Brands continue to assess how their consumers and businesses have dramatically changed during the pandemic.
In a conversation between Gabby Hirata, president of Diane von Furstenberg, and Sebastian Siemiatkowski, chief executive officer of Klarna, the executives spoke about ways in which the consumer has changed her shopping habits and how brands have adapted to the new environment. Livestreaming, fewer online returns and using data effectively were among the key topics addressed.
Hirata noted that the DVF business changed in a drastic way during the pandemic. The company closed most of its stores, except for the flagship in New York’s Meatpacking District, one in Belgium and 60 in China, and pivoted their customers to dvf.com. “It’s super important for us to really give her those retail store services on dvf.com,” said Hirata, citing such things as chatting online and making returns and payment as easy as possible.
Siemiatkowski said he’s seen a “massive acceleration to the digital aspect of things.” At first, consumers were hoarding essential food and supplies and then they realized they needed to start moving again and began buying sneakers and equipment and buying clothes to wear at home, versus buying clothing for parties on the weekend.
According to Siemiatkowski, a major development was that return rates dropped massively in Europe and the U.S. He also said customers started buying more luxury items. He explained that the pandemic affected a portion of the population who lost their jobs, but said that was the minority. The majority has been on a savings program for 25 months and hasn’t spent money on travel, so they had more disposable income, he said. They’re saving, paying down debt and buying more luxury clothing and things that will last. He said return rates haven’t come back to where they were before the pandemic.
Hirata, however, said she hasn’t seen a slowing down in return rates. She said the brand is fashion driven and its average price point is $400. She noted that she budgets her business to allow customers to buy the same product in different sizes to find the best fit. She said their return rates really didn’t change, but the e-commerce to store ratio basically doubled from before the pandemic.
Asked how they’re communicating their brand values to the consumer and how that has evolved during the pandemic, Hirata said at the beginning of the pandemic, she started a livestream with von Furstenberg. They took the viewer from the ground floor all the way up to DVF’s private office. “We find that really exciting and two-way communication is our best solution during the pandemic. We probably will continue after the pandemic is gone,” she said.
“She is the best livestream, hands down,” said Hirata, describing von Furstenberg’s outgoing personality. “That’s because she’s very spontaneous. One word she likes a lot is ‘provocative.'” Hirata said she’s able to read the questions and comments on the screen and relay them to the designer. “She gets into that vibe, really talking back to the viewers. I often encourage live comments and questions. I always think about value proposition. Why I am deserving of 40 minutes of someone’s time? It must be special. You get to talk to DVF immediately and get the most authentic answer. That’s the trick,” Hirata said.
Discussing the broader view of livestreaming, Siemiatkowski said China is far advanced to what is happening in the U.S. When speaking to merchants such as Macy’s, he said, brands are not only experimenting but have solid business results. In addition to product, brand and platform, the curation aspect is important, he said. These days, brands have their own channels, citing a favorite example, Oatly non-milk, which has its own livestreaming channel where a curator talks about boxes of Oatly and buying it directly from Oatly. “You have a whole industry in China around curators who have become superstars,” he said..
Turning to the importance of gathering data, Hirata said it’s hard for an independent fashion brand to have a clear understanding of customer data and to use that data to impact and optimize future decisions. “It’s hard for fashion brands like ours because our products are pretty complicated. They’re not batteries, toilet paper. They have emotional layers of elements here,” she said.
DVF made it a priority to increase technology to understand customers better, to invest in the product, to design and optimize the product assortment based on the e-commerce customer. It’s changing their way of thinking.
“Changing is very difficult for the industry because a lot of our technologies are based on 50 years ago,” Hirata said. She said their dot-com customer isn’t buying 50 things, they’re not Sephora. “She comes to DVF to buy what she knows.…We’re known for the wrap dress.” Instead of making 50 dresses, they’ll make two best wrap dresses in 10 different prints. “If you go to dvf.com right now, we make it very easy for her to understand the product,” she said. The whole design team has to be customer driven, not design driven. They cut back on the nonapparel, non-wrap dress items. “Customers have so many choices and so many places to shop from in so many different ways,” she said.
Siemiatkowski said, “We’re very excited and proud that DVF has decided to work with us. This is the biggest secret of Klarna’s success. People think we’re buy now, pay later. We have recently signed up tremendous amount of LVMH and Kering brands, Net-a-porter, Farfetch, Burberry….The discussions with those partners are not about buy now, pay later, but the data piece is a part of the conversation.” He said as a payments customer, they can help signal to a partner what are their interests and what is their purchase history.
“What we believe is that a payments company should be able to signal this to a retailer and curator as well as to a brand to help increase the livelihood of serving them the right product. We can help profile who this customer is. They want to share that. By sharing some of this data, you can recreate that whole boutique experience you had 50 or 60 years ago, where they will know you and what you prefer but in a digital environment,” he said.
In the U.S., Klarna is in 68,000 stores and just revealed an agreement with Simon Malls. “Part of what we’re about to roll out with our partners is the ability to recognize who just went into your store, who is that person and what’s their preference. This is very key to us and we think it’s our job,” he said.
Looking ahead, Hirata said, “I think a key word here is focus, from the product, and narrowing down the product to really reflect what our core competence is, and what DVF can provide and no one else. I think every single brand needs to think from that angle. What is the unique value proposition that you offer to your customers? For us, it’s providing confidence to women around the world.”
Hirata said there’s a two-year timeline to make dvf.com a destination for all women to find knowledge, connection, content or product that makes them feel more confident of becoming the woman they want to be, which is von Furstenberg’s mantra. “If we execute everything right — product, technology and storytelling — and give her something that’s useful, I think dvf.com will become that destination.”
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