Apparel retail is changing at a dizzying pace. Just when we get used to how to use a new channel — online retail, mobile, social — it shifts again. And again. Long gone are the days of the in-store vs. online dichotomy. For consumers, the line between online and offline shopping experiences has become indistinct. For example, a consumer may begin browsing on a mobile device, read reviews on social media, continue on a laptop or other device, and then ultimately complete the purchase in a retail store. Or not, as retailers can see from virtual parking lots of abandoned online shopping carts.
For a company like VF, with 30 powerful apparel and footwear brands, including The North Face®, Vans®, Timberland®, Wrangler®, Lee® and Nautica®, there's a considerable amount of insight to glean in these fast-changing direct-to-consumer channels — insights that can drive profits. Why did that shopper abandon the cart? Was it a page-load time that took too long, or a review they went to seek out? What else might have that shopper purchased, and at what price point? What is the optimal level of inventory?
We all want to know these things. Here's the secret to understanding and leveraging these insights: Build a digital ecosystem that captures useful data to refine your performance and strengthens your connections to consumers in every channel.
What is a digital ecosystem and why do you need one?
A digital ecosystem is the range of direct-to-consumer channels functioning together to build connections and relationships with consumers. The idea is that brands create value by driving consumers to engage with more than one touch point — be it mobile, social, or brick and mortar —within one, interconnected ecosystem.
At VF, we strive to keep consumer interactions in our ecosystem, since it is there that we are best able to tell our story, create demand and, most importantly, convert traffic into actual sales. Having a single ecosystem also provides the data that enables us to optimize planning and allocation, merchandising, assortment and inventory planning, replenishment, and retail locations.
Unfortunately, a digital ecosystem doesn't just develop organically. It requires rethinking many aspects of your business, and, inevitably, involves some investment. Here are a few tips on how to get started, or at least get moving in the right direction.
Focus on the shopper, not the organizational chart
The whole point is to be able to engage with consumers and understand their behavior across all channels. To achieve that level of engagement and understanding, your channels need to work together toward one set of goals. Assumably, that goal is getting to the sale, either online or in a brick-and-mortar location. A major challenge to this is that most companies still function in silos, which are the enemy of digital ecosystems. While it's hard to break out of a pre-existing organizational structure, it's a necessary part of building one ecosystem. Put simply, if your e-commerce team is not interacting with your team supporting brick and mortar, it's not a model for success.
At VF, all of our direct-to-consumer channels constitute one team, all working to drive traffic into stores. This team includes representation from our supply chain, operations, IT, strategy, shopper insights, retail analytics, human resources, and our digital lab, which drives commerce through our web platform. It only succeeds when they all work in collaboration. When we analyze the data across our ecosystem, we are able to follow shoppers and see how they behave across all of our channels.
A single platform
Mono-brand companies don't have the challenge of multiple platforms, but at VF, we have many brands. A giant leap forward for us has been the move to one platform to support our e-commerce business. We launched Vans on our new platform a year ago, as well as Timberland, The North Face, JanSport and SmartWool. We have plans to bring more of our brands onto this same, single platform in 2016.
The beauty of having one platform is that when we make changes to upgrade our shopping experience, such as improving our checkout process, or adding an outfitting capability that sells a head-to-toe look, we only have to make changes once. Before, if we wanted to implement a new capability, we had to do it nearly from scratch across each brand. The platform enables us to leverage and scale quickly to benefit multiple brands. This doesn't mean that the capability will look the same for each brand, since it is still created to fit their brand DNA and desired customer experience.
Let your data tell the story
Companies are rarely lacking in data, but what many are lacking is the coherent story about what the data is showing them. Having data from all customer interactions in one system enables us to quickly identify patterns to not only diagnose problems, but also to spot opportunities. Why are consumers all leaving on this page? Why is shopping cart abandonment higher on one brand than another? Can we take clues from the products consumers are viewing to inform merchandising? If an item is a top seller on e-commerce, there may be an opportunity to merchandise around that item in the store.
Moreover, having the data in one system frees up time for analysts to pursue predictive modeling. For example, predictive modeling can inform planning decisions such as how products will perform in different areas of the country. As it turns out, people in New Hampshire like boots. This is perhaps not surprising, but we can model, for example, which colors, sizes and price points are most likely to sell.
The customer knows best
You can deepen relationships with consumers by understanding the assortment of tools they want and need in their shopping experience. In today's environment, consumers rely on each other for information more than ever. If your ecosystem doesn't incorporate ratings and reviews, you're missing out on a key opportunity. Consumers often are highly informed about the products they are interested in. In fact, a large majority of them believe they know more about the products than the store's sales associates. But there are two questions you should be asking about ratings and reviews: First, how can we keep our consumer's voices in our system? Second, how can we use that information to enhance the store?
It's essential to make sure consumers opt in to the level of engagement they want with your brand. Brands need to get offers just right, whether it's something that caters to a consumer's past purchase behaviors or something they might need but haven't purchased for a while. It's about providing transparency in how you are using the data and consumer choice in setting preferences for marketing offers.
Ready, set, thrive
Ultimately, the consumer has an abundance of choice in where they shop. More and more consumers are opting for brands that have recognized the importance of providing robust channels, including a digital ecosystem that connects seamlessly across all channels. Brands with effective digital ecosystems have stronger consumer relationships, more valuable data and greater opportunities to grow their revenues.
Brendan Sullivan is vice president,direct-to-consumer, VF Corporation.