The decline of third-party data collection makes a strong loyalty program and physical retail even more important today.
“Stores are really important,” Robin Barrett Wilson, an SAP industry executive advisor specializing in fashion, told Sourcing Journal at The Lead Innovation Summit in New York City. “Brick and mortar is never going to go away. You’re not going to get enough share of wallet by hoping that somebody gets online and clicks the buy button.”
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Jose Nino, VP of global digital and e-commerce strategy for U.S. Polo Assn., described how stores give the company a leg up.
“Leveraging our stores is really a competitive advantage for us because it really provides a lot of our first party collection records,” Nino said. “Without all of these stores, we would have more difficulty obtaining any sort of email addresses.”
Third-party data collection often comes in the form of cookies, which store user data on web browsing activity. However, that also raises privacy concerns, and with Google, Apple and Mozilla moving away from cookies this year, and California, Colorado, Connecticut, Virginia and Utah enacting regulations inspired by Europe’s General Data Protection Regulation (GDRP) laws, brick-and-mortar stores offer reliable data-collection vehicles.
U.S. Polo, for one, places QR codes around brick-and-mortar stores that Nino said can engage 2 to 3 percent of all passersby, even the ones that don’t go into the location. Even just 10 to 15 QR scans a day adds up to meaningful reach but at a significantly lower cost than a big marketing or social campaign, Nino said.
When a customer enters one of the roughly 1,200 U.S. Polo Assn. stores worldwide, associates are instructed are instructed to collect some of their personal data.
“If we bombard them with a quiz with some questions like what’s your favorite color, whats your favorite category, etc., we’ll never pull the information from them,” Nino said. “So it’s just focused on getting their first name, their e-mail address… and then we start working them through different aspects of the marketing funnel; we focus on category and sales, etc. and as they start collecting data as to what they prefer to browse.”
For brands without the resources to open a store, Wilson recommends a similar alternative.
“Try a popup—they still work, they still get your name out,” Wilson said. “It’s also a great way to see whether or not that particular geography might work in the future.”
Wilson also suggested forging a wholesale partnership with an established retailer like Nordstrom or Macy’s.
She pointed to Kate Spade, Coach and Stuart Weitzman owner Tapestry, which eclipsed 15 million customers last year by driving loyalty.
“They’re doing something right; they’re in the right place at the right time and they’re marketing the right people,” Wilson said. “They’ve actually found their tribe. You have to know how to refine that tribe right and grow it.”
Gen Z customers are showing more of an aversion to credit card debt than previous generations. Catch co-founders Denia Ebersole and Nico Perdomo hope young shoppers embrace credit card alternatives, like Catch. With Catch, customers earn discounts at their favorite stores of 10 to 15 percent or more if they spend their balance at that store within a time frame determined by the retailer. Only if that happens does Catch take a cut from the retailer. The Catch card not only encourages loyalty but it also analyzes purchasing behaviors and uses that to help retailers understand how to evolve their retention strategies.
“We’re trying to build the first payments company that doesn’t make money off payments,” Perdomo said. “It works for retailers because they save that margin up front and give it back to the customer to come back and shop again, so it’s a little bit like the opposite of a credit card model.”
Before Catch, Ebersole worked at Google with a focus on customer loyalty and retention. “[Catch] ended up at a perfect blend of payments and marketing potential loyalty,” she said.
Advertising in brick-and-mortar retailers is another way to gather data.
Considered the third wave of digital marketing after search engines and social media, retail media is an emerging strategy.
Jeffrey Bustos, VP of measurement addressability data with Interactive Advertising Bureau (IAB), said that type of brand awareness works especially well when a brand sell its products in the store to get that “closed loop” measurement. For apparel retailers, Bustos pointed to Macy’s as an example of an attractive in-store retail program.
IAB recently published a 47-page study on the merits and strategies behind retail media and how brands can connect with the consumer.
“With all the privacy legislation changes, which are incredibly important to ensuring consumer privacy, retailers do have the first-party data through the loyalty programs, and they do have that consent, which is what’s accelerated this third wave of digital advertising,” Bustos said.