The holidays are a critical time for fashion and beauty retailers looking to maximize sales and win the business of discount-hungry consumers. Yet the real prize comes from translating that holiday spike into a stream of “sticky” lifetime spenders. And, as the market grows more competitive, this is something that’s becoming increasingly important.
So, how can retailers use the holidays to make their brands stickier and win the long-term loyalty of today’s consumers? Where should they focus their attention to turn seasonal shoppers into brand superfans? Our latest holiday shopping survey provides a clue in the form of three trends that outline the industry’s direction of travel for the year ahead.
Consumers Trading Retail Frills for Sustainable Shopping
We’ve entered the era of responsible retail, where consumers are becoming more environmentally and socially conscious and will flock to brands that not only talk about responsibility — but also demonstrate it through their business operations. This is why nearly half of consumers say environmental factors are key to choosing which retailer to shop with.
This trend is particularly evident in fashion, where “fashion waste” (apparel bought for a single occasion and worn only once) is a no-no for a consumer base embracing the circular economy. As a result, consumers are favoring rentals over outright purchases and are increasingly likely to rent rather than buy clothes for their holiday parties.
The demand for retailers to be responsible businesses goes deeper than the environment. More than half of consumers think retailers have a responsibility to address wider social issues through their treatment of workers and others in the supply chain, and more than half of consumers want to see clear labeling to back up a product’s sustainability claims. Women’s wear retailers — a group that continues to receive intense scrutiny from environmental campaigners — must strive to achieve greater levels of transparency in order to reassure consumers that their businesses are ethically sound.
Environmentally Focused Shoppers Still Love Browsing — and Buying — In-store
Having a strong online proposition has become table-stakes, but physical stores will still play an important role in 2020 and beyond. This is reflected in our research, which shows that consumers expect to do at least half of their holiday shopping in store this year. These consumers are significantly more likely to say they would purchase in-store, too, which implies that fewer consumers are treating retail stores as showrooms for later online purchases.
This signals a huge opportunity for fashion retailers that are able to rethink their stores as convenience-focused brand experiences. As one example, Nike recently introduced Unlaced – a “store within a store” that lets women customize their footwear and discover limited-edition styles. Meanwhile, clothing brand Zara has put technology at the heart of its flagship store in London, with interactive mirrors that detect the garment the shopper is wearing and make outfit suggestions. The store also incorporates a self-checkout area that automatically identifies the item being purchased, helping to avoid unnecessary queues.
Although the in-store experience is increasingly important, it’s critical to remember that price remains the biggest driver of in-store purchasing. While “one-size-fits-all” discounting drives footfall, it can hit profits hard. In turn, retailers are moving to precision promotions for a specific customer at a specific moment in a specific store based on real-time inventory plus a granular understanding of each customer’s value to the business.
Superfans Deliver Long-term Value — but Require Special Attention
While improving the brand’s sustainability credentials and transforming the in-store experience will undoubtedly help women’s wear retailers to drive loyalty and attract new customers, leading retailers know it’s vital to identify and nurture a special cohort of high-value customers — the superfans.
Brand superfans come in two flavors — financial and social — and each offer their own value to the business. Financial superfans invest their money in a brand and can be identified through analyzing customer profitability at the individual level (such as regularity of spend and ratio of full-price to discount purchases). Meanwhile, social superfans invest their time and their social capital. Brands can spot them by cross-referencing social interactions (including online reviews and comments on social media) and those they influence.
Jill Standish
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Most likely, high-potential customers look like the most valuable customers a retailer already has. But companies still need to get better at identifying them, which means becoming more proactive and forensic about customer data to understand who they are and what makes them unique. In so doing, retailers can identify specific patterns of superfan behavior — the products they buy, the channels they prefer and the way they respond to promotions or special services. Armed with these insights, retailers can then develop strategies to attract the next generation of superfans.
Once found, these special customers need to be nurtured carefully. That includes rewarding their loyalty with fresh thinking and new tactics. By replacing tired, traditional points-based programs with responsible, mobile-enabled, customer-focused concepts, retailers can strike a new kind of value bargain with these customers: a hyper-convenient personalized digital experience in return for new insights into consumer preferences and behavior.
Apparel retailer North Face, for instance, forges a stronger connection with its customers by giving them greater flexibility around how they spend the points they’ve earned. Rather than redeeming their loyalty points in-store, shoppers can put them toward travel experiences such as trekking in Nepal or hiking in Alaska. Women’s fashion store Pulse Boutique has also launched a loyalty program with an innovative twist — customers earn points by posting product reviews that help other shoppers make purchasing decisions.
Conclusion: Translating Consumer Insights Into Winning Strategy
By responding intelligently to the trends outlined above, retailers can turn seasonal footfall into lifelong customers. The most successful will be those that put data and analytics at the heart of their operations, and translate consumer insight into a purpose-led strategy the whole business can get behind. Combined with greater transparency around the sustainability of their business practices, and a compelling in-store experience, this approach can help women’s wear retailers nurture a loyal following of superfans that amplify business performance throughout 2020 and beyond.
Jill Standish is global managing director and head of retail at Accenture.
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