Looking to the Future of Retail - IMRG Fashion Connect 2018
The IMRG Fashion Connect conference took place in London on 21st February, and the Salmon team noted some interesting speakers, as well as four key trends for 2018.
Mobile and personalisation continue to be hot topics for the coming year. And while new tech such as AI is interesting, most fashion retailers have work to do to fix the basics.
Andy, IMRG’s director of strategy and insight, shared some recent trends that are impacting fashion retail, such as gender imbalance and the environment.
Making Customers Feel Good
Customers like to be recognised. Personal help makes us feel valued and supported. Matthew Henton, Head of Ecommerce at Moss Bros, shared his experience of personalisation.
Moss Bros is an omni-channel formal menswear retailer with 130 stores in the UK and Ireland. It has developed different ways of personalising the customer experience. For example, by leveraging cookies and tracking technoogy, its website can tailor the customer’s experience according to size, fit, and browsing activity.
On its website, the events category incorporates occasions that are associated with garments. For example, the weddings category is linked with specific suits and accessories. Based on the customer’s search and browse history, the website can automatically determine whether the customer is interested in a particular category on the site.
Further customisation comes from brand affinity. When a shopper views a brand repeatedly, that brand appears in the brand navigation menu automatically.
For example, searching for wedding attire results in a weddings navigation option being added to the navigation menu. At the same time, the homepage hero banner changes to fit the event.
Retailers can also personalise on customer type; students are a particularly high value segment because they are entering the category and have a long lifetime value. The brand also leverages personalised product recommendations to show individual visitors more of the items they’re likely to purchase.
Matthew and his team have undertaken an extensive optimisation programme that serves as a handy best practise blueprint:
- Fix the broken stuff: Analytics, and other technology that tracks user activity, can be a quick way to identify the basic issues on a customer journey and on different devices.
- Make it faster: The correlation between speed and conversion is well-known in the industry. With mobile traffic growing, this is still an area that retailers must swiftly address.
- A/B test rigorously: Matthew introduced a new structured approach to testing via the formation of a hypothesis, as shown in the slide below.
- Use traffic wisely: Traffic is a precious commodity in any A/B testing programme. Whatever you do, don’t waste that traffic.
- Achieve a balance: Be bold when testing, and avoiding copying what others are doing, but be aware that customers are conditioned to interact with websites in a particular way. Are they going to react well to big changes?
4 New Trends in 2018
Brandon Wilkins, GM Europe at Oracle Bronto, talked about upcoming trends in 2018. Here are some of our key takeaways:
1. Mobile Commerce is Here to Stay
Mobile commerce is a growing area for retailers, and that trend will continue in 2018. We all need to be particularly aware of our millennial audience, and we need to realise that, for many customers, the mobile experience is now the primary one.
2. More People Are Going Browserless with Voice Search
- Increasingly, shoppers are typing less and talking more. Thanks to the inexorable advance of smart devices, such as Google Assistant and Amazon Alexa, we’re seeing voice search change the way customers search, interact, and shop. According to IMRG, 50% of searches will be activated by voice by 2020.
- Voice activation will bring new challenges. Right now, we’re seeing consumers search by voice for everyday products like milk or batteries. But we could soon see this behaviour influence retail searches too.
- It’s likely that voice assistants are going to draw on online reviews, which will require businesses to manage their reputation much more proactively than they do today.
3. Retailers Must Embrace Machine Learning and AI
Machine learning and artificial intelligence are the next wave in digital innovation. Businesses are already using these technologies to power chat bots and personalisation. In time, machine learning and AI will drive engagement and loyalty. According to BI Intelligence, more than 70% of retailers are planning to invest in AI or IoT by 2020.
- Retailers have access to a huge amount of useful data already, and they can leverage this to show customers products that are relevant to them. Using AI, it’s possible to use propensity modelling to predict what the customer is likely to buy next based on what they looked at or bought previously.
At the conference, there was a very useful panel discussion; participants debated the challenges and opportunities for budget, mid-, and premium-tier fashion retailers. Some very interesting points were raised:
- Premium retailers have a heritage that is very useful in building personalisation, but there is a risk that younger customers see the brand as old, or “stuffy”; Hitwise identified premium as the fastest growing tier for online traffic
- Mid-tier retailers have the challenge of maintaining “share of wallet”, and must keep the brand alive by leveraging its USPs
- Luxury retailers have benefitted from the growth of ecommerce, which has increased the percentage of luxury goods sales online to 8%; at the discussion, we saw some debate about whether these retailers are suited to online, but there is still promise, with predictions that 20% of luxury goods will be sold online by 2025
- Luxury retailers are also benefitting from the changing role of digital, with customers looking on sites like YouTube for inspiration, rather than browsing the high street
- Customers that interact with luxury brands appreciate personalisation of communication; since a small number of clients drive a large proportion of revenue, luxury brands must communicate with them effectively using activities like personalised events
- Even if online sales don’t increase, it’s possible that digital can drive offline purchases; Gucci is a very good example of a luxury brand that has used its online presence to reach a new, modern audience
- Stock management is important for cross-border, and retailers should consider routes to market (for example, from a single distribution centre from the UK)
- New, disruptive payment technologies – for example, Klarna – are changing the way people shop; the participants debated whether luxury retailers should adopt these new payment systems.
During our session with Norman Nielsen at Zalanda, which we’ll look at next, we touched upon the use of AI to optimise search. For example, Express Gifts has introduced AI to improve its search rules above and beyond the native capabilities of its ecommerce platform.
Conversant Media also discussed personalisation at length in the context of affiliate marketing. They asked some key questions that highlight the challengers that retailers will face:
- What is personalisation; is it one-to-one, or is there an alternative model?
- How do you avoid being creepy or annoying with personalised content?
- How will the new GDPR laws affect the way we personalise?
4. All Eyes on Mobile Content
Content is still king, but, as user habits change, content also needs to be delivered effectively on mobile.
Norman Nielsen, Head of Content Marketing at online retailer Zalando, shared his views on winning mobile content at the event.
Zalando is a marketplace founded in 2008 in Berlin. In 2017, it generated €4.4bn of revenue.
Norman described mobile as “unlimited micro moments”, with varied and complex user scenarios of how each shopper is interacting with the site on their mobile. He advised that mobile content should be fun, fast, and functional:
- Zalando is using accelerated mobile pages (AMP) to reduce page loading times for its users; it estimates a page loading time of one second, which compares very favourably to normal loading times for standard mobile pages, which can take more than 8 seconds to load.
- The company is also using progressive web apps (PWA); these aggregate functions that can be implemented on a mobile site, making it feel more like an app, including push notifications, offline usage, and the option to add an icon to the device’s home screen.
- His team has approached the increasing popularity of mobile by building for mobile devices first.
- They’re also mindful of emerging trends in search, including both picture and voice; right now, 87% of voice answers tend to come from featured snippets, but we’ll see voice and visual merge so that fashion retailers can show buyers a product before they purchase it.
- New tools like the Pinterest Lens are allowing shoppers to use visual search in creative ways.
Retail is changing, and technology is changing. There are opportunities and challenges ahead for retail, and the IMRG event offered useful debating opportunities as well as helpful best practice guidance. The day concluded with a useful recap of its benchmark data from Q4 2017; this data offers useful additional insights and talking points.
Here at Salmon, we work with omni-channel fashion retailers such as Selfridges, Ted Baker, and New Look. Learn more about how we optimise online experiences to maximise ecommerce investment.