business news in context, analysis with attitude

Good piece from Bloomberg about how some influential new brands with a direct-to-consumer business model are redefining the notion of “brand affinity,” putting a higher priority on creating a positive customer experience and creating trust - even love - than they are on making a short-term sale.

The story makes the point that one of the reasons that these brands are able to deliver on this part of their value proposition is their access to - and commitment to using - data: “The ability to instantly feed customer data back into a business model is perhaps the most critical change. ‘While these disrupter companies are obviously much smaller, they are advantaged in their ability to obtain and to use that first party data much, much more rapidly,’ said Randall Rothenberg, chief executive of the Interactive Advertising Bureau.”

Leading the way with this strategy are companies like Warby Parker, Casper, and Away - described as digital native brands “known for indulgent niche products at accessible prices.” And their approach is “forcing legacy companies to play catch up on yet another front … But they’ll have to move fast. Close to 7,000 physical stores were shut down by the end of 2017, according to research and advisory firm FGRT. In the same period, e-commerce builder Shopify Inc. powered over 600,000 online businesses, with 73 percent of purchasing traffic coming from mobile devices.”

Americus Reed, a marketing professor at the University of Pennsylvania’s Wharton School, tells Bloomberg, “Retailers in the physical space are going to have to provide something that is more experiential, that is going to draw people in to hang out and do stuff.”
KC's View:
There are so many components of this that I find interesting.

First, the idea that long-term sustainable relationships are more important than making the short-term sale. This is something that I think is critical to surviving in the new world order - retail brands need to realize how important it is to focus on “lifetime customer value.”

Second, that so much of this is driven by the accessibility to and utilization of data … which is the most valuable currency that retailers have these days. It is about knowing as much as possible about customer behavior and preferences, and having a firm grip on what is in their stores and warehouses. I continue to be gobsmacked by how many retailers don’t understand this and make it a top priority.

There’s also a sense of style in a lot of these companies - sometimes overt, sometimes covert, but always a priority about creating something that appeals by being just a little different and a little more pleasing.