Merchants will have to be everywhere — and do everything — to compete in the future.
Mastering the brick-and-click art of omnichannel is just the start. To thrive, brands will also have to know how to market to more than just Millennials, better understand their core demographic and become expert at leveraging data.
That was the word from industry executives and experts hosted by HSBC for “Disruption and Innovation: What’s Next for the Global Retail Market.” The event, held in Manhattan this week, offered different approaches for keeping pace with technology’s fast-moving beat. Here are some places to start.
Brands were once limited to selling in stores or the rare catalogue. E-commerce was a game-changer. And then so was social media as the paths to consumers quickly multiplied.
“The barriers for entering the industry have come way down,” Lisa Myers, a partner at private equity giant L Catterton, said during a panel discussion.
With the seemingly endless number of brands popping up in store and online, bigger companies are losing market share to smaller start-ups that offer shoppers something new.
“The days of the billion-dollar company might be a thing of the past,” Myers said.
Businesses cannot afford to focus on just their core channel. Companies need to be everywhere and follow the lead of Walmart Inc. or Macy’s Inc., which continue to invest in their digital presence and brands born online.
“Consumers are engaging with brands whenever and wherever they want,” Myers said. “But I don’t think that means the store is going away. Staying online-only is a very limited strategy.”
Even so, the omnichanel approach is complex process and doesn’t always work out as expected.
“When the e-commerce wave hit us, we tried to do omnichannel…[but] that was a disaster,” said Sarah LaFleur, founder and chief executive officer at MM.LaFleur, a brand for professional women, during a different panel discussion.
The biggest lesson she learned was that products sell for different reasons online versus in real life.
LaFleur said cost is the most important factor online.
“When you walk into a store, price is maybe one of 10 things that you’re considering. You try it on. [You think] do you like the fit? Is the sales associate helpful?” she said. “Online you can make anything look beautiful. That’s why if you want to be an e-commerce only player, or a strictly digitally native brand, price is actually where you have to be most competitive.”
Instead, she said MM.LaFleur has been successful by offering something shoppers something else: time.
The company helps busy professionals pick out their work outfits, something she said tripled MM.LaFleur’s revenues nearly overnight.
“Nothing else about the business changed — our product is exactly the same, the pricing was exactly the same, the branding is exactly the same,” LaFleur said when the company first started offering the service of curating outfits. “It was all about how you’re telling the customer how they could shop with us.”
Know Your ‘Core Tribe,’ but Don’t Market to Just Them
Consumers care less about a company’s size, margins or even sustainability then they do about style and quality, said Chris Carey, a principal at Stripes Group, a venture capital firm in New York.
That means companies need to know what their customer base, or what experts call the “core tribe,” values and cater to them accordingly.
Anthony Choe, founder and managing partner of Provenance, a brand management firm based in southern California, said consumers often pick brands like they pick their friends: if their values and interests align.
“Does the brand speak to my aesthetic? If there is a political leaning, does it align with mine?” Choe said. “A lot of that has to do with social media.”
But Choe warned retailers not to think too small.
In an effort to seem fashionable, Choe said, many companies are focusing too much on the Millennial audience. But he said a slightly older demographic, roughly somewhere between 45 and 52 years old, currently have the most purchasing power.
“You want to be relevant to the next generation. Because that’s the future,” Choe said. “But a business focused on one group of people is too narrow a path. It won’t be as big.”
Using Data as a Tool
Customer data remains an important resource, allowing retailers and companies to tap into insight that could help them predict the future. Data also allows brands to control their images more easily and engage with individual shoppers.
Even so, Rosen said algorithms can only go so far.
“Data helps you make smarter decisions,” he said. “But you can only use data on strategy, operational and financial decisions. Ultimately, there is a creative judgment you have to make [about the business] and that’s emotional.”
Rosen said companies “need to be led by visions and visionaries and not just data. Without the vision the data is not going to get you anywhere.”
Watching Wearable Apparel
As consumers grow bored with their cell phones, wearable technology might be the next frontier.
But there’s a catch: It has to provide function, style and data.
That could come in the form of attractive-looking Lululemon yoga pants that tell you if you stretched too much. Or, a stylish dress that answers e-mails.
Seismic, a San Francisco start-up, is currently testing “robotic clothing,” or bodysuit that come equipped with ergonomic technology.
The apparel company’s line of robotic styles, which haven’t been released to market yet, would alert wearers if they’ve been sitting for too long. Or, perhaps if they need to slow down their workout. It also supports muscles post-workout.
“We need wearable technology as the world ages,” Rich Mahoney, cofounder and ceo of Seismic, said during a presentation.