Like many reading this, I’m always intrigued by the small business owners I meet across the world, many running generations-old boutiques selling one-of-a-kind treasures.
These shop owners, with their warm welcomes and time-honored craftsmanship, can quickly endear themselves to even the most casual shopper. A storefront with a history or an intriguing story can quickly turn a browser into a loyal customer, as has been my experience time and time again.
Creating this sort of memorable customer experience has always been the key to success for small retailers in the fashion and luxury goods sector.
However, as the worlds of fashion, luxury and media descend upon New York for Fashion Week, these experiences and transactions seem increasingly quaint and inconsequential. Amid all the dazzle, glitz and glamor, one can be forgiven for thinking that high fashion continues to be the realm of global retailers and big-name luxury brands.
Yet remarkably, more and more fashion retailers are starting to embrace being ‘small’ as a strategy for success and growth. Increasingly easy-to-use technology has enabled smaller retailers to speak and deliver to their niche customer sets across all channels with the same voice as they would in a shop in Hong Kong.
So what is driving their success?
Global eCommerce growth is projected to double the retail industry average at least until 2017
1, half of all shoppers discover new products when searching with smartphones, and 82 per cent of smartphone owners look online for product information when shopping; 2, Smartphones already account for over 40 per cent of eCommerce transactions in Japan and South Korea; 3, so it is no wonder that small retailers are realising they need to be as tech-savvy and flexible as their customers. That means engaging and delighting shoppers on mobiles, social media and online channels.
They’re highly personal
Technological advancements and the democratising power of the internet have allowed retailers to scale up without sacrificing intimacy and personal service. As customers no longer think about retailers’ brands in a silo, neither do small retailers.
They analyse insights from website visitor traffic, social media interactions, and newsletter click-through rates to better understand their customers. Any retailer with a Facebook page can now easily discover that their average customer is, for example, female, aged between 16 and 24, and listens to One Direction, and by using this data to precisely tailor their sales and marketing strategy, they can more effectively engage and delight their customers.
They look for ways to cultivate and engage a community
It is much more profitable to sell to loyal customers than to constantly look for new ones. A Bain study showed that just a 5 per cent growth in customer retention could boost profitability by 75 per cent.4
Small retailers are starting to use this insight to build loyal online communities, which do the selling for them. No wonder a brief Google search on the words ‘eCommerce’ and ‘social media’ turns out 101 million results, with articles such as ’12 Social Media Tactics to Drive Traffic to your eCommerce Site’ being the most visited. Another way is through loyalty programs, which 30 per cent of independent retailers are planning to implement in 20165. This is on top of the quarter of independent retailers who already have a loyalty program in place.
They find the right support
Finally, one cannot ‘grow small’ without a reliable network of business partners, whether it’s like-minded companies to cross-sell services and expand the product offering, or other companies to provide operational support in areas where expertise is lacking.6 One example of this is logistics. According to a recent FedEx study, about 70 per cent of consumers surveyed listed shipping-related factors as the most influential in their decision to buy from online retailers in other markets.7 That is why small retailers look to third parties for their expertise and capabilities in potentially complex areas, such as the implementation of a policy that allows customers the option to return items purchased online to a physical store.
#fashion is a game changer
As global product availability is almost a non-issue these days, smart small retailers in the fashion and luxury sector need to constantly rethink their strategies, find ways to stand out, grow, and engage their customers without compromising the essence of their appeal.
- Raj Subramaniam is executive VP, global marketing and communications, with FedEx Services.
References: 1 “Retail Sales Worldwide Will Top $22 Trillion This Year”, eMarketer, 23 December 2014.
2 “Micro-Moments: Your Guide to Wining the Shift to Mobile”, Google, 9 April 2015.
3 “eCommerce Industry Outlook 2016”, Criteo, January 2016.
4 “Effective loyalty programs hinge on engaging consumers beyond sign-up”, Luxury Daily, 13 January 2016.
5 “Evolving Retail Trends to Watch in 2016”, Multichannelmerchant.com, 28 December 2015.
6 “The retail transformation”, Deloitte University Press, 16 June 2015.
7 “Seizing The Cross-Border Opportunity”, a commissioned study conducted by Forrester Consulting on behalf of FedEx, December 2014 (Page 9).