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IRUK Top500 The Customer Report: 2018

IRUK Top500 The Customer Report: 2018

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GUEST COMMENT What can traditional retailers learn from digitally native vertical brands?

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Digitally native brands are making customers feel more valued by offering engaging services
Digitally native brands are making customers feel more valued by offering engaging services

There’s no shortage today of scaremongering headlines detailing the ‘decline of the high street’. While such reports paint a gloomy picture of the retail industry, the truth is that this industry is very much seeing growth in other areas.

 

Yes, Brits’ footfall to the high street may be decreasing but they’re shopping in different ways, exemplified by recent research revealing the UK spent a massive £2bn on subscriptions in the past year.

To survive, thrive, and lock down all-important brand-loyal customers, traditional retailers are looking at ways in which they can meet consumers ever-evolving shopping preferences and high expectations for convenience. It’s not ground breaking news that we’re shopping more online, so it’s only natural that Marks & Spencer (like many other retailers) recently announced their plans to close 100 of their stores, and that it was now placing a bigger focus on online sales.

However, in the current competitive retail climate, true online brand loyalty can be difficult – but not impossible - to achieve and even more so for a heritage retailer like M&S. So, what can companies like this learn from the growing popularity of subscription model retailers, and other digitally native vertical brands (DNVB)?

Experience is everything

Online customers want exceptional and compelling shopping experiences just as much as bricks and mortar shoppers.

Many digitally native vertical brands put the customer at the heart of everything they do. These highly specialised vertical retailers arose as a reaction to the success of generalist retail giants such as Amazon and Walmart. These companies differentiate through offering ‘pure-play’ digital experiences which are design-led and customer-centric. As customers today are increasingly buying experiences not products, when visiting a store, they have high expectations; staff must provide them with thoughtful, personalised experiences that represent the brand’s values not just pre purchase, but post-purchase too.

 

With the right technology it’s not impossible to recreate these post-purchase experiences online, and DNVBs are grabbing the opportunity to do just that. Free from the shackles of physical stores, these young, energetic companies pioneered agile, digital-first experiences that have reshaped customer expectations of what retail can be. Whether it’s direct-to-consumer businesses like Warby Parker, Dollar Shave Club, or Birchbox, these companies are unified by an understanding that owning the customer experience is everything.

Digitally native brands are making customers feel more valued by offering services such as: personalised order delivery updates to the channel of their choice, seamless returns, warranties, repairs with a customised return platform, and even a digital concierge experience for the lifetime of the product. In this way, DNVB are treating online customers as more than just another ‘order number’ from the moment they engage with the brand, to the moment their order arrives, and beyond.


Online and offline worlds are blurring

In recent years something very interesting has started to happen. Many digitally native businesses are beginning to get a foothold in the real world. The lines between physical and online business models are blurring, and a new type of retailer is starting to emerge, one that’s solely focused on delivering exceptional customer experiences – regardless of whether that’s online or off.

Birchbox is a case in point. Once a pure-play DNVB providing personalised beauty kits as a subscription service via design-led digital assets - it then got physical. From November 2017 to June 2018, UK shoppers could visit it’s Carnaby Street London store to create personalised beauty products box. But it wasn’t a traditional store - in effect, Birchbox replicated its online experience in a physical space – the store was an extension of the online experience, not an alternative.

Birchbox isn’t alone. DNVB leaders such as Away and Bonobos have all built physical stores with a difference: spaces with zero inventory but exceptional experiences. In some of these stores, customers are treated to a beautiful brand experience but leave empty handed: any purchase they make is initiated online using an in-store tablet and then delivered later.

This approach was recently adopted by Zara which opened a click-and-collect pop-up store in Westfield Stratford while its flagship store was being extended and refurbished. The success of blending online and in-store experiences led Zara to introduce a permanent online section in its newly revamped flagship store.

This shows clearly that online and offline retail worlds are merging. What binds them is the need for seamless experiences that customers crave.


Experience over product

This trend is set to accelerate as the retail revolution unfolds. Already, there’s a significant development whereby consumers no longer want to own goods – they’re happy to borrow them instead. Companies like Uber and Zipcar are good examples, offering a practical alternative to car ownership in cities. This model is set to be extended to almost any goods you can imagine: why spend money on clothes that go out of fashion? Why buy an expensive drill that you only use once a year? All these goods can be more easily, and cost effectively, borrowed or experienced.

In this new environment, successful brands will be those that understand the interplay between the physical and digital worlds, and its significance in creating compelling brand experiences – including after a payment has been made.


Customer channel preferences

Customers interact with retailers via different platforms at different times to suit their needs, online via a laptop at work, a mobile app whilst on the go, voice assistants at home. To improve the customer experience, retailers and brands need to offer a variety of communication channels for customers, so they can interact via their preferred channel.

Traditional retailers like M&S can innovate by increasing the touchpoint opportunities for customers and making them consistent and seamless throughout the customer journey. Take online returns as a case in point – an area where the physical and digital worlds meet. Research shows adoption of voice controlled devices is set to triple in 2018, so it’s evident that this represents an important new channel for personalised customer communications. A customer wishing to return a coat might initiate the return through an automated voice-enabled Action on Google Home. With the right technology, the retailer could then send a WhatsApp message to confirm the return process is underway and provide a list of near-by stores at which the shopper may return their coat. Luxury brands could take this a step further and offer to send a courier to pick up the item, or a car to take the shopper to the store. It’s all about continuing the experience, fulfilling the brand promise and creating new ways to engage the customer.


Today, brands and retailers need to think in terms of experience – not just products. Digital properties are experience touchpoints in the same way physical stores are. For the customer both are important only insofar as they deliver a seamless and convenient experience.

 



Anthony Gavin, regional director, EMEA at Narvar

Image credit: Fotolia

 

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