Technology is driving change in the global retail market. Companies that use analytics and understand the changing profile of consumers will emerge victorious while those who say “this too will pass” will end up losing.
At times, Stephen Sadove still pines for the scent of the musty old wood floors of his grandfather’s clothing store in Lake Placid, New York.
Sadove, the former Chairman and CEO of Saks Fifth Avenue and current advisor to numerous Fortune 500 companies, is far too busy just to wax nostalgic. He learned a lesson in retail on his grandfather’s lap that he carried with him throughout his career.
“He had a line which I loved, which was: ‘It’s a whole new world.’ My grandfather was always talking about this whole new world. And that describes where retail is at today,” Sadove says.
In his new world, Sadove’s grandfather knew every one of his customers, and their preferences, and he would go out and buy exactly what they wanted. In today’s new world, large retailers can’t know their customers individually, but since 75% of all retail purchases are influenced through mobile devices, retailers can leverage data and analytics to conduct pinpoint marketing campaigns and deliver customized messages to reach a slew of target markets.
The explosion of mobile has opened not just new worlds, but new universes. On a recent edition of “Mind Your Business” on 77WABC in New York, Sadove shared five critical tips for retailers who want to see their profits take off.
1) Differentiate yourself
By using one of several strategies. One is to focus on selling products that aren’t being sold by everyone else. Because if you’re offering the same item as the guy next door, then price becomes the only differentiating factor, and not everyone can win at that game. Another way to set yourself apart is to offer the best service, a unique shopping experience, develop your own house brand, or obtain exclusivity on a popular national brand.
2) Play with Interplay
Some customers prefer shopping online and get home delivery. Others want to shop online but pick up the item at your store. The common denominator is that today’s consumers want products anytime and anywhere, and sharp retailers have developed a winning brand of interplay between the two. Bonobos started out as an e-commerce apparel store that subsequently opened “guide shops” where customers can make appointments to try on the clothing that appealed to them on line. Boutique eyeglass maker Warby Parker offers both home try-ons for couch potatoes and “pop-up shops” in retail giant Nordstrom for those who like to get out: “It’s interplay between the two experiences that is winning,” Sadove says.
3) Keep Inventory Portable
To take full advantage of all the new sales opportunities, retailers need technology that enables them to unify their inventories. When someone orders online but wants to pick it up in the store, you have to make sure the product is in stock at the store, and not stuck somewhere in cyberspace. “This doesn’t happen automatically,” Sadove says. “You need to understand where you have your inventory in order to be able to move the product around.”
4) Watch for Disruptors
The biggest disruption in retail today is the power shift from the retailer to consumer. In the old world, the store had the brand and the associate whose expertise the consumer relied on to make a smart buy. Today, the 75-percenters who tap into a mobile device before buying walk into a store or showroom armed with product knowledge from their own research, reviews and blogs and comparative pricing information. Instead of asking a sales associate their opinion, they’re more likely to snap a selfie and share it with their friends to see what they think. Retail associates should be trained to accommodate this new-age buyer.
5) Vary your Advertising
Some 20-30% of all advertising has gone digital, but catalogs are also experiencing a resurgence, as targeting and segmentation enables customized variations that are important and meaningful to different customers. Don’t just target; re-target. You want the folks who browsed your website and then left to check the latest headlines on Fox News to see a popup ad that sends them right back to your website. National TV may not be within everyone’s budget, but the ability to market through analytics is open to everyone.
Bottom Line Action Step: Differentiate yourself by offering a product no one else has or a service that is second to none.