How to lift retail revenue with product drops

 

 

Retailers are challenged with making their product selections more exciting, alluring and sexy than those of the competition.

Having that certain product or designer that is unique to a particular brand can make a retailer a shining star, at least for the season.

"Drop culture" is a trend that is propelling some retailers to the heights of fame and, sometimes, fortune.

 

Create urgency

Product drops are special releases that will only be available for a limited time.

Customers are excited to be a part of the "in" crowd, getting something exclusive early.

For retailers, the buzz that's created around these events promotes their brands even before the product is launched.

While it can be an opportunity to test new products quickly, product drops are really an event employed to encourage the competitive shopping mindset.

The product that’s dropped is special in some way: a limited edition, something new from a famous designer, a bleeding-edge fashion trend, etc. The value of a “drop” is therefore earned, not assigned.

 

Show scarcity

Today, many luxury products are devalued due to over-exposure in the market, which means that the most desirable items require a level of effort or cleverness to obtain.

For example, U.S. streetwear brand Anti Social Social Club (ASSC) partnered with product release app Frenzy (created by Canadian small business shopping platform Shopify ) on an event where fans had to check-in to a physical location at a designated time to buy a limited-edition sweatshirt online.

But figuring out the exact location of the drop required significant detective and riddle-solving skills. Those who solved the puzzler were automatically logged in, triggering the product to appear on-screen to purchase — but within a certain amount of time.

 

Sell them a spot in the in-crowd

Product drops take advantage of the basic human desire to be included. No one wants to miss out on being part of something special.

The excitement tends to prompt customers to make decisions faster and more impulsively than if they have time to think about the purchase.

Often, quantities are limited and therefore sell out, adding to the "limited edition" mystique.

Although more products often become available in the months following the first drop—and shoppers are well aware of that—the excitement of purchasing these items ahead of the pack is too alluring to ignore for many.

Product drops are a good way to stir up excitement especially during a lull in the shopping sales cycle — such as post-holiday.

By creating a "buzz," a retailer raises the desirability of a product, and the "lucky" purchasers can enjoy basking in the afterglow.

2 years later, Amazon’s retail experiment is still unmatched

 

 

Much has been written about the importance of providing customers a "frictionless" retail experience.

Providing wireless devices to associates has helped with "line busting," and advances in business analytics and operational intelligence have helped retailers predict sales trends more accurately.

But even the smoothest, most personalized experience still requires customers to slow down and pay at registers.

Except at Amazon Go.

 

The brick & mortar experiment

When Amazon opened its first brick and mortar store in Seattle in January 2017, retailers were skeptical the online behemoth could master the nuances of being a neighborhood shop.

Turns out, Amazon created a unique experience.

Rather than try to duplicate what was already entrenched in the neighborhood, it used what it already knew about shoppers — primarily, that they valued convenience and speed when shopping — and parlayed it into a successful, small grocery.

Amazon Go is equipped with technology that lets shoppers make purchases without visiting cashiers or using self-checkout stations.

Shoppers download the Amazon Go app, enter their credentials and receive a QR code, which offers access to the store.

Customers take their selections off the shelves and simply walk through the turnstile, products in-hand.

A few minutes after leaving the store, shoppers receive a notification from the app with their receipts.

 

An irreplicable experience?

Similar trials by retailers at self-service technology, however, have proven unsuccessful.

Among those issues:

  • Shrinkage: A study of 1 million transactions in the United Kingdom found losses incurred through self-service technology payment systems totaled 3.97 percent of stock, compared with just 1.47 percent traditionally.
  • Bugs: Not every item scans properly, causing delays and frustration.
  • Exceptions: Some items need a valid ID to purchase, which requires a cashier's intervention.

Faced with those types of challenges, it's no wonder that retailers are skeptical about implementing "Amazonian" shop-and-go strategies.

Some have removed self-service option altogether, eliminating the headache of shrinkage and hardware problems.

But some research suggests that offering multiple options for check out is really what customers want.

 

Amazon currently has locations in Seattle and Chicago with plans to expand in New York and San Francisco.

The company has leveraged technology to make these shoppers' lives easier.

It has taken away a good deal of friction for customers, while providing itself with reams of relevant data about its shoppers.

 

3 CX improvements that drive revenue growth

 

 

For retailers looking to compete with the fast pace and convenience of online businesses, the in-store experience is an increasingly important battleground.

While historically success for retailers may have been measured by metrics such as comparable growth by store, sales per square foot, and gross margin return on investment, these no longer tell the full story.

Modern retailers need to know more than just what your customers are buying.

To succeed today, you need to understand how each of your touch points impacts the totality of your customer experience.

And the trend is one that’s catching – a recent study by the Forrester Group reports, “72% businesses now say improving the customer experience is their No.1 priority.”

 

CX improvements drive increased loyalty & revenue

For today’s retailers, the availability of point-of-sale data provides a huge range of options when it comes to building true and lasting engagement.

Creating customer experiences that are truly memorable can help drive loyalty and advocacy for your business, so it’s important to make every single moment count.

Here are 3 quick examples of how to deliver a ‘customer-centric’ approach that will spur revenue growth.

 

1: Make each experience count

In an increasingly competitive landscape, you need to focus on creating memorable experiences.

This doesn’t need to involve a radical overhaul of everything you do. As we found with one of our retail partners, the little things can add up.

The Retail Prodigy Group (master franchisee holders for Nike) is committed to providing the ‘ultimate customer experience’ with every visit.

In practice, this manifests itself in a series of relatively cost efficient, but rigorously maintained, service measures, especially at the point of sale.

Staff at RPG are trained to ask for each customer’s name and always offer multiple product selections at the checkout.

Customers are made to feel welcome with small personal touches, creating an authentic and warm experience.

This not only creates happy customers but can lead to financial gain too – we measured a 30% increase in average transaction as a result of these measures and a 5% increase in total revenue

 

 

2: Taking a ‘benefits-led’ approach to the sales process

Today’s customers expect high service standards as the norm: in order to drive return visits, you need to be able to certainly meet and ideally exceed these expectations regularly.

While many sales associates are trained to ensure that they know the features of each of their products, it can be even more powerful if your staff is able to speak to the benefits that a product will offer to each of your customers.

A benefits-led sales approach not only demonstrates expertise but also the capacity to listen well.

One retailer found that a sales associate’s ability to convey three or more product benefits led to a 20% increase in average transaction value. 

Treat your customers well, and they’ll reward you in return.

 

 

3: Make sure that you are staffed appropriately

From an operational perspective, it can be a challenge to monitor for consistency of staffing distribution and the timing of staff breaks across a day so that each customer gets what they need every time.

While breakdowns in your scheduling patterns are not always easy to spot, the negative impacts are.

If your customers aren’t getting the help they need, they’ll quickly take their business elsewhere.

By utilizing technology that enables you to track performance standards across the day, you can reduce mangers’ need to be on the floor at all times.

One specialty foods retailer using the TruRating customer feedback solution noticed their product and service scores were dipping in the evenings.

After an inspection of the floor, it became clear that there were issues in stock and staffing.

Through a scheduling reshuffle and an increased focus on product availability in the evening, the store was able to drive a 22% increase in customer satisfaction and a 12% associated increase in spend.

A low-cost fix was suddenly transformed into a revenue opportunity.

 

Point-of-Sale Insights from TruRating and Retail Pro

With simple changes like these, you can optimize toward a more ‘customer-centric’ approach in your business – and tools like Retail Pro POS and customer insights specialist TruRating can help.

Through a simple integration with Retail Pro POS, TruRating enables you to ask customer feedback questions via your payment devices, gathering insights from up to 88% of customers daily, neatly packaged in an intuitive and easy-to-read dashboard.

To learn more or to find out how you can set up your account today, reach out to your Retail Pro Business Partner or contact TruRating directly at 1(855) 285-1685 or Hello@trurating.com.

 

 

Guest post from our friends at:

 

Attract, Explore, Inspire: United Colors of Benetton

 

United Colors of Benetton's London flagship on Oxford Street marks a significant change of pace for the Italian fashion brand.

 

 

The retailer has incorporated informal, hi-tech spaces into the three-storey space, as well as a knitwear theatre which it claims will offer 'an ultimate brand experience that goes beyond the traditional idea of a shop'.

The 1,500 sq m store is located on the east side of Oxford Street, close to the new Tottenham Court Road station on the Elizabeth Line, and part of a rapidly developing area. It will be an outpost for Benetton in the UK, a market where the brand is present with 55 points of sale and where it plans to expand its activity further.

 

 

“As the world of retail is rapidly changing, the design brief specifically tackles how consumer habits are adjusting, while digital shopping is increasing exponentially, and at the same time physical experience is proving a key factor to a successful retail format, that cannot be left out,” says Michele Trevisan, global head of retail design at Benetton. “When we started the project, the brief was not just to do another flagship store; the idea was to create a brand amplifier, a place where the customers can become users of the brand’s philosophy, not just simple consumers. Therefore, we decided to use three drivers for the project: attract, explore and inspire.”

 

 

On the exterior, an arched counter-facade invites passersby to enter and dream. While the 12m-high arches recall classical architecture, the LED screen cladding will showcase interactive content curated by Fabrica, playing with colour textures, images and illustrations.

“The store façade is the main attracting element, not just a simple facade but a strong and impactful communication tool. The façade philosophy is in fact a combination of the classical architectural elements of the arcade together with a digital LED skin in which the content displayed allows interaction with the public,” explains Trevisan.

 

 

Once inside, shoppers are encouraged to explore the space around them. The store has been designed entirely by Benetton's retail design department and furnished with natural materials such as wood, iron and stone.

“The store layout and the product displays have been designed to simplify the circulation and the product exploration, while the interaction between sales associates and customer is facilitated thanks to a new mobile payment system and the presence of innovative express check out desks which allow a more friendly and queue-free service,” says Trevisan.

 

 

United Colors of Benetton is an Italian company with more than 50 years of history, and this was the real starting point of the project.

“We are proud of being an Italian brand in an international fashion world. That’s why we developed the interior design mood using a selection of warm, elegant and honest materials with Italian taste. The flooring features terrazzo Veneziano for most of the floor area, an essence of ash tree wood furnishes all the furniture in combination with natural iron elements, while the ceiling is composed of a mix of high gloss surfaces, metal mesh and an interpretation of a classical Italian cassettoni wood ceiling. In specific areas, greenery is added to complete the natural environment via the presence of live trees and plants. Colours and finishes are inspired by the Mediterranean environment,” adds Trevisan.

Staff are on hand in the knitwear theatre to present Benetton's vast knitwear collections. In the lounge area, customers can relax while reading books and design magazines. In addition, a series of touchscreen tables allow visitors to interact with the entire collection as well as with the brand's most significant contents.

 

 

Customers will be able to move fluidly across the three levels – dedicated to men's, women's and children's collections – thanks to a 'loop' staircase that extends like a ribbon across the shop floors and leads to a series of scattered stations that replace traditional checkouts.

 

 

Technology is also key to the customer experience. Inside the store, two digital applications were created with the intention to simplify the customer’s activity reducing the waste of time. The first one is the mobile payment system that, thanks to the use of Retail Pro POS on WiFi tablets, allows an exclusive payment via mobile and card only, potentially everywhere in the store, reducing the time spent in a queue.

 

 

The second one is represented by three digital interactive tables showcasing content on selected products, on the Benetton brand initiatives and, thanks to the use of an integrated RFID antenna, they release technical information about the products that are placed on the tabletop.

The new Oxford Street flagship is Benetton’s 16th UK store.

 

United Colors of Benetton leverages Retail Pro POS on mobile tablets for a modern, focused customer experience. Get this whitepaper to see if mobile POS is right for your brand.

 

 

Guest post from our friends at Retail Focus. Read the original story in Retail Focus April 2018.

The Personal Data Paradox [eBook]

 

 

Today’s headlines are ablaze with privacy scandals and consumer demand for transparency in data collection.

From Facebook to Amazon, we aim to bring down giants for perceived intrusions on our autonomy.

These are powerful political concepts that dominate the conversation around today’s technological advancements and our desire to apply morality to the digital world.

Equally as powerful as these headlines are the paradoxical returns and conversion rates that retailers are experiencing from data driven personalized marketing content: content that is derived from data collection unique to individual shoppers, i.e. personal preferences and tastes.

Public opinion seems to contradict consumer expectation.

Get this eBook to see consumers' perception of privacy, their expectation of personalization, and the middle ground we are all looking for.

 

 

 

 

 

 

 

Get the eBook

 

 

 

Brick & mortar borrowed this from online retail and increased revenue by 5.1%

 

 

Brick and mortar has learned a thing or two from online retail, and last December shoppers took a meaningful notice.

By focusing on and improving their buying online and picking up in-store (BOPIS, also called “click and collect”) offerings, retailers experienced a never-before-seen surge in shoppers using the service.

Retailers saw the strongest holiday sales growth in six years, with revenue increasing 5.1% to more than $850 billion this year, according to Mastercard Spending Pulse.

Online shopping also saw large gains of 19.1% compared to 2017. And established brands were a significant part of that good news: Walmart, Kohl's and Macy's reported healthy sales and saw stock gains.

 

Giving shoppers anytime access to goods pays off

By offering true 24/7 access to goods, retailers were able to provide what customers wanted at a time that was convenient for them to shop.

For those who wanted to do some thoughtful shopping but were short on time during regular business hours, being able to browse selections from the comfort of a sofa or bed, pay and pick them up when convenient added some much-appreciated stress relief during what can be a very busy season.

“By combining the right inventory with the right mix of online versus in-store, many retailers were able to give consumers what they wanted via the right shopping channels,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Inc., in a release.

And Frank Layo, managing director at Kurt Salmon, part of Accenture Strategy, told CNBC in an interview that the top five "click and collect" or BOPIS retailers were Bed Bath & Beyond, Best Buy, Kohl's, Target and the Home Depot.

BOPIS was up 47% this holiday season compared with last year, according to analyst reports.

For example, Target reported that it expected order pickup volume would triple this holiday season compared with last year's.

 

Incremental sales increase from wider product offerings

During the past few seasons, brick-and-mortar retailers have worried about being bested by their e-commerce competitors and for good reason.

Online stores are conveniently open around the clock, offer a level of personalization and can provide an inventory with variety that couldn't be accommodated with the footprint of any department store.

Click and collect changes the game, however.

Many stores now let shoppers view inventory in stock, allowing them to place an order that is ready for pick up within a couple of hours.

But they also feature the ability to shop from a wider variety and have that item shipped to the store for pickup. The shopper saves on delivery charges, can see the product before accepting it and is able to take advantage of a wider selection than is offered on the retail floor.

And the stores benefit from incremental sales at pickup too. For example, Kohl's reports an average attachment rate of 20% to 25% for additional in-store purchases.

Retailers this past holiday season seem to have taken the adage, "Nothing ever changes if nothing ever changes" to heart.

 

Is it really discovery shopping if Amazon found it for you?

Effects of data-driven curation on discovery experiences

 

 

Remember when a trip to the store could yield a new discovery -- an unplanned purchase but one that delighted the customer?

Ecommerce handles specific shopping needs seamlessly and efficiently: Search for “motorized pedal exerciser” and buy it in less than three minutes.

But so-called "discovery" shopping — such as figuring out what to get your hard-to-shop-for great aunt for her 90th birthday — is much easier to do through brick and mortar browsing.

 

Selling discovery experiences

The world of in-store commerce offers shoppers an experience, an interaction with others that can't be replicated online.

In the best-case scenario, the experience is enjoyable and memorable, one that a shopper wants to repeat with that retailer and emulate at others.

No matter how good a recommendation engine or a chatbot is, the feeling a shopper gets from finding a perfect product can only come from shopping in a physical store.

That is, until an online retailer aggregates its collected data and presents it in a physical store as a curated collection to reach a specific audience.

If an online behemoth parlayed all the knowledge it has gleaned from the data it has gathered about its ecommerce shoppers, that retailer could be very well positioned against its competitors, online as well as brick and mortar.

 

Peer-based discoveries

Amazon has recently opened a handful of Amazon 4-Star physical locations, which are designed with discovery in mind. All the items are top-rated, and the selection will change frequently, depending on their customers' ratings.

The first, in the SoHo section of New York City, offers at-a-glance products that are "popular in SoHo," "frequently bought together" and "most wished for," among other categories.

Amazon can easily put these displays together due to the data it collects on its online shoppers. And that data collection continues to grow offline.

Amazon-exclusive products are also available, and Prime members get the Amazon price, while non-members pay MSRP. Signing up for Prime in the store not only provides customers lower pricing, but also adds to Amazon's information database.

Shoppers can see how many ratings a product has received and what the average rating is. Others have reviews displayed nearby.

The combination of a physical location and all that aggregated data is a fierce combination.

 

Personal discoveries

However, "discovery shopping" is more than simply sorting through trends and selecting from the most popular items.

If that were the case, small, specialized shops and boutiques would not be frequented, shunned for larger, on-trend department stores.

But the opposite is largely the case.

Discoverers aim to find the one-of-a-kind for a more personal gift or to satisfy their own personal taste. That's more likely to be found in a shop on Main Street than online, because it is not mass produced, so it therefore can't have hundreds of reviews.

 

In the end, Amazon's strategy for its physical stores, and any others like it, will mirror that of large department stores that have built a decent ecommerce channel.

Those stores, such as Macy's, Target and Kohl's, can also look at their data, slice it up regionally and offer only those products based on that data.

While not quite as personal as the local shop on the corner, there's a huge opportunity for larger companies to meet their customer needs more precisely.

 

How retailers are actually spending their customer service dollars

 

 

When companies describe themselves as having "excellent" customer service, the claim sounds user-centered but too often it's actually just a company-centered focus trying to position themselves as user-centered.

Those companies are generally concerned with efficiency and reducing costs first and foremost, and are just hoping to improve customer relations by osmosis, without actually doing the work to get there.

 

Questioning ROI on CX investments

Some retailers resist customer experience investments, believing they do not provide a significant return on investment.

However, Gartner reports that when it comes to making a purchase, 64% of people find customer experience more important than price.

Constantly trying to be the lowest-price provider of goods is futile: Competition is steep and low price is not an effective means of cultivating loyal customers, who are the foundation of success.

According to a Walker study, by 2020, customer experience will overtake price and product as the key brand differentiator.

Customers are loyal to a retailer because they believe they are getting a better experience, higher value and benefits than they would get from other brands.

In addition, a recent study from RetailNext found 57% of respondents said customer service is the only reason they go to a retail store.

Not selection, not price, but service.

Here are 4 pairs of categories in which retailers invest their customer service dollars. You decide which ones will actually create better customer experiences.

 

1: Self-service tools vs well-trained sales associates

Shoppers like that expect to find associates equipped with the information and training necessary to assist shoppers and close sales.

Too many retailers do not have that staff, so customers are frustrated and disappointed.

Today's shoppers want knowledgeable associates in the stores they frequent, as well as convenience. They also want to build a relationship with the retailer.

Retail management misreads customers’ disdain for associates as a desire for self-service.

But customers are happy to be served by well-trained, engaged salespeople. The frustration comes when the associate knows little about the product or has no enthusiasm.

Training goes a long way to fix that problem and helps build a sales team that is a contributing factor to customer loyalty.

 

2: Market saturation with new locations vs pop-up stores

While some brands focus investment toward market saturation via geographical expansion, others use pop-ups to build excitement about their brand.

Event-and experience-driven retail is becoming more popular, as department stores create pop-up locations or marketplaces in their stores and in hip shopping meccas.

Such temporary installations are smaller and more focused with their offerings and are replenished much more frequently, creating the impression of a “fresh” experience at every visit.

 

3: Promos to attract new shoppers vs rewarding repeat customers

Newvoicemedia.com reports that the top reason customers switch away from products and services is that they feel unappreciated.

Once customers have demonstrated their loyalty, it's important to reward them.

Too many retailers use incentives only to attract new customers. That, in effect, "ignores" loyal customers, leaving them frustrated and unappreciated.

 

4: Advertising costs vs experiences that drive WOM marketing

Nurturing existing customers and improving customer service can cost considerably less than launching advertising and marketing campaigns, but can have just as powerful an impact.

As Tony Hsieh, Founder and CEO of Zappos has said, “We take most of the money that we could have spent on paid advertising and instead put it back into the customer experience. Then we let the customers be our marketing.”

75% of Zappos' sales come from returning customers, and the company earns more than $2 billion in sales annually.

The Zappos's commitment to having happy customers and employees ends up being good for business.

 

Walking the customer service walk means more than just talking the talk.

Strong training, with an emphasis on earning customer loyalty, will result in a truly user-oriented business.

 

Attracting and retaining the elusive Millennial shopper

 

 

Loyal customers — the Holy Grail for retailers.

Repeat shoppers are a source of recurring revenue. Smart businesspeople know that success lies in cultivating loyalty, and that means more than creating programs that simply collect customer information.

Today's educated customers understand loyalty programs are often of more value to retailers than to customers.

Millennials in particular are sensitive to that value proposition, and retailers are starting to serve up programs targeted toward the specific desires of this demographic.

A quarter of millennials and 19% of Gen Xers like to shop with family and friends. It's a social activity that's enjoyed at a brick-and-mortar storefront.

But, while Gen Xers value the relationship with a store, Millennials value experience and don't have the same brand loyalty as the older generation.

It's easier to get a millennial to try a competing brand, so it's more difficult to retain millennials as customers.

Retailers have to work at providing customers perceived value consistently to earn their loyalty.

3 things Millennials look for:

 

1. Technological "wins"

 
How does a retailer make it easy for customers?

Millennials are dependent on their phones; 84% of them in a recent study said their mobile devices were the most important thing in their lives.

Retailers can use that knowledge to their benefit by, for example, offering mobile apps that are easy-to-use and relevant.

Many say that shopping is easier through an app than through a web site; by offering a digital experience that reduces purchasing friction and makes shopping easier, a brand can improve its relationship with millennials.

 

2. Shared value system

 

What matters to a brand, matters to Millennials.

For example, Patagonia has supported grassroots activists working to find solutions to the environmental crisis.

Shake Shack's ethos is "We stand for something good," which is reflected in its carefully sourced premium ingredients from like-minded purveyors as well as in its community support.

Customers feel good purchasing from companies that align with their world views.

 

3. Personalization

 
Yes, for customers, it's all about "me."

That doesn't mean obsequious associates greeting customers they don't personally know by their first name or creepily sending birthday cards to clients they've barely served.

Rather, it means positioning the company in a way that feels customized.

That includes having Instagram-worthy products, immediate customer service response and marketing that focuses on word-of-mouth.

Influencers — high-profile customers whose style is "gospel" — can be more powerful brand advocates than any type of advertising.

But it's not all about celebrity: For example, Carter's apparel encourages Millennial parents who want to share photos of their Carter's-clad babies to use its hashtag #lovecarters.

Retailers can have paying customers, or they can have loyal customers.

High quality products and experiences encourage loyalty in Millennials, who tend to be more easily swayed by special promotions and lower cost than previous generations.

However, loyalty can be earned: Retailers with compelling brand stories and experiences that regularly exceed expectations are positioning themselves to welcome the elusive repeat millennial customer.

6 Essential Elements of a Winning Independent Retail Strategy

 

 

Looking to improve inventory productivity and control?

Watch this final part of our 3-part Retailer Success webinar series to see principles and tactics that will help you manage inventory better and compete profitably.

Part 3: Six Essential Elements of a Winning Independent Retail Strategy

  • See how high-achieving independent retailers differentiate themselves to compete successfully in the changing world of Amazon retail
  • Learn the major factors you can implement immediately to differentiate your business in this 6-point plan from Management One