Category: Business News

Why Retail Needs Brick-and-Mortar and E-Commerce to Survive

Why Retail Needs Brick-and-Mortar and E-Commerce to Survive

Whether you rely on your own retail shop or wholesale fashion accounts to thrive, it’s time to stop choosing between brick-and-mortar and e-commerce strategies. At the end of the day, it’s all simply retail and shoppers respond best to a healthy mix of the physical and digital worlds.

Alibaba Makes a Case for Merging Physical and Digital Commerce

Alibaba is probably the largest retailer who has tossed the idea of “omnichannel” right out of the window. And they continue to grow at an impressive speed. They started with the purchase of a major retail brand in China in 2015 followed by a recent $2.6 billion purchase of a Chinese mall operator – complete with 29 department stores and 17 shopping malls across various cities.

Their CEO, Daniel Zhang, has made their plans clear: transform physical stores to reach modern shoppers’ standards using their digital cache of resources (improved inventory management, real-time customer insights and data, digital payments, et al.). The plan is to introduce new customers to the offline shops, while strengthening their overall business. Zhang says: “We don’t divide the world into real or virtual economies, only the old and the new”.

And really, shouldn’t that be the accepted idea of retail strategy across the industry? Brick-and-mortar shops hanging on to old business models and old ways of doing business are really feeling the burn. The same goes for digital businesses that don’t consider what actually happens with customers when they shop offline.

E-Commerce Stores are Opening Brick-and-Mortar Businesses

Don’t let headlines about struggling retailers fool you. Brick-and-mortar still works. Just look at the number of e-commerce shops arriving offline. We’re seeing fully operational stores, short and long-term pop-ups and even offline showrooms all over the country. These brands include Bonobos, MM. LaFleur, Reformation, and Warby Parker.

Bonobos’ Guideshops don’t sell any physical products but they’re the hubs to place online orders, confirm fit, receive style advice, and make easy, in-person returns. MM. LaFleur takes advantage of the best aspects of traditional stores but with a contemporary and digital twist. Their showrooms offer pre-pulled, personalized looks, styling sessions, and accompanying glasses of champagne – an excellent way to bridge shopping with experience. Reformation’s concept is more like a hybrid of both worlds with limited quantities of merchandise and digital screens for online shopping in store. As for Warby Parker, they plan to open at least another 25 shops this year!

Touch Is Only Human

As a species, we’re totally wired for physical touch. Touch is linked to our behavior, emotions, and crucial development. There’s a study that’s widely referenced in retail to translate the science. It was published in the Journal of Consumer Psychology in 2014 and it explains how using a touchscreen interface emphasizes the benefits we experience when we get something new. We psychologically perceive that we own whatever we touch! That means we get the benefits of retail therapy – even before we buy!

The great news is the same research has been correlated to touching other physical objects in stores so every brand has the chance to benefit. Since touch is a natural instinct that brings on positive emotions, it’d be totally irrational to move all of our sales online. We have to embrace technology and the physical world to really maximize the potential rewards. And there are really so many possibilities.

Brick-and-mortar isn’t dead. And e-commerce sales are only one slice of the retail pie. We have about 19 hours a day to create valuable, offline engagement so let’s leverage what we’ve learned to ramp up the real-world retail experience.

Innovation has changed everything and at the same time, nothing at all. Technology, marketing, and shopping habits have changed but we still crave a social experience. Our desire to connect as a community is just as powerful as it was in the height of the department store heyday. Shops got their start as places to gossip, socialize, and relax and today’s stores are still great places to congregate. Digital has only expanded the size of this community, taking it to a worldwide scale.

We still need human touch and in-person interaction… physical stores will always be around. The shops that will survive will use digital to stay connected and improve the ways they engage. They’ll use digital to offer additional brand touchpoints and to deepen relationships with their customers through increased “face time” and additional outlets to share their stories.

You have to be where your customers are. Shoppers may not always make the sale offline but that doesn’t mean their in-store experiences won’t lead them to online sales or digital brand advocacy later on. We have to see retail with a much more holistic view.

Be open to change and nimble to react because if there’s one constant in fashion, it’s CHANGE.

Amazon & Rebecca Minkoff Ditch Cashiers and Sales Associates For New Types of Technology

I’ve always enjoyed walking into a Whole Foods and being able to ask a sales associate to give me qualitative information about products. In fact their experience can largely sway an opinion. Think about ordering food at a restaurant- ever asked the waiter what’s the best on the menu and order that? What if the waiter wasn’t there and every time you ordered something you had to guess what to order? Or have you ever wanted to buy something that went with your outfit, but no one was there to give an opinion? How frustrating.

Taking away key decision making drivers in the sales process leaves a vacuum for a new types of technology to enter. One new technology would aggregate customer feedback and experiences per product and segment based on your friends and similar interest groups. Your friends become the curators. This would go beyond a Yelp or Amazon review system and be curated by similar interest groups.

Another type of technology that will gain traction will be interactive mirrors and social selling apps that allow the customer to take photographs of themselves and share with friends to get instant feedback- these already exist but have yet to take off. In essence, the role of the sales associates preference would be replaced with that of friends and social groups.

Rebecca Minkoff

So then what does the role of the store play? I’ve written in the past that customers are looking for a more interactive in store experience (see the article on my talk at the SAP Retail Forum). They want events, curation, and customization. They crave an experience that is personal and tailored to them.

This is the age of individualization not normalization.

The question remains-will these new types of stores gain traction? If it works in tandem with technology that fulfills the social needs and information needs of a cashier or sales associated then yes. If it leaves the customer hanging, then these stores become showrooms where people will go to look and buy at home- a trend we started to see back in 2012.

As we wait to see what happens with in store trends my advice is to continue to think about your customer value proposition. What value do you offer besides selling products on a shelf? Rebecca Minkoff is first to market in her space selling products up to $1,500 in this new concept store. The novelty of it will drive in store traffic- but will it correlate to sales?

Amazon might see a correlation between in app searches and in store buying- leveraging its app as an information hub and who knows, maybe they will be integrating your in store purchase with the nutrition count and syncing it up with your health data. Scary, but totally possible! Lots of possibilities here, but at the end of the day customer purchasing power is king and will dictate if this new concept store experience will last.

Syama Meagher is the CEO of Scaling Retail, a retail strategy firm that offers insight and strategic consulting to fashion and retail brands. To get insight on sales, marketing and merchandising for your business email: hello@scalingretail.com.

Get on Facebook Marketplace Now

Facebook has launched their in mobile app marketplace and sellers are flocking. In 4 steps you can upload a photo, add a product description, choose a price and post it to the marketplace. You can even change your zip code to show up in more relevant listings and post your item for sale in groups you are a member of.

So why on earth are designers not flocking to this? They will. If you have been paying attention to my last few talks and posts I’ve been preaching the gospel of attention arbitrage – in essence be first and be where your customers are. Don’t wait until brands are getting on this platform before you jump in. Start playing now.

It has a little bit of a Poshmark feel as well; the layout, the necessity for good images, fair prices and the small amount of area to write product copy. Poshmark also allows you to re-sell goods that you buy at wholesale. The official Facebook Marketplace for Business hasn’t launched yet, but be certain that when it does it will be easier for brands who have already had experience on it to quickly jump on board. You won’t miss a beat.

This marketplace acts a little bit like Craigslist, you use your profile and are able to set up a time for the transaction to take place. If you have a studio you work out of it’s a great way to get your brand exposed to more customers. If you are doing a sample sale, boom, mark it down and let your community have first dibs. I really love what types of possibilities this will open up for businesses down the road that participate in popup shops.

facebook marketplace

Facebook is hoping to weed out fake buyers by only allowing those with a full profile and active friends to participate. They also won’t accept payment terms, for now. Imagine down the road Facebook partnering up with Visa or American Express and negotiating special rates with them on the backend if they are the preferred payment processing system. Facebook doesn’t integrate with a shipping method yet. So this means you will be deciding on if mailing or picking up works.

facebook marketplace

To make sure you close the sale follow these steps:

  1. Have great images- you have 4 to use.
    1. Make sure the lighting is good
    2. Use a background
  2. Write your product copy beforehand.
  3. Choose the zipcode you want to do business with.
  4. Pick a strong product title.
  5. Post your product on relevant community groups.
  6. Time the release of your product. Don’t just upload everything at once, your product will become more relevant in search if you stagger, like how Pinterest is.
  7. Use relevant words in your description. This is a primarily search based platform. Think of long tail keywords versus short ones. There will be way too many “little back dresses” to be able to find, but “knee length little black dress with sleeves” might be more relevant.

I’m super excited to see what awaits Facebook Marketplace. Brands have been waiting for when Facebook would diversify its offerings since the plugins that allow selling in your Facebook Page don’t really convert. This is mostly due to the fact that Facebook has become a pay-to-play platform for businesses. Its virtually impossible to get traction on Facebook pages without spending ad dollars. And small brands with little budget have a difficult time seeing ROI’s on their advertisements.

This could be a new channel for distribution and it’s definitely worth keeping your eye on and even testing it out. Remember when eBay first launched? There were business that grew out of eBay, hello, Sophia Amoruso’s Nasty Gal!

Inside the SAP Retail Forum: The Future of Retail

The SAP Retail Forum is a yearly conference where industry leaders gather to discuss new technology in retail and the future of customer service and sales. This year I had the pleasure of attending and speaking on the topic of Social Selling: how to leverage popup shops, mobile and social to sell to customers. I touched on four distinct case studies: Warby Parker, JCrew, Fruit of the Loom and Nordstrom’s. All brands that are creating noise to gain customer visibility. I’ve included a couple slides below from the presentation. The major takeaway was: brands need to engage in attention arbitrage when selling and use cohesive campaigns that are disseminated through online, offline and mobile to sell and create effective brand stories.

SAP Retail Forum

I got to see amazing new RFID technology that allows sales associates to know when customers take product off the shelf. New shopping bag technology that will allow customers to walk out of a store and pay with their profiles and never have to swipe a card or stand in line. There were many “wow” moments.

 

One of my favorite speakers of the conference was Doug Stephens. Doug is a retail futurist and is always looking towards the future of how selling is evolving. He spoke of how the brick and mortar store is becoming a media outlet, and referenced a popup shop we all know well- Rachel Shechtmans Story in NYC. Rachel’s ‘store’ evolves a couple times of year and she sells square footage to brands that want to use her space to sell, test market products etc. Doug pushed the audience to think of this question “what if it was free?” What he was pushing these big retailers to think about was how they could sustain their businesses if their products were free. How would they make money? What types of infrastructure and channels do they have in place that they could sell? Could they sell data? Could they rent out space? What is of value besides the product? This is a very important question. Brands create the conversation on all channels: stores, social media, blogs, tv, radio, newspapers, digital ads, billboards, newspapers. Brands can own the market simply by owning the conversation and brands can create the data an infrastructure to become more than just the seller of goods.

SAP Retail Forum

So how to build the business that will last?

 

Start by thinking about your brand beyond the product. What channels do you want to exploit? Where is your customer? Where can you dominate and be the best? Don’t try to be everything to everyone- be something powerful and poignant.

 

Next, create content that does not center 100% on your brand. No one wants to be in a world that is mono brand. In fact, most consumers are mixing high and low. Think about your ideal brand partnerships- where are they? What channels are they exploiting? How can they create a larger conversation with you? How can that create value for your customer?

SAP Retail Forum

Once you establish the how’s and why’s now its time to monetize. Think about your valuable data on the niche market you are catering to. Who would find that useful? How about the brand partnerships you have created? How valuable is the conversation? Could you charge for co-op advertising? Create events? Think about the value of the brand, not the value of the product. If you hone in on your customer and the conversation you won’t have to build a business based on what worked last year, you will be building based on what customers are asking for tomorrow.

 

Creating value doesn’t just happen on the front end, it happens on the backend too. One of my clients opened up a retail store, and simultaneously created a distribution center and ecommerce platform. The model allowed her to have sustainable revenue streams coming in from both the front end with customers and on the backend with other brands. And since she had the retail space already there was only little that needed to be done to up the shipping systems to allow for creating extra income.

SAP Retail Forum

Ok, ready to rumble?

 

Take a step back and look at what you have already created or want to create. What is the bigger picture here? What value/story can you create? What if what you were selling was actually free? Think big, think beyond your brand.

What the TPP Means for Your Business

The Trans-Pacific Partnership (TPP) is a trade agreement between 12 countries in the Pacific Rim. Right now you may only be familiar with it because of the protests internationally and the vote to Fast Track the TPP in the US Congress. This trade agreement appears to be moving forward aggressively despite criticism that US jobs would be cut. Politicians like NYC Mayor Bill de Blasio have stood against the TPP because of the jobs that were historically cut when NAFTA was signed.

Ok- why should you care?

As a small business the TPP will open up your capacity to export. That is if you are interested in exporting to Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The trade agreement would slash 18,000 tariffs and allow easier access for those countries to export to the USA. This means that as a company based in the USA you will have increased competition domestically. There are some great laws in the TPP, namely the labor laws and the ability to combat child labor and more enforceable environmental laws.

99% of the brands I work with on a daily basis are focused on building a brand online and through brick and mortar channels. The TPP will enforce e-commerce laws that will ensure your products can be sent to the member countries with expedited customs and protected payment gateways. For those of you with big ideas to have international brands being able to work more closely with big markets like Australia could be a game changer. And, if you manufacture your products in the USA you will have zero tariffs and a reduced number of regulations to test, certify and fill out paperwork.

So, what’s the big deal?

There is always a flip side, isn’t there. With international brands able to flood the market with lower priced goods, the strength of your brand will become more important. For the brands out there that are working with US manufacturing I urge you to continue to invest in the domestic economy. It will become easier to manufacture at one of the partner countries due to export ease, however keep in mind that minimums on production will most likely stay the same. So if you are still producing small quantities you may want to stay with the manufactures you are working with. The Huffington Post “The Economic Policy Institute estimates that under the TPP we stand to lose more than 130,000 jobs to Vietnam and Japan alone, with American workers having to compete with their counterparts in Vietnam, where the minimum wage is just 56 cents an hour.”

What to Do?

Strengthen your brand now. Look at your long-term plan and determine if you will want to play in the new markets. Start to read up on the new markets. The Japanese customer is very different from the USA customer. In fact some of my clients currently do very well in the Japanese market- this will only get stronger. Evaluate your current manufacturing needs and be on the look out for apparel trade groups to pop up in these new markets. Similar to how a lot of brands produce in Colombia due to tariff free exports on swim and attend ColombiaTex. Make sure your site is mobile friendly and look into language plugins for your e-commerce platform.

Syama’s Crystal Ball

I predict that the TPP will pass. Mostly because this trade agreement will make it easier for the USA to lessen ties to China imports. As we have seen in the past with NAFTA there will be job loss and an increasing trade deficit. Given that the TPP has been primarily created for the 500 big corporations who have been seated at the negotiation table it won’t be a surprise that they will benefit the most. Small businesses that can take advantage of these potential opportunities will see higher growth.

As you prepare for what’s ahead keep in mind that we keep moving towards a free trade world and not a fair trade world, despite the need to protect people and laborers these agreements tend to mostly exploit them. There are other trade agreements, such as the Bolivarian Trade Agreement, which tend to be people first, but no agreement is ever failsafe. As a brand it will always be your job to vet your manufacturers and really find out what their practices are, no matter what policies or agreements are in place. You can have profitable businesses that are good for all parties involved, but you need to brand, position it and do your research.

Syama Meagher is the CEO of Scaling Retail, the retail-consulting firm for startup and growth stage fashion brands and retailers. Contact Syama at hello@scalingretail.com to schedule a consultation.