I remember during my tenure with Koj est (way back in 2004-2009), I was handling a cosmetics brand Mikyajy and one of the most successful campaigns that we executed was creating our own marketing medium. Yes, it was our first initiative toward creating our “Owned Media”.
Yes, you have guessed it right… it was a Seasonal Product Catalogue.
It was designed in the form of a magazine, showcasing the products, step by step guide on how to get the seasonal look, and educational content pertaining to makeup.
The catalog was instrumental in driving footfalls to our stores as we executed the door drop campaign in the residential areas within the proximity of our stores across UAE and KSA.
The response was amazing as customers walked into the stores with the catalog copies asking for a particular shade.
Nostalgia is the best Emotive trigger
Catalogs create anticipation and expectation for customers.
They showcase brands and reflect their personalities and enhance engagement and aspirations.
Why Catalogs are back?
Digital versions took the place of the typical catalogs wherein the brands took their catalogs digitally and hence we saw fewer catalogs from the brands.
I recall a statement from Jeff Bezzos’s book, “Everything Store”, in order to stay agile and relevant, focus on things that are not going to change in the near future.
People still want to connect with others.
They need to engage, have experiences, explore, and learn.
They want to be entertained.
They need to establish their position and identity within society.
Catalogs are predictable.
Catalogs are measurable.
Using sophisticated metrics, when a catalog drops into a home retailers/brands know exactly when to expect sales.
In best practices, retailers/brands have a 10-day strong selling window with a predictable bell curve model that allows them to time product deliveries.
Retailers can design the catalog based on the product which they would like to push more in the store.
High-margin products get more space in the catalog in the form of editorials etc.
Stores could stock those products accordingly & the selling window also enables them to gear up customer service accordingly.
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The touch points brands need to embrace.
It is the best form of “Owned media marketing” just like your social media pages and channels. It is also a tool for “Unified commerce”.
Brands like Warby Parker who is a true multi/omnichannel marketer, started as a digital native offering five eyeglass frames delivered by direct mail to shoppers.
Their only store was the showroom in their corporate office.
Their website evolved with the technology allowing 3D and augmented reality virtual try-ons.
Brick-and-mortar expansion followed as did their catalog business.
Even Amazon is leveraging a catalog to promote seasonal retail during the holidays.
Brands like The Body Shop and Benefit Cosmetics relied on catalogs as a direct marketing tool in the past.
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Brands worldwide urgently shifted their efforts toward capturing consumer engagement in the digital world.
Retailers who are adaptative and agile quickly learned how to compete with eCommerce, instead of competing with the new buying preferences of the customers, they embraced e-commerce and the convenience of shopping it offered.
We call it the rise of Omnichannel retailing and
I call it “One Retail”.
Recently, one of the middle eastern homegrown eCommerce retailers 6thstreet.com announced that it shall be opening its first retail store in Dubai.
Retail fact 1- Do you know why eCommerce businesses are turning to physical retail?
There is one aspect of the “One Retail” business, that even eCommerce could not match or offer and that is “customer interaction or engagement as it happens in a physical store” & building of a bond by exercising exceptional customer service.
The actual value of the retail environment today is in the less tangible, value of emotional and experiential engagement that only physical retail can offer.
These softer elements are fundamental to establishing long-term consumer loyalty, brand reputation, differentiation, and, ultimately, sales.
Retail fact 2 – It all boils down to customer Experience.
Customer impact takes into consideration customer service, how engaging the store’s design, layout, and features are, and the overall experience that customers have when they visit the store.
A PWC report revealed that when brands offer a superior customer experience, their customers are seven times more likely to purchase from them than from their competitors.
Zappos, instead of focusing on shortening the call times of their call centers, encouraged their call center team to build customer relationships by understanding their buying preferences and knowing them better overall.
Retail is here to stay:
“Nike Live” concept: smaller-format, community-focused stores with tailored offerings and rewards based on local customer feedback and insights.
Even if the final purchase is made online, the importance of the memories, experiences, and emotions tied to the physical space cannot be underestimated in how they contribute to a final sale.
After all, 55% of shoppers visit a physical store before making a purchase online. This is “brand impact”—the role of the physical store in making customers feel more loyal to the brand.
Creating experiential hubs within the store is the key to building engagement.
The US retailer, Target is increasing the number of “in-store shops” from the likes of Disney, Apple, Ulta Beauty, Levi’s, and Lego offering customers the benefit of multiple branded shopping experiences all under one departmental store.
For the in-store brands, it is providing a platform to reach out to a new segment of customers.
Ikea’s central London stores provide free planning and house-organization services, rather than being a traditional showroom of products for sale.
This may seem like a simple business move—opening new stores to attract new audiences—but its success lies in how Ikea has adapted its retail model to focus more on providing customers with new services and experiences tailored to urban living, rather than simply opening more stores of their famous warehouse formats.
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Retail fact 3 – Customer acquisition is the new game of Retail:
One of the most important reasons why eCommerce grew was the low cost of customer acquisition in terms of digital ad spending vs revenue.
But as the organic reach of e-commerce becomes lesser and lesser coupled with the high rising cost of digital spending per click, lots of eCommerce brands are looking toward physical retail to acquire a new set of customers.
As the cost of ad spending increased across digital and social platforms whereas the rentals across all the major markets showed a decline hence it became a lucrative proposition for the eCommerce retailers to open shops and up their customer acquisition game.
One aspect that the eCommerce business has taught me is the new retail analytics or matrix.
Instead of focusing on sales per sqft or GMROI, I have started looking at any retail business from these two parameters.
Customer acquisition cost.
Lifetime value of acquired customer.
In my opinion, by focusing on these two parameters, the conventional retail parameters/ matrix automatically falls in place.
In today‘s digital era, everyone is selling to each other.
Employee selling his skills to his employer,
Entrepreneurs are selling their ideas to Venture capitalists,
Boy friend selling his aspirations and dreams to his girlfriend & kids are selling to their parents and vice versa.
Hence we all are in the SELLING Business.
Gone are the days when a chartered accountant used to say, I am not into sales.
Today right from CEO of an organization to the lowest rank is in Sales Business.
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learning the Art of selling & become a ―Shark in selling.
Recently, I completed a program on retail transformation from one of India’s Premier B-school (IIM-B), and during the course, we undertook several case studies like Threadless and big basket, Webvan, and stitch fix.
Stitch fix is one of my favorites as I relate myself to the fashion & beauty world.
I am writing this article to help my readers and retail fraternity members to take learnings from the real-life case of Stitch fix and learn as to how Katrina lake (founder of stitch fix) transformed her business model.
What is the stitch fix model?
The Basic idea with which stitch fix started was of providing a Personal styling fashion experience and provide customers a personalized fashion outfit, all at a subscription fee model.
Stitch fix selects and mails clothes, shoes, and accessories to its clients based on an extensive style survey (i.e. data).
The better the “stylist” selects the clothing, the more money Stitch Fix makes.
Basically, it is like Netflix of the fashion world.
(Similar to how Netflix suggests programs on your viewing behavior or patterns).
Since its business model is based on predicting the styling that will suit their customer’s preferences hence it became obsessed with Data analytics and understanding their customer’s fashion sense and preferences.
Challenge is “Getting the style and outfit right for the subscriber every time”.
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Data is oil – Stitch fix “tinder for clothing”
As part of their Style Shuffle—a “Swipe right” type of “Tinder for clothing”— Stitch fix has found a way to reach beyond the feedback they’d get from customers through buying alone.
By letting customers swipe through different styles in their entire collection, they amass tonnes of data that helps them better understand the customer, as well as age and demographic trends shaping the fashion industry.
More the customer spends time swiping the garments, is leaving a digital cookie which is then analyzed towards his or her liking for the fashion garment.
The model is very addictive as Tinder since you are shown garments that a professional stylist has shortlisted for you.
Data points on their customer’s preferences make stitch fix’s proposition more profitable.
Stitch Fix makes money on clothing sold more so than subscription fees.
The more clothing from one box that fits or flatters, the more profits they will make.
Why Stitch fix is successful?
Stitch fix changed the paradigm
Stitch fix is not fashion but a “tech company which deals in fashion”.
Instead of fighting head-on with physical fashion retailers and eCommerce companies, stitch fix has created a blue ocean strategy for them by finding their niche in data analytics.
They share the data points with the designers who in turn ensure that their garments are made in line with their customer’s preferences and likings.
“Feedback” is the main crux that stitch fix has provided to designers who never knew about their designs and creations sales movement.
Now with stitch fix, they feel engaged with the customers.
With enormous data points, Stitch Fix is able to see not just products people buy, but products they want to buy.
That’s why I give them the credit for changing the paradigm completely.
Whereas traditional fashion brands are either competing on prices or eCommerce companies on the fastest deliveries, Stitch fix has found their niche is providing personalized fashion experiences to their subscribers.
Their commitment towards their “why” (purpose) is so strong that the founders chose to start the company in the Silicon Valley (being a tech hub) rather than moving to New York City (fashion capital).
They had clarity on the core strengths of their business right from the start.
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Algorithms & Data analytics coupled with Human stylists – Recipe for success.
They aim to bring personal styling to the masses, using data and machine learning to deliver personalization at a mass scale.
Watch the video on why stitch fix clothes have better sizes and fits.
From filing a lengthy questionnaire when customers sign up – evaluating factors like lifestyle, body type, and most-wanted items ;
Stitch Fix’s ‘Style Shuffle’ feature on its app and website allows it to amass huge amounts of data.
Building robust communication channels with subscribers
On receiving the box containing five clothing and accessory items, the customer gets a sense of belongingness as they’ve provided their preferences and selected by the stylists, just for you.
Customers provide feedback after each shipment since they know that their feedback will help stitch fix deliver more garments that they want to buy and not what stitch fix wants to sell to them.
It’s two-way communication.
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Combing the art of discovery and convenience
The fun of discovering the most sought-after garments, that are personalized and customized as per your body type/fit is beyond capturing in the form of words.
Getting your fashion quotient boosted through personal stylists gives a confidence-boosting to the subscribers which remain loyal to the brand since their self-esteem & social needs are getting fulfilled at the convenience of their homes.
In an interview, Katrina Lake, founder once said,
“Our business model is simple: We send you clothing and accessories we think you’ll like; you keep the items you want and send the others back.
We leverage data science to deliver personalization at scale, transcending traditional brick-and-mortar and e-commerce retail experiences.
Customers enjoy having an expert stylist do the shopping for them and appreciate the convenience and simplicity of the service”
I believe this statement from the founder summarizes the brand’s purpose.
References; HBR case study – case study reprint 2018 (IIM-B) , CMO network, Guy Raz book-how I built this.
About the author:
Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
Do you know what is the biggest challenge in today’s digital era for businesses? Here it is, we have access to gigabytes of information at our fingertips yet we fail to see or identify or decode this information/data into useful insights for our businesses.
Zara, the Spanish fashion retailer has been fast to decode the importance of Phygital experience in their stores.
Zara is attempting to elevate the customer experience with a technology-enhanced concept store in London’s Westfield Stratford shopping center. The store focuses on a service where shoppers can try on the clothes they like in store, pay for them online and have the clothes delivered to their homes.
Inditex SA, the Spanish company that owns Zara brand, calls it an example of the technologies it will implement around the world.
Key features of Zara’s Phygital experience are:
Use of robotic arm to retrieve online orders and deliver to customers in-store (Buy online pick up in store):
The new flagship store uses an optical barcode reader system which scans the QR or PIN codes that customers receive when they place an order online. Behind the scenes at the automated online collection pick-up point, a robotic arm then collects trays and organizes the packages optimally based on their sizes, smoothly delivering orders for customers to collect in seconds. Customers can collect online orders made in store on the same day if placed before 2 pm, or the next day if placed after 2 pm.
2. Use of Interactive Mirrors based on AI and AR technology:
In addition, the new store also features interactive mirrors equipped with RFID technology which is able to detect what garment a customer is holding and offer more information on the item as well as multiple choices of what a complete outfit may look like. In store employees will work with iPads and be able to advise customers on product selections or accept payments on the spot.
3. Use of RFID in merchandise inventory planning:
Every garment is fitted with a radio-frequency identification tag. The technology lets Zara check a store’s inventory in two hours, a process that used to take about three days.
4. Digital payment options:
Customers can choose to pay using their mobile phones via the Zara app or the Inditex’s Group app, InWallet.
5. Self-service checkouts:
Shoppers can buy clothes without talking to anyone. Self-service checkouts on floors let customers pay with their mobile phones or credit cards.
Retailers will need to connect decades-old fundamentals & processes with the newest front-end user interfaces. The Spanish brand Zara is one of the few fast fashion brands who has embraced technology and leading its brand’s evolution into the digital world.
Food for thought for Middle Eastern retailers:
Are we getting ready to embrace the fast-changing consumer’s shopping trends? Are we fast enough to embrace the change in our retail environment?
I shall conclude my article with these two thought-provoking questions to my readers and retail fraternity members to share their opinions by leaving a comment below and let the world learn from their wisdom.
About the author:
Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development and Brand management, Retail Operations, Sales Management and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.