Trends Cover

Retail Evolution

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By Arline Malakian & Kirsten Mogg, partners at GYLD*

We all thought things would be better by now: the recession a thing of the past, the customers back shopping once again. But as we welcome 2010, its clear that business is not returning to 'normal', at least not yet. Many fashion boutiques lament the apparent disappearance of their core customers and sparse street traffic. Are they all shopping online or at discount stores by stealth? Is boutique retail dead? How are some stores creating success?

In GYLD's inaugural retail study of independent fashion boutiques we asked the broad question: What must Canadian retailers do today to not only survive but thrive in the future? Here we reveal insights on how retailers are evolving:

Psychology Degree Required

"Guilt has been a big factor," according to Joan Brachman of L'Engage de la Mode in Etobicoke, who saw a dramatic drop off in visits from key customers and overall store traffic in late 2009. "Some admitted to avoid even coming in to the store."  

The boutique shopper is changing. She’s thinking more carefully about her purchases, she uses her purchasing power as she senses vulnerability of shopkeepers. She is demanding look good and ‘feel good’ products and shopping experiences. Retailers see customers more aware and informed earlier than ever of fashion trends, key items, hot brands, and who has what on sale. Older customers value and expect service; younger want a source of inspiration and fun. They are all sensitive to price at any level of the market.

To meet her fashion needs, alleviate the guilt and give customers reason to come in, some retailers are taking up the role of social worker and life coach.

A one-day coat trade-in event held by L'Engage de la Mode and Lundstrum proves customers can be motivated as much by their wardrobe needs as their contribution to the community. It was shopping justification on many levels: the ‘feel good’ donation of gently used coats to Women’s Habitat, a local charity, the delight of a beautiful new coat with a discount, and a hassle-free way to clear their closet. It also was a business-savvy way to generate sales without committing to stocking merchandise that is positive for both brand and store.

Others, such as Margarita Machura co-owner of Poise Boutique in Burlington, Ontario are taking a one-on-one approach as image-maker.

“I make things easy and fun,” says Machura giving an example of how she helped a customer who has been on a inner cleansing journey and needed help to makeover her outside appearance to express her personal metamorphosis.

“I consider myself to have been a difficult project but Margarita’s talent for custom wardrobing overcame my struggles with fit and was invaluable to me at a transitional point in my life,” says Nicole Ziepa a Poise customer for the past 5 years.

Such personalized help from a retailer-as-stylist and image consultant is a powerful connection and example of extreme service only boutiques can offer. Many Canadian retailers offer similar perks to their best customers: bringing the boutique to a client’s residence for private fittings, wardrobe consulting, help with selection and styling for a special event. Yet success seems to come down to the integrity of the storeowner and the trust she can create with each customer, not the immediate sale.

“I always offer my opinion on their choices of outfit for selected occasion - not holding back on suggesting products which I don't carry in my store,” says Machura.

When is a "sale" not a sale?

Discounting is another tactic conventionally used by retailers to unlock wallets and move merchandise. Even this is no longer working to the desired effect.

Experience and coaching by the media, big box discount outlets and predictable sale events, consumers have honed their skill at multi-media comparison shopping, waiting for deeper discounts and striking only when they see a 'steal'. Anything less than 40% off is not perceived to be 'on sale', especially when they know they can find the same brand or similar merchandise somewhere else.

Time-limited promotion twists to create a sense of urgency and the opportunity for add-on sales are also backfiring as consumers cherry-pick the deals and back away from a full-blown shopping spree.

Without the buying power of a chain or department store to protect margins and buffer markdowns, pricing appears to be one of the least effective tools for independent retailers. It also suggests that some merchandise offered is just not special enough to generate a sale at opening price or even 20% off.