5 Things You May Have Missed This Week
By Georgia Buchanan
1. Is e-Commerce Reverting to the Real World?
It is common theory that in today’s world, everything is going digital. And in the world of retail and fashion the prediction has been the same; e-commerce is now a total must have for brands wanting to stay ahead of the game, and even the most high-end fashion labels are getting ‘connected’ through the likes of Facebook Live and Snapchat. However, a number of those in the physical retail world have been “waiting for the balance to tip”, says Ari Bloom, CEO of fashion tech start up, Avametric, who believes that that time may be now, “with more e-commerce first companies finally realising that physical retail is a crucial part of their brand experience and business.”
This shift in the balance is down to something we’ve been seeing and discussing for some time now; the rise of the experience economy. Whilst a lot of attention has been on physical retail stores needing to change the way their shops work in order to respond to this new consumer desire of choosing to buy experiences over products, e-commerce have also been having to adapt to this need. Cue the digitally born businesses taking the plunge into physical retail.
Whilst e-commerce undoubtedly has its perks, and is on the whole working extremely successfully, for a number of customers, you just cannot beat a physical shopping experience. “Shoppers will always want to touch and feel and experience a product in the flesh before they purchase it,” says Zoe Kelly, planning director at shopper marketing agency, Vivid. And vice versa; for the business owners who have gone from solely digital to dabble in the real world of bricks-and-mortar, there can be something wonderfully rewarding about that different level of human interaction and actually getting to see your customers face to face and know who it is that’s buying your product. Neil Blumenthal, co-founder and co-CEO of Warby Parker eyewear, was one of the first e-commerce brands to go physical, with huge success, and he explained: “There’s something special about interacting with customers first-hand, and we’re thrilled to have an opportunity to create immersive environments filled with books, locally specific design features and, of course, lots of glasses.” These books and design features are little indicators of a store that is more than just somewhere to shop, but somewhere to experience things; a concept that most e-commerce brands foraying into bricks-and-mortar are determined to explore.
Rather than following in the footsteps of traditional retailers, a lot of online retailers are reimagining the bricks-and-mortar space to create new, experiential worlds for their shoppers, drawing inspiration from venues like galleries, museums, clubs or event spaces. For example, Birchbox’s store has a beauty and nail salon for customers and iPads and in-store tech for their staff which allows them to get real-life insights into how their consumers interact with the brand. Traditional retailers are savvy to this new boom of the experience economy as well though, and are seizing the opportunity to compete with the internet upstarts by designing their spaces. For example, an increase in click and collect points in stores such as John Lewis and M&S. Michelle Du-Prat, experience strategy director at retail design and branding agency Household, said of this new experience economy: “It’s about understanding different needs of customers and meeting them in interesting and quirky ways, not just online and offline, but the link between them all. It’s about how you can disrupt that.”
2. Pokémon Go: Helping Retailers Everywhere?
This week has seen the monumental introduction of the new Pokémon Go game. Everywhere you go you are likely to see people stopped randomly in public staring at their phone screens, in the very enthralling process of catching a Bulbasaur, or other imaginary species. And whilst on the surface, this may seem totally irrelevant to the fashion world, the augmented reality game is actually driving footfall to shops everywhere and making people venture into stores they may never have otherwise entered. Many of the locations for players to train their Pokémon or stock up on free game accessories like Pokéballs are in malls and popular shops like Forever 21 and H&M. Whilst some stores aren’t taking too kindly to non-paying customers clogging up their storeroom floor, others like Macy’s and Nordstrom, who have seen massively decreasing sales figures in recent quarters, are just thrilled to be getting more potential buyers through their doors each day.
The game is not only directing users into big well-known stores, however. It is also increasing foot traffic to small businesses, like local restaurants, coffee shops and boutique independent stores. L’inizio Pizza Bar in Long Island City in New York claims its sales have jumped 75% over the weekend by activating a “lure model” feature that attracts virtual Pokémon characters to the restaurant, therefore tempting in nearby players. Other businesses are making the most of the current craze by advertising on Facebook that the monsters have taken up residence in their shops and restaurants.
It’s hard to know whether this Pokémon Go craze is a momentary fad or whether it’s the beginning of a longer term trend toward augmented reality games, but what it does offer retailers is a glimpse at how technology can be implemented to seriously help them attract customers. Forbes game reviewer, Jason Evangelho, says: “Trust me when I say this game is exploding, and it stands to have a daily impact on your business. The best approach you can take is to make that impact positive by embracing the game and making the Pokémon Go experience a memorable one for both you and your potential customers.”
3. Influencer Marketing Introduces Performance-Based Pricing
With new laws coming in to make sure followers are aware when ‘influencers’ are being paid to promote products, the process of brands using bloggers, vloggers and Instagrammers to market their products is becoming that little bit more complex. On the flip side, the matter of compensation in influencer marketing is also a sticky subject. Does it depend on the number of subscribers a YouTuber has? Does it depend on the length of the video? Is there much method behind the process at all? Not necessarily up until now, meaning that there have been many cases of brands ripping off ‘influencers’ and vice versa.
However, agencies are not starting to develop a more nuanced metric system for paying influencers, which is based on engagement. The idea of using influencers with a smaller but more engaged following has been on the rise recently amongst brands and agencies, as it tends to cost them less but result in higher conversion rates. Joe Friel, director at Social Circle, an influencer marketing platform that has developed a cost-per-engagement metric, said: “We measure all sorts of engagement metrics and apply proper value attributions to each type of engagement across different platforms. This means that when we discuss prices with influencers, we can estimate the total level of engagement they will deliver and then combine this with the quoted price to work out a cost-per-engagement for that influencer.” Whilst the model is still in its evolution, Friel explains its success so far being down to the fact that “It makes people more comfortable in investing and working with influence. It’s important we are transparent with clients so they see the due diligence that goes in to.”
The current industry standard cost-per-engagement in the UK and Europe is between 5p and 20p, whilst in the UK it is only around 2p cost per engagement due to there being far more influencers and thus more competitive pricing. Influencer agency Fanbytes also measures engagement by views rather than by the number of subscribers, with their cost-per-engagement rates ranging between 10p and £1.10. “We have to show influencers that it’s the audience that make you successful,” says founder Tim Armoo. “You have to live and die by views, not the number of subscribers.” But! The number of views a post receives still does not necessarily collate to the number of sales, so even if an influencer receives a huge amount of engagement on a sponsored post and therefore receives a hefty sum for posting it, the brand may still not see much of a spike in sales of said product.
With this in mind, we are very excited to be discussing all of these areas of interest and more at our upcoming FashTech Talks: “Age of the Influencer?” on Wednesday 27th July in association with IPR London and Diipa Khosla, India’s largest global fashion & lifestyle blogger. If you are an influencer yourself, or a brand who uses influencer marketing, or if you’re simply just interested to find out more and join the discussion, then you can get your tickets HERE. They’re going fast so make sure to get yours soon! We look forward to seeing you all there.
4. Fashion Retail in The Age of AI
This article originally appeared on www.wwd.com
As the fashion apparel and retail market responds to fundamental shifts in consumer behavior, companies are turning to technology solutions to give them an edge.
From point of sale and inventory control solutions to store traffic analytics and customer relationship management software, technology is helping retailers better manage their business. But most of the technology focuses on the transactional aspect of the shopping experience.
Here, Sam Vasisht, chief marketing officer at artificial intelligence platform provider MindMeld, discusses with WWD the emerging role of AI and how it can transform from transactional into the conversational as well as other trends in the market.
WWD: What are some of the changes you are seeing in the retail market today?
Sam Vasisht: Retail continues to evolve and change rapidly as it has done since the advent of digital and online. Pure-play digital retailers continue to gain prominence and there has even been a move from online to physical retail as they have established their brands. At the same time, department stores such as Macy’s, J.C. Penney, Nordstrom and Sears have all reported declining [first-quarter] sales. Revenue shift to online sales is steadily increasing. The user is becoming “mobile-first” in their online behavior, but this is not reflected in the [user experience] of current mobile shopping transactions.
But this will change with AI technologies and conversational interfaces. In fact, AI will have a tremendous impact on many aspects of retail, both in store and online.
WWD: What role does AI play, and how can it be better used by brands and retailers.
S.V.: Fundamentally, AI transforms how brands and retailers interact with customers and customers with brands. The relationship goes from transactional to conversational. Every interaction — be it via a web site, app or messaging platform — becomes more intimate and personalized. Retailers and brands gain heightened insights into customers and their behaviors, shopping patterns and sentiment. This allows businesses to better manage the customer relationship, personalize their offers and create memorable brand experiences.
Retailers and brands can use AI to create consistent experiences in an omnichannel environment. Because AI-based experiences are conversational, the quality of interactions and their resultant data can be pushed to other web sites, smartphone apps, messaging services and even in-store kiosks.
AI-based solutions also increase the reach by brands and retailers. Businesses can now reach consumers where they are already spending time, such as inside messaging services like Facebook Messenger, Skype and others.
AI will be increasingly important for supply chain management and inventory control. Moreover, it will provide for compelling in-store experiences, like smart fitting rooms and great out-of-store virtual reality experiences down the road.
The other way to answer your question is that brands and retailers should be aware of their options and understand that investing in AI is akin to investing in any other mission-critical infrastructure such as POS systems, supply chain management, e-commerce platforms and so on.
WWD: How have mobile apps impacted the market?
S.V.: There are certainly exceptions, but for many retailers, mobile apps have not proved as much of a boon to business as anticipated. The rate at which consumers download new apps has slowed. A 2015 study saw that although consumers spend 85 percent of their time on a smartphone inside apps, just five apps overall saw heavy use.
So, how can businesses boost their e-commerce efforts if mobile is growing faster than desktop, yet no one wants to download a new app? It was in response to that question that 2016’s messaging bot craze really took off. Bots are already much better than their earliest iterations. It will be exciting to review the hard numbers a year or so down the road to see just how much bots have aided sales and cut costs.
WWD: How can AI bots reduce what you describe as a “digital overload” with consumers? Especially in the online shopping environment?
S.V.: AI bots replicate the most natural way humans interact and process information — through naturally spoken dialog. This mitigates sensory overload compared to, say, looking at a screen with many options and menus. By sequentially providing information and soliciting input, AI-based conversational interfaces give users a more streamlined experience. In the specific case of retail, people go through an evaluation and decision-making process, generally by starting with broad requirements and then honing in. The process is not linear, though. In other words, users may make a choice, then go back and change it as something downstream in the selection process changes. Dialog-based interfaces really map well to human behavior in these types of interactions. The big benefit for retailers is that, given a more efficient and natural experience, users will stay engaged longer and be inclined to shop more.
5. #InstagramTakeovers: Brooklyn Fashion + Design Accelerator
This week saw the sixth contribution to our first series of Instagram Takeovers, and it came from the fantastically creative Brooklyn Fashion + Design Accelerator. Following on from the huge success and popularity of Debera Johnson at our London Summit in April, we had high hopes for Wednesday’s takeover, and it didn’t disappoint.
Kicking off the morning with a quick-time video tour of the studio, we saw a sneak peak into a morning at BFDA work space, which looked so inspiring and so much fun. Each subsequent post featured an insight into varying aspects of a working day in the studio, from linkers in their pLab to an example of one of their Venture Flow businesses. Closing the show on their day on the @fashtechldn account, BFDA left us with a farewell team snap, and we would just like to say a huge thank you to them all for a brilliant takeover! If you didn’t catch their posts at the time, then be sure to go to our page now and check them out!
Next week we will be hosting the final takeover in this series, with the brilliant Studio XO on Friday 22nd. Not only will they be taking over our Instagram page, but also our Snapchat account! So make sure to follow us/ add us on both in order to see what the XO team have in store for us!