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The Retail Theory of Everything

Posted By Administration, Thursday, April 9, 2015
Updated: Wednesday, April 8, 2015

by Leela Rao-Kataria, GT Nexus


The Theory of Everything is the Oscar winning movie that is surprisingly relatable to retail executives. If Stephen Hawking had to find a central thread to connect the entire universe, then he has a lot in common with today's retail executives who are trying to connect a single brand experience through diverse channels. What they don't understand is that it's not about offering everything to everyone, it's about finding a point of connection between what the retailer has and what the consumer wants. Identifying that point of connection will ultimately result in success for the retailer. Here are a few examples of what made retailers successful in connecting the dots from product to purchase:

Leverage Disruption
In the AAFA Executive Summit hosted in March, Kurt Cavano, Founder and Chief Strategy Officer at GT Nexus, addressed the CEO's need to manage disruption, holding up an iPhone 6 and explaining it had greater power than the entire MIT campus decades ago. "Shopping is going to shift from computer to tablet to phone so quickly that in the next three years the majority of shopping is going to be on the phone. So if you're not building an experience for your customer on the phone, you're going to be in trouble."1

John Lewis, The Limited Brands, and other major retailers agree, identifying significant holiday purchases driven by mobile channel as their #1 surprise at the National Retail Federation's Big Show. Paul Coby, IT Director at John Lewis, went on to explain that £777 million from the five weeks of holiday were strongly driven by e-commerce (36% of all sales), with a high mobile ratio. To manage the invasion of technology into purchasing, John Lewis put major investment behind click and collect, which represented 56% of their total holiday sales. The retailer credits their strong sales to their understanding of the omni-channel: "It needs to be seamless and frictionless across all channels" and that "pretty front-ends online and on mobile are useless without back-end technology and supply chain excellence."2

When Apple launches its new Apple Watch on April 24th, consumers expect a big splash, but more and more unexpected contenders are coming out of the woodwork to leverage disruption to their advantage. In fact, it was Jeffrey Sears, CEO of Pirch, who won the "Disruptor of the Year" issued by the NRF, for his revamped consumer experience at Pirch, a home goods store. Pirch allows customers to cook, bathe, and iron, and conduct other hands-on experiences in-store to connect with the consumer.3

Uberification of Everything
The latest buzz words to hit the circuit involve the "Uberification of everything." Uber's peer-to-peer business model makes it convenient, cheaper and more time efficient to get from point A to point B and retailers are mimicking this model within their own omni-channel strategy. Consumers want to exude as little mental effort as possible from the time of exploring goods to the actual purchase and fulfillment of the item.

While we hear about the demise of the department store, Macy's is a good example of a retailer that has not only evaded this fate, but flourished against its competitors. Terry Lundgren, Macy's CEO, acknowledges the importance of true omni-channel extending beyond in-store and online presence. Macy's actually hosts competitor brands on their platform as well, giving consumers a true holistic shopping experience and removing their need to go anywhere else. Macy's is moving in on the future with their recent $210 million purchase of Bluemercury spa and beauty chain. They recently invoked a Plenti platform, involving partners across the gamut of retail including energy, phone service, etc., where consumers can spend at Macy's and redeem credit points elsewhere.4

Retailers like ModCloth have a simple to use interface by appealing to a niche market cross- referencing products by categories and independent designers. This is different from traditional specialty stores that are losing market share from their overwhelming offerings and from forcing customers to exert significant effort to time sales while constantly being re-navigated to a new page. Modcloth does an exceptional job of customer service with their unique "be the buyer" program, only ordering inventory as consumers place additional orders for it. This not only results in inventory management for the business, but aids in soliciting direct feedback from the consumer. ModCloth CEO and Founder Eric Koger says, "we take all of the interesting information that she [the consumer] loves and translate that back into the supply chain through some robust analytics and predictive models on what products to produce and how deep to produce them." Customers have direct influence over what merchandise gets made.5

Relate to Your Customers
The more a retailer takes on a personality, the better it can relate to its customers. Everlane's personality is one that cares about sourcing and ethical issues around factories. Their website delivers a clear message to their niche customers, positioning themselves as being fully transparent with the tagline "Know your factories. Know your costs." The site allows the consumer to get a full-on visual for the factories where garments are produced and provides a breakdown cost of your purchase as well as a competitive analysis of others' costs. They've extended their channels from online, to pop-up stores, and special "open studios" invitations so customers can see their upcoming product offerings.6

In comparison to start-up retail models, global giants are finding a way to become more personalized as well. Global beauty giant Estée Lauder is invoking artisan brands to build their business. The company is working with perfume makers Le Labo and Frédéric Malle as well as cult skin care producer, Rodin to appeal to niche consumers. Lauder has done a great job of personifying make-up with existing franchises like Bobbi Brown, Mac, and Origins. Despite its behemoth size, the company maintains an artisanal approach to beauty while enhancing quality standards.

Where Will You Be?
Hockey legend Wayne Gretzky used to tell people, "I skate to where the puck is going to be, not where it has been."7 Retail players who are too ubiquitous in their offerings end up dying out due to unclear messaging and inability to target a key customer. The retailers that are winning have a clear message and operate well in their distribution channels. They also understand that omni-channel extends beyond traditional multichannel presence, but literally engages consumers through all facets of reach including mobile, social media, chat rooms, and partnered services. By introducing new levels of engagement year after year and staying ahead of the curve, retailers need to have a flexible model in place to adjust their channels of distribution in a seamless way.

[1] https://www.sourcingjournalonline.com/technology-every-ceo-needs-know-td/
[2] http://events.nrf.com/annual2015/CUSTOM/SlidePPTs/John_Lewis.pdf
[3] http://www.utsandiego.com/news/2015/jan/05/retail-federation-pirch-jeffrey-sears-disruptor/
[4] http://therobinreport.com/macys-the-distribution-of-things/?utm_source=The+Robin+Report&utm_campaign=a60f72c745-Macy_s_The_Distribution_of_Things_3_18_2015&utm_medium=email&utm_term=0_e90268c709-a60f72c745-201797097
[5] http://www.bloomberg.com/news/videos/b/168d0c0a-4366-4c90-b86d-e3cda8a20de8
[6] https://www.everlane.com/about
[7] http://www.brainyquote.com/quotes/quotes/w/waynegretz383282.html


Leela Rao-Kataria is Retail Marketing Manager for GT Nexus. She has more than 10 years of experience working with fashion brands/labels including Levi Strauss & Co., Sephora, Estee Lauder, and L'Oreal Companies focusing on global product development, international channel execution and luxury products. Leela helped integrate Sephora's loyalty program, Beauty Insider, into Sephora in JCPenney stores. She later joined Levi Strauss and Co. where she partnered with wholesale and retail partners such as Dillard's, Macy's, and Kohl's to deliver heritage programs to Levi's enthusiasts. She has also developed marketing strategies for new market entrants Yellow Brick Coffee and Amyris. Leela received an MBA in Marketing and Finance from New York University's Stern School of Business.

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