Specialty beauty retailer Sephora (2,300 stores worldwide) seems to be a bit ahead of the curve when it comes to brick and mortar retail. As this article describes, they are using technology to give control to the consumer and create a “fun” experience for them. They are reducing the role of the sales person and giving the customer the power to interact with them or not. They note that their customers tend to know more about the product than the sales person anyway.
I’ve stolen that title from the article I want you to read. It’s of particular interest to me because I live in the Northwest. More precisely, in Bellevue across the lake from Seattle. As an aside, the really good thing about living in the great state of Washington (regardless of your political affiliation) during this presidential election is that everybody knows the state will go for Clinton, so we are not being bombarded with Trump and Clinton ads that insult our intelligence.
Especially in the western part of the state, we are pretty liberal. Over in Seattle, they’ve passed legislation that will gradually raise the minimum wage to $15.00 an hour and they are working on, or have just passed, legislation that will give workers certain rights in how they are scheduled.
The Amazon Effect is given a lot of blame for the lousy and, some say, deteriorating retail environment. I gather it was a topic of conversation at the recently completed Surf Industry Summit at Cabo.
A gentleman named Jerry Useem wrote an article with this title for the June 2015 issue of The Atlantic. You can read the whole article here. It reviews research on how behavior in the work place impacts your success or failure.
I would urge you to read the whole thing, but I particularly want to highlight his short discussion of high end brands getting sold at retail. Here’s his whole quote on the subject. I’ve highlighted the paragraph I found most interesting.
Darren Dahl had never set foot in the Hermès store in downtown Vancouver when, one afternoon, he sauntered in. Clad in jeans and a T-shirt—looking “kind of ratty,” he confesses—he had not planned on a shopping excursion. The saleswoman behind the counter looked up from some paperwork and, as Dahl remembers it, “literally shook her head in disapproval.”
What a jerk, Dahl thought. He reacted by leaving the store—after buying $220 worth of grapefruit cologne. Two bottles of it.
“I couldn’t believe I had spent so much money,” says Dahl, who should have known better: he is a professor of marketing and behavioral science at the University of British Columbia. Before long, he had devised a study that asked, was it just him? Or could rudeness cause other people to open their wallets too?
The answer was a qualified yes. When it came to “aspirational” brands like Gucci, Burberry, and Louis Vuitton, participants were willing to pay more in a scenario in which they felt rejected. But the qualifications were major. A customer had to feel a longing for the brand, and if the salesperson did not look the image the brand was trying to project, condescension backfired. For mass-market retailers like the Gap, American Eagle, and H&M, rejection backfired regardless.
Finally, the effect seemed to be limited to a single encounter. When Dahl and his colleagues followed up with the buyers, he found evidence of a boomerang effect much like the one he had felt a few minutes after his purchase: the buyers were less favorably disposed toward the brand than they had been at the outset. (And come to think of it, Dahl says, he hasn’t been back to Hermès since.)
An awful lot of our customers are aspirational, or at least we characterize them that way. Most brands depend on them. In the history of snow, skate and surf, there have been times when we exuded an exclusive image and suggested to potential customers that if they were lucky, we might let them join the tribe. Apparently, playing on that kind of insecurity, if it’s right to characterize it that way, doesn’t work for long. And, if you relieve this research, it doesn’t work at all once a product is in broader distribution.
Put another way, can you have an aspirational brand in broad distribution? Do successful aspirational brands have to be higher priced? Is how closely a brand is associated with a particular activity correlated with where and to whom it can be sold?
I haven’t seen the whole research study, but there’s clearly some food for thought here.
Once again, my research department has come through. They’ve presented me with a paper from PwC and Kantar Retail that talks in some detail about where they see retail going between 2013 and 2020. It’s a little dated, but still very relevant. If you’re already seen it, never mind.
I suppose one of the reasons I like it so much is that they say a lot of the things I’ve been saying, but they’ve taken 44 pages to say it with more analysis and explanation than I ever have time for.
Here’s a quote from their summary, but you really need to read the whole thing to understand what they mean.
“Success will likely be shaped by several factors, weaved together in a flexible, scalable, and agile model. The winning retailers will have a superior understanding of their consumer, considering income and demographic fragmentation, as well as behaviors, and will have the inert ability to analyze shopper data and extract valuable information. They will leverage technology shifts to their advantage and turn business intelligence and data into actionable insight to grow and benefit the business. They will integrate these insights into the demand chain and into enhanced customer service models. They will have an enhanced understanding of market fragments and patterns of growth and will be able to operate and manage “glocally”- on a global scale with attention to local needs. Leading retailers will address the challenges to their economic models and adapt their frame of mind on store formats, employment models and return on investment. The successful 2020 retailer will also build a true omnichannel operation that allows customers to interface through any channel of their preference on a 24/7 basis, anywhere at any time.”
The Board Press published a really good interview with Ultimate Distribution founder Kevin Harris. It’s his description of what he learned visiting 55 skate shops in Western Canada. I didn’t know there were 55 skate shops in Western Canada.
Kevin’s description of what he learned reminds us, or at least reminds me, is how important it is to get the hell out of your office and visit shops (and, I’d add, skate parks). This is where the real business of skateboarding happens and where you can really discern the trends.
Here’s the link to the article. I’m going to go read it again. Then I’m going to get my ass out from behind my desk and go visiting.
I enjoy hearing from you, even when you disagree. The exchange means that I learn something, too. Leave a comment on any of my posts to contact me directly.
Market Watch updates
- No Store Growth; Perhaps a Good Decision, But What’s the Strategy? The Buckle Annual ReportApril 19, 2018 - 1:40 pm
- A Brief Remembrance of SPY CEO Seth HamotApril 2, 2018 - 10:59 am
- Zumiez’s Annual Results; And Tales from its Conference CallMarch 30, 2018 - 10:44 am
- VF’s Management Process and Strategy: Thoughts on Their Annual ReportMarch 18, 2018 - 12:49 pm