Customer lifetime value (CLV) is one of the most important retail growth metrics. So, what can you do to build long-term, profitable relationships?
In today’s digital age, you have to have a progressive omnichannel strategy. After all, consumers who don’t limit their shopping to a single channel generate the highest CLV. To bring about value though, you need to provide value.
Digital technology has changed customer expectations. Shoppers expect more touchpoints, personalized service and super-fast delivery. Customers want to purchase products when, where and how they want. This evolution in customer expectations is one of those crucial do-or-die situations for retailers. Those who adapt to an empowered customer base will thrive, and those who don’t will die out.
To provide real value to shoppers, fashion retailers need to lean into the changes and offer modern store fulfillment solutions. It’s a win-win – retailers fulfill orders in a way that’s convenient for the shopper, and efficient and profitable for their brand.
Adapting to a New Customer
No, we are not in the midst of a “retail apocalypse.” There has certainly been store closures and bankruptcies, but it’s not because fashion is suffering. Rather, some retailers aren’t adapting to today’s always-on customer.
Stores will always have a place in the retail equation. We’re reimaging them today because 62 percent of fashion shoppers still prefer to purchase in-store. But it’s not apples to apples for every cohort. Gen Z and Millennial shoppers have different shopping preferences. While Gen Z still enjoys physical retail, Millennials prefer to split their purchasing between online and in-store.
The short is customers want and need not only options but convenient ones. And convenience is king. It’s the reason people love shopping online as much as they do – 57 percent of those who shop for fashion online, do so for the convenience.
Brand interactions across channels, therefore, need to be seamless. This is even true of returns, which aren’t ideal but are a reality of retail. In fact, more than 50 percent of fashion consumers think a smooth return process is critical to a brand gaining their business.
Fashion retailers need to unify their channels into one brand experience that seamlessly manages product and offers consumers options at the point-of-purchase.
How to Add Store Fulfillment Options
There are plenty of areas where you can improve your store fulfillment operations, especially as your omnichannel organization matures.
Our annual Omnichannel Leadership Report shows some key areas where retailers have been utilizing store fulfillment options to address key customer pain points during the shopping experience.
Buy online pickup in-store (BOPIS) is being utilized by 26 percent of the 150 brands we analyzed – up from 18 percent the previous year. Not only does it reduce strain on employees and free them up to perform other critical in-store tasks, but it also lets consumers avoid painful shipping fees — 61 percent of customers say their shopping experience would be improved if they didn’t have to pay for shipping — and skip long checkout lines.
BOPIS has become an agent of change for retail. For example, during the 2018 holiday shopping season, BOPIS orders were up 73 percent from Thanksgiving to Black Friday. The increased foot traffic to physical stores on Black Friday resulted in significant upsell opportunities, with 64 percent of consumers making additional in-store purchases.
Providing the option to BOPIS is not only convenient for shoppers but profitable for retailers.
We were surprised to learn that only 21 percent of brands allow customers to use endless aisle from a mobile device. As a “save the sale” mechanism, you’d expect more retailers would have the option for store associates to access and sell inventory from any enterprise location.
Historically endless aisle transactions have been cumbersome, especially when stores are busy. This is where connected devices help immensely. Processing an endless aisle order is by far easier with an intuitive app on a smartphone than on a clunky POS system. The holiday season proved this to be especially true. When you can break down the barriers between cross-channel transactions, you see purchases move in line with sales growth on busy days like Black Friday.
Endless aisle provides 360-degree visibility into real-time inventory which has a positive effect on your margins. Offering it on a smartphone is, well, smart.
We also saw a sharp increase in the number of retailers utilizing Apple Pay for friction-free checkout — 23 percent in 2017 and 57 percent in 2018. More and more retailers are catching on to Apple Pay, which is great considering the payment method is activated on 383 million iPhones worldwide.
Offering as many payment options as possible is the way to go for fickle customers. You give customers the freedom to buy how they want to. Remember, your customer holds the power, and they can shop elsewhere if your brand doesn’t align with their purchasing values.
We expect to see more retailers adopt wider payment options in the coming years. It’s even likely that fashion brands will go cashless.
Buy online return in-store (BORIS) is a powerful tool. Since 92 percent of customers are more likely to purchase from a retailer again if they experience an easy return process, BOPIS has become a pillar of growth for retailers.
To bring that point home, reducing customer defection rates by a measly five percent can result in 25 percent increased profitability. BORIS makes customers return time-and-time again, which is probably why we saw 29 percent of brands supply in-store refunds for online product.
If you’re a fashion retailer and you haven’t adopted BORIS, now is the time. It’s an important part of customer service – which is omnichannel’s most simple definition.
Retail is fundamentally about buying and selling. All that has changed recently is that consumers want it to be a more seamless experience. This can be done by improving your store fulfillment architecture and using solutions that provide real value. If you do, you’ll acquire more loyal customers that stick with you even as retail continually evolves.