What’s the return on investment of culture? Why do some refer to customers now as “guests?” Can you still be a tech company if you have physical stores? If the era of transactions is done, what about Amazon?
These were the heavy-hitting questions on the docket at a SxSW discussion on culture in retail, but one conclusion was indisputable: The world of retail — online, off-line, and in between (virtual reality, anyone?) — is full of options, and of change.
Elle editor in chief Robbie Myers hosted the talk with panelists Rick Badgley of Toms, Ethan Song of Frank and Oak and Lacey Norton of Kit and Ace. The conversation covered the nebulous concepts of creating a community, generating participation with the brand and the store’s evolving role as an entertainment destination.
Myers began the talk by emphasizing the steadfast predominance of brick-and-mortar retail for most transactions in the U.S., comparing the billions spent online in 2015 to the trillions spent in physical stores, and reminded the packed house that almost half of online sales are attributed to Amazon, Apple, Wal-Mart and Staples.
Badgley shared the company’s approach to balancing between a philanthropic approach — Toms donates one pair of shoes for every pair that is purchase — and justifying every square inch of retail space.
“The new loyalty is participation for us, of those who come into our stores and experience interaction with our associates, we know the spending habits of those individuals are three times as much, so there is a revenue aspect,” he said. The return on the investment is that “they believe in us and they’ll come back time and again; we aren’t fast fashion, we can’t keep up with H&M, but it pays dividends for years to come.”
Plus, he said, “You cant go online and build a succulent garden like you can in our stores.”
Song, whose Frank and Oak started as e-commerce, said it was less about stores, and more about a relationship and being local. And in response to that Amazon question of transactions versus meaningful connections, Song countered that most brands don’t plan to, and can’t afford to, have the scale that Amazon does, so they compete in other ways. “What you own is not square footage or e-mails,” he said. “You own the values of the customer.”
Norton said this was among the reasons that, unlike Wal-Mart for example, each store is tailored to its geographic location. She also said the brand’s supper clubs, meant to bring people together, was another tool they have used to create a sense of culture and community among potential customers.
“It’s about bringing people together and rallying around beliefs,” she said, when Myers pressed to see how this translated into sales. “If you feel our product supports the lifestyle you lead, it’s a win for everyone.”
Badgley said, it’s a balance, as investors still look at the bottom line.
Perhaps Song, who went so far as to characterize apparel brands as media companies, summarized the “bottom line” of culture in retail best: “You still need an amazing product. The e-commerce business is extremely important, and just having an amazing in-store experience isn’t enough.”