Ideal partnership ‘a dream’

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Today’s retail “dream team” isn’t just about particular employees or roles. Strategic partnerships also can provide fresh insight and ideas.

“We live in extraordinary times, and extraordinary times provide extraordinary opportunities,” said Martin Barthel, global head of retail and ecommerce strategy for Facebook.

Barthel spoke during “Building a Retail Super Team: How Collaboration can Underpin Success in Today’s Market,” a Main Stage presentation at NRF 2018: Retail’s Big Show. He was joined by Jennifer Hyman, CEO and co-founder of Rent the Runway; the two shared a conversation with Rod Sides, vice chairman and U.S. leader of the retail and distribution practice at Deloitte.

The trio explored profound changes from recent years, and how the use of data in the right hands helps alter the picture for everyone involved.

Sides began with a few statistics from Deloitte research, including the fact that consumers now check their phones an average of 46 times a day.

“Imagine if you could have your customers check your website 46 times a day,” he said. “It really is interesting when we think about how many times we have an interaction with that device.”

In hopes of meeting consumers where they are, Facebook has been working on ways to use social media to impact not only the online ecommerce experience, but also the offline store experience. Using machine learning, the retailer’s data about its own customers is combined with the knowledge Facebook has about people in general, Barthel said. The result is a world in which consumers don’t have to go searching for products, but the products essentially seek out consumers with the highest probability of buying.

Customers see location-based ads on Facebook, which also can be layered with a location-specific call to action, such as finding their way to the store, calling the store or sending a message to the store. The process allows retailers to track the entire customer journey from online to offline. Facebook also works with retailers to turn still photography into video images, since appetite for video has greatly increased.

Many retailers don’t yet understand how digital can be used to drive in-store business, Barthel said. But it’s only because the solutions are so new; Facebook launched its offline solutions less than a year ago.

“We are at the beginning of the learning curve together,” he said. “Retailers need to figure out how to use digital to drive their in-store business, and Facebook wants to partner with you to accelerate this journey.”
Hyman, meanwhile, spoke of a different sort of partnership.

She told the story of using data to foster relationships with designers. In the early days, she said, many thought there was no way designers would want to rent their pieces at the same time they were on the retail store floor. “They thought that would destroy their businesses,” she said. But Rent the Runway was able to prove that rental removes the friction around trial and creates fun. In 2012, the company worked with 75 brands; that number is now over 550.

Rent the Runway started with the idea that customers would rent designer items for special occasions, perhaps a few times a year. Increasingly, however, it’s being used for work or weekend activities, dates or nights out. The company recently introduced an updated version of its subscription program, where consumers can have access to four items of clothing per month for $89. The more expensive subscription plan, with access to high-end designers, remains.

“There was an enormous pressure on our business to greatly multiply the amount of inventory that we had,” she said. “Not just in terms of quantity of inventory, but in terms of all categories of clothing. We need to be able to serve you for not only the black-tie event that you’re going to, as well as dress you for your office environment.”

Being able to amass the right inventory would require new ways of partnering with designers, she said. The key was in the sharing of data: “We had to educate them on what product would work for us, as opposed to all of the other retailers that they worked with.” Consumers rent items that fundamentally are different than the staples that they buy.

But Rent the Runway can share with designers how their items are being worn, to what event and how the items last. “If you’re a designer and you’re working with a retailer, in the past, all that retailer could really tell you is what your sell-through was,” she said. “They couldn’t actually tell you if the customer wore the shirt, how often, whether it stood up after three dry cleans or 30 dry cleans. The data we have now, because we’re obviously renting clothing over time, is so important to manufacturing cycles of designers. We’re able to identify, you know, the reason your sell-through is high, but your loyalty rate might be low is because the quality of your garment isn’t right in these places.” From there, adjustments can be made.

What’s interesting, she said, is that what started out as a new business opportunity for designers — renting their creations — has become a way of expanding their original businesses. “They’re able to identify some of the problems and challenges in traditional retail,” she said, “and fix them through the data that we’re giving them.”

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