It’s not easy to succeed in retail these days, but if they’re smart about it, smaller retailers can buck the trend.
Retailers in Australia haven’t exactly had it easy in recent years, with fashion stores in particular impacted by cautious consumer spending and strong competition, including from global and online brands. Several supposedly successful fashion businesses including Marcs, David Lawrence, Maggie T and Oroton have gone into administration, and global brands have come and gone too, including Topshop and Gap.
But despite some failing, others are thriving, and a few global brands are still making their first foray into the market, including UK department store Debenhams which recently opened a fashion boutique in Melbourne. With some big brands going under, it’s easy for clothing industry startups to lose heart, but all is not lost – there are many ways to be a strong competitor.
Here are four tips on how to become a successful fashion business in the current climate:
1. Know your customers
Knowing the customer is crucial for running a successful fashion business, argues Steve de Mamiel, director of web hosting business Hostopia and author of The Mongrel Method; Sales and Marketing for the new Breed of Buyer. It’s about understanding customers’ thought processes and what is attractive to them about your retail business, including fashions and customer service.
Retailers with an online presence can discern plenty of information about their customer’s preferences in terms of styles, sizes and fashion trends. But those with a bricks and mortar outlet can also use location-based technology such as beacons and Google’s Physical Web to get to know their customers.
“It’s a $20 piece of tech that gives retailers the same customer insights that online retailers have,” says de Mamiel. “In my view, it’s the understanding of customers and inventory that is making online retailers successful.”
Social listening is also important in getting to know your customers, says de Mamiel. That is, listening on social media to find out what your potential customers are talking about and what they’re buying.
“In the old days you’d run a survey, but if you’re actually listening to what’s going on online, it will inform inventory orders for next season.”
2. Create experiences
Consumers have high expectations, and millennials desire an experience – from everything, and above all else. Put simply, a big part of the recipe for retail success is using their knowledge about their customers to ‘wow’ them with a unique, personalised and seamless experience both online and instore.
This is where a bricks-and-mortar presence can be used to your advantage. Customers still enjoy face-to-face interaction with a salesperson and touching and trying on clothing. Retailers need to make that experience within the store compelling enough for the customer to not only come back, but to tell everyone else about it.
When it comes to sales, one of the best influencers is your last customer’s review, according to de Mamiel, which people may even look at in store before buying. But at the moment, he says, there’s lack of understanding about the power of reviews and the need for great customer service, which is “killing” bricks and mortar retailers.
“You walk in there and one, they don’t know you, and two, they don’t care; they’re not having a conversation with you.”
In contrast, he says, other industries fully understand the power of reviews, and work towards making customers happy to get a great appraisal and achieve a profitable fashion business.
He points to a 3.5-star converted 1960s apartment block in Los Angeles in the US, the Magic Castle Hotel, that is consistently one of the top-rated hotels on TripAdvisor, despite not being one of the big names or fancy hotels.
It’s all due to the power of positive customer reviews, which arise from simple, special moments. Successful fashion retailers, such as David Jones, used to be very good at creating a great experience for customers, says de Mamiel. They used to have a pianist in a tailcoat playing at a grand piano, for example.
“It was an ‘event’, and if retailers put the ‘event’ back into the shopping experience they’d get customers back,” he says.
If you don’t have a big budget, don’t worry. It doesn’t have to be fancy; it can be very simple things, or even quirky if you want to really stand out.
“For a lot of smaller retailers their ‘wow’ is simply acknowledging customers,” says de Mamiel.
“A lot of retailers have given up on it, or they’ve forgotten, what makes it special.”
“If retailers want the love from customers, they need to start showing the love first.”
An Accenture Interactive report in the US and UK found 56% of consumers were more likely to shop at a retailer that recognises them by name, and 58% were more likely to make a purchase when a retailer recommended options for them based on their preferences.
Small retailers may have the advantage when it comes to creating unique experiences as they often have more control and can interact with individual customers, therefore boosting their chances of running a successful fashion business.
3. Go digital
Part of creating a great experience for customers is having seamless engagement across both online and instore mediums. Making the digital transition is important, and expected. This includes having an online presence, integrating ecommerce into the business and using technologies within your reach.
While small retailers should be on social media, de Mamiel explains that it’s becoming very difficult to have a strong presence. If you want to get traction through this medium, you need to start by getting to know your customers and making them feel “special” first, and then they will pay attention online.
“A lot of retailers have the order back to front,” he says.
“There’s no point posting something every day, putting a photo up on Instagram, and hoping somebody looks at it.
“If you do that you will just get buried, and it becomes a demoralising exercise for the retailer.”
Social media posts have value if you are communicating to a customer you know and understand, he adds. Once retailers get to know their customers they can also ask them to interact on social media, such as making a comment on Instagram or posting a review or photo.
4. Make it easy for customers
Retailers need to find their points of friction and try to reduce or remove them, says de Mamiel. Instore points of friction might be about whether stock is available, where customers can park or how they can pay. Examples of online friction include order status, when will the item be available and how quickly the transaction can be completed.
Friction points are another factor many retailers have forgotten, with customers expected to just put up with the process. Successful fashion businesses, however, are taking action to make the process as simple as possible, according to de Mamiel.
“Amazon and Uber put a huge amount into reducing customer friction. Amazon is now doing it with their grocery store where this no checkout. It’s put it in the bag and leave. – no checkout lines!”
What’s your best tip for succeeding in the current retail climate? Share your experiences with us!