NRF’s Big Show: A hopeful shift in focus from Amazon to the customer
Every year, 30,000 retail industry professionals descend on Manhattan for the National Retail Federation’s “Big Show.
It’s a once-a-year opportunity to take the pulse of one of our most familiar industries. Amazon conspicuously abstains from the event, but it is nonetheless the focus of many conversations, distracting some retailers from the real opportunity: innovations in customer experience. Thankfully, this year a healthy shift seems to have begun.
Over the past decade, retail-focused events have become general technology events. Out are the shelving, printing and shipping vendors. In are companies like Microsoft, Salesforce, and a mosh pit of smaller Silicon Valley companies competing to help retailers reinvent themselves. Nowadays, the Big Show is first and foremost a tech event centered on innovation.
Given Amazon’s mammoth size, continued growth (26% year-over-year in Q3), and their staggering market share for online commerce, it’s understandable that they’re a topic of conversation in every retailer’s board room. Amazon is the pacesetter in online commerce.
But competition among traditional retailers is significant and growing, owing to their omnichannel capabilities and brand strength. Retailers are finding ways to deliver integrated online-offline experiences, services that can only be delivered in person, and offerings reflecting regional tastes and trends.
Kohl’s, for example, while seeing foot traffic decline, has grown its omnichannel business to nearly a quarter of its total online revenue. A quarter of all transaction value was either picked up in-store or shipped from a store to a consumer. Kohl’s claims that 90% of all transactions are now delivered in fewer than two days.
Despite this progress, it became clear from dozens of conversations this week that the stubborn industry focus on Amazon is dangerously reductionist. While Amazon represents the winner in a massive market shift, it is not the customer. Retailers, their suppliers, and partners must shift their focus to the underlying trends that are driving consumers into the arms of Amazon. Their deep understanding of what today’s buyer wants has enabled them to deliver a superior customer experience.
It’s easy to forget that Amazon’s rise is a response to a shift in consumer trends that has already occurred. It begs the now-cliched Wayne Gretzky adage of skating to where the puck is going to be: the winning retailers will create customer experiences that reflect an understanding of emerging trends, and apply their unique strengths to create customer experiences around them. Amazon is part of the equation, but it’s not about Amazon.
Innovations in customer experience go far beyond knowledgeable staff or clean stores. We often focus on the interaction between a consumer and a retail employee. But with today’s buyer, that’s an outdated framing of the customer experience. A far-reaching Accenture study showed that while 82% of Millennial shoppers prefer shopping in brick-and-mortar venues, they also demand a consistent journey across their online, mobile, and in-person experiences.
Amazon cannot deliver this experience, at least not yet. Leveraging the assets of brand, physical stores, and, most importantly, the intelligent human beings distributed across a retail or restaurant chain equip offline retail with both online and offline advantages in providing an experience that can differentiate retailers from the Big Bad Wolf.
What’s more, the next cohort of buyers behind Millennials, the so-called Gen Z, are yet again a different beast, bearing characteristics that play to the geographically localized strengths of traditional retailers. Surprise! Gen Z shoppers show a preference http://www.fitch.com/think/gen-z-and-the-future-of-retail for good human interaction.
For today’s retailer, the challenge is not Amazon. The challenge is correctly identifying the consumer trends that enable a next-generation customer experience, and then executing toward realizing a vision that aligns. Retailers must independently innovate around customer experiences to capture the next wave of growth. After all, every great innovation in every industry must eventually give way to the next. In retail, with history as our guide, we can be sure the next great innovator won’t look anything like Amazon.
Matt MacInnis is CEO of Inkling.
Hollister Co. bringing back a familiar name
Hollister Co. is reviving its intimates brand.
The retailer, a division of Abercrombie & Fitch Co., is reintroducing its Gilly Hicks line of intimates, loungewear and swimwear. Gilly product can now be purchased in all of Hollister’s U.S. stores and globally online. Hollister plans to open Gilly in-store shops in selection locations “that will provide the customer a unique Gilly Hicks brand experience.”
Abercrombie closed down its 28 freestanding Gilly Hicks stores in early 2014, but continued to feature the brand in Hollister stores and online for a time.
"We recognized an opportunity to redefine the Gilly Hicks brand and we know our Hollister customer will enjoy another destination for fun and cozy bras, undies and sleepwear," said Kristin Scott, brand president of Hollister Co.
The relaunch comes as American Eagle Outfitter’s intimates brand, Aerie, is enjoying widespread popularity, partially due to an advertising campaign that showcased natural-looking young models and also due to young women’s penchant for bralettes, a more casual and relaxed bra style. Early images from Gilly’s new campaign seem to pick up on both elements.
Lululemon’s journey toward ‘mindful’ customer interactions
Like the principle of yoga, Lululemon Athletica knows the value of learning from a journey — in this case, its shoppers’ journeys.
In fact, this information will help the athletic apparel retailer hit its newest milestone: “touching one billion people and doubling our revenue over the next five years,” Miguel Almeida, Lululemon’s executive VP digital, said at last week’s NRF Convention and Expo in New York City.
The chain is already a global brand that has eight local websites, one million app downloads, and 400 stores worldwide. The company’s growth in the last five years has outpaced “the growth we’ve had in 19 years,” he said, adding that Lululemon’s community has always been at the core of the chain’s success. And this community was built by the associates.
Whether employees forged relationships during free weekly in-store yoga classes or kept paper-based files on shoppers’ preferences, "It's never been only about physical products but human relationships,” Almeida said. “We were always about creating a community hub as our core foundation.”
To achieve its five-year goal however, the chain can’t only rely on transaction and profile data. Wanting to amplify its relationships and connections, Lululemon began focusing on web visits, email communications, social media and mobile engagement — and all touchpoints are continuously creating increasing volumes of incoming data.
By leveraging these critical details, Lululemon is positioned “to reach the right guests at the most critical times,” he said. “We need efforts that will drive them back to stores. But this required tapping into our digital DNA, whether it is from our mobile app, website or social media connections.”
It also requires the company to process this robust data at faster speeds. By leveraging a new customer relationship marketing (CRM) system from AgilOne, the chain now uses machine learning algorithms to analyze and identify customer behavior patterns — the foundation to “building a single view of guests, understanding them at a local level, and better delivering one-to-one experiences to shoppers, an effort that builds relationships,” Almeida said.
Since adding the solution approximately 12 months ago, Lululemon’s social site visits increased by 50%. The chain is also creating more intelligent direct marketing campaigns that are sparking a 25% increase in guest attendance at in-store events, and contributing to between a 10% and 15% spike in baseline revenue.
“It’s all about connecting the dots between channels and touchpoints,” Almeida said. “When using intelligence, we also saw that customers engaging across all of the brand’s touchpoints tend to have 10 times higher annual spend than those only connecting with us in one channel.”
The next step in Lululemon’s journey is creating a more seamless experience across its channels, including its mobile presence. Besides making its mobile website more user-friendly, the chain is also improving its native app. Calling it the “connector” of the “local experience,” Lululemon will further leverage the app to stream content, and share announcements about events in a shopper’s local market.
“The app is an engagement platform for us,” he added. “We believe all of our technology solutions can amplify what the brand stands for.”