CEO & Principal Consultant, Clientricity, LLC
  • Posted on: 09/12/2017

    Nordstrom tries a no-merchandise store

    While the concept of a "no merchandise" store seems economically unsustainable, it may make sense when considering the real "problem" Nordstrom is attempting to solve. There are a great many people that prefer a curated, high-service consultative experience when purchasing their apparel and health and beauty products. For many, buying online and shipping to their home doesn't address the next step of the process. However, for categories such as tailored clothing, getting expert alterations and assistance with coordinating an outfit is exactly what they want. The local "third-space" aspect may well increase the number of 1:1 relationships between customers and associates and if those associates are doing their clienteling work, it should increase frequency, conversion and average transaction size. This is not dissimilar to the small high-service custom apparel shops that exist today. These retailers don't have a stitch of ready-to-wear clothing but often see +$1000 per square foot revenue and an intensely loyal clientele. The future of retail depends on new ideas and formats designed from a customer point of view. Kudos to Nordstrom for exploring this new initiative.
  • Posted on: 06/23/2017

    Will Amazon Prime Wardrobe change how Americans shop for clothes?

    The practice of an "approval sale" has been around in luxury retail for decades, particularly for customers that didn't live in the area. Brands that focus on high-touch clienteling and deep relationship building have the ability to curate based on specific customer lifestyle, sizes and other articulated needs. These relationship are based on trust and generally result in huge conversion rates on products shipped for approval. The new box concepts are based on this same formula -- expert advice from a trusted source and the convenience of product being shipped to your home. What's different about the Amazon Prime Wardrobe concept is that the selection is self-curated, albeit with a little help from Amazon's AI recommendation platform. With free shipping and free returns, presumably a Prime Member could approximate this service on Amazon today. Payment simplification seems to be what's really happening here, but the marketing message of Prime Wardrobe seems far more newsworthy and disruptive. The biggest challenge for any online apparel retailer is returns. At 30-50% return rates, the costs of providing free shipping & returns erodes margin and makes it very difficult for online merchants to achieve profitability. I am not sure that Prime Wardrobe will ultimately reduce returns (certainly not without size-fit recommendation technology), it may actually increase them. However, it does potentially telegraph Amazon's next big move. Retail has been on the personalization path for years, collecting data and eventually learning how to drive customer-focused value with all that data. The logical extension of personalization is personalized product, i.e. "mass-customized" apparel. "Custom" ensures that you get what you want and is guaranteed to fit! Customized concepts like Proper Cloth, Indochino and direct sellers are seeing significant growth and relatively nominal returns. I recently read a NY Times article that Amazon has been filing patents and buying IP in and around the custom apparel category over the last couple of years. New agile manufacturing techniques and robotic production is making this all possible. If Amazon can become the destination of choice for highly curated apparel purchasing, how long before Amazon just makes you what you want? It allows them to solve the inventory and return problem all together. For those customers that want to touch/feel sample product, Amazon could provide showrooms ... they have that figured out too. This could easily be supported by their foray into bricks and mortar retailing last week. While I am not sure that Prime Wardrobe in and of itself will disrupt the apparel industry, keep your eye on Amazon. What happens next could be big!
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