‘The illusion of deceit’: The success or failure of fashion memberships hinges on the fine print

Glossy – Across fashion, membership models have become a normal part of everyday shopping. Companies like Stitch Fix, rental platforms like Rent the Runway and Nuuly, big brands like Nike, and cosmetics retailers like Sephora all have introduced paid membership programs in order to build a loyal, recurring audience. But when these programs break down, either through poor communication or intentional misdirection, the effect on brand perception takes a hit.

Savage x Fenty, Rihanna’s lingerie brand, recently received some criticism from customers who found themselves charged for a monthly membership without even realizing they had signed up for one. Similar stories abound from customers of Fabletics, which backs a membership that is infamously difficult to cancel, and Guthy-Renker, a beauty company that was forced to pay nearly $9 million in a legal settlement over illegal auto-renewal payments it collected from customers.

“These types of memberships may be an easy way to make money up front, but they can create larger long-term ramifications,” said Krista Corrigan, retail analyst at Edited. “It can tarnish the brand’s reputation and almost gives off an illusion of deceit. The digital age has given more power to consumer reviews where any feedback or criticism about a product is readily available before purchase. Brands are leading with great deals like freebies and large discounts to entice customers to sign up, and hoping they’ll love the product once received.”

Fabletics, for example, took a big risk by requiring customers to either be fee-paying monthly members or purchase clothes at significantly higher prices. While this approach may be helpful for driving initial revenue spikes and maintaining a prestigious aura around a brand, the long-term sustainability is not guaranteed. Fabletics alone received hundreds of complaints against it through the Better Business Bureau in its first three years of business. Its membership policy requires that customers pay every month or notify the company within the first few days of each month if they would like to skip that month.

“In general, having a membership fee can drive value if the programs are simple and there is a significant value returned for the fee,” said Perry Kramer, senior vice president and practice lead at Boston Retail Partners. “In the online fashion business, however, it is a delicate balance between getting a quick revenue boost and enjoying long-term success.  With few exceptions, when a membership fee is required to shop, the initial revenue spike drops off significantly and falls short of customer loyalty and lifetime value in programs that do not require a membership fee. The long-term growth, membership size and membership growth rate is usually substantially higher in programs with no fees.  The bottom-line risk for companies that have a high membership fee is that they will alienate customers who do not see a significant value every month.”

Still, Fabletics has managed to grow considerably. Forbes reported that Fabletics’ revenue was over $300 million in 2018 and is growing each year. The company has opened more physical stores this year, including its first New York store last April.

Read the full article:  ‘The illusion of deceit’: The success or failure of fashion memberships hinges on the fine print

Steve Madden acquires DTC sneaker brand Greats in a bid for young male shoppers

Glossy –  With Steve Madden’s latest acquisition, the DTC sneaker brand Greats, the nearly 30-year old company is tackling several industry trends and customer demographics in one move.

Steve Madden is primarily known for women’s shoes, though the company has been trying to boost its sales among men for at least a few years now. Five-year-old Greats serves that purpose as a men’s brand while also giving Steve Madden a link to younger consumers who gravitate toward trendy DTC brands.

Steve Madden, the company’s founder, called out Greats’ popularity among young men as one of the major contributing factors in the company’s decision to acquire the brand.

“[Founder and CEO] Ryan [Babenzien]’s shoes are the talk among all the millennial men I encounter,” Madden said in a press release. “He reminds me so much of myself. We can’t wait to explode this thing.”

The terms of the deal were not disclosed. Greats did around $13 million in sales last year, according to a press release, and Steve Madden did $445 million last quarter, a record for the company.

In the past few years, Steve Madden has been actively acquiring brands and expanding its portfolio At least five brands have been purchased by Steve Madden over the course of the 2010s, all in various sectors of footwear from sportswear, like Superga, to casual womenswear like Blondo

Many of the brands rely heavily on wholesale partners —  for example, Blondo is sold in Nordstrom, DSW and even Amazon, and Scwartz & Benjamin, acquired in 2017, makes licensed shoes for brands like Kate Spade and Rebecca Minkoff to sell in department stores. Greats, on the other hand, is a DTC-focused business selling mostly online and from its single store in New York City. It’s established a few wholesale partnerships including Nordstrom and Madewell since 2017. With the strongest growth for Steve Madden coming from the wholesale sector — 13% compared to just over 6% for its online business — it could be that Steve Madden is looking for a brand with built-in DTC knowledge.

Steve Madden is not alone in acquiring companies with skills that it lacks. Earlier this year, Vera Bradley acquired DTC jewelry brand Pura Vida for similar reasons: the ability to target younger customers more effectively. Similarly, Farfetch acquired Stadium Goods late last year to give it a foothold in the sneaker resale world.

Read the Full Article: Steve Madden acquires DTC sneaker brand Greats in a bid for young male shoppers 

Omnichannel Retail Philosophy: Best Way to Battle Showrooming

TWICE –“Showrooming is a legitimate consumer behavior which has created actual disruption in the industry.”

Sears recently reported that it would start close-out liquidation sales at more than two dozen locations. Streets crisscrossing downtowns in big and small cities alike are increasingly filled with depressing, empty storefronts.

The primary doom factor for giant nationwide chains, local mom-and-pops and every type of retailer in-between has been the explosion of online retailing. Unfortunately, the future of brick & mortar isn’t getting sunnier due to the continuing expansion of e-commerce. Not that evidentiary statistics are necessary, but Big Commerce reports that 67 percent of millennials and 56 percent of Gen Xers prefer to shop online rather than in-store.

For brick & mortar consumer electronics retailers, the showrooming phenomena just adds insult to injury.

“As a phenomenon, showrooming is a legitimate consumer behavior which has created actual disruption in the industry, specifically for CE retailers – as a whole, CE retailers typically lead the industry in showrooming behavior by their customers,” reports BRP Consulting SVP and practice lead Ryan Grogman, who specializes in retail strategy and technology solutions surrounding the customer experience. “Roughly 50 percent of consumers exhibit showrooming behavior, more strongly tied to big ticket purchases such as consumer electronics.”

Every retailer has been impacted by showrooming. “Abt has battled showrooming for the last 20 years,” Jon Abt, co-president of Chicago-based Abt Electronics notes. “It’s a way of life in the retail world because the internet has made it much easier for a consumer to comparison shop.”

Successful retailers, however, after initially piling up merchandising sand bags, have come to adopt a more judo-like approach to e-commerce, using the internet’s force against itself to combat showrooming.

Turning Showrooming Against Itself

The physical, real-world relationship between customer and technology product – as well as the physical, real-world relationship between retailer and customer – forms the basis for succeeding in a showrooming-dominated retail environment.

“In order for most humans to understand a product or service, they need to see it, touch it, use it, experience it,” explains Robert Heiblim, president of Blue Salve Consulting. “Anything new, such as VR/AR/XR, is not a common experience, so people will want and need to try it before they can decide to buy it.” Apple, for instance, immediately grasped this see-it/touch-it/use-it/experience-it necessity, and its retail outlets are constantly swarmed by customers playing with product as a result. A plethora of retailers have since followed suit.

This real-world hands-on experience available only in-store is merely the foundation of an omnichannel sales approach almost de rigueur in the 21st century. According to “The New Rules for Omnichannel Retailing” report from Shopgate, “being an ‘omnipresent’ retailer is no longer a ‘trend’ in 2019 and beyond. It is now table stakes to remain competitive…”

Read the Full Article:  Omnichannel Retail Philosophy: Best Way to Battle Showrooming 

For a fast supply chain, Target is betting on in-store fulfillment

Supply Chain Dive –  Retailers are putting physical stores at the center of e-commerce fulfillment and delivery, but the strategy requires a careful balance.

In the modern retail world, a store isn’t just a store. Many retailers are starting to use some of their stores as mini distribution centers, as consumers demand faster fulfillment for online orders. Shipping online orders from brick-and-mortar locations not only increases customer options and speed, it can also offer big cost reductions for retailers.

“Retailers are looking for ways to meet those expectations created by the Amazons of the world,” Jeffrey Neville, Senior Vice President and eCommerce and Digital Marketing Lead at Boston Retail Partners, told Supply Chain Dive.

But as retailers move to ship more items from their stores, they’ll have to strike a careful balance in their use of space, inventory and staff. Using stores as fulfillment centers can come with many challenges, and even the largest retailers are still refining their processes.

The growth of mini distribution centers

It has often been more efficient to consolidate and ship from large distribution centers, but competitive pressures and the availability of physical space has encouraged many retailers to change the equation, Greg Conner, Vice President of Global Sales at Bastian Solutions, told Supply Chain Dive.

“Having all these nodes and physical retail stores has been their magic pill on how to compete with others like Amazon and pure e-commerce players,” Conner said.

Amazon’s move to more rapid fulfillment in recent years has created greater expectations for consumers, and 88% of shoppers say they would now pay for same-day delivery or faster, according to a survey by PwC. Nearly 80% of logistics companies also say they expect to provide same-day delivery by 2023, according to a recent study by Zebra Technologies.

Despite the frequent headlines about the demise of brick-and-mortar retail, physical locations are as relevant as ever. 42% of retailers now say faster delivery of online orders is their top customer-facing priority, and many use stores to achieve that goal, according to a recent survey from the National Retail Federation. Large retailers such as Walmart, Home Depot, Best Buy and Dick’s Sporting Goods are now using many stores as mini distribution centers and shipping and fulfilling orders directly from stores.

Likewise, Amazon’s acquisition of Whole Foods in 2017 was partly to gain a physical footprint. And in July 2019, the company started offering in-store pickup at Rite Aid locations and accepting returns at Kohl’s.

Read the full article: For a fast supply chain, Target is betting on in-store fulfillment

Leveraging Blockchain for Omnichannel Success

Multichannel Merchant –

The challenge of modern retail can be wrapped up in one statistic: 56% of consumers would likely shop at a retailer if they offer an omnichannel experience, but only 7% of retailers actually offer that capability, according to research from Boston Retail Partners.

Most of today’s supply chains are siloed, linear, inflexible and reactive. They suffer from poor connectivity and fragmented data, causing inaccurate supply planning and inventory distribution.

Bottom line: Retailers are struggling to create the kind of seamless omnichannel experience consumers crave. The fundamental challenge is predicting and respond to changes in demand across channels. However, modern technology now offers a cutting-edge solution: Blockchain.

Blockchain is a shared business reality where multiple partners drive mutual accountability, trust and transparency across the entire supply chain. The chain is connected digitally, allowing each part to drive growth for the whole. Sounds impossible?

Pratik Soni, CEO of Omnichain Solutions, and Stephen Davis, CEO of Ruby Rockets, broke down the real-world benefits blockchain is creating for retailers at Ecommerce Operations Summit 2019. Here are some of the insights and best practices they shared.

From a Linear, Reactive Supply Chain to a Holistic, Proactive Model

Instead of focusing on solving problems after they arise, imagine a team that prevents problems before they even happen. A holistic model promotes communication and transparency across the supply chain, allowing for lightning-quick decision making and the ability to forecast problems.

When you’re up against the challenges of omnichannel consumer demand, you need a flexible, efficient supply chain to stay on top of the game.

4 Ways Blockchain Can Improve Your Supply Chain

  1. Consensus-based: all participants need to agree that a transaction is valid, making sell-through easier to manage and predict while boosting collaboration
  2. Providence: All partners know the origin and movement of a product over time. This data layer allows you to make faster, more informed decisions across your supply chain.
  3. Immutability: If an error is made, it can’t be hidden or deleted, improving accountability and transparency for all partners
  4. Formality: It’s simple to determine the ownership and lineage of each product, allowing for complete control of assets throughout the process

Blockchain is also surprisingly easy to get started with. Many people see it as sort of a black hole technology, but in fact it’s quite simple and easy to integrate into your existing tech stack.

Read the full article: Leveraging Blockchain for Omnichannel Success 

How technology is transforming in-store shopping

Internet Retailing – With ecommerce growing at an unprecedented rate all around the world, brick and mortar stores have to work twice as hard to attract customers’ attention. No wonder – online shopping keeps the desire for convenience alive. There are ways to compete with online retailers and create a greater in-store experience, though. And the easiest way to do so is by using technology to their advantage.

As a matter of fact, the industry is already undergoing a digital transformation, with worldwide retail tech spending expected to increase 3.6% to $203.6 billion in 2019. It’s mostly due to the rise of new technologies, changing patterns of consumer behaviour, as well as the influence of companies that put digital first and become true pioneers of the industry.

The response to these changes, however, vary from business to business. One thing is certain – the changing nature of retail is bound to require a tech-fueled and customer-centred approach from the retailers. If they want to stay competitive, that is.

TRANSFORMING IN-STORE SHOPPING WITH TECHNOLOGY

Implementing technology just for the sake of it is not good enough anymore. But, using tech solutions to increase convenience for shoppers and franchisees, or gather relevant data to enhance and personalize their shopping experience, is a completely different story.

Collecting and analysing customer data more effectively, leveraging new technologies like AR and IoT, and incorporating innovative payment systems are only a few examples of how technology can transform in-store shopping. In fact, there are many ways for retailers to differentiate from their online competitors.

THE USE OF MOBILE TECHNOLOGY

With software being one of the fastest growing technology expenditures in the retail industry (according to Gartner), online and mobile shopping have become disruptive forces within this sector. Many retailers are adopting data analytics software to manage their stores more effectively and provide an effortless and personalized shopping experience to their customers – even in real time.

That’s hardly surprising. According to BRP Consulting’s “2019 Special Report: In-Store Mobility”, 63% of consumers rely on mobile phones while shopping in-store to compare prices, search for offers and coupons, and check inventory, among other things. With self-scanning apps, mobile devices can also turn into a POS system and speed up the checkout process while selling on-the-go. The BRP study noted that 44% of consumers surveyed would shop with retailers that offer such a possibility.

These numbers might be the reason why in-store mobile experience is one of the top customer engagement priorities among retailers. Even though many of them have already developed some sort of shopping apps, retailers are now looking at new ways to take advantage of mobile technology. And rightly so.

The biggest Central and Eastern European convenience store chain Żabka is a great example of such efforts. It has been working on two mobile apps – one dedicated to its franchisees (the award-winning “frappka” app), and the other meant for its customers. In the near future, the app will encourage shoppers to purchase products based on the circumstances while they’re inside the store, and send them notifications about any Żabka stores in the vicinity – suggesting that they may be in need of shopping. Both apps align with the company’s digital transformation strategy that is supposed to lead to the creation of “the store of the future” very soon.

Another brand that brings retail to a new level is Nike. Its flagship store in New York is mobile-centred and clients can check out and choose products to be delivered to the fitting room using an app, which is also a source of personalised discounts.

Read the full article: How technology is transforming in-store shopping

How Brands are Taking Social Media into the Real World to Connect with Us

Fast Company – The umlaut-studded Swedish outfitter Fjällräven has been around since 1960. Back then, it was dedicated to providing sturdy Scandinavians with parkas and backpacks that could stand up to the region’s frigid temperatures and rugged terrain. Now, nearly 60 years later, you’re as likely to spot Fjällräven’s iconic fox logo on a backpack in Brooklyn as you are on a trail in the Arctic Circle. Fjällräven didn’t change, but it’s marketing tactics did.

The brand’s transformation was a conscious one. Fjällräven didn’t want to be seen as just another clothing brand; it wanted to inspire fierce devotion among its customers. That drive to differentiate was behind the creation of Fjällräven Polar and Fjällräven Classic, a pair of bespoke excursions that lets customers experience the brand in the wild. Both have been a huge success, attracting new customers while giving established ones something novel to be excited about. In an increasingly digitized world, physical experiences can create a visceral link between consumer and brand, and savvy companies are making that bond a priority through every channel possible.

THE EXPERIENTIAL FEEDBACK LOOP

The demise of brick-and-mortar retail has been greatly exaggerated. So says Scott Lachut of retail consulting firm PSFK. He points to digitally native brands that are discovering the appeal of physical stores to potential customers. “There’s a direct-to-consumer luggage company that found a 40% lift in website sales wherever they open a new store,” Lachut says. “They’ve realized they can capture passersby by having them come in, speak to an expert, have an experience, and test out a product before they buy it online.”

Those bridges are becoming even more central to social-media strategies as retailers start to realize that throwing money at Facebook and Instagram without a comprehensive plan can result in diminishing returns. “Brands are moving into physical spaces almost as a marketing channel,” Lachut says. “A lot of discovery is happening online, but that’s starting to draw people into stores where they can walk out with a product and share with their respective audiences right away.” Think of it like a feedback loop: A customer discovers a product on Instagram, visits the store in person, snaps a picture of the product, and then shares it on Instagram, starting the cycle again. The physical amplifies the digital.

Read the full article:  How Brands are Taking Social Media into the Real World to Connect with Us

How to find the right point of sale system

Pet Business –  Pet specialty retailers know they need to keep up with the latest technology in order to remain competitive, but sometimes it’s difficult to figure out exactly what tools they need. According to the 2019 Unified Commerce Survey by BRP Consulting, 87 percent of consumers want a personalized and consistent experience across channels, 64 percent of consumers choose a store based on product information availability via their mobile device and 68 percent of consumers would choose a store that offers personalized promotions/discounts over a store that doesn’t.

The best way to encompass all of these wants is through a comprehensive point of sale (POS) system, which provides solutions in the forms of payment processing, data analytics and customer communications. The right POS system can help retailers connect with consumers across all channels and handle the day-to-day of the business. The key, manufacturers say, is to learn about the features that are available.

Retailers must consider several factors when shopping for a POS system. Among the most important features are inventory management, integrated secure payments, reporting and analytics, third-party integrations and loyalty programs.

Retailers need to look for a POS system that covers all these bases and is designed specifically for the pet specialty retail industry, says Carl Hildebrandt, senior director of product management for Austin, Texas-based Epicor. He explains that while a generic POS system might show short-term gains, the ability to grow and scale will plateau very quickly, putting the retailer back to square one after a year or two.

“A functional application that is not designed specifically with a retailer’s industry and users in mind will result in frustrated employees, disparate workflows and a compromised consumer experience,” explains Hildebrandt. “It helps to have step-by-step instructions, intuitive workflows and analytics for quick decision making to help employees feel empowered. The system should help the retailer ensure the right products are being stocked at the right times, and that customers are being rewarded with the incentives and elevated experiences.”

Epicor recently launched Epicor Retail Cloud, which has robust point of sale and store management capabilities and training features, such as embedded and contextual learning resources, including interactive tours, guided learning, videos, articles and more.

“These tools accelerate onboarding of new employees and help them continually improve their productivity and fluency with the system,” says Hildebrandt.

With cloud technology, retailers are able to have a solution anytime, on any web-enabled device. Employees can immediately look up product information, use or care instructions, pricing or inventory to answer customer inquiries.

Taking Inventory

Retailers should look for a POS system with built-in inventory management, says Kyle Diamond, director of sales for Lightspeed. He explains that a POS with “robust” inventory management capabilities helps forecast what products will be needed and help keep shelves stocked with products that customers actually want. Spending resources on inventory that’s in demand will boost a store’s revenue potential and keep customers happy.

The most important functions include the ability to view stock levels for each store location, reports on which brands and products are top sellers, automated reminders when an item is running low on stock, simplified purchase orders and work order workflows, and automatic product imports from vendor catalogs. Also important are customizable customer profile accounts that keep track of information, such as the shopper’s pet’s breed, favorite treats and last grooming appointment.

Diamond explains that some retailers, especially first-timers, make the mistake of shopping for the lowest price POS system.

“Some will fall for POS systems that are almost free, but offer very limited functionality,” he says. “To unlock more out of it, you’d have to buy all the functions you need à la carte, much like the in-app purchasing done by apps on your phone,” which would end up being more expensive in the long run.

Read the full article: How to find the right point of sale system

Increasing Efficiency in Today’s Stores

Progressive Grocer – In some respects, today’s stores would be unrecognizable compared with those of 50 years ago. The latest technology has upended traditional in-store processes in favor of more efficient, streamlined systems. This is especially true when you consider what Amazon has done to move the grocery industry forward (imagine the confusion on a grocery store manager’s face from the 1960s if they saw a store with no employees or checkout counters). Everywhere we look, we’re exposed to the revolutionary technology of today’s grocery store, from self-checkout to order-picking robots.

As these innovations flood the store, grocers want to ensure that new initiatives such as self-checkout, delivery and click-and-collect are proving profitable to the bottom line. The reality is that simply adopting these programs isn’t enough to ensure more revenue. Grocers need to complement new technology with efficient processes within the workforce. Empowered workers are the key to unlocking technology’s potential and ultimately improving the shopping experience for customers.

EMPOWER THE WORKFORCE TO EMPOWER THE TECH

A Salesfloor study found that 72 percent of hourly retail associates are more likely to stay with a retailer if they have the right technology and resources, and two-thirds said that access to digital tools and technology is a must-have at a future retailer. Stores that want their associates to succeed and excel must invest in relevant technology and easy-to-use tools that can make a difference in productivity and customer service. Let’s take a closer look.

MOBILE

A simple way to ensure that associates are informed and connected is to embrace mobile options. Retailers recognize this, which is why, according to BRP Consulting, 49 percent of retailers name in-store mobile experience a top priority. For example, coordinating click-and-collect and delivery can be complicated if associates are just radioing each other when an order is placed, printing out a shopping list or taking other antiquated steps to fulfill orders. Similar to how customers turn to mobile apps to communicate with their favorite brands, handheld devices and apps can be extremely useful in communicating with operational systems and coordinating tasks. Tablets and similar devices alert associates when an order needs to be filled, what items need to be picked, where those items are located and where to meet the shopper with the items.

ROBOTICS

Introducing robots into the aisles of a store isn’t as futuristic an idea as it may sound. Seen on show floors and in countless articles, these robots are capable of picking items, scanning shelves for inventory, and more to reduce the workload placed on associates. Last year, Albertsons announced an initiative using robots to pick items for online orders where AI-enabled technology and conveyors will bring the ordered goods to an Albertsons employee, who will manually compile the order. Meanwhile, Walmart has invested heavily in piloting robots in stores for a variety of purposes – including unloading boxes from delivery trucks, checking items on the shelves, changing price labels on products, and selecting items for online grocery. Retailers are recognizing that any efforts to automate mundane in-store tasks will enable associates to perform at a higher level and provide a more rewarding work experience.

Read the full article: Increasing Efficiency in Today’s Stores

Omnichannel Consumers and Retail of the Future

Business 2 Community – Retail is continually evolving to embrace new technology, the rise of ecommerce and changing consumer shopping trends. With these continual changes, the tactics used by retail marketers are also adapting.

The Rise of Ecommerce

eCommerce continues to grow at an unprecedented pace. In 2017 it reached around $2.3 trillion and is expected to hit $4.5 trillion in 2021 (according to a Statista report). In the US alone, ecommerce represents almost 10 percent of retail sales — a figure that is growing by nearly 15 percent each year.

Retailers can’t expect to remain competitive unless they are present on their customers’ preferred channels. Investments in online, digital and mobile channels is a necessity. In fact, eCommerce/digital influences up to 56% of in-store purchases. Many consumers are also shopping online via their mobile devices. As much as 11 percent of online shoppers now shop online via their smartphone on a weekly basis, and 35 percent say it will become their main purchasing tool. (source – Shopify)

Amazon continues to be a major player. According to a report by Walker Sands, a third of consumers (32%) now receive one or more Amazon packages per week, and one in ten (10%) consumers receive three or more Amazon packages per week. Millennial consumers ages 18-35 are even more likely to receive multiple Amazon packages regularly — in fact, nearly half (43%) report they receive at least one Amazon package per week.

The Personalized Experience

Personalization is a top priority for marketers – consumers are in control and want and expect a personalized experience. However, as new concerns over privacy emerge, brands are beginning to take a new look to balance personalization with data privacy.

Despite the many studies that cite consumers want personalized messages, studies also exist stating that consumers only want personalization if it’s done right – meaning not overly creepy or overly invasive. Personalization on their times. This can be challenging for brands – knowing how far to take it and what may be crossing the line.

In a study by Salesforce, 51% of respondents stated that they were more mindful of balancing personalization and privacy than they were two years ago.

Marketing Personalization

McKinsey recently performed a study to better understand consumers’ reactions to privacy. In looking at industries that consumers receive personalized offers from, the industries they receive personalized communications from and those they wish they did are fairly in sync. Topping the list are consumer goods brands, restaurants and bars, and fashion retailers and department stores.

Read the full article: Omnichannel Consumers and Retail of the Future