New York – After several years dominated by uncertainty, apparel retailers have a plan of action: 2023 is the year they reap the benefits of their investments in AR (augmented reality), AI (artificial intelligence) and other technology to drive customer loyalty.
Earlier this week, the who’s who of the retail industry gathered at the year’s largest trade event in the US to discuss whether this goal of customer loyalty should be achieved through more intensive analysis of consumer behavior, inventory management, omnichannel strategies, price discounts or a combination thereof. If there was an overarching theme during this year’s edition of the National Retail Federation (NRF) Big Show, it was certainly understanding the always-connected customer and maintaining their long-term loyalty.
“The answer always lies with the customer”
In this regard, Paige Thomas, president and CEO of Saks OFF 5TH, encouraged other retail leaders to look to their customers for the answers they need. “The answer is always with the customer. Part of that is engagement — customer acquisition. The other part is the customer experience, the customer journey. Do everything you can to smooth the way,” THoma advised fellow retailers in a conversation with CNBC’s Melissa Repko during NRF’s Store Show.
And customers want to return to stores, “but only because they have a good reason to go out,” indicated one industry veteran who returned to the NRF Big Show after a few years away. As pointed out by many of the expert panels at America’s largest retail conference, brick-and-mortar stores will continue to be relevant and become more strategic for retail businesses as the most effective channel for customer acquisition and engagement. Gone are the days when brick-and-mortar stores were just points of sale; physical stores now function as logistics, service and experience centres. Consumers go to the store to design their personalized items in real time using advanced digital design tools, try them on in virtual fitting rooms and easily process their returns. Roberto Funari, CEO of Alpargatas, and Giorgio Pradi, CEO of Sunglasshut agree that retailers need to change course and focus on truly customer-centric business models, which require “new ways to increase stores’ contribution to attracting, retaining and loyalty of more customers” .
“Something we’ve tested for several fashion customers is leveraging 360-degree insights based on behavioral data to optimize delivery and returns processing so they can meet their customers where they are and increase brand loyalty,” said a manager of one of the suppliers. who participated in this year’s Innovation Lab. “The big question that remains is how they can deliver the value-added services” that turn customers into loyal, repeat customers.
According to Shelley Bransten, who is at the head of retail and consumer goods industry, “we live in an era of incredible digital transformation.” But, warned Bransten, “Everything is attainable now, but with that power comes high consumer expectations.”
Long-term sustainable growth
The ever-present supply chain issues have raised concerns in the retail industry that continued delays and product losses will erode customer confidence. This is exactly where a more established technology like the Internet of Things (IoT) comes in. Or in the words of Willio’s CMO: “It’s about getting real-time automated supply chain visibility.” The chip-based tracking tag maker – backed by Qualcomm and Amazon – believes that in the near future IoT devices will be able to collect demand signals from a store and order them automatically.
In the conversation about environmentally friendly practices that would not jeopardize demand, Wilio’s manager suggested that a smart wardrobe that analyzes what clothes a consumer wears and does not wear and suggests better quality clothes that he will wear more often, e.g. e.g. environmentally could offset the impact of fast fashion.
Prove the ROI of technology investments
After a few years of spending heavily in new technologies—from augmented reality to predictive analytics, from autonomous delivery fleets to Web3 stores—the time has come for retailers to prove the return on those investments. “Retailers must learn to do more with less. It requires working smarter, not harder, and being agile,” she added.
LVMH is the forerunner in this regard. Speaking at one of the keynote sessions at the NRF Big Show, Anish Melwani, LVMH’s chairman and CEO for North America, said the company has “always been in favor of innovation” as long as it reinforces the heritage and DNA of the group’s houses. Melwani highlighted the case of Tiffany & Co., whose foray into the blockchain world has led to one of the most successful luxury NFT projects to date: NFTiff. “Each NFT sold for about $50,000 (about $46,000). But buyers got more than a .jpg or token,” the luxury conglomerate’s chief executive stressed. “What you got was the ability to buy a real piece of jewelry that was custom made for your CryptoPunk.” To achieve that, Tiffany had to answer many questions. “How do you embrace the technology, how do you embrace the community that’s super excited about this technology, but use it to introduce the world to what you’ve always been good at?” In this case, the solution was to modernize the goldsmith’s workshop to create a physical jewel that accurately reproduced the pixelated 8-bit image.
Meanwhile, LVMH has been working to leverage its blockchain capabilities for authentication and traceability to deliver on its promise to various customer groups. For example, Tiffany’s customers can obtain a digital certificate that allows them to trace a diamond all the way back to the mine it came from. The luxury brand believes that younger shoppers will care “more and more” about the source of ingredients and wants to be able to meet this demand.
FitFlop is another retailer pushing AI to the max to realize its vision to “create internal systems as advanced as the products it sells,” CTO Sal Usmani explained in a conversation with its technology partner Peak. The footwear brand uses AI to understand how its customers interact with different products on the website and engages them based on increased insights from digital channels.
Fygital is king
Kyndryl CTO Kayla Broussard and WOW Concept founder Dimas Gimeno assessed the power of data and the various advanced technologies that enable phygital stores. “Phygital goes beyond omnichannel to provide customers with seamless and interchangeable experiences. This means combining the best of the physical experience with the efficiency of digital to create a unified retail business.” Broussard and Gimeno agree that today’s consumers expect a seamless, personalized shopping experience wherever they go. For retailers, this means staying competitive and finding inventive ways to connect brick-and-mortar stores with digital platforms.
For retailers big and small, it’s about understanding “what makes them special”. That was the parting thought from Domenico De Sole, President of Tom Ford International, to his colleague at Nordstrom, President and Chief Brand Officer Pete Nordstrom. “What makes you special? In your case, it’s the service – your service is legendary. What you’re doing right now to improve the customer experience is amazing. One area you can work on is visual merchandising, a sense of elegance in the the way the store looks. Combining that with the service and customer experience is an incredible formula for success.”
This article was previously published on FashionUnited COM. Translation and editing into Dutch by Caitlyn Terra.