It’s tough out there for retailers and fashion apparel brands. Between finicky consumers, fleeting social media trends and a race to dominate online sales, retailers are in a place of transition and reinvention.
Last week speakers at the 2016 SAP Retail Forum held in Miami, Fla. addressed these challenges and proposed points of advice for mastering the swelling learning curve of the “Internet of Things” and understanding the complexities of the Millennial consumer. Here, SAP general manager of consumer industries Lori Mitchell-Keller explains how retailers can delight consumers with comprehensive online and in-store experiences, how to reach shoppers of all demographics and how to successfully launch a new customer engagement strategy.
WWD: How can retailers approach shoppers from different demographics and still send a consistent message that is true to brand integrity?
Lori Mitchell-Keller: The interesting thing within retail is that we have so many generations that we’re trying to cater to: we have the grand generation that’s probably going to be shopping in your store and won’t have as high expectations as some of the younger generations. Certainly the Millennial that we talk about all the time are the biggest shoppers, they will have the most expendable income. Millennials are still shopping [in store] — they’re not just shopping online, they’re not just sharing information via Facebook and Twitter, or Snapchat. They actually are continuing to talk, and they do like the shopping experience. In the last two years we’ve figured out that physical stores are a huge asset à la Amazon opening up pop-up shops. They’re a huge asset in brand affinity and understanding your customer.
The advantage about physical stores is that you have the opportunity to share an experience with the customer. This concept of getting to know your customers started more in the luxury area a few years ago and certainly our clients like Burberry are more into the space, but that’s not necessarily what you have to do to have that experience.
The other thing we’ve been talking about with experiential retail is all about the service and the culture. The service, the culture, the experience, the getting-to-know-you, none of that can solely be done in the digital world — maybe as we get more into virtual reality — but today what I’m advising retailers is that you have to use simple processes. You have to use digital to make your operations more efficient and make your supply chain more real-time. You need to make your ability to respond to trends or unanticipated demands more real-time; you need to have capabilities to sense that information, and then decide what you want to do about it quickly and then act.
So you do need a lot of digital technology, but that does not take the place of engaging with the customer in the store. It’s what she’s doing in the story and marry that [with digital]. At the minimum you need to ensure that the store experience is the brand that you want the consumer to understand.
WWD: How can retailers capitalize on both the showroom trend to highlight new product and still offer experiential shopping experiences?
L.M.K.: I do feel that there’s been this fear of bricks-and-mortar stores that they’ll become showrooms for the products and [the consumers] don’t actually buy. I think there is some “showrooming” going on, but I think that the best retailers are using that showrooming to their advantage. Take Wal-Mart, for example. They have two interesting apps: one that guarantees if you buy something in store and then you see it online for a cheaper price, you just scan the bar code on your receipt and you get the difference in price the next time you go in store. The other app searches online for [the customer] instead of you searching online for this particular item at a different store versus what’s sold at Wal-Mart and they’ll automatically reduce their price for you. I think there are opportunities for bricks-and-mortar to merge showrooming concepts or activities into actual experiences that the customer is so surprised and delighted by, she’ll buy the item.
For items that are only offered online or in store, there’s an opportunity for customer engagement to the extent that they’re helping the consumer: I only have [this product] in store, here is the nearest store, and here’s the level of inventory at that store, so I know if I want to trek 20 miles to buy this product. That is such a rich experience that the consumer is finding that, “Wow this store is really interested in getting me this product.”
The whole synergy between bricks-and-mortar and e-commerce is coming full circle. We thought it was a detriment and now it’s an advantage. We thought [the answer] was showrooming and now we can actually change that into an experience if we have the right technology. We’re reaching out to the customers appropriately so we can make that experience such a positive one that the loyalty and the brand desire becomes even higher with the customer, because they like the way they were treated.
WWD: What advice would you give to retailers who find themselves behind the curve of consumer engagement?
L.M.K.: When I talk to retailers about technology there’s multiple levels of technology to utilize: There’s the differentiation [digital] capabilities that hold your planning solutions for your supply chain — the things that the customer never sees unless you’re out of stock and then the customer sees that the system broke down. Then there’s this whole level of customer experience and engagement that you might want to deploy, but I think that it’s really hard to change your customer experience or engagement if you haven’t changed the processes that support customer engagement. At the end of the day, if you haven’t simplified and streamlined the processes that support that customer engagement, you’re not really going to change the customer engagement.
I think the best advice for retailers who are not yet in the fray and are trying to figure out what they’re doing is to have a conversation about what you want the customer engagement process to be. How do you want the customer to experience the brand when they walk into the store? How do you want them to work with you online? Then after you figure out what your goal is, don’t focus on implementing that goal, focus on what are the things that are supporting that goal that need to be streamlined, simplified, or fixed first to reach the goal. Otherwise your customer will get an experience exactly the opposite of what you want.
You’ll put the customer engagement goal into place, but it’s not going to be met because your employees haven’t been supported with the right information, the supply chain isn’t set up to respond to unique promotions. For instance, [the retailer] gives a set of customers a coupon so they go in store or online and the store is out of stock. A better process is to set the expectation internally and then figure out what you need to do, pilot that in a few stores and then figure out what’s working and what’s not working. Fix the kinks then begin to roll it out.
WWD: Is virtual reality the next phase that retailers need to consider for their stores? What technology is most exciting to you?
L.M.K.: I think that augmented reality is definitely on the rise and it is a trend that we will see more of. I think there are other areas in IoT that are interesting: sensors and wearables are making huge growth opportunities in all different industries, not just consumer products. Under Armour is doing it using its app and marrying it with purchases — they’re integrating purchases with lifestyle information and becoming more of a technology company. I think there are things in IoT in general — dash buttons, sensors, wearables — that we’re going to continue to see.
I think we’re just beginning to see snippets of augmented reality. There are entrepreneurs building virtual reality malls. They set up where you want the stores in the mall and then [the customer is] in the store and you’re actually browsing [in store], and from the virtual reality device you can order the product directly from the store. I do think that given the pace at which we’re all going and dissatisfaction with a flat digital experience with online retailers that more of this virtual reality capabilities will become much more interesting to us than they are today. I don’t think the older generations are immune to it. I certainly think that the younger generations will pick it up quickly.
WWD: As Millennials age and become the main demographic in the workforce, how do you think this will change professional dynamics?
L.M.K.: There’s this stereotype that [Millennials] are more entitled. I don’t see that they’re much more demanding. I do see a realization that they can have a bigger effect on how their life is lived from flexible work weeks, smaller work weeks, how they actually go about engaging with an employer. My daughter who belongs to Generation Z is the first demographic that sees females in executive roles making changes; they might be the first generation that sees a female president.
Both Millennials and Gen Z see how they can influence the way their lives are lived — [which is] so different than those who are older, who had a set expectation: “I’m going to work and follow the rules.” They’re not as much rule-breakers as they are rule-makers.