The implications of consumers preferring to have experiences over buying physical products is having a profound impact on the fashion and retail markets. This shift is also occurring at a time when consumers — regardless of household income level — are more frugal about how and where they spend their money.
Simultaneously, Millennials continue to be more brand agnostic. When they do embrace a brand or product, it has to have a compelling narrative behind it that is also authentic.
Here, global executive Ryan Patel, board adviser to social enterprise company GIVN Goods Inc. and mobile platform provider Nirvana XP as well as the former vice president of global development at Pinkberry, discusses these trends as well as how retailers can use data and technology in a more informed way.
WWD: Consumers seem to be shifting toward experiences over “buying things.” But what does that really mean? Isn’t shopping itself an experience?
Ryan Patel: It means that no matter the value of the product, there still needs to be a good experience associated to it. Yes, shopping itself is an experience; however, there are so many ways to enhance the consumer’s experience to the product, such as e-commerce, corporate responsibility and even as simple as customer service. Many brands are elevating in all realms of these areas. This elevation, especially in experiential marketing for brands, has created expectations from the consumer on the product and their experience to the product. Can the product tell its own story? Can the consumer relate and know the differentiation between products and brands without anyone assisting them? We live in a world where consumers want to instantly understand the product and the brand’s mission.
Ultimately, the brands want to provide the consistent type of experiences from products to the interactions with and authenticity of the brand.
WWD: Behavioral scientists note that consumers — especially Millennials — are craving authenticity when making purchases. They also seek out the narratives behind a product, store and brand and expect greater transparency. Who do you think is doing a good job of meeting these consumer demands, and why does it work?
R.P.: I am definitely in agreement that consumers appreciate companies who stay true to their mission and product credo. This appreciation is creating a demand for more than just purchasing a product. One brand that comes top of mind is [footwear company] Toms. They have done a tremendous job with that, especially when it comes to these types of narratives. When Toms arrived, it was very easy for the consumer to understand its “one-for-one” model. They were immediately able to create authenticity and a bond with its consumer. Through its mission-driven social responsibility, it has become a mainstream brand that has leveraged its core values into other product lines (i.e., eyewear, coffee, etc). They have furthered the industry standard with this and now have a majority of consumers asking their favorite brands about their social responsibility and what they are giving back to the community. With the Millennials being a large force, this question needs to be answered and cannot be ignored by growing companies.
Another brand I think is doing a good job in creating a type of authenticity in the community is MOD Pizza. This authenticity begins for MOD with their hiring process. MOD has instilled not to exclude anyone who is looking for a “second chance” and that has paid tremendous dividends in not just creating high employee morale or positive culture, but also a stronger tie and relevancies to the communities that they are in. They are building a foundation of not just authenticity but credibility in a whole different way.
WWD: There’s a lot of data generated in the retail industry. Do you think companies are using it in the right way? Why or why not?
R.P.: True, there is a tremendous amount of raw data at the fingertips to the industry now, but whether companies are using it in “the right way,” that is tricky to answer. It can be a daunting task to properly formulate strong inferences and strategy to all the raw data generated, especially in a fast-paced environment.
Also, if there was an absolute “right way” of using retail data to make companies successful, then everyone would be successful and never fail, in what I would call the rights to use data to inform on better decision-making for the brand. One way that companies are applying this is to make an investment into analytics and integrating it to be part of the decision-making process. This includes not only dedicating resources but also hiring the appropriate talent whose skill sets are phenomenal in data gathering and analysis. As the retail space continues to be very competitive, data analytics is one of the ways that can help retailers differentiate and improve decision-making, so their business can achieve its goals.
WWD: Why do you think so many retailers are slow to adopt new technologies? And when and where does it make sense to invest?
R.P.: The issues with adopting technology are mainly two things: cost and trust. Many retailers and executives have been burned in the past by new technology, either with certain vendors or decisions based on wrong data. In addition, companies generally need to dedicated resources for the implementation process of the adopted new technology. This typically causes downtime and shifts focus away from other core initiatives by the company which need more attention.
But with that said, there are plenty of benefits of being an early adopter to new technologies. Retailers need to investigate more into new technologies. For example, many new technologies help companies stay better connected with their consumers along with helping to grow and maintain their business model as well. When you can build a solid strategic plan and vision for both short- and long-term goals for the company, it becomes a much easier discussion and decision on whether to add new technologies or not. Many companies are starting to invest earlier in some segments of the business which can lead to future growth. By dipping your toe in the water with new technology, you can learn a lot and build the confidence of not being afraid to adopt newer ones any time you feel there is a competitive advantage.
WWD: In regard to the international market, what trends do you notice that are worth exploring?
R.P.: Many of these international markets are very sophisticated, but one trend worth exploring is the influences across markets. For example, the consumers, who do not get enough credit for this, are big influencers beyond their own market (i.e. in other global markets). This shift has been seen with the power of social media and its reach. This aligns with many of the retailers who have had success internationally because their products and designs are locally adapted. It is now time to explore and take the local tastes and bring into other markets, specifically in the U.S. where there has been a growing trend and appetite. When this is done right, it can potentially be a game-changing attribute for companies in the domestic and international markets. They can have a whole different line, vision and a new type of consumers across markets.