Shopper Experience - Retail TouchPoints - Retail TouchPoints https://www.retailtouchpoints.com Wed, 12 Dec 2018 13:45:02 -0500 RTP en-gb Exclusive Q&A: How Farmstead Leverages AI To Deliver Fresh Local Groceries In One Hour Or Less https://www.retailtouchpoints.com/topics/e-commerce/exclusive-q-a-how-farmstead-leverages-ai-to-deliver-fresh-local-groceries-in-one-hour-or-less https://www.retailtouchpoints.com/topics/e-commerce/exclusive-q-a-how-farmstead-leverages-ai-to-deliver-fresh-local-groceries-in-one-hour-or-less 0aaaPradeep ElankumaranOnline grocery is a market that’s flooded with both traditional grocers and young startups, but all share a common challenge: figuring out how to control delivery costs, delivery times and (perhaps most important to the consumer) freshness of food.

Founded in 2016, San Francisco-based Farmstead sought to solve these problems by accurately predicting supply and demand of locally-sourced goods. Leveraging proprietary machine learning, inventory and logistics platforms, Farmstead guarantees delivery within 60 minutes throughout the San Francisco Bay Area. Shoppers pay a $4.99 fee for one-hour delivery, and $3.99 for three-hour delivery.

In an interview with Retail TouchPoints, Pradeep Elankumaran, CEO and Co-Founder of Farmstead, described the online retailer as a “technology company, first and foremost.” Elankumaran discussed how Farmstead:

  • Shrunk its food waste percentage to under 10%, well under the supermarket average of 35%;
  • Built its own merchandising, inventory control, picking and packing and route generating software;
  • Plans to leverage machine learning and AI to predict factors such as how many drivers are needed on the road and how many employees are needed to pick and pack products; and
  • Uses online search to determine future products.

RTP: From a value standpoint, what was online grocery missing that led you to start Farmstead?

Pradeep Elankumaran: When this started in 2016, the only major delivery option in my neighborhood was Instacart. There was Amazon Fresh as well, but it was pretty dire and the selection was weak. It didn’t have the right products and the packaging was horrific.

I had a two-year-old who all of a sudden was drinking a lot of milk, and I had another child on the way. Picture going to the supermarket three or four times a week at around 7:30 to 8:00 pm, to Safeway or Whole Foods, buying the same things over and over and dealing with big lines. It’s a very stressful situation, and I was complaining to my now co-founder, ‘You’re having a baby on the way as well, do you have any ideas of what we can do here?’

Over time, he suggested posting on the Nextdoor community for Mountain View, Calif., asking if anyone was interested in weekly delivery of staples such as milk, eggs, yogurt and bread. We figured if 10 people responded, then we could get someone to do shopping for us as a private shopper. In two days, 200 people said ‘yes’. We weren’t really looking for that, but when that kind of interest is shown, it’s really hard to say ‘no’ there.

As engineers, we dug further into the space and realized there’s a much more interesting product here. If we put the right software in the right places and leveraged new delivery models that are currently coming into play, it would be possible for us to deliver groceries to you perfectly every time — without any substitutions, delivered in a very flexible window of time, while at the same time you don’t pay any more than you’d normally pay in the supermarket.

We took a deep dive into how this was possible — we have to take perishable supplies that we buy wholesale and connect it to demand using digital channels. Can we can get milk in our warehouse and sell it to people using online channels, doing online marketing before the milk expires? Can we write enough software to orchestrate all of this so that we can rapidly scale these locations that we were building?

The key is that Farmstead isn’t a retail store, we are a smaller-format warehouse. Our locations are 3,000 and 5,000 square feet, and we don’t carry every single item at the supermarket, we carry about 1,000 SKUs and invest in many categories. When we add more items, we’re actually adding more categories. If we want potato chips, we’ll have three SKUs of potato chips, not 50.

The items that we pick are usually very high quality, but our mission is to make the high-quality foods accessible to everyone. Because of that, we try to pick multiple price points in these categories as well and get the best possible quality. We sell both commercial and organic produce, cheap ketchup and fancy ketchup. We don’t really want you to position between “lower quality” or “this is more expensive so it’s higher quality.” Whatever you’re able to afford you should be able to buy on Farmstead.

RTP: Weekly subscribers have an hour before their delivery window starts to adjust their order. How does Farmstead execute such quick turnarounds based on these adjustments?

Elankumaran: That level of flexibility is very difficult to pull off, and we had to write a lot of software to support the operational efficiencies that are required to deliver rapidly. The software is really the heart of Farmstead. We have software to manage inventory, reduce food waste, schedule a labor pool to pick and pack these orders in a very efficient way, and recruit and retain drivers.

One of the key concepts here is that this is a rare instance of a technology company spending this much time and attention on the mechanics of perishable products. We first didn’t want to write all the software ourselves, but in reality there wasn’t a lot that could be used to make these efficiencies happen.

Take food waste as an example. Supermarkets waste 35% of their products. When we first saw that number as data people, we thought it was appalling. Why is that number so high? At Farmstead, the goal was to have [food waste in] single digits while aggressively adding more customers.

One of the challenges of Farmstead is that we also are not like a supermarket, in that we don’t just have a three- to five-mile radius around our store. Our locations have a 50-mile radius. Approximately 10 to 12 stores’ worth of demand can potentially be connected to one of our locations. As a result, while the number of customers we have is increasing, we still have to keep the food waste low.

Supermarkets typically have one person in charge of one or two aisles of product, and most buyers are making gut calls on produce and perishables projections, saying they need to buy an extra case of carrots because it was moving fast last week. But that’s a very inefficient way of buying. In reality, software should be doing that, so we buy all our products using software. There are no purchase orders that are generated by people, it’s all generated by code.

We reached 20% food waste after implementing the software, but still didn’t achieve our sub-8% goal. We realized that using our software alone was not enough. Then we turned on our machine learning layer to take into account all the historical sales data, all the seasonality for any particular item. By that, I mean buying more croissants for Friday, Saturday or Sunday, and buying more heavy cream during Thanksgiving time. The machine learning makes a prediction for every single item, for every single location, saying buy ‘this much’ and not ‘that much’. With that model in play, our food waste is now well under 10%.

We also built our inventory control from scratch. Most inventory control systems don’t support perishable sell-by dates that well. We did the same thing for picking-and-packing, where we used off-the-shelf scanners to create an efficient system that we control 100%. This allows us to pack a $150 order in five minutes.

We built software for our drivers, so they can go on these long delivery routes. They show up at our location, they grab the orders to put them in their car and the software tells them to drop the items off at house A, house B, house C in this specific order. A lot of things had to go right for all this to click into place, but the heart of it is our software that we’ve spent a lot of time developing.

RTP: Where do you feel machine learning and AI solutions fit into overall grocery strategies, and how should companies use this technology to their advantage?

Elankumaran: Machine learning is very good at predicting, and enterprises — not just grocers — are bad at predicting. A lot of the reasons that costs overrun are that predictions are really off. We have doubled down on machine learning to predict inventory, which is the number one cost for us. Very soon we are going to predict:

  • How many drivers will we need?
  • What’s the probability of those drivers going to those locations?
  • How many people do we need picking and packing these orders on any given day?

Grocers need to understand that the assumption that shoppers will always come to your location is changing, and in order for someone to support that change, it requires a certain level of sophistication around what needs to happen in real time. Any particular location you start has to have an increasing number of customers connected to it.

Machine learning for prediction is something that is very underutilized in grocery, and in general.

RTP: How does Farmstead go about understanding (and catering to) evolving consumer preferences, especially given your locally-sourced product offering?

Elankumaran: We’ve been collecting customer feedback for a very long time — since the day we started. The majority of items on Farmstead are added because customers tell us that they want them. We also have usage patterns. For example, someone is searching and they type in “cranberry sauce” and if we don’t have that, we can look at our reports to see that consumers may want cranberry sauce, and we should probably add it.

The biggest way that we add items is that people tell us ‘It would be nice if we carried this brand.’ For a while, there was a lot of demand for raw milk, and it wasn’t something we planned on adding, but we kept getting more people who wanted it. And they kept searching for ‘raw milk’ on Farmstead. We said, ‘You know what, let’s try it,’ and now raw milk has been a top-10 seller on Farmstead for a long time.

The worst thing we can do is have a lot of inventory that’s not selling. My nightmare scenario is having all the product that a supermarket has that is just sitting there, and it’s just one or two customers buying something every week. That’s not what we’re about. We’re trying to bring in the products that will move and will also have a higher probability of being part of your weekly basket.

]]>
feed@retailtouchpoints.com (Glenn Taylor) E-Commerce Wed, 12 Dec 2018 09:49:35 -0500
Accenture Study: 47% Of Consumers Will Leave Brands That Lack A Purpose https://www.retailtouchpoints.com/features/trend-watch/accenture-study-47-of-consumers-will-leave-brands-that-lack-a-purpose https://www.retailtouchpoints.com/features/trend-watch/accenture-study-47-of-consumers-will-leave-brands-that-lack-a-purpose Accenture Study: 47% Of Consumers Will Leave Brands That Lack A Purpose

Consumers around the world are expressing a strong preference for brands with a purpose (that is, beyond selling products and making money). Commitments to environmental sustainability, treating their own employees well, ethical sourcing, and an active charity profile have moved up dramatically in shoppers’ decision calculus, according to a new survey of nearly 30,000 consumers from Accenture Strategy. Nearly two thirds (63%) of respondents prefer to buy goods from companies that stand for a shared purpose that reflects their personal values and beliefs.

Having a purpose is much more than just a nice-to-have bonus, however. Brands that don’t have (or don’t communicate) a higher purpose run a significant risk of customer defection.

“Brands need to be more creative and ambitious than the typical approach to corporate philanthropy, simply listing all the charities they contribute to on the web site,” said Kevin Quiring, Managing Director at Accenture Strategy and a co-author of the report. “Our data says people are going to respond to a brand purpose, and that a good part of that response will be increased retention. A retailer might be in a secure place right now, but as soon as consumers find a competitor that has products they like, offering the right price, quality and customer experience — but with a better purpose than your company — 47% of them will shift. That’s a huge at-risk portion of your revenue if you don’t have a purpose.”

Other key findings from the Global Consumer Pulse Survey, titled From Me To We: The Rise Of The Purpose-led Brand, include:

66% of consumers are attracted to brands with a “great culture,” one that does what it says it will do and delivers on its promises;

66% prize companies that are transparent about issues such as sourcing and treatment of employees;

52% like brands that stand for something bigger than themselves that aligns with the shopper’s personal values;

50% prefer brands that stand up for societal and cultural issues they believe in; and

38% like brands that connect them to like-minded others and provides a sense of community.

“The real ‘a-ha’ for us was that, just as 10 years ago when we started seeing customer experience grow to become tantamount to price and quality for consumers, we’re suddenly seeing the same kind of growth around brand purpose,” said Quiring in an interview with Retail TouchPoints. He sees this new surge as a logical progression: “For years, customer experience has been a top priority of many brands, not just retailers but wireless companies, CPG manufacturers and banks. Just as price and quality were table stakes, customer experience has become table stakes for brands. And as soon as something becomes de rigeur, customers move on to higher-order expectations and higher-order values.”

Tips For Activating A Brand’s Purpose

Brands that lack a well-defined purpose need to have an inclusive process for discovering one, involving customers, employees and members of the larger ecosystem of stakeholders. Involving more people and groups allows brands to identify shared values and areas where the company can make a difference, according to the report.

Companies also need to establish emotional connections with their customers, and communication is key in this area: 64% of consumers find brands that actively communicate their purpose more attractive. It’s also vital to be sincere: 36% of customers have interacted with a brand that lied about what they stood for, but 42% of this group said they would give the company a second chance if the brand apologized.

Additionally, brands need to make sure that everyone in the organization is both walking the walk and talking the talk. The survey found that 65% of consumers are influenced to buy a brand, product or service by the words, actions, values and beliefs of a company’s employees — not just the CEO or marketing spokesperson.

Multiple Factors Influence The Importance Of Purpose

While almost any brand can benefit from establishing an authentic purpose, it’s more urgent for some companies than others. The study identified five factors influencing the importance of a brand purpose:

  1. Geography: In more mature markets, companies are likely to expand from individual experiences to collective values and shared experiences, while those operating in growth or frontier markets are more likely to align on traditional competitive differentiators rather than social, cultural or political issues.
  2. Product Categories: Purpose is less important for brands producing basic commodities like laundry detergent, than for brands offering an experience and engaging consumers directly in an ecosystem of activity and connections.
  3. Brand Maturity: New, smaller brands often use their purpose as a competitive strategy against larger rivals, but big brands can still compete using their built-in advantage: 29% of consumers prefer large brands, compared to 23% that prefer small, local or independent brands. Large brands that get their purpose right can further their lead.
  4. Demographics: Approximately 60% of Gen Z and Millennials believe it’s important for companies to stand a stand on issues such as human rights, race relations or LGBT equality, but barely more than 50% of Gen Xers and Boomers feel the same.
  5. Ecosystem Readiness: Companies will find it easier to activate a relevant purpose on a group scale when they engage a brand ecosystem. However, only 40% of executives feel they have what it takes to build an effective ecosystem, which could put these brands at a disadvantage.
]]>
feed@retailtouchpoints.com (Adam Blair) Trend Watch Mon, 10 Dec 2018 09:23:51 -0500
Kroger Adds Curated 2,300-Item Assortments At 13 Walgreens Pilot Stores https://www.retailtouchpoints.com/features/news-briefs/kroger-adds-curated-2-300-item-assortments-at-13-walgreens-pilot-stores https://www.retailtouchpoints.com/features/news-briefs/kroger-adds-curated-2-300-item-assortments-at-13-walgreens-pilot-stores Kroger Adds Curated 2,300-Item Assortments At 13 Walgreens Pilot Stores

Expanding on the pilot program that began in early October, Kroger will add Kroger Express, a curated assortment of 2,300 products, at 13 Walgreens stores in northern Kentucky. The items will be selected using customer data and insights provided by Kroger subsidiary 84.51°. The first concept store already is operational in Florence, Ky., and the remaining 12 pilot stores are scheduled to go live in early 2019.

The Kroger Express selection will include Home Chef meal kits, national products and Kroger’s Our Brands private label items, along with dairy, meat, produce, frozen and meal SKUs. The Walgreens stores also serve as pickup points for online grocery orders placed on Kroger.com.

“We are excited to enter the next phase of the pilot,” said Robert Clark, SVP of Merchandising at Kroger in a statement. “The Kroger Express concept creates easy access to our most popular Our Brands products through a fill-in grocery shopping experience for Walgreens customers, and our Home Chef Express meal kits provide customers with an on-demand solution for tonight’s dinner.”

Kroger and Walgreens also are integrating their product offerings in a larger market, making Home Chef Express meal kits available in 65 Chicago-area Walgreens stores. The kits already are available at certain Kroger banners in the area, including select Mariano’s stores.

During this pilot program, Walgreens will offer three unique Express meal kit options, with recipes rotating bi-weekly. Other recipes are available for delivery through homechef.com.

“We’re pleased to continue working together to explore new concepts that expand product selection to provide a better shopping experience and greater value for our customers,” said Richard Ashworth, Walgreens President of Operations in a statement.

]]>
feed@retailtouchpoints.com (Adam Blair) News Briefs Tue, 04 Dec 2018 12:14:03 -0500
Getting Physical: Three Tips For Bridging Online And Offline Experiences In The New Year https://www.retailtouchpoints.com/features/executive-viewpoints/getting-physical-three-tips-for-bridging-online-and-offline-experiences-in-the-new-year https://www.retailtouchpoints.com/features/executive-viewpoints/getting-physical-three-tips-for-bridging-online-and-offline-experiences-in-the-new-year

0aaaCarl Tsukuhara OptimizelyRecently Wayfair and Casper joined the likes of fellow e-Commerce brands Amazon, Everlane, Glossier and many others that are all experimenting with, or opening permanent, brick-and-mortar stores. However, with many traditional retail stores closing shop in the last year, it's even more imperative to integrate offline and online channels to provide a consistent experience across all touch points.

These digitally-born businesses are in a battle with Amazon to retain customers by offering a great in-store experience at a reasonable cost, all while avoiding the mishaps Build-a-Bear and others recently encountered. In fact, while 87% of consumers say they expect an omnichannel experience, only 7% of retailers actually provide the ability to shop seamlessly across all channels.

That means opening physical stores requires delivering a hyper-personalized and streamlined experience that is massively digital-friendly. This is fundamental to the future of this omnichannel company’s business model. Here are three ways retailers can marry their online and offline customer experiences to accelerate growth in 2019.

Create A Personalized Experience

Customers have come to expect personalized experiences online, and brands need to find ways to replicate the tailored experience in store. Since 85% of customers say they like to shop in stores because they want to “touch and feel” items before they buy them, it’s imperative for brands to provide highly relevant experiences that are “digital enabled” as a way to enhance relationships with customers and boost sales.

Nordstrom has done this through its “reserve online and try in store” service. By giving customers the option to reserve items online before heading to the store — where they are met with a personalized dressing room with their name and selected items — the retailer is combining the best of personalization across online and physical experiences.

For 110-year-old legacy brand Neiman Marcus, personalization is the new loyalty. They’ve incorporated data and machine learning across all their platforms to learn more about what customers prefer, which includes embedding new capabilities on the devices its sales associates use in stores. For example, they launched the Snap Find Shop, a visual search feature in its app that lets customers take a photo of any clothing item and find a similar style in the store’s product line using AI. The company has continued to maintain its stellar brand reputation by using the data it collects online and off to provide superior customer service and a distinctive, personalized shopping experience.

Thanks to the endless amount of data businesses can collect online, retailers are able to create targeted experiences for their customers and build relationships with them based on their interests. This is a key point where experimenting with this holistic experience comes into play. Retailers can now experiment with their online and mobile experience with the direct objective of on-premise, physical conversion. In this case, the retailer owns the entire process and supply chain and can directly measure the impact of their digital experience on both the e-Commerce and physical world.

Think Outside How Digital Experiments And Success Can Enrich On-Premise Experience

Brands can now test all kinds of variations in the digital world that can be transferred to the physical storefront with much less supply chain and physical merchandising risk. By creating highly personalized digital experiments around things such as pricing, recommendations, bundling or affinity, teams can know how to execute with high levels of certainty in the physical world.

For example, any retailer can experiment with offers against specific customer “buckets” or try checkout-level offers to see what improves average order value for different audiences. Once the suggested variation is proven to work, then a physical version of such offers, sales or displays can be replicated in physical locations where similar customer demographics apply. By getting this right ahead of larger scale physical deployment, it reduces the need for storing inventory, cuts down on operating costs and provides customers with a tangible way to know the proper in-store experience before committing to deployment at scale.

As consumer expectations and demands continue to rise at an accelerated pace, retailers must stay unique, leverage their digital data and experiments and think outside a purely digital or physical (brick-and-mortar) box in order to stay ahead. You may have a great idea for a pop-up shop or an in-person campaign, but how do you know if anyone will actually show up? Who will be interested? By testing online first, brands can learn about the customer journey, consumer behaviors and individual preferences, and use that to foster loyalty in the physical space.

One brand demonstrating the power of experimentation before national success with brick-and-mortar is Warby Parker. While the company originally got its start selling eyeglasses online in 2010, it plans to have 100 physical stores open in the next year. Before creating any permanent stores, the company started with showrooms and pop-ups. In fact, they even had a school bus early on that traveled to different cities where employees sold their glasses on wheels. By learning about their customers’ wants and needs before setting up shop, they’ve been able to take the convenience of online shopping and combine it with the in-person experience found in actual stores.

Other examples include online dating app Bumble, which just launched “The Hive” in New York, a brick-and-mortar hangout space, and Refinery29, which now hosts pop-ups as a way to bring readers closer to their brand through visual, immersive experiences.

Summary

Brick-and-mortar isn’t dead, the model is just changing. While many brick-and-mortar stores are going out of a business in the digital age, this is largely due to lack of modernization. Bridging the online and offline experience will be necessary in order for retailers to succeed, and brands that successfully adapt their approach will keep their customers coming back for more.


Carl Tsukahara, a 25-year veteran of Silicon Valley, is Chief Marketing Officer at Optimizely, a leader in digital experience optimization with customers including Gap, Revolve, Trunk Club and Blu Dot. Prior to Optimizely, Tsukahara was CMO at Birst, which delivered enterprise business analytics to major global corporations. He also has held executive management roles at Evolv, Monitise and Vitria Technology.

 

]]>
feed@retailtouchpoints.com (Carl Tsukahara, Optimizely) Executive ViewPoints Wed, 28 Nov 2018 09:30:49 -0500
Three Best Practices For Digital Customer Experience Success https://www.retailtouchpoints.com/features/executive-viewpoints/three-best-practices-for-digital-customer-experience-success https://www.retailtouchpoints.com/features/executive-viewpoints/three-best-practices-for-digital-customer-experience-success

0aaaBen Harris DecibelProduct, placement, price and promotion may have been the holy grail of marketing, but in the digital era, customer experience now tops the list. It is critical for all types of businesses, retail especially, to provide a positive, meaningful and engaging digital experience to its customers and prospects or else they will take their business elsewhere. In fact, a recent Salesforce survey found that 76% of consumers felt it’s easier now more than ever to take their business to a brand that better matches their expectations.

Before e-Commerce, sales associates provided in-store service (and still do) to ensure customers are having a positive shopping experience. They would do so by visually understanding customers’ reactions — be it engaged with a product or frustrated they can’t find their size — and catering the customer service as needed. Store associates can easily alleviate confusion or frustration by visually observing body language — both on an individual level and for the broader audience. They can help someone find the right shoe size after watching them sift through several pairs, or offer a dressing room if their hands look full. Taking a macro perspective, if the arrangement of the clothing racks leads to people constantly asking where to find items, or cause the flow of traffic to be dysfunctional, a visual merchandiser might be asked to readjust.

In today’s e-Commerce world, the same level of service must be provided digitally. But online, understanding those confusions and frustrations is not as simple.

As e-Commerce continues to grow at an unfathomable rate, marketers need to provide the same empathy and experience for shoppers online as they would in person. To reach this level of behavioral knowledge and mirror in-store customer service for online consumers, marketers should change their mindset and best practices.

1. Take offline behavioral knowledge and apply it to online strategies

In a digitally-driven world, marketers must understand the “why” behind online shopping behavior at a deep level — far beyond the “what” behind traditional, quantitative metrics. Take the following anecdote that everyone can relate to:

  • A shopper scrolls through a web site for an hour, opening tab after tab, trying to find the perfect pair of sunglasses and finally makes the choice;
  • Excited, she presses the checkout button, but it malfunctions and results in an error page instead of confirming the purchase;
  • The user becomes extremely frustrated, feeling that she wasted her time and exits the web site;
  • The retailer doesn’t understand the real reason why the shopper left the page after being so close to making the purchase, attributing it to cold feet or going elsewhere for the purchase, and as such continues targeting her with ads for the sunglasses; and
  • These taunting ads make her more frustrated, and the improper and uneducated response from the brand ultimately costs them her customer loyalty.

In an industry with endless choices for nearly every type of product, marketers need to be equipped to identify when an issue arises and show empathy to quickly alleviate it, as they would in-person. To reach the level of real-time intelligence required to best understand and connect with consumers, retailers need to take what has long been done offline and apply the same practices online.

2. Read between the clicks to understand behavior

Measuring online behavior to improve and manage the customer experience is no easy task. Traditional subjective metrics, such as Net Promoter Scores or surveys, no longer provide marketers with the full insight required to note what works versus what makes someone run to another brand. To understand state of mind and gather objective, qualitative data, reading and tracking digital behavior is key. And fortunately, similar to in-store shoppers, online consumers provide warning signs of an issue through digital body language.

Every engagement and gesture made on a web site or app — what happens between the clicks — represents digital body language. Being able to understand and address behaviors such as those listed below are critical to analyzing and benchmarking the brand’s success.

  • Multi-click indicates user frustration; when a web link is broken, or a confirmation button is slow or unresponsive, users might click repeatedly until the link works.
  • Bird’s nest identifies user frustration, too; a jumbled mouse trail from a user clicking around rapidly, resembling a bird’s nest, might occur when a page is unresponsive or poorly designed.
  • Mouse reading behavior refers to when a shopper directly follows the content they are reading on a website with their mouse, denoting engagement.

3. Address confusions and frustrations to build lifetime loyalty

To understand and address the pain points that customers face on a web site, marketers must be able to read online behavior as seamlessly as they would in person. Building an understanding for digital body language indications over time lets marketers quickly intervene when a user becomes frustrated, thus solving the issue for the individual while also offering an opportunity to fix the problem for any future shoppers. This is critical to not only ensure an ongoing positive relationship but also to benchmark and improve online performance over time.

Without having the ability to pinpoint confusion or frustration, it is impossible for marketers to create a positive, personalized experience. Attaining this intelligence and alleviating issues will ultimately increase the user’s perception of the company, enabling them to return and build the relationship. Acquiring new customers is not cheap, nor easy, so in a world where consumers can leave one brand for another in the blink of an eye, retailers that will win in the long term are those that focus on creating loyalty with existing customers over time.


Ben Harris is CEO and co-founder of Decibel, the leader in Digital Experience Intelligence. Having started a London-based digital agency in 2002, Harris became increasingly aware of the gap between traditional web analytics and the ability to make informed decisions to improve web site performance, so he set about creating marketing technology company, Decibel. His vision for Decibel was to make customer experience an objective science; reinventing the approach companies take to create, measure and optimize digital experiences in ways that are obvious, compelling and actionable. Now Harris helps the world’s leading retailers — such as LEGO, River Island, CVS, TUI and British Airways — leverage machine learning that automatically measures and understands how customers feel when interacting with web sites and apps so the organizations can create better experiences. Harris has worked for over 20 years in the delivery of digital projects for clients including Microsoft, NYSE, Nestle, Nokia and Citrix.

]]>
feed@retailtouchpoints.com (Ben Harris, Decibel) Executive ViewPoints Mon, 26 Nov 2018 09:23:26 -0500
Exclusive CEO Q&A: How Touch Of Modern Uses Customer Feedback To Drive Merchandising https://www.retailtouchpoints.com/topics/inventory-merchandising-supply-chain/exclusive-ceo-q-a-how-touch-of-modern-uses-customer-feedback-to-drive-merchandising https://www.retailtouchpoints.com/topics/inventory-merchandising-supply-chain/exclusive-ceo-q-a-how-touch-of-modern-uses-customer-feedback-to-drive-merchandising 0aaaJerry Hum TouchofModernTouch of Modern, an e-Commerce retailer focused on selling lifestyle products, fashion and accessories for men, has always strived to introduce merchandise that shoppers can’t find anywhere else, even dabbling in wine sales. After six years in business, that mantra has clearly paid dividends; the retailer now generates $120 million in annual revenue and is profitable going into 2019. So how does Touch of Modern consistently deliver the right goods to its target audience? The retailer uses a strategic combination of customer feedback and merchandising analytics to determine its most loyal shoppers’ preferred products and buying patterns.  

In an exclusive conversation with Retail TouchPoints, Touch of Modern CEO and Co-Founder Jerry Hum reveals:

  • The company’s recently developed national television ad campaign;
  • Curating new merchandise that’s in line with the Touch of Modern brand;
  • How the company balances customer retention and customer acquisition efforts by educating the shopper on the product’s value;
  • Video’s role in educating shoppers on the Touch of Modern brand and products; and
  • Potential partnerships with more direct-to-consumer brands going into 2019.

RTP: Touch of Modern has been profitable going on 12 months. Has this changed your strategic approach to the 2018 holiday season?

Jerry Hum: The strategy that we took [to achieve profitability] was to realize that our largest costs, outside of the cost of goods, were on the marketing side. If we were to become profitable, we had to cut back on marketing, and in order to do that while maintaining revenue we had to make sure that our existing customers will keep repeating.

We did research on customer behavior and also their brand affinity and asked them, “Who are we to you?”, “Where are we lagging?” and “Where do we improve?” The great thing was, our customers actually saw us the way we saw ourselves. They recognized that we bring them high-quality goods, things that are hard to find at traditional retailers, and often, a lot of what we sell can only be found here. That’s why they kept coming back to visit.

One of the things they wished we could do better was shorten the delivery time. That’s a big push that we’ve been working on over the past year. It’s even more important now that we’re in the holiday season and it’s something that we’ll continue to keep working on for the future.

On the other side, when we became profitable, by coincidence, we had just started going into a new marketing channel — national television ads. At the time, we had no expectation as to performance — it was more of a bet. Not only did that perform well for us, it also opened up a whole new channel for us, at a volume that was comparable and larger than marketing on the web. It alleviated the pressure on the existing channels as well. We actually just pushed a new TV spot that first aired in October.

We’ve been testing iterations of it — the first one was a homegrown spot with just our own employees, the second one we pulled in some of our vendors, and the third is shot completely from the ground up.

RTP: How do you keep curating new and unique products that accurately embody the Touch of Modern brand, and how do you expand beyond what you already have?

Hum: When it comes to keeping momentum and staying fresh, the strategy we’ve come up with has always been pretty sustainable, and it’s inherently baked into the model. We email our customers every day, and they tell us through their purchases what resonates with them and what doesn’t. Every day we take that feedback and we use that to inform all our future merchandising.

We do this agnostic of the category. When new categories show up, we’re able to move on them pretty quickly. Because we’re able to be that fluid, we haven’t really had to change the fundamental formula. Through our research, we did find that things our most loyal customers bought were not the things that our least loyal customers bought. We did some pushing into the categories of where our most profitable customers were buying, to increase their lifetime value and keep them engaged.

RTP: How does Touch of Modern balance customer retention vs. acquisition?

Hum: What we’ve seen is that our best customers will spend more with us over time. Part of why we started Touch of Modern is because we felt that a lot of our prospective customers could use a bit of education. The other co-founders and I had a conversation early on about who made the best speakers, and our CTO had all this technical knowledge on speakers, so he won the argument and educated the rest of us on the topic.

That’s the kind of aspect we wanted to bring to our customers. A lot of these products are new or they appeal to a niche audience of enthusiasts. We want to bring them to the mass market to let people know about, not just items exposed in the malls or department stores, but also items that were created with more intention and more purpose. When we looked at that, we thought that if we could successfully educate somebody on why this product was better than your average, they might start to trust us and spend more with us over time. You start to realize that the thing that provides most value isn’t always what’s cheapest, it’s what’s the highest quality for the money.

When we see that our best customers start to spend more with us and their average order value continues to increase over time, then we’re successful at doing that. Between the existing customers and the new customers, we tend to walk them through that education process, first by showing products that are more affordable but still high-quality, and then moving them upward over time.

RTP: In the past, we’ve discussed content as a driver for marketing strategies. How much does that come into play as far as delivering the right information about a product to the consumer?

Hum: It’s an ongoing battle, and it’s something we think we have a lot of room to improve on. One of the things our customer research showed was that a lot of times, customers weren’t aware of the quality of the product from the get-go. They would have to go off our app to do research and find that out. That shows that we could be educating customers better than we currently are.

Video is a strategy we’re taking more advantage of — it’s a format shoppers are gravitating more toward for things that require more information. They don’t like reading big blocks of text. They’d rather watch a video informing them of why a product is special, rather than taking the same amount of time to read a paragraph.

We’re also operationally making sure that we are able to capture why we thought these products are unique and explain that to the customer for everything, and not just the few that stand out to us.

RTP: On the supply chain side, what do you feel has been working to help Touch of Modern handle increasing consumer shipping demands?

Hum: A lot of it is just sharpening the tool in terms of forecasting and then communication with the vendor. There’s no real magic sauce there, it’s more about being on the ball. I wish I could give a silver bullet for that, but there isn’t one, at least not yet.

RTP: Does Touch of Modern have any brick-and-mortar plans, and what would it take for the company to make that leap?

Hum: We actually opened and operated a small pilot in San Francisco just for a month, and we are expanding on it through the 2018 holiday season. We have not yet reached a conclusion about it, but a lot of the unit economics we’ve seen so far are very promising.

RTP: Are there any other trends that have affected Touch of Modern going into the holiday season?

Hum: You probably have seen this for a little while now — more direct-to-consumer brands are gaining traction and getting significant scale, and that’s something that we have to keep paying attention to. We’re actually seeing more of those kind of brands wanting to partner with us as well, so it can definitely benefit us.

Pure D2C is tough. If you had to do all your own marketing and bear the entirety of the customer acquisition costs while only selling a limited number of products, it’s going to be hard to get a return on investment. The beauty of a company like ours is that we have a lot of merchandise we can sell to customers. Therefore, we can stomach higher acquisition costs compared to a lot of pure D2C brands that only have five products to sell.

]]>
feed@retailtouchpoints.com (Glenn Taylor) Inventory / Merchandising / Supply Chain Wed, 21 Nov 2018 07:41:45 -0500
Thriving In The New World Of Grocery: Five Keys For Brands https://www.retailtouchpoints.com/features/executive-viewpoints/thriving-in-the-new-world-of-grocery-five-keys-for-brands https://www.retailtouchpoints.com/features/executive-viewpoints/thriving-in-the-new-world-of-grocery-five-keys-for-brands

0aaaJim Hertel InmarMuch has been made of the challenges facing retailers in today’s grocery marketplace. However, their manufacturing trading partners are contending with equally pervasive disruption and the effects have been significant, with most of the top 100 brands continuing to lose market share to smaller competitors.

The issues impacting large CPGs are many — and they’re growing. For one, shoppers are increasingly brand agnostic. They’re looking to manufacturers to address a need state and, if they have confidence that the product can meet their  need(s), it matters not the brand.

At the same time, there is growing demand across shopper segments for specialty, healthy and functional foods, as shoppers are moving well beyond “low sodium” or “sugar-free” line extensions in their efforts to eat better and improve their nutrition. As a result, they’re turning to new and emerging brands to help them reach their goal of establishing a better diet. And the barriers to entry for these emerging brands have never been lower. Leveraging available technology, even the smallest food producer can achieve speed to market with enviable alacrity.

Further complicating matters is that at the center of everything is the “mantra of me” — shoppers’ deepening expectations of a personal connection with brands. So what must big CPG brands do in order to address these challenges and protect profitability?

Reclaim Competence At Consumer-Driven Innovation

The current “innovation model” of big brands acquiring smaller, emerging brands and then extending their distribution across vast retail networks is quickly losing viability in the face of rising costs and increasing market complexity. Innovation needs to be brought back in-house and re-established as a core asset.

Being perceived as innovative and in tune with consumers provides a key advantage over competitors; shoppers want to engage with brands they view as helping them address need states and live better lives. By creating small, dedicated teams to act as startups within business units — and informing their efforts through social listening — brands can effectively focus on consumer needs and reignite internal innovation.

Re-Establish Trust In The Consumer-Value Proposition

Along with everything else they’re facing, brands today must contend with a growing distrust of large corporations, including “big food.” Regardless of whether or not the distrust is warranted, it exists and it has to be addressed.

To rebuild that trust, brands must be transparent and forthcoming and their leaders must be likable, believable and accessible. Brands need to understand who they are as a brand — and who they aren’t. And the brand must stand for something beyond profits.

Aggressively Explore All Methods Of Selling To Consumers

This, of course, includes selling directly to them. Engaging in direct-to-consumer sales allows brands to effectively define, and directly express, the consumer-value proposition without it being filtered or changed by an outside party.

The result is a better buying experience that is free of the barriers and obstacles that can complicate and hinder the relationship between brands and consumers. In addition, direct-to-consumer is a proven path to valuable consumer data that makes success easier with new demographic segments and niche markets.

Develop A Culture Of Speed

While it’s not an easy ask for large organizations, big brands must find a way to create a definitive structure focused on driving faster growth. Brands can, and should, take advantage of large-scale operations by placing those closest to consumers, those most closely connected to the marketplace, in decision-making roles. This includes empowering them to stop activities that aren’t contributing to profitable growth.

The “need for speed” can also be met by partnering with emerging players (when internal capabilities are insufficient) to respond rapidly to shifting consumer trends or regulatory changes. Investing appropriately in very early-stage companies can enable big brands to optimize, and accelerate, their response to changes in shopper behavior/attitudes.

Succeed At Smaller Scale

The once tremendous competitive advantage that big brands exercised in producing millions of cases of product and driving production cost down on a marginal basis no longer exists. Succeeding through volume in spite of low margins is also quickly disappearing. Now, brands must concentrate on serving niche audiences/market sub-groups demonstrating demand for niche products.

Although many more startups fail than succeed, they are driving explosive growth and taking serious share from the big players. Large CPGs must match up with these challenger brands, operate with the same sense of urgency and adopt a similar mindset of developing brands that have deep connections with consumers.

According to PwC Global’s study of 2017 CPG trends, small CPGs (those with sales of less than $1 billion) outperformed the competition in 18 of the top 25 categories. This is an undeniable wake-up call for big brands to re-examine their product portfolios, their consumer-engagement mindsets and their plans for future growth.

Achieving greater speed to market, speed to admit failure and speed to shed activities that are not measurably driving success must be prioritized. Dismissing emerging brands as merely “ankle biters” is a good way for large CPGs to lose a leg. But, by identifying and fulfilling consumers’ needs — both physical and philosophical — big brands can thrive in the new world of grocery.


 

Jim Hertel is Senior Vice President, Inmar. In this role he is responsible for business development, client service, new-solution creation and strategy development for Inmar Analytics’ retail and manufacturer clients. Prior to Inmar’s acquisition of Willard Bishop, a food retail consulting company, Hertel was Willard Bishop’s Managing Partner. Throughout his career, Hertel has developed insight-based growth strategies for companies including Anheuser-Busch, Campbell Soup Company, Kraft Foods, Unilever, Wal-Mart, Coca-Cola and Purina.

]]>
feed@retailtouchpoints.com (Jim Hertel, Inmar) Executive ViewPoints Tue, 20 Nov 2018 09:09:59 -0500
Nike Debuts App-Enabled Experiential Store In NYC https://www.retailtouchpoints.com/topics/shopper-experience/nike-debuts-app-enabled-experiential-store-in-nyc https://www.retailtouchpoints.com/topics/shopper-experience/nike-debuts-app-enabled-experiential-store-in-nyc Nike Debuts App-Enabled Experiential Store In NYC

Nike has opened the Nike House of Innovation on Fifth Avenue in New York City, combining experiential retail with the power of the Nike App. The 68,000-square-foot space spans six levels, each devoted to a separate product line or experience. The store extensively incorporates mobile devices to minimize friction across the shopper journey.

The ground-floor level will feature the Nike Speed Shop, a curated selection of seasonal items and products that are currently popular among New York City shoppers. The space also will house the Nike Sneaker Bar, where shoppers can check out the latest footwear, and Speed Shop digital lockers, where customers who reserve items on the Nike App can pick them up later. Other ways that the Nike App will empower shoppers include:

  • Shop the Look: Instantly shopping the products featured at in-store displays;
  • Instant Checkout: Paying for items directly from a mobile device; and
  • Scan to Try: Remotely requesting an opportunity to try out items throughout the store.

Another in-store innovation: the Nike Expert studio on the fifth floor, which will be dedicated to offering personal service for NikePlus members. Customers can book personal sessions with experts, while the Nike By You Studio will offer exclusive products, one-on-one styling and the opportunity to create personalized products. Additionally, the Nike App will add new features for NikePlus members in-store over time.

The fourth floor will be home to the Nike Sneaker Lab, which will serve as the largest concentration of seasonally current Nike footwear in the world. The brand’s Men, Women and Kids sections will each receive a dedicated floor as well.

Even the entrance to the store, dubbed the Nike Arena, will help create a memorable experience. The arena will feature the Sport Beacon, a visual and sonic installation inspired by New York City, with a combination of seasonal and sport-inspired storytelling moments. Nike Arena also will be home to the exclusive Noise Canceling Collection, a collection of limited-edition footwear that can be customized with dip-dying, printing, embroidery, patches, lasering and a full accessory bar.

The House Of Innovation Supports Nike’s Broader Brand Strategy

The new House of Innovation serves as the retailer’s latest expression of its commitment to cutting-edge marketing. The company took a potentially risky political stand and named Colin Kaepernick as a brand ambassador for its latest ad campaign, but the gamble paid off: the brand sold out of 61% more merchandise between Sept. 3 through Sept. 13 than the 10 days prior to the campaign’s launch.

The most successful modern retail brands are those that resonate with their shoppers on a personal level, according to branding expert Erich Joachimsthaler. The core of branding has shifted from differentiation and image to creating connections and promoting virality.

“The brands that are doing extremely well right now are those that have learned about the new principles of branding, and that are able to establish a direct connection with consumers and a constant interaction,” said Joachimsthaler in an interview with Retail TouchPoints. “Nike is doing it with their direct-to-consumer activities, including selling on Amazon. They are shifting their business model to be more like Casper, which also has a direct connection to consumers.”

]]>
feed@retailtouchpoints.com (Bryan Wassel) Shopper Experience Fri, 16 Nov 2018 11:12:48 -0500
One Poor Post-Purchase Experience Drives 36% Of Online Shoppers To Other Retailers https://www.retailtouchpoints.com/topics/shopper-experience/one-poor-post-purchase-experience-drives-36-of-online-shoppers-to-other-retailers https://www.retailtouchpoints.com/topics/shopper-experience/one-poor-post-purchase-experience-drives-36-of-online-shoppers-to-other-retailers One Poor Post-Purchase Experience Drives 36% Of Online Shoppers To Other Retailers

While retailers always prioritize driving sales, what happens after the sale can be the ultimate customer retention driver — or it can drive customers away. In response to a bad post-purchase experience, up to 90% of U.S. online shoppers will take some type of action that can hurt a retailer’s brand. More than one-third (36%) say they would shop somewhere else after just one poor experience, according to the 2018 Pitney Bowes Global Ecommerce Study. Among Millennials, 30% will go public about their poor experience by complaining in an online review or social media post, potentially affecting the buying decisions of their entire social networks.

Retailers have left themselves vulnerable to these criticisms — 56% of consumers felt let down during the 2017 holiday season due to a post-purchase issue. Specific problems included:

  • The shipment arriving late (15%);
  • Shipping is too expensive (12%);
  • Wrong address/lost in the mail (7%);
  • Shipping tracking is inaccurate (6%);
  • The wrong item was shipped (6%);
  • Unclear return policies (4%); and
  • Poorly packaged gift items (4%).

More Purchases, More Problems

Overall, the percentage of U.S. shoppers that felt let down by a holiday shopping experience jumped s20 percentage points, from 36% in 2016 to 56% last year. Lila Snyder, President of Commerce Services at Pitney Bowes, noted that the rise in frustration is linked to the velocity and volume of online shopping.

“There’s no doubt that as volume goes up, it gets more difficult for retailers and their partners to keep up with that,” Snyder said in an interview with Retail TouchPoints. “At the same time, you have rising customer expectations. It’s almost a multiplier effect. You have to deal with such rapid growth that it’s hard to have physical infrastructure and processes keeping up.”

Successful high-growth retailers (those with 25% or greater year-over-year revenue growth) place a greater emphasis on the post-purchase consumer experience than their slower-growth competitors. This includes providing services like free returns and day-definite guaranteed delivery. While 54% of high-growth retailers offer two-to three-day free shipping, 60% of low-growth retailers (those with 10% or less year-over-year revenue growth) offer four-to seven-day free shipping.

Free, Fast Shipping Are Top Reasons Why Online Shoppers Select Retailers

“Fast and free” shipping is no longer a competitive differentiator; these services have become table stakes. In the U.S., online shoppers list free shipping (80%) and fast shipping (66%) as the two most important criteria in determining where to shop online, well ahead of:

  • Free, easy returns (49%);
  • Better delivery tracking (43%);
  • Confidence in delivery date accuracy (38%);
  • Better overall post-purchase experience (37%); and
  • Fast refunds on returns (32%).

 

For example, 91% of U.S. online shoppers said they will leave a retail web site if shipping options aren’t “fast and free,” with 43% opting to purchase from a marketplace instead.

“Consumers are telling you, if you don’t offer the kind of shipping I want, I’m gone,” Snyder said. “Retailers can’t get faster overnight, but they can get freer overnight. If I’m a retailer reading that statistic going into the holiday period, I would absolutely be thinking, ‘Are my shipping offers attractive enough, given the way consumers are likely to behave during this high-volume shopping season?’”

Retailers must be aware that expectations for “fast and free” continue to rise. While 95% of online shoppers consider two-day free shipping “acceptable,” only 47% consider it “fast.”

U.S. consumers still rank free shipping over fast shipping, with 79% preferring free (actually down from 86% last year). This reversal is mostly driven by Millennials, with 35% willing to pay for fast shipping, up from 20% the year prior.

With that in mind, retailers actually can afford to institute a pricing minimum for free shipping. Nearly 66% of U.S. consumers expect to spend at least $25 to qualify for free shipping, with Millennials and parents the most lenient, at approximately 75%.

Subscription Brands Continue To Gain Favor With Millennials

Beyond post-purchase concerns, the Pitney Bowes survey also analyzed the growth of subscription box surveys, noting that 51% of Millennials are now enrolled in at least one subscription box. This total is expected to grow 11% by the end of 2018.

“Any time you get over that halfway adoption point, it’s probably not going to be a trend that changes anytime soon,” Snyder said. “You also see households with children reaching almost 50% adoption, which gives you a sense of the convenience factor for those busy families. That emphasis on the post-purchase experience is something we feel the subscription box services have done a terrific job at, because we know that the way to keep that subscription alive and keep that loyal customer as part of their platform is to make sure that the delivery and returns experiences are flawless.”

]]>
feed@retailtouchpoints.com (Glenn Taylor) Shopper Experience Tue, 13 Nov 2018 09:15:44 -0500
50% Of Millennials Put Luxury Spending Ahead Of A Solid Health Care Plan https://www.retailtouchpoints.com/topics/shopper-experience/50-of-millennials-put-luxury-spending-ahead-of-a-solid-health-care-plan https://www.retailtouchpoints.com/topics/shopper-experience/50-of-millennials-put-luxury-spending-ahead-of-a-solid-health-care-plan 50% Of Millennials Put Luxury Spending Ahead Of A Solid Health Care Plan

Higher costs of living and shrinking disposable incomes have put 46% of Millennials into credit card debt, according to a study from NBC News and GenForward. Even so, half of Millennials are unafraid to spend on luxury: 50.9% prefer to use their disposable income for luxury products, entertainment, meals and high-end experiences rather than a better health care plan, according to a report from The Pearl Source.

The survey took a peek into Millennial luxury spending habits, revealing that even though luxury retail had struggled prior to 2017, high-end brands still may have a lot to look forward to:

  • 36.5% said they'd forego paying down credit card debt for more disposable income for luxury products and experiences;
  • 49.9% are spending up to $500 per month on luxury items; and
  • 50.2% admitted that they were buying those items knowing they were not able to afford them.

“Millennials still spend a lot of money, and they’re quite unapologetic about how they choose to do so,” said Sos Nazaryan, Content Specialist at The Pearl Source. “From Uber to farm-to-table foods and premium coffee, the generation certainly has preferences for what are traditionally more expensive products and services. This is particularly true for luxury items, including but not limited to designer clothing, handbags, shoes and jewelry.”

The global luxury market grew 5% to an estimated $1.36 trillion in 2017, with Millennials and Gen Z driving a whopping 85% of that growth, according to a report from Bain & Co. Bain estimated that growth will continue at a 4% to 5% compound annual rate into 2020. 

With Millennials overtaking Baby Boomers in spending power, luxury retailers should continue to offer personalized products and services and to focus on shopper engagement across all touch points. For example, luxury brands are reinterpreting streetwear to appeal to younger consumers: T-shirts, down jackets and sneakers were among the standout categories, growing by 25%, 15% and 10%, respectively.

Millennials Want To Pay Later For Luxury Purchases

But while Millennials are willing to make luxury purchases, they are approaching the payment process differently than older generations. The Pearl Source study indicated that Millennials prefer to finance their luxury purchases over time as opposed to paying everything up front:

  • 57% were more willing to spend on luxury purchases, such as jewelry, when financing was available;
  • More than 40% financed their engagement rings;
  • Nearly 70% took on debt for their engagement rings;
  • 22% took up to two years to pay down the debt; and
  • 9% took more than two years to pay down the debt.

Most Millennials Consider Cost And Quality Top-Of-Mind, But Don’t Share Ethics Concerns

The research also revealed that while Millennial tastes are changing, the “death” of some luxury industries is probably exaggerated. Diamonds were still the most preferred luxury gemstone among the Millennials polled; however, 46% of Millennials indicated that they prefer alternative gemstones, such as rubies, sapphires and pearls.

As many as 90% of Millennials identified cost and quality as the two most important buying considerations with regard to jewelry; only 9% weighed ethical and environmental considerations when it came to luxury purchases.

The Pearl Source conducted the study of 1,000 randomly selected individuals aged 22 to 37 across the U.S. The study was designed to gather more insights and a greater understanding of how Millennials spend on luxury goods and services.

]]>
feed@retailtouchpoints.com (Glenn Taylor) Shopper Experience Mon, 12 Nov 2018 09:16:45 -0500