Trends & Tides

We, the First Insight team, are very excited to announce merchandising expert Gwen Manto has joined the company as the Chief Customer Officer.  Gwen brings a broad retail background and over 35 years of industry experience to the role, which includes responsibility for all customer-facing aspects of First Insight, including business development, sales and marketing.

Gwen has held leadership roles across various retail formats, including department stores, mid-tier, specialty and off-price stores. Most recently, she served as the Executive Vice President & Chief Merchandising Officer of Dick’s Sporting Goods where she was responsible for all areas of merchandising, planning and allocation, product development and sourcing.  Prior to Dick’s Sporting Goods, Gwen was the Executive Vice President of Softlines for Sears, Roebuck & Company where she led the apparel and soft home categories to over $6.5 billion in revenue.

In 1999, Gwen joined the Stein Mart team as Chief Merchandising Officer and subsequently became Vice Chairman.  She was responsible for merchandising and marketing for this 270-store chain. Before joining Stein Mart, Gwen was the President of the Kid’s Foot Locker.  Gwen has also held senior roles at Kids R Us, Babies R Us, Rich’s and Macy’s.

“Gwen is an extremely talented merchant and business executive that has a keen understanding of the customer’s perspective and the value this can provide retailers,” said Greg Petro, Chief Executive Officer and Founder of First Insight. “Throughout her career, she has been involved in vetting and selecting retail technology solutions, so it is a great vote of confidence that she has chosen to join our team at First Insight.”

“First Insight’s solution has the power to truly transform the entire retail industry.  By incorporating consumer influence and predictive science in a real-time selection process, First Insight gives retailers and manufacturers more control in making the most profitable decisions.  I am excited to join such an innovative team and to be part of such an impactful solution, “Gwen said.

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Let the games begin! Over the past three weeks, we have stressed the importance of cultivating a team-like relationship with your customers in this volatile playing field. Their influence can impact your products, so it is vital to keep them engaged. Unfortunately, satisfying your customers does not always guarantee a win. There are other players in the retail industry and they are ready to compete for your customers’ business. So how can you gain a competitive edge to triumph against these key players?

“Rebound the Right Way” According to the Harvard Business Review

“Are You Ready to Rebound?” asks author Donald Sull in the latest edition of the Harvard Business Review. To evaluate your readiness, Sull follows up with yet another question, “Do you miss opportunities that others spot?” As we cautiously crawl our way out of the recession, companies need to have a strategic plan. But this plan must also be extremely flexible to remain competitive. “More than ever, companies need AGILITY – the capability to consistently spot and execute on unexpected opportunities before rivals do.” Companies often look to sophisticated IT systems for guidance, but Sull reminds us it is not how much you spend, but how you spend it.

Take for example, the Spanish retail company, Zara. Zara is highly regarded for their flexible supply chain. Despite only spending one-quarter of the industry average on IT, Zara is able to consistently spot trends and indentify changing customer preferences. So what is their secret? At Zara, designers, marketing managers and buyers work side by side, which promotes the sharing of relevant data collected by each function. Sull concludes, to surpass the competition, you must use real-time data to identify gaps and to predict future trends. This data must also be easily accessible and shared throughout your organization.

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Knowing that 3 out of 4 Americans use social technology – visiting social sites is the 4th most popular online activity (ahead of email), and spending time on social networks has tripled in the past year – it is obvious that social media is here to stay. But how can you leverage this ambiguous media outlet to help you and your business?

So far, the First Insight team has addressed the importance of not only including but also engaging customers in your business decisions.  We know consumers are willing to participate in conversations about your products.  But we also know consumers at large are savvier and no longer accept being “spoken at” by the media.  They are exposed to over 3000 advertising messages each day and have learned to “tune out” those messages that are not relatable. Fortunately, social media enables retailers to transform broadcast monologues into social dialogues.  The idea is customers who first share their feedback, and then listen, and then share again, are committing to more than just transactions.  They are developing deeper relationships with your product.

Over the past year, more and more companies are beginning to understand the advantage of strategically using social media. In “Social Media:  The New Front Row of Fashion,” Wall Street Journal writer Lauren Benet Stephenson explores the phenomenon of social media use throughout the fashion industry.  “What began as a tepid courtship between fashion and social media has become an all out love affair,” she exclaims. From Calvin Klein, Marc Jacobs, Michael Kors and Tommy Hilfiger streaming live runway shows to Oscar de la Renta and Tory Burch using Facebook and Twitter to update followers, never before has the idea of sharing been so prevalent.  But these leaders are going well beyond simply “sharing.”  They are incorporating the ideas of “listening” and “learning” to their strategy.  For example, during Tommy Hilfiger’s show streaming, fans were asked to vote on their favorite looks and to provide personal feedback on designs.

Those in fashion are not the only ones taking advantage of the growing social media phenomenon.  Take for example, Best Buy, a company that “chirps” with customers via Twitter to give technology advice.  Best Buy also uses video blogs to engage consumers beyond the world of text.  Companies embracing the social media revolution are benefiting from active integration. According to a recent statistic from the International Herald Tribune Technology conference, when engaged in active social media integration, brands reported as much as a 25% return on investment.

Please keep an eye out for next week’s final insight email in the “When Uncertainty Isn’t an Option” series.  We will be focusing on how to efficiently measure, and ultimately maximize, your products/designs performance.

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In the first edition of “When Uncertainty Isn’t an Option,” we addressed the impact consumers have in setting trends.  We know that fashion is no longer a top down industry and customers must be included in the decision-making.  But the question still remains… will they want to participate?

“Harvard Business Review’s Advice in Going Beyond Transactions”

According to “Rethinking Marketing” recently published by the Harvard Business Review, never before have customers expected to interact so deeply with companies.  They truly want to shape the products and services they use.  At the same time however, commitment to products has never been so weak.  A recent research study by Leo Burnett Worldwide shows that 80% to 90% of people are willing to trade off or trade down when it comes to shopping. The HBR concludes there must be a focus shift driving transactions to maximizing customer lifetime value in order to stay competitive.

Fortunately, today retailers have the technologies to directly interact with consumers, creating a forum to learn what their customers want.  Take for example your neighborhood grocery store’s loyalty card.  Upon each visit grocers can track what their customers buy and how they choose to pay for products. This information helps grocery stores tailor merchandise to local tastes and customize offerings at an individual level.  Loyalty cards are an extraordinary way to collect information about customers shopping and products found already in the store.  But what if you could know what customers will buy?  Would knowing this information upfront help deliver on expectations, increase satisfaction and strengthen overall customer value?

First Insight’s powerful predictive analytic technology helps forecast a product’s performance before it is sourced or brought to market. We give you a clearer sense of demand by integrating customer feedback into buying decisions, well surpassing the direction provided by historical data. At the same time, you are strengthening your relationship with customer by giving them a more active voice and influence.  Behind these gains lie increased buying accuracy and greater success in introducing new products. For the first time, there is a proactive and accurate tool that allows you to look out the front windshield instead of the rear-view mirror when making key decisions related to buying, inventory management, manufacturing and marketing.

In going back to the original questions proposed, yes, we know customers want to shape and influence the products they buy, but how can this be done? First Insight’s unique solution provides consumers with both value and entertainment.  We engage consumers with interactive online games to play and share.  These games are distributed into various communities across the Internet – both internal to your company and across the Internet.  We can even use social media sites to connect with people who may already be talking about your company. But, games, do my customers really want or even have the time to play games?

According to the Casual Gaming Association more than 200 million consumers play online casual games each month.  And unlike traditional video games, casual online game players are typically older and predominantly female.  Nearly 60% of games played are by women with the majority between the ages of 25-54 years old. Women are attracted to the ease of use, puzzle-like nature and ability to connect with like-minded people.  Knowing the mindset of our players has allowed First Insight to create engaging games that consumers find fun, entertaining and worthwhile to play, consumer just like Katherine:

“What Would They Pay,” is one of First Insight’s original casual games.  The game is designed to resemble a virtual buying floor where participants are shown various products.  Their goal is to act like a shopper at a particular store, assigning pricing and ratings accordingly.  In the end, the customer is rewarded not only with a score, but also with the pride in helping to influence potential merchandising decisions. The games yield data, which our predictive analytics use to give you a competitive advantage.  You will have the power to know what your customers value and want before competitors.

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With New York Fashion Week drawing to a close, followers of the event were able to get a new look into just how technology is changing fashion. As First Insight blogged a few months ago, designers like Norma Kamali were starting to stream their shows live via the web. As the month-long runway circuit progresses, the fashion industry is seeing more and more designers jump on this social media trend and others. Now listed among the live streaming designers are Giorgio Armani, Ralph Lauren, and Dolce & Gabbana. During the London Fashion Week, Burberry is taking their live streaming one step further: On February 23, the designer will webcast its show at events in 3D!

In a recent LA Times blog post, “Fashion Diary: Technology meets Fashion Week,” the comment is made, “The only thing left to figure out will be how to monetize the shows instantly.” Designers typically see a six month lag between runway and retail, but technology is helping them to find ways around this problem. As a different article from Women’s Wear Daily [log-in required] points out, some designers are already finding ways to do this, while at the same time taking a bite out the knockoff business. Norma Kamali and Cynthia Rowley, among a few others, have started selling their samples from the show immediately after. Rowley also had limited editions of dresses, skirts, tops, and handbags ready for sale after the show. Designers feel that this is a way to take ownership of their designs before the knockoffs can be produced. But, designers are also seeing this as a way to keep up the “fast fashion” retailers like H&M and Zara.

The WWD article continues, “French designer Roland Mouret is taking it a step further: pre-selling his RM line to retailers before showing it on the runway, so that his styles will hit stores just a month after his show.”

It is exciting for designers, retailers, and consumers that fashion is getting faster. As the world continues down a path of instant gratification, the faster fashion can be, the better it is. But in the rush, we lose the 6 month long feedback that merchants have to gauge the marketplace demand for the items. Often times, retailers are able to adjust their buys or negotiate prices closer to the delivery date. Merchants use feedback sources to fine-tune their buys along the way. Without the long lead times, retailers need a faster, more efficient way to gauge marketplace sentiment. As the lead time shortens, the stakes get higher.

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“When Uncertainty Isn’t an Option – The First Challenge”

There is a light. After higher than projected results over the holiday season, retail sales continued to rise throughout January by 3.3% according to Thomson Reuter and Retail Metrics Inc. Although stability is in sight, the full recovery will be slow and future uncertainty still lurks around the corner.

Making such great strides over the past year has been difficult. With companies forced to adjust to the turbulent marketplace by restricting inventory and cutting costs, little room is left for error. Over the course of the next four weeks, the First Insight team will address some of the challenges that still exist in the retail industry. Our goal is to provide visibility for the future when uncertainty isn’t an option.

With fashion week in full spin, those in the retail industry are on the edge of their seats, anxiously waiting to see what the next “hot” trend will be. Well, get comfortable.  The answer may no longer rest among the fashion elite.  According to a new article in the Wall Street Journal, to truly learn what the next “trend” will be, we need to look to the street versus the runway.

In,  “What’s Out:  the Fashion Trend,” Christina Binkley proclaims the power of consumer influence in setting trends.  “People now dress the way they want, choosing looks that flatter their bodies and lifestyle.”  Consequently, those in fashion industry are left with fewer persuasive marketing tools and less control.  Fashion is no longer a top down industry.  With the surge in technology and user-generated content, the traditional distinctions between producers and consumers are becoming increasingly blurry. The democratization of fashion is here and the votes of consumer preferences and styles are endless.

The bright side is everything today is “trendy.” The challenge however, especially for retailers, is everything is not “trendy” to everyone. You must first identify who is important to you, your customers.  Then, form a close relationship with this group to learn exactly what they want and expect.

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In “The path to successful new products,” McKinsey Quarterly surveyed more than 300 employees at 28 companies across North America and Europe to find out what companies were doing to develop more successful products. They found the most successful companies “create a clear sense of project goals early on, they nurture a strong project culture in their workplace, and they maintain close contact with customers throughout a project’s duration.” According to McKinsey, the study focused on companies in the automotive, high-tech, and medical-device industries. They  did state, “We believe that product makers of all stripes could benefit from our work.”

It turned out that more than 80% of the most successful innovators engaged with consumers throughout the development process to gauge how consumers felt about the direction the development was taking, and were able to fine tune the product before it’s launch.

High tech industries have been much quicker than retailers and brands to adopt such consumer engagement ideas, but as McKinsey points out, any company developing consumer goods could benefit from such interactions and feedback. It may be hard for brands and retailers to see how these types of conversations early in the product design phase could benefit them. We typically hear, “That’s great and I can definitely see how it would work for so-and-so, but it won’t work for me.” The truth is, that if you’re designing a product to be sold to consumers, these conversation will benefit you, and the earlier and more often you can engage with consumers, the better your product will be adapted to their needs and desires. The difficulty lies in doing this is economically feasible way while obtaining the best data you can.

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A few weeks ago, RetailWire published a Braintrust Query, “Do you hear what I hear? – Listening to Best Customers.” The article made a good point about the need to make it easier for your best customers to share feedback with you. The article gave three ways for companies to make it easier for these best customers to share: Start a Facebook page, call the best customers every week, and ask for feedback after every e-commerce transaction.

It’s good to see that companies are beginning to understand just how important customers are, but aside from starting a Facebook page, these methods are still far from “best practices.” Soliciting feedback from either a phone or email survey is an interruption. Yes, consumers want to be heard and they love to share, but it’s important to realize that they want to share on their own time, and in their own way. They don’t want marketers calling them during dinner anymore. Plus, consumers want to be entertained. It’s important to make your methods of listening engaging and fun. Sharing has to be beneficial to both the retailer and the consumer. Asking for feedback in an intrusive way makes consumers feel used, not appreciated, and could quickly turn best customers into worst.

There is also an often overlooked issue with Facebook pages, too. According to Inside Facebook, a site that tracks growth and leaders on Facebook, in August 2009 the average retailer had over 2,100 fans. If all of these fans are sharing with your company – through comments, messages, and discussion boards – how do you aggregate and act upon what they are sharing? If you aren’t able to do this effectively, you’re hearing, not listening. Actively listening requires retailers to be able to separate the noise from the meaningful feedback, and then to turn this feedback into action. And action requires more than sending a short note thanking or apologizing to the customer with a coupon attached.

Filed under: General by Sara Owczarzak
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Last week, eMarketer published the results of a December, 2009 Marketing Sherpa survey. The results, not surprisingly, show that the main reason people connect with brands and retailers online is to find exclusive deals and offers. What may be surprising to some, is that the second reason, by a very narrow margin, is to learn about new products.

People are so interested in learning about new products that Proctor and Gamble has let social media do its marketing for them. In August of 2008, P&G sent samples of its new Weekly Clean Intensive Cleaning Paste to bloggers and watched the buzz spread. While it is a new approach and a divergence from traditional marketing, it works and shows the power of social media.

But even more, it shows that consumers want to be in the know. They want to engage with retailers and brands. They want to rave and rant about new products. They want to be first. They want to be cutting-edge. They want to be heard.

Are you listening?

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I came across an article on OPEN Forum today called, “5 Futuristic Applications that Are Here NOW.” Somewhat sadly, crowdsourcing was #3 on the list. Even though this technology is the foundation for companies like Threadless.com and Quirky.com, and has now been used by companies from Procter and Gamble to Rubbermaid, this technology is still considered “futuristic” by most. The truth is, if you’re still thinking this way, you’re probably behind. The real future is having a way to effectively judge the feedback and ideas that are being submitted. The real future is being able to tell who is worth listening to, and who doesn’t know what they are talking about. You’d be surprised who can tell a good product and who can’t. It’s not always as you’d suspect.

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