Fashion is having a knowledge-is-power moment.
When luxury powerhouse Chanel said last week that it would transition its wholesale business into a concession model, it signaled real changes for its accounts, from Bergdorf Goodman to Saks Fifth Avenue to Bloomingdale’s.
But beyond the ability to more directly control its image in department stores, in part through hiring 700 people, the new arrangement takes the retailers out of the equation in a very important way and connects Chanel right with its end customer.
Control over customer data is one of the biggest advantages of moving to a concession model.
“It means owning the client experience and being able to connect the touch points for the shopper,” John Galantic, president and chief operating officer of Chanel, told WWD in a rare interview. “So the visit to a Neiman’s or Saks or a Chanel boutique, whether it’s fashion, watch or fine jewelry, is part of the same brand and not happening in different silos.”
Chanel wants to own the Chanel experience and the Chanel customer.
In many ways, Galantic is reading from the same script as Alibaba, the giant Chinese e-commerce giant that has made a point of being where buyer meets seller even if the sale happens in a brick-and-mortar shop.
Michael Evans, Alibaba group president, has said: “We’re very happy for people to come online and search and look and have an experience and then go off-line to buy the products because we’re going to track the data either way, we’re tracking what they’re searching for what they’re looking for, how much they’re spending. They’re going to use their Alipay app to buy in the off-line stores. We can see what they’re buying.”
That kind of visibility is more important than ever.
If Alibaba — or any merchant — knows their shoppers are going elsewhere for a certain product, they can react and bring that competitor into the fold or find an alternative and market directly to the shoppers who have strayed.
Retail has always been awash in sales data, but the web has opened up new avenues to the nitty gritty details of their customer’s lives. And those details are being used in increasingly sophisticated ways. Big splashy marketing come ons in magazines have been replaced with exercises in digital micro targeting.
“The path to the consumer has changed,” said Marcie Merriman, Americas cultural insights and customer strategy leader at consultancy EY. “If [brands] don’t take more ownership of it, they’re going to end up in a very challenging situation.”
Customer expectations have been reset, she said. Shoppers are now used to having their own preferences reflected in their online browsing and are less patient and looking for more when it comes to hunting through physical stores.
Retailers need to know what their shoppers want if they’re going to meet their needs.
And while the information on what shoppers buy, when they buy it and how much they spent has long been available, putting that knowledge to real work has been hard until recently.
“Even if the data had been there before, there just wasn’t the bandwidth and the capability to do the quick and meaningful analysis that there is now,” Merriman said. “And there is going to be more of in the future.”
It’s the rise of artificial intelligence has suddenly made it possible to make sense of that data and put the insights to use.
But it’s a fast-moving work in progress.
“This is fundamentally different than even a year ago,” said Sarah Engel, chief marketing officer of DynamicAction, a prescriptive analytics firm. “Customer data is the new sustainable energy, we’ve moved beyond this broad stroke, big data concept. You’re unique understanding and your relationship with your customer is your most-valuable resource. It’s something Amazon and none of your other competitors have.”
The industry is still learning how to talk about the art and science of using customer data in a more targeted way and building a lexicon.
Engel said executives talk about their company’s “customer centricity” or how they’re evolving to a “customer first model,” but what they’re getting at is how they’re using massive amounts of data to understand their customers.
Mom-and-pop boutiques can “know” their customers, national chains with thousands of employees and supply chains that reach around the world, need some help.
“If you have a million customers, you almost have a million opportunities to have a different type of interactions,” she said.
As more companies pull off the feat of giving something like individualized attention to shoppers, more consumers are going to expect it.
“I don’t believe there’s an option not to evolve in this way,” Engel said. “The customers are not going to allow it.”
And that seems to hold true, from Chanel to Alibaba and beyond.