As brands’ reputation and sales are increasingly made or broken on the back of their reputations, retailers share their tips for success in a changing consumer economy.
While the old adage that the customer is always right has been a rule of thumb in the retail industry for time immemorial, the ever-growing importance of customer sentiment towards them was the main theme on the first day of the NRF Big Show in New York.
Some of the world’s most innovative brands and retailers shared tips on how to keep customers happy in an environment when even a negative review can hit sales.
In September, clothes subscription specialist Rent the Runway was forced to stop taking on new customers because of a supply chain issue that hampered deliveries.
Faced with a problem that could have destroyed a business that prides itself on availability, chief executive Jennifer Hyman decided to bite the bullet. It followed an attempt to implement what Hyman said was the “number one most requested feature” by customers, better inventory availability, but Rent the Runway instead found itself being forced to delay fulfilment.
Hyman says that admitting to the mistake and not making promises that it would achieve perfection has actually contributed to an increase in loyalty – both from existing and new subscribers.
“I think there’s a new relationship that companies need to have with their customers,” she maintains. “That relationship is one where we don’t promise perfection – innovators like Rent the Runway are never going to be perfect. There are times in the future where we are going to innovate on behalf of our customers and fail. But, what we are promising, is transparency and commitment to always do right by our customers.
“The warehouse delays that we had have fostered even greater loyalty amongst our customer base. That’s certainly what we’ve seen in the last few months.“
As consumers become more aware of how important their personal data is, so they will become ever keener to keep that data out of unscrupulous hands.
Only this month, Dixons Carphone was stung with a £500,000 fine by the Information Commissioner’s Office – the maximum allowed under law for data breaches at the time of publishing – for a number of breaches. The biggest occurred after the retailer’s point of sale systems were targeted with malware between July 2017 and April 2018.
The retailer is not on its own and Microsoft chief executive Satya Nadella believes the possibility of business data breaches in future are increasing exponentially.
He says that as artificial intelligence becomes increasingly ubiquitous and sophisticated, knowing which organisations to trust will become increasingly important to shoppers.
Nadela says: “In an AI world people don’t need to see your data to steal it. [It’s] Something you have to watch for, in a world where some of the biggest aggregators also happen to be technology vendors, you have to ask yourself the question: who can you trust in the world going forward? And if you don’t have that transparency going forward, the retail dynamic is going to be very, very tough.”
Recognise new realities
For much of its 58-year history, homewares and furniture retailer Crate & Barrel’s target customer has been a homeowner.
However, as both the millennial and Generation Z demographics have matured, chief executive Neela Montgomery noticed a trend. Younger generations were owning less property, and the properties they were inhabiting were smaller than previous generations’.
To continue to appeal to younger generations and better understand their changing needs, Montgomery says Crate & Barrel undertook a partnership with furniture rental start-up Fernish, a tie-up she said made her initially “uncomfortable” because it seemed so far removed from the established ownership proposition.
She says: “We’ve been around for 58 years, but that doesn’t mean that we have a right to exist for the next 58 years. Look to unexpected partnerships. They are incredibly important and challenge your thinking. It might make you uncomfortable, but that’s a good thing for any retailer. I would encourage you to seek out partnerships that respond to customer trends but that make you potentially uncomfortable.”