In today’s competitive retail climate, especially with online shopping, how can fashion and footwear brands improve margins, reduce discounting, cut down on wasteful overstocks and mitigate costly returns? How can they offer differentiation while also remaining true to their brand DNA? One effective strategy is through personalization and customization.
“Custom has been the next big thing for the last 30 years, but I’d say it’s really been the last five that things have lined up to make it viable profitable and scalable,” said Jud Barr, founder and principal of JTB Custom, a customization software and services company that has created programs for Vera Bradley bags, Chaco footwear, Volcom shirts and many other clients.
To offset any intimidation, it’s good to know that customization exists in stages, which makes it attractive to companies that want to start slowly.
To use Vera Bradley as an example, the first stage would be personalization (monogramming an existing bag). Next would be decoration (enhancing one step further with, say, smiley faces or unicorn patches). Next is aesthetic customization, a more sophisticated experience where JTB set up a production line in Fort Wayne, Ind. to build eight different styles of bags from the ground up, for which a customer chooses the fabrics, trims, patterns, etc. Finally, there’s functional customization (changing operative attributes to meet a specific need, like adding a wet/dry pouch for towels or a side pocket for a water bottle).
There are also distinctions between what type of product even gets customized. Build-to-stock programs add value to existing items in a brand’s warehouse, while build-to-order or on-demand is just that: nothing gets created until the customer orders it.
“It’s very hard to get to a fully on-demand environment, although that is where we’re trying to help our customers get to,” he said. It’s less about a huge technology investment, he said, and more about rejiggering the supply chain, and shifting culturally how one thinks about product, demand and supply. In some cases, JTB Custom will set up a domestic production facility for clients that don’t want to make that investment.
Customization programs also stop discounting and reduce returns. “The customer feels invested in the process and the end result, and will pay a premium for that,” said Barr, adding that while many categories in the industry see return rates up to 20 percent, returns from custom products are typically less than 3 percent, and actually closer to 1.5 percent.
The wild card, of course, is whether consumers will wait for their customized products, but Barr said it’s not a problem—if the wait is reasonable. “There is a price/value sort of threshold on that. Will they wait for a $10 T-shirt? No. But if that T-shirt becomes a $40 shirt with a great custom graphic on it, that’s okay. In fact, if you deliver something too quickly, the customer doesn’t feel it’s special and truly made for them!”
Barr advises companies to start small but with commitment: take a top-selling style, add personalization to it and watch it become 15 to 20 percent of that style’s sales.
Click the image to view the Fireside Chat and learn how JTB Custom can help your company develop a customization program of any size.