. Online stores like Nasty Gal are in reverse going from online to brick-and-mortar. Is the failure of these companies that have been around for decades due to the “death” of an industry or an evolution that they simply were not a part of?
Through social media, shoppers today have a direct link with their favorite brands. Their voices and opinions express different views on topics from the brands products to their ecological footprint. This level of insight is gold for marketers. Social, eliminates the need for focus groups and surveys. Yet certain brands are too quick to dismiss what their shoppers want and thus commit the cardinal sin of marketing; Believing that what is best for the client is decided inside a boardroom.
This ideology of “mother knows’ best” is unfortunately most prevalent in the fashion industry. For example, I was brought to consult with a major Canadian retailer regarding their consumer data and eCommerce strategy. After loading their database of 500,000 emails, I was able to match 60% of them to some sort of social profile. Doing so allows me to gather the right amount of information and start building a customer avatar.
The collaborated data showed a shift in demographics; the shopper’s age went from 35-40 to a younger base of 25-30. Furthermore, the same shoppers were more attracted towards more business like clothing as expressed by their purchasing behavior with competitors. The impacts of these shifts have affects on all departments from buying to marketing. The client thanked me for my time but expressed that this could not be right and that they instinctively knew what the shoppers wanted regardless of the data. They brought me to save them from a fate similar to Mexx, a company whose downfall was attributed to ignoring the shoppers’ new behavior, yet the irony was lost on them.
Fashion retailers need to engage their customer with more than a red sign ‘stating 50% off everything.’43% of all customers want their prior purchases to result in new product recommendation. Meaning customers want and expect brands to engage with them on a more personal level. This should be great news, since there is clear evidence that price point is on the main driver behind purchase decision, meaning less of a hit on gross margin. Retailers need to be aware of this evolution and make the right operational changes or be left as a cautionary tale.