Does anyone remember going to the mall with friends “just because” and searching for treasures that you didn’t need? I certainly remember doing that, but my memory looks through a filter that contains knowledge of online shopping and drone delivery, and I’m conflicted for my high school self who spent entire afternoons searching through racks and racks of items, robotically trying on forty pairs of jeans only to leave the mall with a tiny bottle of new nail polish. Was that fun or was that unnecessarily tedious? Can you imagine today going to a video rental store and walking down aisles of movies in order to make your selection? Insanity! How did people survive!
At this year’s RLGC conference, panelists took a look at our over-saturated consumer world full of things and impulse shopping and have-it-now mindsets, and discussed how our generation is going to reinvent retail. Where is the market leaning, how are those currently leading the industry preparing for a shift, and what advice do they have for those of us wanting to enter the industry?
I chose to go to the Innovation with Insight panel that discussed big data and how it’s used today. Big data can be scary – how does Google know that I’m thinking about taking a trip to Fiji so that they show me advertisements for flights while I’m casually browsing a beauty blog? How does the internet know that my sister just had a baby and I’m suddenly in the market for blocks?
Data is pervasive and data is everywhere, and it can appear out of control. Business leaders today are trying to contextualize that data without losing the trust of the consumer.
Omer Artun, CEO & Founder of AgilOne, stressed that big data can be paralyzing. “Too often people start with data when they should be starting with a business plan. When you’re a business that deals with data, spend 80% of your time thinking about your original problem,” he said. Thibaut Munier, Co-founder and COO of Numberly agreed, but reiterated that “data can be fun, enjoy it!”
The excitement of being a part of the next big thing and trying out something new was a common thread amongst the panelists and founders at the conference, and the next big thing is clearly steering away from selling products and navigating towards selling experiences.
Just like the fitness movement (think Melanie Whelan, CEO of SoulCycle and keynote at the WSA conference), the organic movement and most recently the mindfulness movement, the next industry wave is sleep, as predicted by two of the RLGC founder panelists. Neil Parikh and Luke Sherwin, both co-founders of Casper, a unique mattress product, say that they are selling more than just mattresses. “Sleep is a singular investment, not a product investment,” said Neil.
With a general lifetime value of one (how often have you purchased a mattress yourself?), Neil and Luke face challenges other founders do not. However, Luke optimistically points out that “the market size for a mattress is 100%, everyone sleeps on a mattress.” They are trying to capture and sell the cumulative experience of sleep (“a life well slept”), rather than simply selling mattresses of the past.
Casper’s experience starts with selecting your mattress online, then getting it delivered to your door in a box. You then have 100 days to sleep on it and decide if you like it; if you don’t, Casper will come pick it up for you. With that model, it’s easy to see that Casper is using customer service not only in a traditional operations service, but even more so now as a marketing service. Ben Fischman, founder & CEO of M. Gemi (and founder of Lids and Rue La La) says, “You can sell anything online if you use service as a weapon.”
“If you do it right, a customer becomes a more loyal customer and is highly more likely to repurchase. We always focus on the second transaction. Anyone can buy once. If a customer buys a second time, they are 80% more likely to but a third time,” explained Ben. When applying that thought to Casper, people may not be buying three mattresses consecutively, but they sure will tell their friends about their new mattress and consequently create a ripple effect.
How have businesses succeeded in this transitional period of consumers shifting their mindsets and preferences to buying online without being able to physically see the product? “Customer service overcomes touch-feel-try,” says Ben. “Branding and service are everything. It’s not a logo or a color or a font – you can recover from a bad logo – it’s now the whole experience.”
Interestingly, all of the founders at the roundtable are in markets where demand already exists (luxury shoes, swimwear, baby blankets, mattresses), and none invented their product from scratch. That speaks further to the idea that the retail landscape is undergoing more of a transformation in the transaction process, rather than innovation in product offerings.
Clearly, the retail landscape is in a state of flux – the traditional way things have been done is continuing to change and those going into the industry have the exciting opportunity to shape the future. It was an inspiring and motivating day – congratulations to the RLGC presidents for putting on a grade-A conference! And that swag bag was not bad either.
Emily Dohse (Class of 2016 Partner) is a Harbus contributor and an Executive Assistant at Egon Zehnder. She enjoys reviewing HBS events, attending themed parties with her fiance Ed Kennedy, and is an avid fan of Dateline.