How High-Ticket Specialty Stores Can Win More BTS Sales
Back to school is the retail year’s second most critical season. It’s thought of as that make-or-break stretch that provides momentum into the holiday season. For several years, retailers have seen changes in the way the back-to-school season behaves. This year will be no exception as e-commerce and convenience plays continue to devour consumer attention and wallet share.
For retailers with a more specialized offering than those of Amazon or Walmart, there’s some good news. By understanding how and where you customers are shopping, you can begin to win back some of that spend. Through analysis of our Checkout Tracking receipt-based data, we’ve seen that back-to-school customers are compartmentalizing their spend, shopping for different things at different retailers, and looking for the best deals.
In one particular case, we found that while customers were doing their high-ticket buying from one retailer, they were shopping the lower-priced items from its competitors earlier in the season. The learning from this: If you know what your customers are buying from your competitors and when, and cross-incent with attractive pricing or bundling, you can capture a bigger piece of back-to-school spend from your high-ticket customers.
One key measure for retailers that is often overlooked is the customer lifecycle. Looking beyond back-to-school, if your average customer visits your store every 60 days, and you are able to see that purchase cycle starting to go off pattern, you can use strategic marketing and promotion activities to entice them back into the store, back on cycle, and even increase their spend.
By doubling down on efforts to retain loyal customers, retailers stand to reap noticeable rewards — a mere 1% increase in spend from that “best customer” group represented a $17 million opportunity for one midsize retailer we worked with. While this outreach could be done intuitively, the retailer that knows their customer’s purchase cycles and takes steps to minimize attrition within the cycle, while trying to decrease the cycle time between customer visits, will realize better gains.
What does this mean for back-to-school? Let’s suppose that as a retailer, you are more of a specialty outlet. While you carry those items that are considered everyday spend and you have a broad assortment of back-to-school offerings, your customers think of you as the preferred destination for high-ticket items. Bottom line, you’re not thought of as a convenience play. Nor do you want that.
It’s important to realize that consumers are looking not only for deals, but also for convenience. People are shopping at food and drug stores with much greater frequency. Online, Amazon is all about convenience. And this is not going to change anytime soon. So the challenge for you as a specialty retailer — one that is regarded as the destination for non-everyday purchases such as computers — is how to pull back spend from retailers where customers go every day.
Now that you realize you are losing business to convenience plays such as drug and grocery stores that also carry back-to-school supplies is critical, here are two things you can do:
1. Create the awareness that you have these other, lower ticket office and back-to-school supplies and incent customers to come to you first.
2. Bundle or use other promotional strategies to get the customer to wait to buy these things from you, and not just buy them from a convenience player.
You can incent those best customers who would be coming into your store to buy the big-ticket item anyway, to think of you as a destination for those other back-to-school items. Do they buy the multitude of small back-to-school items — pens, notebooks, binders, highlighters — before or after the big-ticket purchase of computer or graphing calculator? This is where understanding the customer’s purchase cycle can make a huge difference.
The specialty retailer needs to create awareness among their best customers that they’ve got other necessary back-to-school supplies. And they can look at data to determine when, where, and at what price people are buying the pens, notebooks, etc. Then they can align the timing of the customer’s big, let’s say tech, purchase with all of the ancillary purchases. With that knowledge, specialty retailers can create the right awareness campaigns and bundling to get some of that spend back.
Keep in mind, that spend may not occur in the physical store, it may be online. That’s where you can cross-incent between physical and digital channels. Smart retailers know that there’s a far higher return to be gained by focusing on expanding their offerings to existing high-value customers than by trying to win new customers to come in and buy the big-ticket items.
Doing more for these already loyal customers — whether it’s offering double points for buying ancillary items, sending them the right offers at the right time, or bundling — can add up to big returns, with data taking out some of the guesswork, for a better back-to-school season.
Beauty giant gives loyal shoppers their own ‘chat-room’
Sephora’s new service strives to connect customers while they shop.
The specialty retailer launched a digital platform that invites customers enrolled in its Beauty Insider loyalty program to connect and chat about all things beauty. The mobile and online platform serves as a destination for members to find inspiration, ask questions and get recommendations in an unsponsored, real-time social setting.
As members log on, they can post beauty questions, photos and reviews, share experiences and connect with other loyalty members. While all shoppers are invited to read Beauty Insider Community information, only registered members can post new questions, photos, answers, or comments. Members can also track discussions and receive notifications when new posts are added.
The interactive platform is a first for the prestige retail industry, according to Sephora.
“As with any digital innovation that we bring to our clients, we look not only at how we can optimize our client’s online journey for a seamless online and offline experience, but also at how we can make our digital offerings truly essential, intuitive and fun to use,” said Mary Beth Laughton, senior VP of digital at Sephora.
“For our Beauty Insider Community, we set out to take all the things that were working really well across our various digital platforms and combine them for a unified, mobile-friendly experience,” she said. “Community is for those clients who crave a deeper level of beauty connection and inspiration from people just like her, whom she can trust.”
In addition to its interactive platform, the beauty giant is also planning to launch a “Live Community Chat” on each online product page. Here, members can ask questions to other Sephora shoppers — a move that will help them make informed purchase decisions.
Amazon making inroads in home and kitchen categories
Amazon is making great strides in the home and kitchen space with its Amazon Home store, which curates home and kitchen wares, furniture and appliances.
Housewares account for 15% of Amazon's growth in 2016, according to a report from One Click Retail. During the first two quarters of 2017, the growth of the home & kitchen product group has continued on an upward trajectory.
From Jan. 1 through Prime week (second week in July), Amazon sold $3.8 billion worth of housewares in the U.S., according to the report. Both the home and kitchen product groups are growing at a similar rate of roughly 25% year-over-year, although home continues to be the larger of the two with $2.1 billion in year-to-date sales compared to kitchen's $1.7 billion.
"Amazon's growth rate in home & kitchen is no fluke: The Amazon Home store makes a point of enticing shoppers with not only competitive prices but also with added services and conveniences," the report reads. "These include the ability to shop by category or room, seasonal curated "gift guides," 'kitchen shorts,' which offer video recipes, and others."