Communication is fine, but, in retailing, it’s commerce that matters.
In the ever-morphing world of social media, retailers are realizing that simply bombarding consumers with messages via Facebook, Twitter, Tumblr or other media just isn’t good enough. They have to convert those consumers into shoppers — and the latest wave of digital strategies is designed to do that.
This story first appeared in the September 6, 2011 issue of WWD. Subscribe Today.
“Having a social media presence is table stakes — every single retailer has one. Social media has become ubiquitous, but it’s about beginning to use [these platforms] to monetize your communities,” said Maureen Mullen, director of research and advisory services at New York University’s think tank Luxury Lab.
This is where the opportunity is right now, she said, whether it’s to drive retail sales to a company’s e-commerce channel or direct foot traffic into stores.
Mullen said retailers can capture and engage their respective communities in three ways: by utilizing “sticky” programs that have multiple components, “localizing” their outreach strategies and, in a new buzzword, via “F-commerce,” or selling through their Facebook pages.
Innovative digital strategies are already helping to drive retailers’ growth, according to Scott Galloway, NYU marketing professor and co-founder of Luxury Lab, which late last month released its second annual Digital IQ Index that ranks specialty retailers according to their online competence. Macy’s led the list, followed by Victoria’s Secret, Nordstrom, Sephora and Urban Outfitters (tied for fourth place), Threadless.com, Bluefly, Bloomingdale’s, Gilt Groupe, and Net-a-Porter and Pottery Barn. The average Digital IQ for department stores grew 14 points from 2010 — coming in second to e-tailers for highest category IQ — a telling statistic about the impact of digital, given that the latter are native to the medium. The category as a whole went from “average” to “gifted” status, and Macy’s and Nordstrom were even labeled “genius” in terms of innovation in mobile, social and branded sites. Neiman Marcus and Saks Inc. also scored well, and Bergdorf Goodman ranked 22nd — impressive given that it has just one physical location and is competing digitally with retailers that boast hundreds of doors, such as Macy’s and Victoria’s Secret.
Galloway labeled 2011 “the year of the department store and mobile commerce” and said the study’s findings mimicked financial performance, indicating that companies investing in digital mediums are increasing shareholder value.
In a further refinement of the whole idea of social media — where for a time the goal seemed to sign up as many Facebook fans and Twitter followers as possible simply to brag about the number — companies now are realizing that more isn’t necessarily better. In fact, an L2 study reported that the more “likes” a brand has on Facebook, the less engagement there was to the page by consumers.
“It’s about quality over quantity,” said Oliver Walsh, founder and chief executive officer of Wednesday London, whose clients include Mr Porter, Tory Burch, J. Crew, Alexander McQueen, Balenciaga, Giorgio Armani and Bobbi Brown. “Why would a customer come to you as a retailer as opposed to anyone else? If you can answer that in a genuine way, it will resonate with your fans.”
Walsh stressed that this is what stores need to be working toward. The purpose of content — from a retailer’s standpoint — is to bring the consumer closer, build engagement and get them to connect with you on a regular basis so they feel comfortable and can hopefully purchase more product from you.
One such retailer is Macy’s, which took the number-one spot in L2’s survey that used a 350-point data system to rate retailers in digital competency, spanning categories such as social-media strategy, site interface, mobile-commerce capabilities, digital marketing, search engine optimization and more.
Macy’s executes a multifaceted approach to engage its fans — apparently so much so, that the response to this spring’s Million Dollar Makeover initiative exceeded the brand’s expectations by four times, according to Jennifer Kasper, Macy’s group vice president of digital media and multicultural marketing. The project was primarily a Facebook activation with components on YouTube, Twitter and broadcast advertising that gave one customer the opportunity to win a whole-life makeover worth $1 million. The retailer thought it would receive about 5,000 entries; instead it got almost 20,000.
Social media can also be a tool to drive traffic in-store, which translates directly to sales, according to Kasper.
“When we launched Someday by Justin Bieber earlier this summer, one tweet from Justin had kids sleeping on the street for two nights so that they could buy his fragrance. When Rihanna came to Herald Square this spring, she tweeted an hour before she arrived at the store, and 1,000 fans came to see her,” Kasper said.
Shenan Reed, co-founder and chief media officer of Morpheus Media, now a Createthe Group company, credits much of Bergdorf Goodman’s success within the digital world to crowdsourcing. She cited initiatives such as its “Faces of 5F Contest,” where fans had the opportunity to model the store’s contemporary offerings, and a collaboration with Fendi where Facebook fans got to enlist in a design competition.
She also said that the retailers that stand out are the ones that distinguish what is unique about them. Again, she points to Bergdorf Goodman, a store that clearly recognizes the fact that it has only one door, but that takes the opportunity to highlight events and product that are only available in-store, and not on its Web site.
“They have this rich history and they can bring a slice of New York City to anyone who is following them anywhere else in the world. There’s an extreme amount of value there for a consumer. It gives Bergdorf a unique story to tell,” Reed said.
“The advantage that retailers have over brands is that they aren’t a one trick pony — they have all of these brands under one umbrella,” added Reed. “Today they can talk about shoes, tomorrow about handbags, and they can switch from Donna Karan to Fendi to Pucci, and there’s so much available content to them. The smart retailers are the ones that are taking advantage of the fact that they have multiple brands at their disposal to tell stories about and gather stories from.”
Perhaps most important to a retailer’s digital strategy is what Reed labels “transmedia storytelling” — or using the various social media channels to tell a story in a way that’s appropriate for each medium.
“Figuring out what each of the different social media channels is good for allows you to cater the content that you’re delivering to the customer to that channel, naming it unique to that channel. The power is not just simply repeating yourself everywhere,” Reed said.
To her, the future of online marketing and advertising in the digital community hinges on brands and retailers telling a transmedia story through all of the channels they operate on — so no matter what entry point the consumer takes, they have a unique experience at that point.
Every different social media channel — whether it’s Facebook, Twitter, Tumblr or now Instagram — has a unique feature to it. Not every Facebook user is fluent on Twitter, not everyone who tweets is on Tumblr, and not everyone on Tumblr uses Instagram, the iPhone app that allows users to take photos with various enhancing options and share those pictures with friends. According to Reed, if a retailer can identify the platforms and deliver on the unique attributes of each channel, it will create an a more worthwhile experience for the customer.
Bergdorf Goodman is taking advantage of the Instagram craze and using the medium as the basis for its latest social media program.
To coincide with the opening of its newly renovated and expanded shoe department, the store introduced its “Shoes About Town” Instagram project August 26 where users are encouraged to Instagram photos of shoes against cityscapes and other creative backdrops, according to Mallory Andrews, Bergdorf’s senior vice president, sales promotion, marketing and public relations. The images will appear on an interactive map of the city on the retailer’s 5th/58th blog, and the photos — also hashtagged with #BGShoes — will become part of an in-store installation.
While it’s obvious retailers with the highest Digital IQ’s have all built massive followings across a myriad of digital mediums (Victoria’s Secret has more than 14 million Facebook fans), Mullen, Galloway and Reed maintain that it’s no longer just about building a bigger fanbase — it’s about taking that following and engaging them through initiatives centered around smaller, more localized communities. This means that while the retailer might have one, centralized Facebook fan page that houses all of its information, images, tabs, etc. — it also has additional Facebook pages for specific store locations so consumers in each area can connect with the outlet closest to them and learn about new products, events and goings ons in their communities.
Mullen cites specialty retailer Lululemon’s localized Facebook presence as an example.
“Lululemon has actually empowered each of their individual store locations to create independent social media communities that feature local product,” Mullen said, noting she’s seen quite a bit of this within the hospitality category for both Four Seasons and Starwood hotels, but it could be a real opportunity for retailers as well.
Companies providing their stores with these tools report highly engaged communities, according to Mullen — and the more local retailers get at the store level, the more the content is tailored for the target community, ultimately resulting in higher rates of engagement.
Macy’s has taken the local approach by creating Facebook pages for individual locations, including doors in Herald Square and Fulton Street in New York, as has Gilt Groupe’s lifestyle arm, Gilt City, where creating a hyper-localized experience for consumers in each of the 11 cities it targets is the foundation the company is built on.
For Macy’s, rather than having one mass Twitter account, the store introduced several new streams that give followers the opportunity to subscribe to different topics. Whether it’s @MacysEvents or @MacysGives, Kasper said the level of segmentation gives customers the ability to choose what they want to hear from the retailer.
Quynh Mai, founder and ceo of Moving Image & Content, a digital agency focused on content and marketing that works with Yves Saint Laurent, Mugler, Stylemint, J.C. Penney, Estée Lauder, Range Rover and Clarins Group, thinks there’s great opportunity for departments stores to localize in the digital space via virtual trunk shows.
Department stores have always been a conduit for the consumer to connect to the designer and have been successful in doing so, according to Mai, and she’s surprised this has yet to be replicated online. Despite this, she’s optimistic that the same level of intimacy can be carried out in the social media realm if stores are willing to open up their digital channels to the voice of the brands and designers.
“Department stores have an overall store brand voice but they haven’t yet utilized the brands and the people within their own community to engage with their consumer. They’re the perfect vehicle to host this one-on-one because they have such a breadth of diversity within their house. They’re a house of brands that can leverage the individual voice of designers to aid in local communication,” Mai said. “The tried and true department store trunk show is one of the highlights of the season for top consumers. If I can access Lady Gaga via Twitter, why can’t I access Georgina Chapman of Marchesa?”
E-tailer Shopbop hosted its version of a virtual trunk show to coincide with the arrival of Rachel Zoe’s apparel collection on Aug. 1. In addition to posting an exclusive video and a lookbook, Zoe hosted a live chat with fans on Facebook answering questions about the new line (at the same time the film premiered), while consumers were encouraged to shop the collection. The event was also posted on the Web site’s Shoptalk blog and promoted through Twitter and e-mail blast.
Leaping from local to mobile, Galloway contends the most dramatic changes in digital this year occurred within m-commerce, with two thirds of retailers now having mobile sites, versus just 25 percent a year ago. Retailers on Twitter have also jumped to 52 percent, up from 28 percent last year.
For Net-a-Porter, which proved that the sale of luxury items can thrive online, mobile commerce is a double-digit portion of business, and this number continues to grow, according to vice president of sales and marketing Alison Loehnis.
Despite the growth of m-commerce, Facebook is the medium that will have the most impact in the coming year, industry experts speculate. While this might’ve been a banner year for m-commerce for brands and retailers alike, F-commerce (Facebook commerce) will be the next big thing in digital for 2012.
“Mobile and social innovation are so torrid right now. You can’t move forward at a trot, because the industry is moving at a gallop. If you move ahead at a steady pace, you will fall behind,” said Galloway. “Almost 100 percent of brands cite Facebook as a source of upstream traffic. Burberry is getting more traffic from Facebook than Google. It’s the largest source of traffic to its site. Brands are transitioning from spending money on Google into Facebook programs. All of this [Facebook] traffic and investment is leading toward commerce.”
Gilt Groupe launched F-commerce late last month with a Facebook store, allowing fans to purchase directly on the medium using their Gilt.com user names and passwords, and Rachel Roy pioneered the commerce platform in February 2010. E-tailer ASOS also saw success from a Facebook store it launched in January, but it’s a category where the fashion industry is still testing the waters.
Jason John, Gilt Groupe’s director of marketing, wanted to make sure the Facebook store didn’t just duplicate sales on Gilt.com.
“We wanted to put a little bit of a twist on it — the goal is to not do that like other retailers have done. Our goal is to create a unique and viral experience that can take advantage of the Facebook platform and build in a lot of social shopping tools. [It allows for] easy sharing and commenting that people will get excited to share with their friends,” John said.
He believes a big opportunity exists in having commerce functionality within the Facebook news feed — making it so users don’t have to leave their news feed to reach the point of purchase. Gilt Groupe has yet to launch this feature, but it’s something it hopes to implement in the near future.
Although John speculates that revenue from F-commerce will continue to be a small percentage of sales, it will drive engagement and increase brand loyalty for fans due to the nature of the unique experience. John sees the engagement factor as converting consumers to become more loyal.
“I view it less as a revenue opportunity and more as an engagement opportunity.”