How are retailers winning spend in a crowded market? A selection of industry experts aired their views on connecting with the customer both online and in store.
No matter how retailers choose to interact and reach out to their consumers, whether it be across multiple channels or via the use of innovative in-store technology, it will be those that offer a well-differentiated product and personalised service that prosper.
This was the overarching message among delegates from the likes of department stores John Lewis and Harrods, and womenswear chains Topshop and Oasis, in attendance at Drapers’ Customer Insight roundtable on May 15, held at The May Fair Hotel in London in association with consumer insight and data provider Kantar Media Compete and digital marketing, ecommerce and website design agency WMpS.
Drapers’ Customer Insight report found that a 31% majority of consumers buy clothing every two to three months, with 61% citing value as the deciding factor over which retailer to shop with and 41% describing a discount
as an incentive to splash out on a new brand. Despite this, the delegates were adamant that retailers and brands shouldn’t get caught up in discounting, and that instead they should add value via first-rate customer service, with great product at the core.
Douglas Hood, owner of brand management consultancy Outside Looking In, argued that consumers are “swamped by great product” and retailers must get their proposition right.
“I always go back to product and service. I think if you’ve got those two things right then you have a chance to survive. It’s very difficult for all of us at this time,” he said.
Anna Bance, founder of designer dress rental website Girl Meets Dress, agreed and said that simply resorting to discounting can confuse a brand or retailer’s proposition. Claire Goodman, customer relationship manager at womenswear chain LK Bennett, echoed this: “It’s hard because you see the incremental sales come in after discounts and then you realise it’s hitting your profit line, so you have to weigh up the benefits.”
She added that when LK Bennett discounts, it experiences a dip in sales the following week, so in effect all it is doing is “moving sales forward by a week”.
Jill Smethers, head of marketing at fellow womenswear retailer East, said while many consumers now expect discounts and are prepared to hold out for them, retailers should stop short of shouting about discounting.
However, she added that it is about more than just product: “If you’ve got a great product that’s great, but everything has to live up around it. It’s got to be the whole journey, the store environment, the service, the after-service, the communication; not just that initial conversion.”
Hood argued that for high-end brands especially, discounting can be damaging. “When’s the last time someone went into Prada, Luis Vuitton or Gucci and got a discount? Never. The big word is aspiration. If a consumer aspires to have that product they will pay by hell or high water to have it,” he said.
Sean McKee, head of ecommerce at footwear retailer Schuh agreed and described discounting as a “race to the bottom”. He said: “We’ve chosen to draw our battle lines in a completely different place: service. So if you want free delivery we’ll give you free delivery, but it will be on full-price product; if you want efficient returns, fine, but it will be on full-price product. And for us it’s fulfilment rather than discounting.”
Relevance, such as targeting consumers with promotions based on their previous shopping habits, was a key theme of the discussion. “I think you’ve got to look at your data because there will be customers that are buying and want a discount and there will be customers that will buy regardless. So you need to understand what the data tells you,” said Goodman.
Marcus Thrall, senior business consultant at WMpS, agreed. “It’s about offering people the product and the service that ticks all their channels that they want to be engaged in. By leveraging online and offline direct marketing smartly, we can not only engage our customers personally but deliver dramatically higher sales. To me that is good retail,” he said.
However, Mark Lewis, head of omnichannel programmes at John Lewis, wondered when a retailer reaches the point of holding too much data and the relationship becomes intrusive.
David Hathiramani, co-founder of etailer A Suit That Fits, agreed that failing to send relevant emails can be a turn-off for consumers. “If you get spammed by one, email is less important to you in general because you’ve got so many coming through. In the early days of the internet I used to open all emails I got and now mainly it’s just noise.”
However, Bance asked how many newsletters it is right to send, noting that Girl Meets Dress has increased its own mailouts after noticing they increased traffic and sales. “We were doing one a week and now we’re doing two a week, and I’m getting some every day from some retailers. And if the response is good for every newsletter it’s tempting to do them more and more.”
The delegates agreed that so long as communications are targeted and relevant then consumers don’t mind. Margaret Hung, managing director, international, at Kantar Media Compete, said: “The discussion about relevance, segmentation and going back to basics does really resonate, because that’s what the consumer research proves. There is still a lot of work to be done to refine the industry’s understanding of how different mediums should be best used to communicate.”
She added: “Communications are inundating people and it’s because marketers aren’t sure what the best practices are in terms of frequency, how often and how you should be using the different communication tools.”
There was also debate around the effectiveness of in-store technologies. Iain MacDonald, multichannel marketing director at lifestyle retailer Crew Clothing, said introducing tablets into stores two years ago has been “fantastic” for smaller shops that carry a smaller range, while Lewis added that click-and-collect has been a success at John Lewis. However, he added: “For me the jury is out on kiosks. I almost wonder if that’s going to be a tech that is totally leapfrogged by tablets and customers enabled with their smartphones so they can do that interaction themselves.”
McKee agreed: “Our experience is that you can make it look very sexy but you can’t get a customer to engage with it for any length of time. No matter how useful the job, just getting them to linger long enough to do the job is very difficult. The reality is they own technology that will always be a bit sexier than what the retailer can provide.
So I think for me the future is enabling their own technology, which will be cheaper and will be more relevant anyway.”
And it’s not just consumers becoming more enabled, but staff too, said Mike Anderson, managing director of WMpS. “Irrespective of our marketing, customers come into a fashion store for the pleasure and reassurance of trying something on. Supporting the sales assistant with a tablet or iPhone that provides general style advice complemented with personalised recommendations transforms the customer experience from simply one that takes orders to providing a true personal shopping experience. Customers will come back as a consequence.”
The retailers were also keen to discuss consumer engagement around social media channels. Drapers’ report found that Facebook is the social platform of choice for engagement around fashion, at 53%, followed by Twitter
at 15%. However, this itself throws up its own challenges, forcing retailers to remain vigilant in regards to customer service 24/7.
McKee echoed this point: “Historically the retailer did things to the customer and they just had to be grateful depending on the retailer they were dealing with. But now the customer is doing technology to the retailer and is better informed than the retailer. So that will raise the bar and is good for the industry; but it’s challenging in the short term.”