Although there’s some nervousness in the market regarding the second half — especially how apparel, outerwear and accessories will perform during the holiday shopping season — analysts and solution providers note that for every challenge, there’s an opportunity.
Moreover, it’s not too late to start deploying strategies and technologies around marketing to acquire new consumers and boost sales while also being mindful of the demands of today’s shoppers, who want to quick delivery and hassle-free returns.
At the moment, the apparel and accessories segment seems to be struggling as retailers head into the fall selling season. In a research note Monday, Ike Boruchow, senior analyst at Wells Fargo Securities, cited data from ShopperTrak that showed same-store traffic worsened, from declines of 5 to 6 percent in June and July to 6.3 percent for August.
That said, Boruchow said the past two weeks were better than the first week of the month. “In fact, the week-four performance was actually the best traffic performance for the group [apparel and accessories retailers] in 25 weeks (excluding holiday-shift weeks),” he said. “Interestingly, the traffic improvement in the last two weeks of August corresponded with weather getting a little more favorable (though still a little warmer, year-over-year).”
Boruchow said this could prove to be important as forecasts are calling for cooler temperatures for early September. “Given the warm fall-winter season last year, which dampened demand for cold-weather apparel and accessories, retailers are likely hoping for a cool second-half this year,” he added.
Meanwhile, analysts at Telsey Advisory Group said while the retail market is “showing pockets of strength as well as weakness, we came out of the second-quarter earnings period pleasantly surprised at the operational discipline displayed by many of the companies within our apparel and department-store coverage universe.
“With fashion trends emerging, such as denim, and inventories in good shape, a more level playing field appears to be taking shape,” the analysts told clients in their research note.
From an operational perspective, lean inventories and strength in denim is good news. But retailers and fashion apparel brands still have a lot of work to do — even if the field is more level — especially in regard to gaining new customers and retaining old ones while delivering a top-notch shopping experience. With retention strategies, there are no quick, short-term tactics.
Neil Lustig, chief executive officer of Sailthru, a cross-channel marketing firm, said research studies “repeatedly emphasize the benefits of increasing investments in customer retention. But the big question is how marketers can make the transition from prioritizing short-term conversion to programs that foster long-term, profitable growth when quarterly goals need to be met.”
Lustig said clients such as Rent the Runway and Betabrand “are breaking down the wall that traditionally has divided their marketing data, teams, and channels by using long-term retention data to optimize acquisition [of consumers].”
“The new customers these retailers are acquiring cost less to convert and, in the long-term, are higher value than those brought in through traditional methods,” Lustig explained. “Essentially, they’ve discovered that the ‘silver bullet’ to promoting retention is through acquisition.”
Eric Porres, chief marketing officer at Sailthru, said companies have to go beyond having a single view of the consumer. He said successful companies “act on the data asset they’ve built over time. The challenge for the vast majority of retailers is to identify technologies that truly enable, rather than disable, modern marketing.”
Porres said what’s hamstringing many retailers is outdated, legacy technology that offers up consumer data in a fragmented way.
“But all hope is not lost,” he said. “Modern marketing technology exists where retailers can seamlessly manage email, web site and mobile experiences from one provider, and have all of the rich customer interaction and transaction data from those channels collected in one universal customer profile.”
Increasingly, the role of fulfillment is becoming more important as well, as shoppers demand quick delivery. Amit Sharma, founder and chief executive officer of shopping experience solution provider Narvar, said today’s consumers “expect instant visibility, knowledge and gratification in every aspect of their lives.”
“As real-time information and instant delivery become mainstream, brands must keep focus on fulfillment and returns as a place to engage customers rather than as a back-end function,” Sharma said. “Shoppers are both more excited and more stressed than usual during the holidays, so getting real-time information about where their purchases are is especially critical to avoid gifting disappointment.”
And then there’s the issue of returns, which becomes more amplified during the holiday shopping season. Sharma said returns “can be a huge pain point for consumers and retailers.”
“It’s frequently a frustrating, complicated process accompanied by customer service phone trees, ugly emails and a trip to an overcrowded mall,” Sharma said. “Retailers feel the pain as well. It can cost double the amount for a product to be returned into the supply chain as it does to deliver it. When returns start pouring in, products are often routed to the least optimal location (warehouse-distribution center, or vendor) and often using a freight type that’s more expensive than it should be.”
“All this adds up to less cost efficiency for retailers as they attempt to balance their business operations with customer experience,” Sharma added.