APPAREL’S BLACK HOLE
Byline: Miles Socha
It was in the early 1990s when Connecticut retailer Jack Mitchell first detected a sea change in consumer expectations.
Suddenly, meeting expectations was no longer enough. He had to exceed them. It wasn’t about “transactions” anymore. It was about building relationships. And being reactive just didn’t cut it; proactive was the new way of doing business.
“It’s a customer focus and it’s a mind-set in our stores,” said Mitchell, chief executive officer of Mitchells of Westport and Richard’s of Greenwich. He credits that service philosophy, and a “bone-deep commitment” to technology, for doubling the business in the last five years and increasing more than fivefold the number of clients who spend over $5,000 a year in its stores. In 1992, there were 162. Last year, their ranks grew to 884.
In a panel discussion titled “Apparel’s Black Hole” — suggesting consumers’ dissatisfaction with clothes shopping — Mitchell had lots of suggestions for avoiding service pitfalls and for making the purchasing experience more enjoyable and productive.
“Transactions are not enough; relationships are everything….All of our operations are designed so that we stay intimate with the consumer,” he told Summit attendees. “Our customer mind-set starts at the top and permeates down. When you stay close to the customer, you listen and learn.”
Mitchell said every person in the company, including the comptroller and chief financial officer, is expected to spend time on the sales floor to learn about customers: what they do, their workplace dress codes, their lifestyles. He calls the entire staff his marketing department, each engaged in one-on-one marketing.
“How can your buyers not be on the floor?” he asked. His son, Bob, for example, is on the floor every Saturday, racking up sales of $500,000 a year and gleaning important information from customers, including what kind of amenities they most appreciate.
“The big secret behind this is we’ve built a team of very satisfied sales associates,” he said. “They do feel powerful, they do feel important and they get paid very well.”
Asked how long it took for his sales associates to grasp the consumer-focused orientation, Mitchell said some took a month or two, others up to a year. But he stressed that “once you get it bone deep, it becomes part of the culture.”
Other executives on the panel offered very different suggestions on how to improve the shopping experience for consumers who are less interested in clothes than they once were and frustrated by everything from long lines to ill-fitting styles.
Peter Gurney, founder and research director of Seattle-based Service Intelligence Inc., urged retailers to define their “best practices” based on how well they improve profits. He stressed that service initiatives must result in “a measurable and identifiable change in customer behavior.”
That’s been the case at Mercantile Stores Co. Inc., where a new entertainment-based format for selling activewear and footwear called ActiveZone boasts such amenities as juice bars, sport-specific merchandising and lots of video monitors pumping the adrenaline of shoppers with live-action sports broadcasts.
David Nichols, chairman and ceo of Mercantile, said the first location, in Augusta, Ga., opened in March and has posted sales 35 percent over plan to date. The activewear department is generating 4.2 percent of total store sales, which is well above the 3 percent figure in the balance of the company, he said.
“Each generation of retail has to redefine what constitutes a satisfying shopping experience,” agreed John T. Cody, president and chief operating officer of J.C. Penney Stores, Merchandising, Marketing and Catalog. “And expectations are rising. The American consumer is better educated, has more disposable income, less free time and more options.”
Citing new data from Kurt Salmon Associates, Cody noted that 80 percent of consumers say stores don’t seem to care about customers. The result is that 49 percent of customers, even if they come into a store knowing what they want, leave without making a purchase.
Today, good customer service requires adequate floor space, convenient merchandise adjacencies, knowledgeable sales associates, centralized and convenient cash wraps and the right product and stockkeeping unit in stock all the time, Cody said.
Acknowledging the latter criteria is the hardest to meet, Penney’s uses its catalog as a backup to improve customer satisfaction. Cody said that last year, eight million customers faced with a stockout were referred to the catalog, accounting for 10 percent of all catalog sales.
Looking ahead, Cody said Internet commerce holds “revolutionary” promise for retailers and that projections for apparel sales have been understated. He noted that the stereotype that most Internet surfers are male has already been shattered. According to Penney’s, 80 percent of those logging onto its site are women. Meg Rist, senior vice president at Sears, Roebuck & Co., also set out to defend the service strides made by department stores, which only 15 years ago Fortune magazine called dinosaurs awaiting extinction.
Once consumer research identified women as it core customer, Sears set about meeting her “hierarchy” of needs, which includes having the right merchandise in a fun place to shop. To meet those needs, Sears added more national apparel brands and introduced private brands like Canyon River Blues jeanswear, Rist said.
She acknowledged that Sears still needs to improve its ability to have the right products in stock when the customer wants it. But efforts to improve customer service have included: relieving sales associates of administrative duties and providing bonus and stock incentives, renovating stores, introducing a gift registry, holding more in-store events, introducing consumer-loyalty reward programs and aligning the Sears name with more charitable causes as a way to inspire loyalty.
“What we’ve done is to get us to parity,” she said. “There’s more work to be done.”
Don Henshall, ceo of Diesel USA Inc., stressed the entertainment factor, which the jeanswear firm conveys with its irreverent advertising and freestanding retail stores with such features as live deejays and espresso bars. He said entertainment is what helps innovative retailers like Starbucks sell specialty coffees for $2.50, when only a decade ago few would dream of spending more than 50 cents for a shot of caffeine.
During a lively question-and-answer segment, Barneys co-chairman and co-ceo Gene Pressman took the panelists to task for too stridently stressing consumer research and ignoring the need for retailers to take risks with product.
“It’s kind of ironic that I’m asking a question about risk-taking,” Pressman offered, “but retailers are too preoccupied giving the consumer the product they want, instead of looking for new people and new designers. I think there has to be a balance and the retailer has to take a leadership role. A lot of buyers today are order takers just selling the same proven people. It’s more about real estate than picking the best items. Most stores look the same, with no point of view or focus.”
Henshall agreed. “Consumers don’t necessarily know what they want,” he said, alluding to consumer-driven car clinics conducted by Ford in the 1980s that generated bland automobile design. “Too many brands start with basics and then think about adding some icing as an afterthought. The consumer can see through that. We begin with fashion and then add basics.”