What Do Big Retailers Fear? You!

What Do Big Retailers Fear? You!
‘The Future of retail can be the highstreet, if it’s a good highstreet’ Robin Lewis, CEO, The Robin Report

I visited the World Retail Congress in Dubai to see what the world’s leading retailers are up to, and how they feel about their own progress in giving modern customers what they want. I went because although the growth strategy for Calvin Klein is a long way from that of my local independent boutique in Oxfordshire, I wanted to see what we, in the Independent Retail community could learn from the biggest and best. I also suspected there might be opportunities discussed that smaller retailers are best placed to take advantage of, and I wasn’t wrong.

I came away really excited despite the fact that brands like Macy’s, Marks and Spencer and lots of the other retailers present, are having a nightmare keeping up with customers changing demands. My unseemly optimism was down to things I heard constantly repeated during the event: The key to sustainable retail is catering to young consumers who want:

  1. An experience. Might be emotional, might be entertaining, but not just ‘stuff’, it might even be that your products deliver this by having a story of their own.

  2. A sense of place, a local connection. A shop that’s a part of a community, perhaps with products that are linked to the area, perhaps an online shop with a strong regional personality

  3. A personal service. People who say hello, emails that tell your best customers when they’re favourite soap has been delivered, packaging that says thank you.

Huge stores like Waterstones are opening pretend independent shops to imitate those things and all progressive multinational retailers are spending huge sums on their customer data, so that they can create the impression of personal engagement. Actual indies have this already, and this presents a huge opportunity to make the most of what comes naturally to them and use it to become a destination in their area.

Waterstones actually had a great year, despite Amazon’s total domination of the book market, by using their experience and book recommendations to stand out.

For inspiration from larger retailers on elements you might want to adapt for your own store, follow the advice of Martin Newman Founder of famous consultancy Practicology, and check out:

  • Rapha. The cycle retailer has styled its stores a club houses and offers an amazing array of events, a real sense of community. Revenues areup 30% on the previous 12 months, so what they’re doing is obviously working.

  • Jo Malone’s new store, Jo Loves. 92% of people who took part in her Perfume Painting experience went on to make a purchase. Take a look at her new initiatives for inspiration on making your store an unexpected delight for customers.

With the ability to change direction and respond to the customer, at speeds that large retailers can only dream of, indies are perfectly placed to offer the kind of retail experience consumers want. I know it’s very difficult to take time away from the day to day management to look at how to develop your store, or in the words of Exec Director of M&S Patrick Bousquet-Chavanne, answer the question, “What do you want to be when you grow up”;. But the rapid changes in the industry have created an opportunity, and it’s important to take it now.

I’ve picked out five of the most important quotes I heard during the congress. I hope you find them useful. If you’d like us to follow up on any of these topics to get more detail for you, email me!

“A customer who engages with us on more than one platform is 5 times more valuable to us than one who only engages with us on one” Terry Lundgren, Chairman, Macy’s

This means that if one of your customers likes your Facebook post and buys then something from you in-store for instance, that person is much more likely to buy from you again, and to spend more than if they’d only popped into the shop. You could use:

  • Pinterest, Facebook, Instagram,

  • An online store, a pop up shop,

  • A guest blog/ Q&A on a local publication,

  • Events in your garden centre

  • Sponsorship of your local football team.

There are loads of different ways to give your potential customers an opportunity to build trust in and interest in your shop. None of which require a Macy’s budget and 728 stores!

“When we opened Bloomingdales in Kuwait we made it a women-only store. This was controversial and took a lot of convincing the board but it’s highly successful. Don’t be afraid to take a risk if you know what your customers want” Khalid Al Tayer, CEO, Al Tayer Insignia

You’re probably not expanding to Kuwait but the willingness to listen to local customers made Bloomingdales a lot of money, so there’s no reason it can’t do the same for you.

  • If you’re looking to open a second store don’t just reproduce your product range and call it a day. Conduct local research to see if incomes, tastes, age groups etc are different. Invite yourself to local community groups – golf, mums and toddlers, WI, swing dancing and ask them what they would like to be able to buy from you.

  • When you’re sure, take a risk, whether in a new store or the existing one. If you know from your research and experience that your customers want a range of socks with flamingos, don’t buy black tights instead just to be safe, they can buy those anywhere.

  • Tell your customers about what you’ve done for them. If you’ve opened a new shop, or taken another risk, GO BIG in telling people about it. Why you did it, how excited you are, where to buy and how, and make sure you’ve got it online! It’s where people look for new things.

“83% of customers want a personalised experience” Brian Elliot, Managing Partner, McKinsey

McKinsey advise huge corporations on how to transform their businesses and Brian talked a lot about using big data to give a personal experience. The end game is a series of actions based on using customer information, to make more money for the retailers. Some key tricks the big boys use:

  • Using personalisation to shift old stock. Offer customers who have purchased a product before, a small discount before it goes on sale. Ie: ‘Mrs Jones, you bought a Cath Kidstone gardening fork from us in June. We’d like to offer you a 10% discount on the rest of the range, to give you first choice before it goes on sale’. This can help you get better margins on products prior to heavier discounting.

  • Tell people who tried to buy something, when it’s back in stock.

  • Send people relevant content. For instance, a tip sheet you’ve written on how to style a jumpsuit for a wedding, sent to women in their 30s. Or chatting to people in-store, about the occasion they’re buying for, and making suggestions.

Some of these work best if you have your customers email addresses or home addresses. If you don’t have those, it might be time to start thinking about how to collect them. Don’t forget though, the reason big retail focusses on email is because they cannot realistically offer a personal service instore (with new interactive changing rooms, this is just around the corner for the fashion industry). If you know your best customers by name, and/or have well trained staff, you can create a personal service, but without a system to record what your customer loves, it is difficult to keep track.

“On Amazon, small no-name brands are the biggest competitors to brands like Sony and L’Oreal” Spencer Millerberg, Founder, One Click Retail.

Amazon is a key reason for the decline of big retail and in the small retail community we need to recognise its influence without being intimidated. One Click Retail analyse product sales on Amazon. If you’re thinking about using Amazon for your own gain, here are some tips from a company that tracks how products perform on the platform. They advise companies like Unilever and Nestle.

  • 90% of purchases begin with the search bar. Nobody chooses the ‘shop by department’ option

  • To take advantage of that, describe your product using words the customer will search for eg, Soap not ‘cleansing bar (a mistake Dove made!), and fish tank rather than an aquatic orb. Good search terms result in more people to your product page, it generates traffic.

  • 95% of customers look at ALL the photos and these are the best way to convert the people who visit your product page, to paying customers.

  • Most customers don’t scroll down to the bottom of the product page, they just look at the top part ‘above the fold’ and all the pictures. Make sure the text and photos at the top of the listing are detailed and interesting enough that the customer can feel confident purchasing from you.

Working on these until you’ve managed to get onto the first page of the search results will put you in a position to compete on a level playing field with enormous conglomerates. And if you’re getting good reviews there’s no reason you can’t outsell Sony!

“Department Store retail now makes up 2% of the total retail market. It used to be 10% and we’ve seen 10yrs of steady decline.” Robin Lewis, CEO, The Robin Report

The big thing I took from this fascinating session was that ‘big stores are not cool’. As young consumers look to experience and discover things, driving to an out of town retail park and wandering around DFS doesn’t cut it. The Big Box formats are only surviving in the US (where they lead, we follow) if they operate like neighbourhoods, with sports, community, great food, farmers markets ie a Highstreet!

Robin said, ‘The Future of retail can be the highstreet, if it’s a good highstreet’, and he’s got a lot of data to back it up.

  • Independents have a better profit potential than Big Box retail. A single brand/store personality, and an intimate, social atmosphere is where the potential is. Ralph Lauren, Gap, Levi all missed the boat with this and got confusing and stale

  • The small shop has better potential to offer generation Z customers want they want

  • Cause-based retailing really sells now, trust is important. Eg, selling a product that you know contributes to charity, or is made from waste plastic, or by disadvantaged people will appeal to young buyers. You can work with tiny, unique suppliers, big retailers cannot.

  • Sharing, renting and swapping are becoming very popular, small shops find it easier to offer this.

  • Bricks and mortar have the huge advantage of being able to offer an online and offline service, with customers who have access to multiple platforms spending 3,4,5 times more, this is a huge asset. Pure online retailers struggle to offer that.

His parting shot. “The consumer has changed totally” Small start-ups are going to chip away at the big stores because they can’t move fast enough.

Amazon is a big beast but it’s a great place for would be online-indie retailers to get started. Testing products, making sure you’re logistics and systems work etc, before you start to offer a full range under your own steam.

In conclusion:

As Macy’s put it ‘Why would a 25 year old want to drive to an out of town store to look at a huge building filled with stuff, when they could buy it online and then go rock climbing. We need to provide an experience’.

Our independent shops can offer that experience.

Get in touch with me if you’re doing a great job of making shopping fun. I’d love to interview you about what you’re up to.