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.
Things like:
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.
To Learn more about growth hacks for supermarkets, grocery retailers, click here.
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.
If you are a Brand Owner operating in the beauty/fragrance genre & want to grow his/her business & need a retail expert to help you realize your vision then feel free to write to me at riteshmohan@yahoo.com or call +971502476483
Toys R Us which shut down its last store in Jan2021 is now making a comeback as a shop-in-shop concept with retail giant Macy’s.
As Fox Business reports, the Toys “R” Us stores inside Macy’s range from between 1,000 square feet to 10,000 square feet in size, with larger flagship stores set to exist in Atlanta, Chicago, Honolulu, Houston, Los Angeles, Miami, New York, and San Francisco.
Last month, Glossier (a beauty etailer) announced its distribution partnership with Sephora. (read the article here)
Nordstrom recently teamed up with at-home fitness brand Tonal to put mini-storefronts into 40 of its stores in an effort to capitalize on the boom of interest in home fitness.
Walmart had earlier set up Disney SWAS stores as well.
What is SWAS model (shop within a shop) & why it is helping brand to reinvent their physical retail?
One of the most popular strategies right now is SWAS, also known as ‘store within a store’.
Store Within A Store, also known as SWAS, is an experiential retail strategy where retailers set aside floor space for partnering brands to set up shop.
This may be done as a permanent lease or as a temporary pop-up lease strategy to drive footfalls into the main departmental store or even malls.
Pop-up stores are very popular amongst luxury brands as well as they get an opportunity to showcase their new collection in a high upmarket commercial space without opening a permanent retail store.
SWAS concepts will often involve value-added offerings in addition to just selling products.
This includes tutorials/product demos, roundtable discussions, or product sampling campaigns that enhance the customer experience and drive a buzz around the brand and the host retailer.
Post-Pandemic, most retailers are trying to reinvent themselves and the SWAS model is an excellent strategy to expand & increase brand presence.
Benefits of SWAS model for the host retailer/ shop in shop benefits.
Adding newness into the store without adding burden on capex.
Partnering with known brands attracts new customers for the host retailer
Maximum utilization of the store space by adding complementing brands to the host retailer’s offerings.
Additional source of revenue generation for the host retailer.
Changes in consumers preferences driving growth of SWAS model
Today, consumers are just as likely to discover new products on social media as they are in-store.
Moreover, 81% of consumers say that they research a product online before purchasing it in any channel.
Why SWAS is a good model?
Having maxed out their online audience and facing increasing acquisition costs, many successful D2C brands have taken the plunge of bringing their products offline to participating retailers.
Product Visibility and product trials are the key to growth.
Retailers can provide unique value by offering experiences in-store that shoppers cannot get online.
Opportunity to touch & feel which is not applicable to the online shopping experience
To learn how a toy retailer could add million dollars to their profits, click here.
Physical stores are a crucial touchpoint – but not necessarily the point of purchase.
Today physical retailers are moving their mindset from Transactional relationships with their customers to “imparting experiences” to build brand loyalty.
Allowing customers to book an appointment via the website for a free makeover, lead the customer to experience not only the makeup brand but uplifts the probability of higher purchases in-store.
Focus of right merchandise mix.
SWAS model helps the brand to optimize their merchandise offering, instead of offering everything, it gives them an opportunity to curate the right product offering which is a more focused approach towards inventory planning.
Walmart announced a 97% leap in online sales, and some physical stores saw earnings drop by as much as 256%.
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.
Ritesh Mohan
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.
To learn about how to franchise your business, click here
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.
Summary:
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.
My book, ― How to become a shark salesman provides tricks, concepts, and hacks to grow your business by
learning the Art of selling & become a ―Shark in selling.
Ritesh Mohan is a passionate retail professional with over 22 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, 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.
Last decade, marketing was all about Personalization but fast forward to 2021, it’s all about Hyper-Personalization.
Have you observed, How Netflix is able to suggest movies, web series based on past viewing patterns?
Have you noticed how amazon suggests you the new book titles based on your past book purchases or shopping cart abandonment?
How does Facebook or Instagram know about my last search for a florist in my neighborhood or city done on google? (as they start targeting me with florist ads)
I am sure, we all are getting emailers from our favorite brands even if we have not purchased or bought them as yet.
Do you know the biggest challenge for the retail business today?
The answer is to get the customer to shop again and again i.e. Repeat purchase generation.
This is what keeps the cash flow alive.
My article will talk about this new-age marketing mantra called Hyper Personalisation.
Personalization vs Hyper-Personalization
Personalization is the using transactional information like name, title, organization, purchase history, etc when communicating to your existing customer.
Hyper-personalization goes one step further and utilizes behavioral and real-time data to create highly contextual communication that is relevant to the user.
For example: Sending an email to a user (post-purchase) with their first name in the subject line is a typical example of personalization. A good practice, but does not ensure their loyalty in the future.
Hyper-personalization is more advanced. For example, a user browses for a Management book on your app, spends around 15 mins and leaves without purchasing. A quick analysis of the user reveals:
An affinity for buying management books but maybe looking for books on promotions.
Prior search and purchase history for ‘X’ book by a particular author.
Your purchase patterns i.e. past purchase times (day, afternoon, night, late-night, etc)
With this information on hand, a retailer or eCommerce retailer can target or segment you with their push notifications customized for you.
This is a common technique used by travel booking sites as well as eCommerce retailers.
Why the need for Hyper-Personalization?
Massive competition & fight for customer’s mind space (share of voice)– you have less than 5 secs to communicate your key message that you are trying to convey.
According to Accenture, 75% of consumers will be more likely to purchase from someone whose offerings are personalized according to individual preferences.
Top brands like Amazon, Spotify & Starbucks have moved on to a stage of predictive personalization, where AI & machine learning analyze a whole host of factors to power their recommendation engine.
As per statistics, the “Recommendation” section engine, helps the e-tailer Amazon, with 35% more conversions on their website which means more revenues and lesser cart abandonment rates.
Hyper-Personalization – Integrate with Loyalty programs.
Brands who are already having their loyalty programs can scale up their game with Hyper-Personalization techniques.
Hyper-Personalization example – Starbucks.
Starbucks Loyalty program is incredibly successful, boasting over 13 million users.
Past Purchase patterns (money spent previously, purchased dates, payment methods, purchase time, purchase items, etc)
Armed with this information, Algorithms create a “Lookalike audience” and start targeting the customers with their personalized messages and even Recommendations.
Personally, I use the “Spotify” app and sometimes I get amazed when they customize the song’s playlist as per my taste. (being an Arijit Singh fan, my playlist includes most of his recent songs in the list).
Learn how Lenskart is using data to thrive in Omnichannel space, Read here.
A personalized experience establishes goodwill,increases loyalty, and brings a smile to your face.
Summary:
Today the customer is highly evolved and well aware of his needs and what product or brand he or she wants to purchase.
Businesses too are well aware of “Products people buy “ and “ Products people are sold”
Creating generic customer segmentation buckets and mass marketing campaigns isn’t going to work for you.
Learn why 70% of family-owned business closes down as they transition from the first generation to the second generation; click here.
With a surge in customer touchpoints & competition and an information overload in terms of communication, the best way you can attract and hold your customer’s attention is through personalized communication and customized experiences.
Hence, Hyper-Personalization is the new Marketing 4.0
About the author:
Ritesh Mohan is a passionate retail professional with over 22 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.
Retail trends 2021- Your guide to navigating 2021.
As we say adieu to one of the toughest years for the retail sector i.e. 2020; one question is on everyone’s mind i.e. What are the retail trends in 2021? How 2021 will be for the retail business?
The answer is simple, if you as a retail business owner are forward-thinking, ready to adapt to new ways of doing business then you shall thrive.
But, in case you belong to the old school of thought wherein you keep repeating what brought you success in the past then you may start counting your days…
Yes, I am being very blunt in stating the same.
Always remember Darwin’s theory of survival.
The law is relevant even after 100s of years.
“It is not the biggest or strongest that survive any kind of apocalypse but only the one who is the most adaptable to change.”
The objective of my article is to highlight key insights and trends which can guide retail business owners and help them in giving some guiding reference so that they are better equipped & can drive retail transformations in their businesses.
What must retailers do to remain popular?
1) Retail trends 2021- Experiential retail
Gone are the days when the customers expect only product and service. Today millennials and mobile-savvy customers need “experience” along with the product & service.
We are in an “experience” economy.
Brands like Nike & Ikea are experimenting with smaller shop concepts but fused with more engagement activities using technology and Artificial intelligence to drive social engagement in their stores.
Watch Nike’s digital retail transformation
In the fragrance sector, niche brands are implementing engagement tools using technology within their displays.
Watch the display stand of a perfume brand “Min New York” at Bloomingdales Dubai mall.
To learn more about the gamification of retail, click here.
2) Retail Trends 2021– “One Retail”
One of the trends in 2021, the line between digitally native retailers and brick-and-mortar stalwarts will become blurred.
There is no eCommerce or e-tail or physical brick & mortar retail but it’s going to be the “ONE RETAIL”.
Brick & Mortar retail will adapt itself to different customer touch-points.
They shall expand their sales funnel instead of depending upon the mall’s feet-ins, they shall start their customers journey from the “search” intent itself online.
Driving brand awareness online & on social media and using it as a part of their “customer acquisition” strategies.
Engaging customers with their relevant content and forming their own communities digitally.
Content marketing will be the new Oil in the experiential economy.
3) Retail trends 2021 – Use of tech products & Augmented Reality
As per a Harvard business review study,
73% of shoppers switch from channel to channel when shopping.
AR can be used to “preview” items before committing to a purchase.
60% and 55% of furniture and clothing retailers, respectively, already use AR
As already mentioned, consumers no longer distinguish between online and offline shopping.
They may start shopping in one and checkout in either.
A Harvard Business Review report disclosed that 73% of shoppers used multiple channels to discover and buy products.
Needless to say, it is mandatory for retail brands to be present on all the channels that their customers are using.
Watch the video of an AR tool by an Indian e-tailer, Lenskart.com.
This video highlights the biggest change in consumer’s buying behavior i.e. today customers try the products and check for its social proof and based on the response (likes and comments), he/she buys the product.
Technology is going to be your best friend in 2021.
4) Retail trends – Sustainability will be the driving force.
The biggest lesson 2020, has taught us is that we need to take care of our planet, our resources, and our health by adapting our urban lifestyles towards a more sustainable future.
A study from Unilever highlights the changing stance of consumers in this aspect.
21% of consumers now report that they would prefer brands with an active environmental responsibility campaign.
Retailers who are fast enough to adapt to this trend either by replacing their packaging with sustainable materials or reusing recycled bags or even producing fashion clothes and shoes from the waste materials will be in a better position to face the challenges.
In 2020, nearly 41% of customers said they were currently shopping online for things they would normally buy in-store.
Today, retailing demands a seamless User experience and User interface (UX/UI).
We saw the emergence of platforms like TikTok collaborating with Shopify, enabling Shopify eCommerce platform retailers to sell on TikTok with buy buttons.
Facebook and Instagram also launched their “shop now” tabs.
It will boost sales for retailers to sell directly on Facebook and Instagram without going through the hassles of driving traffic onto their eCommerce websites.
I had previously written a detailed article on this topic, click here to learn more.
6) Retail trends – Digital native brands to open more physical stores.
Brands like Lenskart, Glossier, Warby parker all started as digitally native brands have ventured into physical retail. As a result, excelling in their overall sales also.
These brands have developed their digital communities and now servicing them through physical stores which are more on experience and engagement.
The Amazon Fresh grocery store is a new grocery store designed from the ground up to offer a seamless grocery shopping experience, whether customers are shopping in-store or online.
How you can apply basic marketing principles in the digital world, to learn click here.
7) Retail trends – faster Last Mile Logistics.
It seems like customer expectations for shipping times are only getting faster.
First came 2-day via the rise of Amazon Prime, then next-day, then same-day.
And now, Walmart expanding its two-hour express delivery options.
PwC reports that 88% of consumers are willing to pay for same-day or faster delivery.
From Amazon’s Prime Air — which uses drone technology to deliver shopper’s orders in 30 minutes or less — to the rise of delivery robot startups, delivery is only getting faster.
As a result, Last mile logistics will see all the excitement and investments in 2021.
This sector is about to grow exponentially.
For example, Talabat, uber eats, swiggy are all expanding their delivery systems not only to cater to food delivery or restaurant sectors but are now even delivering groceries, perfumes, and cosmetics- all within 30 mins to 1-hour duration.
To learn more about last-mile logistics, click here.
8) What products will be trending in 2021?
Apparently, Voice search and gadgets like Alexa, Echo, Google Assistant, Google Home, will be at the forefront when it comes to products.
Retailers need to adapt to this emerging trend by optimizing their eCommerce sites and SEO to adapt to voice searches that will be happening on these gadgets like echo etc.
I hope this article will help my retail fraternity with insights on the trends that will be prevalent in 2021.
In case you need any clarifications, then you can reach out to me at riteshmohan@yahoo.com
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.
Recently I took a certificate course on Digital First- Digital transformation retail journey. The course was really an eye-opener for me to start thinking from new perspectives i.e. Digital
I hope that is the NEW NORMAL.
Digital economics is not the only e-commerce but it is a new way of thinking from your customer point of view.
In this article, we shall talk about gamification as a strategy.
What is gamification?
Gamification means bringing engagement elements of gameplay into something that is not naturally a game or sport.
Parents usually use this gamification strategy on infants while feeding them to distract them from food and make them feel engaged in the process of the game.
Even in order to get kids dressed faster, parents prompt them to race i.e. who gets ready faster & so on.
In retail, a store uses loyalty cards to encourage customers to collect more points on their purchases or even cashback on spends & making the customers splurge on certain categories.
Online digital e-learning systems often use gamification to nudge learners into completing tasks or assignments.
Giving course completion certificates, badges, or using progress bars, to get users to feel a sense of competition and a desire to reach the next level.
How Gamification is used in retail Business?
There are various areas in retail wherein a retailer can implement games
Customer engagement
Technology in-store
Dwell time
Interaction leads to retention
Data gathering
Positive experiences
Rewards encourage loyalty
Brand awareness
The most critical desire of any retailer is to make their customers spend more time in-stores.
As per a recent study, Digital marketing experts estimate that most Americans are exposed to around 4,000 to 10,000 ads each day.
According to Gallup’s study, fully engaged customers represent a 23% share of profitability, revenue, and relationship growth compared to your average customer.
Hence Gamification becomes a critical strategy to enhance customer engagement.
Gamification helps brands to cut the clutter
Content is the new buzz word.
Every marketer and agency is talking about it.
Interactive content draws people into your brand story and gets them to take part.
Games or gamification can stimulate parts of the brain to release dopamine which a static advertisement never can.
Dopamine release provides a feel-good factor which is more comforting and builds a connection with the brand.
Instore Technology driving Gamification.
We all keep reading about the retail apocalypse & various negative sentiments like digital will now replace traditional retailing.
My opinion is completely different from the above.
We all grew up studying retail definition that it is a theatre wherein the people from different backgrounds come together to enjoy some form of artistic expressions.
Think of your retail store concept as a theatre, wherein your merchandise is your leading actors, your Visual merchandising is how you dress up your actors and make them look like reel-life characters.
Merchandise planners should think like casting directors as to which collection or merchandise will fit the role/characterization better.
I believe the future of retail will be dominated by organizations that can blend the two spheres i.e. digital and physical retail.
Deploying gamified experiences on in-store kiosks is a way to grab customers’ attention in a way that your app or website never can.
“Show me how to do it and I shall understand & remember.”
This adage old quote is still so relevant and retailers must try to utilize it to enhance customer engagement, dwelling times in their stores.
Watch the video of Nike using gamification.
Book retailers like Kinokuniya and crosswords frequently organize book reading sessions or meet & greet the authors so that the book reading community gets a platform to meet the author and share their experiences with other like-minded readers.
Data crunching made easy using gamification
As per research by salesforce connected shopper report, 63%of the respondents felt that the retailers don’t know their taste or liking
Traditional customer research methods capture customer views only post-purchase,
In-store gamified experiences can capture the mood of customer’s in-the-moment, while they’re still in the store.
This makes the data more accurate and more reliable as a driver of business strategy.
Gamification of loyalty programs.
According to one survey from Boston Retail Partners, almost nine out of 10 retailers (87%) will use gamification methods in the next five years.
And nearly half of those (46%) pointed out that a loyalty program incorporating these elements is one of their top priorities.
Recently, in one of the case study which I undertook during my retail course, our professor had given us an excellent case study on Bed Bath & Beyond brand.
Case study: Bed Bath & Beyond
Though the case study was on different aspects of the strategy that did not work for them; what stuck to my mind was the gamification of their plus-size mailer, known as Big Blue.
The founders of Bed Bath & Beyond were very clear from the conception that they are not going to advertise items, nor change prices and run sales.
They believe running a sale was a very costly way of doing business.
Instead, they told the customers that they would give a discount on the items which they want — and not on the one that the brand wants to put on sale.
The solution was mailing a mail-coupon direct to their customer’s addresses.
No advertising on TV or press about the stores or offerings, instead they focused on mailing the coupon to their customer database.
The big blue coupon became the brand itself from Bed Bath & Beyond.
Bed Bath & Beyond was sending out nearly a billion pieces of mail a year.
Mail coupons became a gamified version of loyalty cards which drove traffic to their stores.
They used data analytics to understand what products those coupons were being redeemed and stocked more of it – simple maths.
I shall limit my article to the positives of Bed Bath & Beyond and how the senior leadership’s vision drives the retail concept to great heights.
Below video please find the video which summarizes my article beautifully.
In case if any of my readers want to have a more detailed discussion on the topic, they can reach me on riteshmohan@yahoo.com
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.
Last fortnight’s, the biggest headline in the eCommerce world of Amazon’s entry into luxury retail.
Amazon.com Inc. in order to penetrate the luxury segment has launched a “Luxury Stores” platform.
Oscar de la Renta is the first and only brand so far, but it is amazon’s first step to persuade other luxury retailers on its market place.
In this article, we shall review why luxury brands are slow in adapting to the eCommerce model.
I did a poll on linkedin.com to assess the respondent’s intent to buying luxury goods online, the results were really shocking and the comments revelation was really an eye-opener.
“67% of the respondents said No, to buying luxury goods online.”
The most feared reason for their reply was “Prevailing fake luxury goods” on the eCommerce marketplaces. Lack of authenticity and trust on the part of marketplaces.
I feel with more stringent laws pertaining to fake luxury goods, especially in the Middle East region, the trust for buying luxury goods online shall be more prevalent in the coming times.
Why luxury brands are late in embracing eCommerce?
Traditionally, luxury brands work on a model called “Exclusivity”;
They are exclusive in their marketing, distribution and hence they are able to impart excellent customer service which makes their customers feel exclusive and elite.
It’s all about Brand Imagery.
Secondary, the fear of “loss of control.”
Luxury brands are in love with their processes and control.
They love to stay in command when it comes to communication, pricing, visual merchandising, brand look & feel, customer engagement, etc.
When it comes to eCommerce marketplaces, all of the above tend to lose control and may hamper brand imagery.
Frankly speaking, eCommerce marketplaces are all about Prices and Discount seekers.
Hence the luxury brands have shied away from it so far.
10 hacks to kick start your eCommerce business, click here.
Disrupt yourself before anyone else does it- Luxury eCommerce strategy.
In June 2017, global luxury goods company LVMH launched its own multiband eCommerce portal 24 Sèvres, inspired by its Parisian luxury department store Le Bon Marché.
Featuring not only LVMH’s own portfolio of brands (including Louis Vuitton and Christian Dior) the eCommerce site also curates luxury fashion, accessories, and beauty products outside of the Group.
Are there any other luxury goods eCommerce platforms?
Yes, there are a plethora of eCommerce platforms selling luxury brands but the major ones are Farfetch and Yoox Net a porter (Richmont group acquired it in 2018).
Most of the eCommerce luxury platforms invest heavily in glossy editorial content and fast delivery,
24 Sèvres (LVMH group) is trying to differentiate itself by focusing on visually-led digital “storefront” windows (as we can observe from the site homepage) and interactive customer service technology.
They too have personalized fashion stylist service for the affluent customers seeking more customized options.
How do Luxury brands need to adapt to the new normal of selling?
Traditionally, luxury retailing is all about imparting experience to their affluent customers which are more personalized.
While embarking on a digital journey, Luxury brands need to ensure that their customers can get the same level of effortless ease in navigation and luxury experience on the website as in the brand’s physical shops.
User interface / User experience
Check LVMH site 24sevres, the entire experience is simple and very engaging at the same time
Augmented Reality
Cosmetic brands are already using this technology to help consumers try out products online.
Prada just published, for example, a virtual reality application that takes its customers on a tour of the latest luxury fashions.
Check out the Prada VR video of the making of Men’s Shoe. (Very interesting video)
Treat your online customers as VVIP: Luxury eCommerce.
JD.com, one of the largest e-commerce sites in China, offers ‘Luxury Express’ to deliver high-value products to customers in a special vehicle with a driver wearing white gloves (some Chinese associate white gloves with an English-accented butler).
It triggers a feeling of being treated like a VIP.
I recall one of the hi-end Jewellery retailer in India (from Gujrat) when they launched their brand and store;
They noticed that most of their online traffic was coming from search engines and not particularly from the direct source (no one was typing the brand name directly while searching them).
They came up with an interesting concept, wherein they used to approach the online customers (who pre-register or express their intent in their jewel pieces) offline and bring them to their store in a luxurious, chauffeur-driven Mercedes Benz (pick up & drop was complimentary).
The Concierge service was unheard of in the early 2000’s in the Indian sub-continent.
This innovation gave their online customers a feel of excellent customer service.
Covid19 accelerating the eCommerce shift – luxury eCommerce.
Luxury consumer behavior is changing.
A Vogue Businesspoll of 700 Chinese consumers in March showed luxury consumers picking mono-brand e-commerce platforms as their primary shopping channel post-Covid.
We all have read the news of Hermes, the highest single-day turnover in Guangzhou post reopening of their store, for instance.
This shows the potential that exists with luxury brands in case they embrace eCommerce in sync with their physical stores.
China is one of the biggest markets for luxury goods.
Affluent Chinese prefer buying brands like Rolex, Gucci, Louis Vuitton, etc.
As a result, Tmall (Alibaba Group Holding Ltd.’s) has lured more than 180 brands to its Luxury Pavilion platform.
Learn about Category management & how it Can Make or Break your retail business, click here
Conclusion
In conclusion, Luxury brands are embracing eCommerce platforms keeping in mind their core principles like uniqueness, Look & feel, User experience, and exclusive service.
The luxury sector is creating its own ecosystem with subscription & rental business models.
You can read my case study on Rent the Runway, click here.
Moreover, a new format is also emerging from the luxury branded goods market i.e. Pre-loved luxury retailing.
I have penned an article on this newly emerging sector for the magazine, “Retail People” (by the Middle east council of shopping centers) & shall publish the article once the magazine is released at the end of Oct 2020.
Till then stay safe and connected & keep following #retailritesh
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.
Post Covid19, as most of the sectors are gearing up for recovery mode, my article highlights the new era of a retail renaissance.
Retail is one of the sectors most affected by COVID-19 in both positive and negative ways.
There are sectors that are thriving in the current scenarios such as grocery shops, hypermarkets, pharmacies, food delivery aggregators, and e-commerce marketplaces.
It is a very busy time for these sectors.
As every coin has two sides, the flip side of covid19 on retail sectors such as fashion, beauty, and non- food sectors which are facing challenging times. And most of them are closing as well or filing for bankruptcies.
These turbulent times are giving birth to a new era in Retail.
I call it Retail evolution or Retail renaissance.
My article highlights the changes that one can expect in the future of retail as we all gear for economic recovery.
Retail renaissance – Covid19, no longer a health pandemic, its economic disruptor.
It has impacted the changes in the consumer’s behavior. Today consumers have got themselves accustomed to the convenience of shopping from their couches.
The emergence of the shift to online and digital shopping
Pre covid19 era, most of the retailers used to think that digital /eCommerce initiatives will take time to pick up since eCommerce trade was only 8% of the overall brick & mortar pie.
Fast forward to today, post covid19 era… digitization is no longer an option. It’s is a fact of life now.
The aftermath of any economic downturn is an increasing trend towards value for money brands across retail sectors.
This is already happening in essential categories, for example, when the pandemic occurred this March month, I recall spending dhs 140/- on a jar of 5litres of sanitizing gel.
As time progresses, more and more players in the market introduced their range of sanitizers, the price corrected itself and today, the same jar is now available for less than dhs 40/-.
That’s the perfect example of Product life cycle & market dynamics.
How will the Retail Renaissance look?
Ideas are the new currency for new era economies.
Amidst shop closures and bankruptcies, a new kind of retail is evolving.
The entry of Digital Native brands into physical retail formats.
While digital-native brands like Bonobos, Glossier, Casper, and Warby Parker started online, many are launching and expanding their physical presence.
According to a study by a Real estate Company, digitally native brands are predicted to open 850 brick-and-mortar stores in the next 5 years, with New York being the most popular destination. (Study conducted in the US)
An example from our Indian ecosystem, Urban ladder, which started as a purely eCommerce site, today is creating experience centers in a couple of malls in India wherein they want their customers to engage, feel their furniture prior to purchasing.
Brick & mortar (B&C) brands are creating online channels to complement there physical ordering.
Customers can purchase their groceries online and come to a mall’s parking facility having dedicated space counters for picking up your online orders.
Amazon GO concept is in line with this philosophy.
Watch the video here.
Experiential retail – the core of phygital (physical and digital) world.
Retailers are leveraging AR technology to bridge the gap between the digital and the physical.
Experiences have become the social currency of a new generation of consumers who have commemorated every meaningful life experience online.
Mega-brands like Target, Lowes, and Amazon have launched AR features that allow shoppers to picture furniture in their homes.
AR app of Ikea Place.
Read more on experiential retail in the beauty sector, click here.
Data-driven shopping enhancements
Amazon scout is an example wherein it uses machine learning to recommend specific products to shoppers based on their likes and dislikes & their shopping patterns on the digital space.
Currently still being tested, Scout provides recommendations in the categories of home furnishings, decor, and women’s shoes, with more categories coming soon.
Mergers & Acquisitions – forms the new normal in the Retail Renaissance.
The retail renaissance shall see more mergers and acquisitions, either like-for-like acquisitions, that is, the purchase of a direct competitor, who plays in the same categories.
The recent acquisition of Future group by Reliance Retail falls into this type of acquisition.
Or category or channel expansion, that is, buying into a new category or channel with the goal of improving growth exposure and/or broadening the product offering to the consumer.
Retail Renaissance offers a dual-edged sword to new era consumers.
They have to face new financial realities.
While their targeted millennials’ incomes have increased when compared to previous generations but their net wealth continues to trail.
So today retailers will have to serve consumers, who are well informed, more discerning but pressed with low incomes & higher debts.
It is going to be more challenging to entice such consumers and keep them engaged with brand stories and emotional & experiential connects.
If a retail concept that can address these concerns with their value for money proposition shall thrive in the coming years.
Retail Renaissance- New era retailers will empower their front-liners more.
Have you ever wondered why a neighborhood grocer is able to run his small shop more profitably than the major hypermarkets?
Many of you will say since the small shop owner operates on lower overheads that’s why he or she is far more profitable.
The above may hold true partially.
The main reason for the success is that he knows his customers face to face.
He understands his customers, their shopping behavior, and accordingly, he plans for his merchandise mix.
The Reason for success: Knowing your customers.
Big retailers miss this aspect as they get entangled into the processes & SOPs and hire research firms to find what their customer need.
There is a loss of key insight in the process.
New era retailers, will empower their front-liners more, push more power, autonomy, and decision-making back to the front lines.
They will create more information capture channels from the front lines to make an agile strategy for their brands.
Make your brand –purpose-driven & technology your BFF. (best friend forever).
I am not a huge fan of technology as I strongly believe in simplifying retail.
However, technology can be your BFF if retailers are clear on their brand’s promise.
For example – Walmart is investing in robotics in order to reduce its operating expenses.
It is in line with its brand’s promise,
“Everyday low Prices”
By lowering operational costs, they can offer better prices to their customers.
Conclusions:
Never seen or heard brands will make a foray into the retail sector and that’s the crux of
RETAIL RENAISSANCE
Feel free to reach out to me in case you are a business owner willing to reinvent your concept.
References: header pic Photo by Ksenia Chernaya from Pexels, Mckinsey report on next normal, Arabian Business, and other business publications.
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.
How experiential retail is changing the customer experience?
Millennials are no longer driven by product benefits and brands. they need experiences.
Covid19 has accelerated this change in customer’s preferences even more & has put Beauty retailing into various challenges.
Few of them are:
Non-usage of testers as precautionary measures by cosmetics brands
Low sales turnout especially if you are a physical brick & mortar retailer.
Growth of digital avenues but online sales are not enough to sustain the overheads of entire retail concepts.
Despite rent reliefs from the malls, the low sales traction is not enough to meet P&L objectives.
Retailers are pushed for short term liquidation strategy. (sales & discounting)
Pricing or COGS (cost of goods sold) is unstable to sustain Brick & mortar concepts.
An overall decline in the category but there are few categories which have shown growth in term of Eyeliners, compacts (daily usage for work from home women) and skincare.
Today’s beauty industry is different from 10 years ago.
Earlier, retailers used to focus on color pallets based on the target customer’s skin tone, used to order quantities from the manufacturers based on the number of stores (footprints of the brand).
Retailers used to push the products with some “How to use” videos and train their front liners and the product used to fly off from the shelves with little advertising.
Today, Instead of traditional advertising, beauty and cosmetics brands are largely digitally-focused, using social channels (and influencers) to reach and engage users.
Learn how technology is driving growth in beauty retail, click here.
How to drive scalability in the current scenario? Can experiential retail redefine traditional retailing?
Experiential retail is the answer.
Millennials are no longer enticed just by good product, but they prefer to accumulate experiences from either using your products or by experiencing the product benefits and the positive affirmations which they can share on their social handles i.e. creating shareable moments.
Are you creating shareable moments in your beauty stores?
With 100 percent confidence, I can say that none of the beauty retailers are doing so. (Barring a few).
Today, Beauty retail has evolved from Departmental (multi-brand stores) to mono-brand (standalone stores) to specialized experiential stores to specialized eCommerce stores.
Experiential retail is also another big source of investment, with campaigns allowing beauty brands and retailers to tap into the changing behaviors and interests of consumers.
Are you ready to embrace a new trend- Experiential Retail?
“Customer loyalty is a myth.”
If you as a beauty retailer is having a strategy based on increasing your customer loyalty then you are going to burn much of your cash resources.
With an increasing number of direct-to-consumer brands entering the beauty market, the fight for the consumer’s attention is now fiercer than ever.
Alongside this, today’s customer is overwhelmed with options, and that their loyalty is easily lost.
Reach out to your customers wherever they are on any of the platforms.
The customer can be online, on market place websites as well as on social media (Facebook, Instagram, Twitter).
You as a retail brand need to be more visible than ever before.
TOP OF MIND approach is more and more relevant today.
Case study: Boots
Objective– Reposition Boots as a big player in the beauty retail space
Strategy:
Boots partnered with Glamour Magazine on the ‘Glamour Beauty Festival’ – a live event giving visitors the chance to discover some of the new brands set to launch in Boots’ stores.
With interactive services such as skincare consultations and foundation matching, the event allowed both Boots and partnering brands to capture the interest of consumers at the same time the products became available to buy.
Watch video of last year’s Glamour beauty festival and how brands used it effectively to their advantages.
One of the international brand Charlotte tilbury’s (partnered with local regional retail powerhouse) did an activation in one of the leading malls in the UAE which saw a plethora of media, beauty fashionistas & influencers turning for the experiential event.
See the pics here.
Retail is not dying, Bad Retail is certainly dying.
Post covid19, as more of the stores open up for trading, there is a huge pressure on the frontliners to push for the sales, merchandising to ensure that the display and mini tester units are available, use & throw kind of testers, store operations to ensure that they maintain safety standards while welcoming their customers.
Basically, all the departments of the store are under pressure.
Learn how you can reach millions of people with just one phone ‘missed call’, click here
Stress is good: create experiential retail
Today’s customers want “shareable moments”.
Brands like Lululemon, are intended to build a community around the brand through activities like workout classes, group meditations, and scheduled events and invite their customers to engage with the brand using activities instore.
Buy Online & Pick up instore more relevant than ever.
Beauty retailers who have their own e-commerce sites must try to drive traffic from their sites to their stores.
Encouraging returns through stores or even making your stores as fulfillment hubs.
Watch my webinar which I presented to over 75 retail professionals on how they can thrive during covid19.
Using in-house influencers – your biggest influencers or ambassadors are your front liners.
During the covid19 outbreak, this Chinese beauty retailer was forced to close down 40% of its stores in Wuhan (where the virus started).
The company immediately pivoted using its sales team to interact with the customers on WeChat and encouraged their team members to become influencers for the brand.
By posting educational makeup videos on product usage, unpacking their gift sets, etc.
Result:
Despite lockdown, the brand was able to garner a 200% growth in its sales.
Do you as a beauty retailer innovate to sell?
Majority of the Middle Eastern retailers are having a mindset of Traders and not of a Retailer.
Historically, the Middle East region was evolved from a trading hub to a Retail hub. That’s the history of retail evolution in the region.
Innovation to most of the retailers means product development, packaging, or product usage only.
“Innovation can be deployed even in selling.”
Learn how Men’s grooming market is adding a new dimension, click here.
If any of my retail fraternity members, want to share their experiences with me or need my input towards their recovery plans, then they can reach me on riteshmohan@yahoo.com.
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 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.
Understanding the shopper’s journey in a hypermarket/ grocery retail
Recent research of consumers in a grocery retail/ hypermarket revealed
80% percent of the shopper’s time is spent simply in moving from one place to another, not looking at and purchasing items i.e. major chunk of time is wasted resulting in nil sales.
The average hypermarket carries 30k-50k SKUs, yet the shoppers past by them all to emerge with few items in their basket. On average each household buys 300 items per year.
The pain point of modern retail is that most of the shopper’s time in the store spent not buying or selling.
Of all the products on the shelves, only a small number account for most sales.
The challenge for any retailer is to optimize the merchandise mix and stock those items which are required by their customers. Also, ensure that the transactional process gets completed in the shortest time possible.
Is the concept of increasing the customer’s dwelling time a myth?
Myth 2:
Do we need to carry a large number of SKUs to attract customers which results only in sales of few items?
Let me present some stats here based on research conducted in a hypermarket
20 million seconds an average shopper spends in a hypermarket or supermarket per week.
300 seconds all shoppers spend in a given store, on average, on any single item, in a single week.
There are two main critical factors that create customer angst or dissonance as per the study
Navigational angst – a shopper spends more time roaming within the store without actually purchasing as he or she is not clear on the placement of the items that he/ she is looking for.
2. Choice angst– overwhelming SKUs 30k-50k in a typical supermarket/hypermarket creates more dissonance rather than enhancing the customer choice aspect.
A 500 million USD fresh food retailer, 80% of the products sold are fresh produce. The secret of their success is that it is the retailer who has identified the above two pain points and has alleviated them in their store designs.
The store layout is like a serpentine path with one big aisle leading from the entrance to the end. This eliminates the navigational angst of the shoppers since shoppers follow the single wide aisle path which is followed by other shoppers.
Through its store design, stew Leonard ensures that the right products show up in the shopper’s field of vision by the time they get to the checkout counters.
Thus reducing the second angst i.e. choice angst.
Stew Leonard has a small warehouse area on the side, at the end of the trip, where shoppers can browse for those less needed items.
It makes the store more attractive without bombarding the shopper with massive amounts of merchandise in which they have no interest.
Who owns stew Leonard’s?
Stew Leonard Jr. is an American businessman who is the current president and CEO of Stew Leonard’s, a supermarket chain based in Connecticut and New York.
Watch their video & see the physical store & study its category lay-outing and trolley movements.
Retailers like Tesco and Lidl and Aldi are all pursuing the limited selection strategy on the lines of stew leonard’s approach to the modern retailing.
My Learning:
Active retailing is actively understanding where shoppers are headed and actively making sure that they run into the products they need and which you want to sell.
Myth 3:
Earnings from the margins of the goods sold are the major source of revenues for supermarkets/hypermarkets.
A large share of retailer profit comes from the manufacturers of brands in the forms of rebates, listing or slotting fees, promotional allowances i.e. weekly offer leaflets, seasonal offers, and campaigns.
Second, earnings from the float on cash (accruing interest on cash from sales)
Thirdly, real estate (appreciating value of the property) is applicable to the Indian subcontinent and even the US where the real estate belongs to the hypermarket only.
Lastly, the margin on sales.
Future of Grocery Retail – Rise of small-format stores
German discounters Lidl and Aldi are growing rapidly in the UK with stores that are a tenth of the size of Tesco or Asda stores.
The smaller store offers a faster trip with a more limited selection at lower prices.
The growth of these stores is in fact in understanding the power of the quick trip customers. In fact, the most common number of items purchased in a supermarket is ONE.
Single item purchases account for more than 16 percent of all the shopping trips. 50% of shoppers come out with 5 or more items. The average purchase basket size is 12 items.
I call these stores as community stores, as they operate as neighborhood stores, offering just what the neighborhood’s household needs with an emphasis on freshness (quality) products at modest prices.
Hence, due to this very same reason, in India Kirana shops (small grocery shop) does better business than most of the hypermarket retailers.
Since these small Kirana shops become part of the community or the neighborhood as they understand their customers and even go a step forward in extending their self-funded credit facility to some households.
To date, no hypermarket retail chain has been able to compete with these neighborhood Kirana shops in the Indian sub-continent.
Merchandising challenges for modern grocery retail/supermarkets
A big question is how to merchandise the store, how to do store lay-outing in order to attract customers.
The solution lies in layered merchandising which means that the principal product of each segment or category should be easily accessible in a short path as possible between the entry and the checkout.
The quick trip items like diary etc are kept near the entrance so that the customer enters, picks the product, and goes straight to checkout instead of wandering inside the store.
This approach requires the retailer to understand the buying pattern and segment its shoppers into
quick trips,
fill in and
stock up shoppers,
and layout the floor plan accordingly.
The retailers fail to study the trolley movement paths of their customers.
Main pointers for hypermarkets & supermarket retailers to improve their businesses
To summarize main pointers
Focus on short trip customers.
Focus on the vital few items that drive success
Highlight the promotional price products adequately in the right places
Create more open spaces within the store layouts.
I would like to end this article with a quote from Frank Woolworths
“I am the World’s worst salesman, therefore I must make it easy for the shoppers to buy”
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. Ritesh has been instrumental in the growth of some of the regional brands as well in the 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.
References
Book “Inside the mind of the shopper” by Herb Sorensen.
