Increasingly the customer experience is what’s differentiating retail winners and losers—online and off. Providing shoppers with a useful service or catering to their desire to be unique are two proven methods that can trump price.
At the American Apparel and Footwear Association Executive Summit last week, executives from Birchbox, New Balance and Lululemon discussed what service means for their target consumer, and how their companies have evolved their models to adapt to changing demands.
Contrary to popular belief, you don’t have to be beauty obsessed to be a Birchbox customer. In fact, the subscription box service, which supplies consumers with trial-size tubes of cosmetics and skin care, wasn’t designed with makeup mavens in mind. It’s actually for the girl (or guy) who wants a little something to help them look their best but isn’t inclined to troll the beauty counters.
“Our business is about utility and relevance for our customer,” Eric Neher, vice president of merchandising at Birchbox. “Surprise and fun is important but [utility and relevance] are how we established a long-term relationship.”
By providing a curated selection and not just a grab bag of random goodies, the company provides a service people are willing to continue paying for over time.
Like many subscription box companies that have sprung up since Birchbox’s launch in 2010, the beauty purveyor collects as many data points about its customers as it can from the moment she presses subscribe. This data is then used to curate the boxes she receives.
“We’re sending boxes to 1 million people, and they’re personalized by cohort. And there are rules like not replicating products or sending the same brand over and over again,” Neher explained. “It’s a complex problem. We use all of the data that’s available to us and distill it to something that’s tangible and customer centric.”
New Balance is using bespoke product to create a differentiated experience. Currently customers can go online and create customized kicks from four of the company’s top sellers, which are delivered to their doors in two weeks. The quick turnaround is thanks to the five manufacturing facilities New Balance operates in the U.S.
“Customization is a perceived value,” said Ashley Renzi, global expansion manager at NB1, New Balance Athletics, adding that the company has to be careful not to undermine that value by delivering the goods too quickly. “That time is a competitive advantage but it’s sensitive because of consumer perception.”
Stores help drive the NB1 business by creating awareness. “There’s a large majority of customers who don’t know about customization, so retail is about discovery for us,” she said, adding that she can see a time when stores will further facilitate the process, which can take 20 to 30 minutes. “We’ll start to see a curated experience like scheduling and booking to make sure people are getting the support they need to work with someone who understands the material and offerings.”
Birchbox New York City store also helps the brand’s online business, by providing even more information about the “beauty majority” that make up its customer base. “The value of being able to interact with your customer in person is invaluable,” he said.
Conversely, the company’s e-commerce know-how and focus on practicality also proved valuable when it came to setting up its physical store. “In most beauty retailers, everything is organized by brand,” Neher explained. “Our store is merchandised like an online store so all products of the same type are together. So, for our customer, who’s not tuned into the beauty feed, she comes in to solve a problem and we’ve merchandised it to help solve it.”
Contrary to the cohesiveness between the Birchbox e-commerce site and in-store platforms, Lululemon embraces the differences and relative strengths of each.
In stores, the Canadian-based company practices a very hands-off approach, which allows the store managers to create the environment that will best serve their local customer. Celeste Burgoyne, Lululemon Athletica’s executive vice president for the Americas, said it works so well that Lululemon often picks up ideas from individual stores, which it will then roll out to additional doors.
“Our goal is 400 different unique experiences with one feeling,” she said. “You have to empower and trust your people to create the experience and recognize a bunch of people in Vancouver don’t know what’s relevant in New York City.”
The experience of the stores, which are known for having events like in-store exercise classes, can’t be replicated online, and Burgoyne is ok with that. “What I love about omnichannel is that it’s not about having the same experience. We leverage them for what they’re really good at. Online is about inspiration, storytelling, bringing our ambassadors to life and product education,” she said, adding it’s also the place where shoppers can always find their size in their favorite style, which is impossible to promise in store.
She said online can even be a tool to increase sales in stores. As an example, Burgoyne points to the feature that allows shoppers to locate the products they want in store, where the chance of converting them is greater.
By understanding what their customers really value, all three companies are able to create true cross platform experiences that speak to consumers’ needs.