How the COVID era has impacted retail: "It's like playing Jumanji"
Whether it was re-thinking an entire growth strategy or moving a local community to the digital realm, all our panelists agreed that the past ten months have required long-term planning while also responding swiftly to new circumstances. For example, Jeff at Billy Reid shared that even though limiting discounts was part of their strategy at the beginning of 2020, COVID made that approach nearly impossible given the rapid change in buyer behavior. At the same time, COVID also served as motivation for many new business practices: working from home, spending less of the budget on travel, and being more diligent about the risks that can come with inventory buys and store leases.
For Jeff, "Covid has made us do things that we've talked about but we wouldn't have done without a catalyst." Their goal for 2021 is to be more data-driven in their decision making and more strategic about where they place their new stores. "We want to make sure you're getting your traffic and that the economics of the store makes sense."
Covid has made us do things that we've talked about but we wouldn't have done without a catalyst.
Lindsay from Hatch felt similarly. "We're still very much believing in our store strategy and continuing to make cautious but the right investments there because we do think there will be another side of this."
For Jason from Gorjana, a big focus of the COVID era is on accommodating for lower transaction volume overall, which means focusing on how to maintain gross margins and a full price point; Gorjana has offered zero promotions since the pandemic hit. The importance of margin was on everyone's minds.
According to Lindsay, "getting the margin as much as we can and maintaining that integrity through the assortment is really important."
The role of physical retail in the new world: "We've gotta pick a number."
As we all know, what everyone thought would be two weeks of store closures became a much longer, unpredictable stretch of complicated operating hours and having to board-up stores on the fly. Nevertheless, Jason's take is that while retail may be one of the most challenging parts of the business, "it's also going to be the reason why we survive." Even with looting, lawsuits, forest fires, and COVID protocols, stores still prove to be valuable and, overall, a net positive resource during the pandemic for Gorjana.
"Our lifetime value of our customer is double when they omnichannel cross-convert - 50% of people who walk into our stores and convert are new."
Similarly, all the panelists referenced a switch to digital communication with their store consumers through email and text as a way to compensate for the type of clienteling and high-touch attention that used to take place in-store.
Our lifetime value of our customer is double when they omnichannel cross-convert.
In fact, clienteling used to make up nearly half of Billy Reid's business. "Repeat customers, very loyal customers, folks who would come in and have a glass of whiskey and hang out in the store and spend a couple thousand dollars... that's our retail business." But the brand is learning how to maintain relationships through their local stores and through their marketing team.
For Hatch's audience of expecting mothers, between health concerns and the need for nesting, going to a store is even less likely than it is for the average consumer. To compensate, the brand expanded its physical presence by delivering the merchandise right to the customer at home or by setting up trunk shows in smaller stores throughout the tristate area (Normally, Hatch has two permanent stores in NYC and LA).
How to Run Holiday Promotions 2020
When to start holiday promotions was a point of contention among our panelists. On one hand, as Lindsay pointed out, the sooner we get to holiday, the sooner it feels like there's finally an end to this crazy year. Jason, however, is less convinced that the holiday season ought to start early. He believes if COVID is making us all "live more in the now," then people are going to get into the holiday spirit at their own pace, and we'll likely see more consistent spending compared to spikes retailers may be expecting (or hoping for). If that's the case, convenience ought to play a critical part in every brand's holiday strategy, where services like same-day shipping and curbside pickup can help retailers still close business, even without a big promotional push. For Billy Reid, even with Black Friday approaching, the focus is much more on storytelling and relying on marketing initiatives, interesting collaborations, and PR rather than on discounting to move the needle.
If you'd like to hear everything that the panelists had to say, you can catch the full recording here.