The future of retail: Looking back to go forward - Coley Porter Bell

The future of retail: Looking back to go forward

Featured in WARC December 2020.

Why it matters

Bricks and mortar retail has been devastated and e-commerce brings added competition, but brands employing analog techniques standout with fresh and more personal interactions.

  • The shift to e-commerce makes it harder for brands to connect emotionally with customers – a key driver for success.
  • In a digital world, tactile, physical moments are all the more memorable.
  • Catalogs have been rethought to be more editorial, encouraging dwell time with corresponding increased response rates.
  • Customer service is the ultimate way to gain emotional brand connection and an opportunity to demonstrate customer commitment.

Not a week goes by where there’s not an article touting a new technology that is predicted to disrupt retail – from AR and VR to beacons, AI and more. While some of these technologies have been – or will prove to be – successful, in today’s retail reality brands may need to think beyond the latest bells and whistles and consider taking strategies from the past, to succeed in the future. Shopping has changed drastically over the past year and some of these changes could be permanent. Brick and mortar businesses have suffered a devastating blow since COVID-19. It is expected that over 14,000 stores will close this year alone in the US, while we’ve seen monthly increases of up to 209% for online sales. This has serious implications.

As businesses make e-commerce their pivotal sales channel they will face new competition. Think about it, a retailer that counted on a large portion of its revenue from in-store sales in a Simon or Westfield mall faced competition mostly from stores within the mall. Online, these brands will compete with DTC brands as well as main street retailers, which are now on a more equal playing field. The shift to e-commerce makes it harder for brands to connect emotionally with customers – a key driver for success.

To standout and win during this mass online migration, brands should be considering how analog experiences can help make the digital ones work harder to attract, engage and connect with customers. Unboxing is a good example of this, as discussed in ‘Delight at the Doorstep’. Many of the best unboxing experiences come from digital brands. These brands recognize how important tactile, immersive experiences are, understanding that digital-only brands need to compensate for their lack of physical and in-person touch points.

Extending beyond letterbox packaging and the delivery experience, many of these brands have found other ways to surprise and delight consumers. For example, Tile Bar has beautiful black and white letterbox packaging that stands out on the doorstep but its approach to gifting – a retailer’s version of an amuse bouche – is memorable with gifts including hand sanitizer at the height of the pandemic and an etched shot glass. But unboxing is just one way brands can create more immersive experiences – analogue experiences can support digital ones to access new audiences and deepen the connection with existing ones. Three others that brands might want to consider are:

1. The return of the catalog

With the rise of e-commerce, many brands walked away from, or limited, catalog use and moved to quicker, digital marketing tactics – but given today’s retail dynamics, brands might want to revisit their marketing mix and catalogs. Research has shown that catalogs are again becoming an effective marketing tool, with response rates increasing 170% in recent years. With the amount of competition with digital advertising, it makes sense that we are seeing results like this.

Consumers don’t need to open an email or visit a store, but they do have to interact with the catalog that arrives on their doorstep, even if they were just going to throw it out. And when you receive something like a 700+ page Restoration Hardware catalog, it’s hard to immediately throw it out without first perusing. Younger audiences, like millennials, are now favouring catalogs – they receive less mail and as a result, they are engaging with, and embracing, catalogs rather than writing them off like some older generations. According to a study conducted for the US Post Office, 64% of millennials would rather scan for useful info in the mail, than in email. The Canada Post had similar findings with millennials in a neuromarketing test. Participants’ recall of a print ad compared with a digital one was 70% higher and the part of the brain that corresponds to motivation was 20% higher. We are now seeing many companies that started as pure online brands embracing catalogs – Bonobos, Wayfair, 1stdibs and Amazon, along with some of the start-up DTC’s like Primary. Catalogs are going through a reinvention. Historically, they were functional, synonymous with the definition of the word, “a complete list of items, typically one in alphabetical or other systematic order”. Today, catalogs are more editorial, like magazines or coffee table books. Catalogs for brands like Serena and Lily and Patagonia include inspiration and storytelling – with consumers keeping them longer and flipping through them multiple times.

Many of us grew up with the ritual of pouring over a catalogue, circling our favorites ahead of a store visit. The digital equivalent can be found with brands like Boden providing a sample of products within different format catalogs, then directing you online to learn and see more. Amazon’s latest holiday catalog gives a curatorial experience, sans prices, driving consumers online to engage further and purchase.

2. Rethinking service

Customer service is no longer a hygiene factor – it’s pivotal to the experience a brand delivers and even more important in the current retail landscape. Studies show how important service can be for customer acquisition, retention and for commanding premium pricing – according to American Expresses’ Service Barometer, millennials are willing to pay 21% more for great customer service.

Technology has played a role in improving customer service, including bots and using social media to provide a timely service. Brands such as Nike have a separate Twitter handle for support and it has been applauded for solving customers’ problems. But there are aspects of service that cannot rely on technology alone and that is where brands need to spend more time and resources. Retail customer service cannot be discussed without mentioning Nordstrom – it set the bar on service with its tire story.

In 1975, a customer went into a Nordstrom store in Alaska to return tires he purchased from the store that had previously occupied the Nordstrom space. The store manager decided to refund the man the $145, even though the tires were not a Nordstrom purchase – a true example of giving the customer what they want. I’m not advocating that brands should make a practice of taking returns from other businesses, but it is a great example of a customer service-first mentality. At Zappos, everyone, no matter what their job or hierarchy, gains experience working on the customer service phones.

This manifests a core part of the brand’s strategy, as it helps employees understand their customers’ needs. Employees are encouraged to have long interactions with customers – a few years ago a Zappos employee had the longest customer service call in history, almost 11 hours long. Both companies have made delivering great service a critical part of their brand and have empowered their sales and customer service people to use their judgement to deliver excellent customer service, as opposed to relying on a script and a strict set of rules. But moving forward, the customer service role will include connecting emotionally with customers.

Most brands have not done this well. Few train their employees thoroughly to be on-brand or consultative in their sales approach. Really good branding is when you can look at communications, cover up the logo and the product, and still identify the brand. It is similar for service, remove product conversation or written communications and could you tell what brand you are interacting with? Brands such as Starbucks have successfully developed and adopted their Green Apron book but more brands need to make defining their service experience a priority and foundational brand asset.

Owning retail stores for over a decade, I learned that most people want to hear the stories behind the products they buy and they are most effective when told by a person. Employees can become the living embodiment of the brand.

3. Personalization – low-fi and hi-fi

The increase in data and technology has meant large brands can offer personalized experiences – according to Shopify, 75% of online shoppers like brands to personalize their offerings and messages. In a study by Salesforce, 51% of consumers expect brands to anticipate their needs and make relevant suggestions.

Natural food and e-grocer, Thrive Market, developed a new member quiz that helps it deliver hyper-personal recommendations leading to increased sales conversions, and increased repeat custom. Chairish, the online marketplace for furniture and home décor, uses customer browsing behavior to send personalised emails with recommendations. But where brands can really win, is by using technology to personalize in a more intimate way.

Receiving digital content by an algorithm will only go so far and there is a risk that the plethora of emails received on a daily basis become white noise. One example, is the comeback of the hand-written note. While heritage brands such as Chanel, Liberty of London and Tiffany & Co. have long sent hand written notes to customers, new DTC brands are realizing the power of this analog experience. Chewy sends hand-written notes to customers and has even sent flowers to bereaved customers. When Laurie Samuel’s Westie died, she received a hand-written note from the brand sending its condolences and refunded her previous month’s cost of pet food.

Agents at Capital One are encouraged to offer personalized interactions – a Capital One customer having trouble accessing his account online due to a malfunctioning keyboard was sent a hand-written note and a new keyboard. The increase in e-commerce and new technologies has changed how brands interact with customers but as more brands double down on delivering mostly digital content, it will become harder to stand out. The win will be combining technology with analog; brands need to look to the past, to win in the future.