L Brands chief Leslie Wexner believes department stores are in a “death spiral.” Specialty stores aren’t in much better shape, and the overall number of announced store closings — big and small — continues to grow, seemingly on a daily basis.
Overflowing racks and 30 percent off coupons are just not working anymore and merchants are seeking more innovative solutions to lure shoppers.
But while the overall retail climate remains challenging — even with the all-important holiday season in full swing — there are a few companies that appear to have found a solution. By developing an intimate, emotional — and authentic —connection with customers, sales and profits have followed.
Care about sustainability and fair trade? Head to Patagonia for a panel discussion and film screening on the issue. Does jogging with your dog sound fun? Try an Outdoors Voices-sponsored 5K dog jog. Want to hone your skateboarding skills? Take a lesson at a Vans skatepark. Need a pair of shoes and care about Third World nations? Buy your kicks from Tom’s and the company will donate a pair to a child in need. Ditto for buying a pair of glasses from Warby Parker.
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In a time when creating “experiences” has become the latest buzzword among retailers, companies such as these are benefiting by simply staying true to their mission and drawing in customers who feel the same way.
“If you want to build legitimate loyalty, it’s not enough anymore to say, ‘Here I am, I’m fabulous,’ or ‘Here I am, I have a good price.’ You have to build a legitimate connection with a community,” said Wendy Liebmann, chief executive officer of retail strategy consultancy WSL.
When looking at Tom’s or Patagonia, for example, “that approach has been built into the DNA of the companies since the beginning — it’s rooted in their ethos,” she said. “And it’s true, it’s not a marketing campaign. People see through it very quickly when a company just slaps their name on something for marketing purposes. It gets the hairs on their necks up.”
Instead, today’s consumers are looking for brands that have a long-term, consistent point of view that is similar to their own. And when they find it and they’re ready to buy, these brands are top of mind.
“That’s the pillar of what people are looking for,” Liebmann said.
But it has to be subtle, she believes. “If you commercialize it and rub it in people’s faces, it loses the benefit. But it works if it makes me feel better and I know my money is going to a place that cares,” she said.
Ryan Patel, a global brand-building executive, agrees. Corporate transparency is the future, he believes, and “the consumer will see whether it’s fake or not.”
So whether it’s H&M or Zara’s commitment to recycling garments or Hugo Boss’ sustainability efforts, he said, these corporate-based initiatives are vital to growth.
“This is not just a trend,” he said. “This is here to stay. Businesses need to take a stance on what’s important to their consumer. Those who are doing it right are moving to the top and giving others a blueprint to follow.”
Case in point is Outdoor Voices. Founded by Boulder, Colo., native Tyler Haney in 2013 as a gentler alternative to the athletic bravado championed by Nike and Under Armour, the company has so far attracted $22.5 million in funding from venture capitalist firms. What attracted these investors was Outdoor Voices’ unique market position in the red-hot fitness category.
Haney, who grew up hiking, running and doing every other sport under the sun, said she wanted to “create a brand about activity, but not performance.” The executive, who was named to Forbes’ 30 Under 30 list in 2016 and Fast Company’s 100 Most Creative People in Business this year, counts Gwyneth Paltrow, Lena Dunham and Allison Williams among the brand’s fans.
The company opened its first store in Austin, Tex., and now operates two units in New York — one in Dallas and one in Aspen — with Los Angeles and San Francisco bowing next month. “Our approach is to inspire people to get out there every day — frequently and consistently,” Haney said. “And we have a huge opportunity to flip macho performance activity on its head.”
For Outdoor Voices, “the future of athletics is not about being there first, but being there frequently,” she said. And having fun at the same time.
So in addition to the requisite leggings, T-shirts and sports bras, Outdoor Voices reaches out to a “community of recreationalists who prefer a pickup game with friends to slashing seconds off a time,” according to its web site, which also invites customers to “swing by” its stores to “hang out and suit up.”
“Our stores become a clubhouse for activities,” Haney said. “Dog walks, Pilates, yoga. And it’s become super-successful for us.” She said that 70 percent of Outdoor Voices’ business is still done online, but these activities drive traffic and awareness and ultimately, sales.
Ditto for Patagonia, although its mission is different.
“Consumers are feeling disempowered and are looking for ways to express themselves through brand purchases,” said Helena Barbour, vice president of global sportswear for the Ventura, Calif.-based brand. “At Patagonia, our internal mission is to inspire solutions.”
Since its founding in 1973 by Yvon Chouinard, the company has positioned itself at the forefront of environmental activism. It proudly calls itself “The Activist Company,” and touts: “At Patagonia, the protection and preservation of the environment isn’t what we do after hours. It’s the reason we’re in business and every day’s work.”
This unwavering commitment to sustainability and social responsibility “gives people a way to connect to the brand,” Barbour said. Calling their customers a “like-minded family,” the brand not only sells fleece pullovers and puffer coats, but its Patagonia Provisions directs shoppers to regenerative organic agriculture sources for dry goods, fish, grains and even beer.
“Customers are looking to make a difference by connecting with a company with similar views,” Barbour said.
In fact, over 200 people ponied up $5 each to attend a Patagonia event at the REI store in Seattle on Fair Trade. (The money was donated to The Conservation Alliance.) And an event on regenerative agriculture drew 600 people. “We end up being the connector,” Barbour said.
Patagonia’s own stores host similar events and draw like-minded people by inviting them through its social media channels and in-store staff, which is “engaged with the issues,” Barbour said. So while visiting to check out films on Fair Trade and munch sustainably produced chocolates, visitors also see fleece jackets displayed under a Fair Trade banner explaining that every purchase sends more money back to factory workers outside the U.S.
“It’s part of our ethos and DNA,” Barbour said. “Trying to do the right thing and run a business well are not mutually exclusive. People care, and they want more than just a purchase. They want to connect with things bigger than themselves.”
Ironically, that connecting has also made Patagonia a hit with the fashion world these days; its logo is suddenly popping up on the chests of trendsetters worldwide who are drawn to its authenticity. It’s further proof that consistency of message and “doing it your way” can actually drive recognition and sales.
While the message may be different, the community is just as strong at Vans.
Bobby Gascon, director of action sports marketing for the VF Corp.-owned skateboarding brand, said Vans has had “a sense of community from the beginning.”
The brand was founded in 1966 in Anaheim, Calif., and its first product was a deck shoe. Within a few years the skateboarding community in Southern California had embraced the brand for its ruggedness and sticky sole. Although the company went bankrupt in 1984, by 1991 it had rebounded and went public on the Nasdaq exchange. By that time, the core skateboarders were joined by BMX riders, surfers, snowboarders and other action sports fans who embraced the brand.
As early as 1995, Vans started sponsoring Warped Tour, the longest-running concert series in America, and the next year it sponsored the inaugural triple crown of skateboarding events.
In 2016, the brand created the Vans Park Series, a park terrain skateboarding world championship tour for men and women. Before Vans tossed its support behind the idea, “these kids would never get the platform they needed,” Gascon said. By including women, it’s also helping “uplift women who skate.” Skateboarding has been added to the 2020 Tokyo Olympics, Gascon said, which he expects to further fuel the category.
As it has from the beginning, Vans still believes it has a “responsibility to progress the culture,” Gascon said. And it views its customers as “part of our family. We have such a strong emotional connection and that’s pretty powerful.”
The brand has been owned by VF Corp. since 2004 and even though its parent is a multibillion-dollar corporation, Gascon said being part of a large conglomerate only benefits Vans by providing support on the back end and allowing the sales and marketing team to continue doing what they do best. “It’s about building brand equity and not maximizing profits,” he said.
That’s not to say the brand isn’t performing well. In the third quarter, VF reported that revenues overall increased 5 percent to $3.5 billion, driven in part by its outdoor and action sports coalition, most notably Vans, whose sales globally are leading the corporation with a 28 percent jump in the three months and 14 percent for the nine months ended Sept. 30.
Tommy Bahama has notched similar success for its parent company, Oxford Industries. In the second quarter, ended July 29, the corporation pointed to the strength of the Tommy Bahama brand and its 1.9 percent sales gain in the three months and 3.8 percent increase in the first half. Operating income also rose in that time frame, increasing 6.5 percent in the second quarter and 12 percent in the half.
“You can’t just focus on one-to-one selling of items or direct transactions,” believes Andy Comer, senior vice president of marketing and creative services for the Tommy Bahama brand. “You have to build a real relationship that is rooted in the expression of your lifestyle. We’ve learned that our guests want that connection with us.”
For Tommy Bahama, that connection is centered around becoming the definitive island lifestyle brand. That translates into everything from its signature woven shirts to indoor and outdoor furniture, home accessories, the food and drink it sells at its island-themed restaurants and bars around the country, and even an Airstream mobile home.
“People today want more storytelling and they’re looking for the Tommy Bahama point of view on everything from travel destinations to a dinner party to what to wear for a beach wedding,” Comer said.
The company’s motto is “Live the Island Life” and for Comer, “Everything we do in marketing over the next three to five years will be around expanding that community,” he said. “We have an enormous opportunity to talk, not only to our loyal base, but also to people who have a high potential to buy into what we do.”
Building a “stronger bridge” between the company’s retail stores and restaurants is part of the strategy, he said. “The Tommy Bahama store shopper is not necessarily a restaurant guest and vice versa,” he said. “So we have to connect the dots more.” And so, adding events where food and beverage are incorporated into the stores such as cooking classes, hand-crafted cocktail parties, live music, etc., will be a priority going forward.
“We’ll be doing more events that expose the unknown elements of the brand,” Comer said.
The need to truly connect with consumers doesn’t only apply to brands, however. Retailers also have to do so these days — and even successful online ones.
Mr Porter uses a weekly online magazine and targeted e-mails as tools to communicate with its customers. “Different people connect differently, so they can choose what they want to interact with,” said Dan Rookwood, U.S. editor.
There are videos that offer style advice as well as daily “bite-sized” bits on everything from keeping healthy at work to the man who reinvented Chilean cuisine.
Rookwood said Mr Porter also encourages customers to get in touch through its “You Ask” column on Fridays. “It’s the first time in my career that the questions haven’t been made up,” Rookwood said with a laugh.
Events are also a key part of the brand’s strategy — and will become more important in the future, both for Mr Porter and Porter, its women’s brand.
Recently, Porter named Sarah Bailey executive brand editor. She will be charged with further growing the Porter women’s brand through a series of events ranging from dinners and talks to galas.
Subscribers to the bimonthly Porter magazine shop more frequently on the site, 5.2 times a year versus 2.2 times a year for those who don’t subscribe, according to Net-a-porter, Mr Porter’s parent. Although the company doesn’t keep the same statistics for Mr Porter, men’s-skewed events offer customers “a different touch point,” Rookwood said. “Since we don’t have a physical store, they’re an opportunity for us to demonstrate the life of the brand and bring it to life.”
One of the most successful events was held in both New York and London for the Kingsman, a movie franchise for which the company created a men’s wear collection. A Made in California-themed event this spring where the company converted a “dilapidated Hollywood hotel to a Mr Porter experience” was also popular, he said. “That was the [most elaborate] event we’ve done and we really saw a sustained spike [in sales] after.” Other events center around new brand launches where customers can see the merchandise and chat with personal shoppers.
This fall, the company launched Mr P., a new private brand centered around essentials that has its own landing page on the web site, a dedicated Instagram handle and separate ad campaigns. Rookwood said that knowing its customers as well as it does gave the company the confidence to launch Mr P., and he’s expecting it to perform well.
“We’re investing a lot in events and sophisticated editorial,” he said, “and we wouldn’t do it unless it made strong commercial sense. We’re a business.”
Glossier, the women’s direct-to-consumer beauty brand, has also built its business by creating emotional connections with its customers.
The brand was founded by Emily Weiss in 2014 as an offshoot of her beauty site, Into the Gloss. It now boasts nearly 340,000 followers and is considered a pioneer in empowering its customers to interpret beauty in their own ways and share it with their peers.
When it entered the Canadian market last summer, Glossier hosted a community movie night as well as several dinners, and its entry into the U.K. was celebrated by a Sunday roast for members with the first customers receiving hand-delivered roses and Glossier sweatshirts.
The company’s success at creating a fellowship has caught the notice of the financial community. In fall 2016, Glossier raised $24 million in Series B funding from IVP with support from Index Ventures. This followed $10.4 million in seed and series A financing in 2014.
“We like to say that Glossier was born from content and built on community,” Weiss said. “Born from content because we’re a digitally native brand and built on community because we’re engaging with our customer to create a lifestyle around Glossier. Being digitally native lets us communicate directly with her through owned channels; we ask her what she’s looking for in a particular product, exchange content with her and give her a front seat to what’s happening at Glossier headquarters. Ultimately, I think it’s the inclusive and transparent friendship that we’ve built with our customer that fosters such a strong sense of community around the brand. We’re giving her a seat at the table and because of that she’s not only electing Glossier, but she’s sharing it with her friends and making it a part of her lifestyle.”
These success stories can serve as lessons for other companies, even large ones that on the surface can seem too big and unwieldy to truly connect with customers.
WSL’s Leibmann pointed to Coca-Cola’s commitment to local schools in South Africa as an example, as well as L’Oréal’s work supporting Women in Science, which she said is “mostly done very quietly as part of the corporate strategy.”
She said Target’s program where it has donated over $1 billion to 120,000-plus schools in the U.S. and overseas was also a success in terms of creating a feel-good response from its customers. But Gap’s Red campaign where it served as the apparel partner for the AIDS organization founded by Bono and Bobby Shriver “felt incredibly promotional,” she said.
On the other hand, Wal-Mart’s new marketing message where its commercials show people from all cultures having a meal at the same big table is “very subtle” and very effective in making customers feel more warm and fuzzy — and bonded — to the large retailer, she believes.
“This is soft and has a very rich message that people respond to,” she said, “and it might just make you reconsider what you think about Wal-Mart.”