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Shopper Marketing: How to Drive to Retail | WMI

Posted by Ann D'Adamo on Aug 3, 2016 8:23:41 AM

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We’re constantly hearing from clients, “How do we drive to retail?”  From mass market to luxury, it’s a pain point for almost every brand. Consumer needs are evolving and retailers have struggled to keep up. They know they need to make big changes in their marketing to remain a viable business model long-term, but they are uncertain about which direction to take. Today, we’ll look at the factors that led to the decline of the industry, where it is now, and the innovative retailers who are getting it right.

Consumers changed…but retailers didn’t

The mall was once a social hub for the community. Moms went to shop, teens to hang out…the stores were full, retail was booming and everyone was happy. So, what happened?

The Great Recession of 2008 changed the way consumers shopped. Deep discounting changed their perception of “value” – goods became commoditized and consumers were no longer willing to pay full-price for merchandise. Simultaneously, there was a shift in values, people realized they didn’t need, or want, as many “things” and began moving away from “acquisition” to “need-based replenishment.” More recently, Millennials and GenZ consumers are driving an experience economy where experiences are more valuable than things. A recent survey of teens found that 89% said they were price-conscious shoppers and 62% would rather spend money on an experience over purchasing something material.

Even fast-fashion, which seemed immune to the problems other retailers are facing, is challenged. H&M just posted its weakest quarterly sales growth in three years, Urban Outfitters reported falling same-store sales this quarter, and Forever 21’s year-over-year same store sales are drastically down. What changed? Millennials are graduating to a philosophy of quality, not quantity. Teens are also more enlightened, 19% want to know how a product is made and where the materials are sourced and a whopping 65% share quality reviews on social media. Fast-fashion brands with a reputation for higher quality apparel, like Zara and Primark (an Irish brand new to the US) seem to be the bright spots in fast-fashion…for now.

Digital Disruptors

Digital and mobile changed the game for retailers in two major ways. First, they enabled consumers to shop when, where, and how it was most convenient for them and, second, they allowed consumers to compare prices among multiple retailers, this squeezed margins and forced retailers to drop prices to remain competitive. Great for consumers…not so great for retailers.

Today, 96% of Americans shop online—one third do so at least once a week and almost three quarters shop online at least once a month. And this is true across all demos, 67% of all Millennials, 56% of GenX, 41% of Boomers, and 28% of seniors shop online.

Moreover, mobile has become a key component in the path to purchase—60% of fashion and retail website traffic comes from a mobile device, 82% of shoppers say they consult their phones before making a purchase, and 78% of consumers believe they can shop for 100% of the things they need online. These are just a few reasons that experts predict that by 2020 e-commerce sales will hit $523 billion, a 56% increase from the $335 billion achieved in 2015.

Texting and social media made it so much easier to communicate with friends. Teens no longer had to meet at the mall and their moms no longer had to drive them there! Facebook, Instagram, Twitter, Pinterest, and now Snapchat have made it easier than ever for brands to communicate with consumers. Women don’t have to go to the mall to discover the latest fashions or learn how to style them – they can simply scroll through their favorite blogger’s Insta feed or a brand’s Pinterest board and shop posts and pins.

And there are other factors. Tough economic conditions outside the U.S. and a decline in tourism from Asia, South America, and the Middle East, political uncertainty within our borders, stagnating wages and a rising cost of living, and even unpredictable weather patterns have all challenged retailers this year…but it’s not all bad news.

The Good News

In survey after survey, consumers still say they PREFER to shop in store. In fact, 85% of consumers say they enjoy shopping in retail stores because they like to touch and feel the products before they make a decision.

In addition to the tactile factors, in-store shopping also offers something that online shopping doesn’t—face-to-face interaction with store employees. In fact, 90% of consumers say they are “somewhat or extremely likely” to make a purchase when they receive assistance from a knowledgeable sales associate. This is especially true for consumers of luxury products.

Doing Retail Right

Retailers know they have to do something…and fast. Brands are getting smarter about focusing on the right channels of distribution and consumers are forcing retailers to up the ante on the store experience, becoming showcases for merchandise and brands. Rather than price, which they may not be able to compete on, brick and mortar retailers are focusing on connecting with people and satisfying their emotional needs and desires. Today, when people go to the store, they want a shopping experience, not a buying trip.

What we see is that those retailers that encourage high levels of shopper involvement and interaction and allow consumers to explore and discover products by touching, feeling, trying on, and participating in the store experience are successful. Beyond the physical store, those that develop a synergistic omnichannel strategy that includes interactive apps, engaging social media, and smart email marketing keep the consumer connected to the brand 24/7.

One could easily argue that Apple reinvented retail. Their stores offer an on-brand environment that practically begs you to touch and explore their products, helpful and friendly product experts, repairs by appointment (no waiting!), and educational classes. Simply Genius.

Taking their cues from Apple, beauty retailers are emerging as leaders. Sephora, Ulta, and Bluemercury are all innovating the buying experience. Like Apple, they encourage shoppers to touch and explore product in a branded environment, offer highly trained sales staff, product education, and online and social integration to keep consumers engaged with the brand even when they’re not in the store. Last week, Barnes and Noble, yes, the book seller, announced they were launching Glossary, a store-within-a-store beauty destination in their college bookstores…again, bringing the experience to the consumer when and where she is.

Outside of beauty, Warby Parker, Rebecca Minkoff, and Barney’s New York are innovating the retail experience. Warby Parker, which was originally exclusively ecomm, expanded into bricks and mortar and created a seamless experience—encouraging shoppers (even those who don’t need eyeglasses) to try on frames in their stores, Rebecca Minkoff’s connected store uses the latest technology to help shoppers find styles that appeal to them, Barney’s is using iBeacon technology and the Relevance Cloud platform to deliver editorial content, video, interviews with designers, and look books to shoppers to inform and entertain while creating a seamless, personalized in-store experience. Each of these retailers is innovating the retail experience by igniting shopper curiosity, creating an environment ripe for exploration, providing a highly trained and enthusiastic staff, a distinctive point of view, and an atmosphere that’s authentic to the brand.

The Future

Pokémon Go has been doing a great job of giving people a reason to visit stores and malls, and this is just the tip of the iceberg. But what it’s really doing is getting back to the community aspect of the “mall as destination.” The traditional model for malls has been 70% retail and 30% food and entertainment. Industry analysts believe those numbers need to be inverted. As retail futurist Doug Stephens told Retail Dive, “Shopping centers should be community hubs, social gathering points, and entertainment complexes that also happen to have an assortment of awesome retail. We don’t need more retail, we need better retail. We don’t need more malls; we need special places that communities value and gather in.”

Women’s Marketing offers brands innovative go-to-market strategies that include digital, social, influencer marketing, and event activation. Contact us today to learn how we can help your brand deliver a game-changing retail experience for your brand.

Sources: Robin Report What Retail Goliaths Must Learn From the Davids June 2016, The Business of Fashion What Will The Store of The Future Look Like June 2016, Walker Sands Future of Retail 2016 Reinventing Retail: Four Predictions for 2016 and Beyond, Top 10 Luxury Retail Efforts of H1 2016, Retail Dive Beyond Walls: How Retailers Can Bring Back the Magic of Shopping February 2016

Filed Under: Media, Fashion, Beauty