Featured advertorial – Being Local: The transformative power of not so big business
Dassault Systèmes examine the advantages that small-to-medium businesses have when it comes to delivering a modern, localised, consumer experience.
You shop online. And you buy from Amazon. Probably not exclusively in either case, but from time to time it’s difficult to deny the pull of convenience and broad availability.
What you want is there, available for delivery with a couple of clicks, and it’s competitively priced. But when it comes to finding new things, trying them on, or being encouraged to look at something you mightn’t necessarily have thought would suit you, where do you go? The odds are good that at one time or another the answer would have been “the high street” – a pedestrianised strip of diverse stores operated by people with extensive knowledge of their products and a keen eye for which of them you might like.
In many places, in 2014, that option has been taken from you. The growth of department stores, out of town shopping centres, and e-commerce have collectively pulled the shutters down permanently on hundreds of thousands of retail operations around the world – stores with the global economic downturn already nipping at their heels. Today, your high street may have up to 20% of its storefronts sitting empty (according to UK statistics issued last autumn), and those that are inhabited will likely be owned by international businesses, and come stocked with the same products and the same experience as their counterparts a continent away.
The growth of online retail and internationalisation – the proximate causes of the high street decline – have both been spurred on by the same slightly spurious line of reasoning. When it emerged that people liked to shop online, big retailers and brands diverted their attentions away from bricks and mortar retail, assuming that digital-only was the future. Similarly, when a domestic territory expresses a liking for a particular product or sales approach, the broad assumption is that every other territory will want the same thing.
Direct engagement, local colour and community have defined retail since time immemorial, whereas the idea of selling the same products the world over is a short term aberration: one enabled by technology, but sustained by an outmoded way of thinking that today’s best-loved brands actively refute. Those select companies recognise that while online shopping and the big, one-style-everywhere brand fill a commercial need, they do not necessarily fulfil a human one. And these not-so-big business are increasingly coming to understand that they themselves are perfectly poised – agile, responsive, and driven – to deliver something different.
There is a broader discussion to be had about technology’s impact on our personal and interpersonal lives (speaking at the National Retail Federation show in New York City last month, retail impresario Rick Caruso cited research demonstrating that more than 40% of us are lonely, despite our hyper-connected lifestyles) but in this article we want to talk about how this broad trend affects the retail, footwear and apparel industry. Most importantly, we want to explain how small-to-medium businesses in particular stand ready to reclaim retail’s lost magic through simple changes in their priorities, and by making informed investments in technology.
So, when abandoned storefronts abound, and malls and traditional shopping centres continue a steady and precipitous decline, there can be little question that for many of us, shopping is not what it once was. And as the opening to this article suggested, the chances are good that you, as a consumer, feel this way too.
But what can you, as a retailer or brand, do about it? The first step lies in understanding the causes.
Retail and fashion industry analysts have blamed a “nexus of forces”, including social media, the proliferation of mobile devices, and cloud computing for the sweeping transformations that have affected how footwear, apparel and accessories – as well as consumer products on a broader level – are produced and sold. The complexity of this explanation belies the simplicity that beats at the heart of the problem: big retailers and brands have, in many cases, let their founding principles languish, pushing them aside in the pursuit of internationalisation and expansion. And in a world where consumers are increasingly pining for a return to the storekeeper of old – personal, available, expert – those same companies are struggling to reclaim what was once their raison d’être: delivering a considered and curated consumer experience that reflected its surroundings.
As a case in point, SH Lee (Chairman of Tesco’s Korean Homeplus business) recently went on record declaring the “age of imperialism” in retail over. For a retailer whose products and personality are routinely criticised as being monolithic in nature – not to mention whose approach to expansion has been condemned as effectively steam-rolling small businesses here in the UK – this is a telling proclamation. The international Tesco brand is founded on the understanding that the shopping environment and the consumer experience will be identical, irrespective of where the company sets down the foundations of its store. So when a senior Tesco executive acknowledges that the big business approach to physical and digital internationalisation is faltering, it practically goes without saying that others will follow suit.
The common wisdom, though, is that big business moves slowly, and those retailers and brands with the strongest foothold in the established order are often the most inertial when it comes to doing things differently. And if the modern retail and brand environment demands one thing above all else, it’s differentiation – across channels, between competitors, and, crucially, between territories. As Lee went on to say, speaking at the World Retail Congress, “there are many imperialists in the Korean market who fold[ed] as they did not understand the local culture”.
He was talking sense in more ways than one.
Lee’s decision to focus on the domestic Korean market helped Tesco to leapfrog its competitors by a full ten places, becoming ranked the second-largest retailer in his home country in a comparatively short space of time. And there’s ample reason to believe that the same strategy can be applied to the full spectrum of global markets, from Los Angeles to Lahore. Putting localisation at the forefront of a global expansion strategy, it seems, can allow retailers and brands to bag market share, as well as reclaim the high street and the web-shop, at home and abroad.
To achieve this, however, requires larger retailers to back-pedal in many respects. These are in many cases multi-billion dollar organisations operating on the precept that products and collections created at the corporate level will sell to markets around the world. These companies work on the assumption, too, that their merchandise planning, store planning, point of sale experience and much, much more can be deployed intactus in every corner of the globe. Understanding and catering to the local culture, for big businesses, requires far-reaching changes to their fundamental ways of working. As such it can be a costly and time-consuming exercise for an international retailer to put an end to its own “imperialism” and adopt a more considered approach to globalisation.
In this area, the small-to-medium business (SMB) has a distinct advantage. Lacking the sheer inertia of their larger counterparts, SMBs retain a sense of the intimate. And having not long since emerged from local markets – where many were founded as boutique brands – companies in the SMB sector possess a keener understanding of what it takes to deliver transformative consumer experiences and grow consumer loyalty at both a personal and corporate level.
When Lee and other industry figures talk about retailers becoming global as opposed to international, their words have a very specific meaning, and it’s important to distinguish between the two. An international retailer or brand will take a successful regional business and extrapolate it across the world; a global business will examine the facets of their domestic strategy that worked well, and then figure out to transpose those to a new environment in a way that satisfies local commercial and human needs. Both will operate on the world stage, but only one will prioritise the knowledge and intimacy that allows them to leverage micro and macro-level trends (sometimes product offerings change between domestic cities, as is the case with Rio and Brasilia) to deliver an experience that isn’t the same everywhere, but that can make the brand resonate anywhere.
Luckily, not-so-big companies have agility on their side when it comes to more than just regionalising their offer. They can opt out of the traditional retail paradigm entirely (or at least temporarily) in order to better shape not just the products their customers want to see, but the channels through which they want to buy them. In some cases this involves selling directly to the consumer, bypassing department store concessions or wholesale channels to establish their own online or high street presence.
Speaking to the New York Times in March of last year, James Dion of Dionco (a retail consultancy working out of Chicago) explained the shift quite succinctly: “…department stores used to be able to deliver […] credibility to your brand”. Today, however, technologically-enabled agility has democratised that credibility. So while the high street may be suffering, its salvation rests in the empowering knowledge that in 2014 almost anyone can sell, and an SMB business has a greater range of options for engaging their consumers than ever before. There’s no need to aspire to a foothold on Bond Street or 5th Avenue in order to build prestige, cachet and mindshare; it’s no wonder the companies willing to experiment are flourishing. And it’s equally unsurprising that the SMBs spearheading the new vanguard of retail and brand engagement are those with the inherent flexibility to do so. That flexibility can take many forms, but the most obvious is the ability to blur the boundaries between traditional channels, and even to do things the opposite way to how traditionalists expect them to be done.
Warby Parker is an eyewear brand, founded in 2010. Originally an online-only business, the company was founded on the principle that selling traditionally-expensive products (prescription glasses and sunglasses) direct to consumers would allow them to eliminate extraneous costs, retain margins, and deliver a new consumer experience starting from just $95 a pair. Shoppers selected up to five frames, and Warby Parker shipped them to the consumer’s home for a five-day, no obligation try-on period. The strategy was so successful that the company later began to explore physical showrooms and even a cross-country tour bus as new methods of engaging with their consumer.
Today, the company has showrooms operating as concessions in existing boutiques, as well as pop-up and permanent stores in Los Angeles, Boston and New York City, as well as its proven online channel.
The Warby Parker story, despite being thus far confined to the United States, has a number of parallels with the transformation of retail in general – particularly in how more humble retailers and brands are leveraging the power of not-so-big business. By sidestepping traditional retail channels, the company was able to deliver a desirable product at the right price. By engaging directly with its consumers and sending out tangible product samples, Warby Parker encouraged hands-on consumer interaction and, in the process, gleaned a huge quantity of regional and national market intelligence. Today the company has grown from its SMB roots to become considerably larger, but its essential DNA remains intact; despite being fully national in one of the biggest nations on earth, Warby Parker delivers personal service and tailors its bricks and mortar presence to account for regional tastes.
This approach might sound ideal, but it’s important to remember that replicating or learning from it requires a great deal of agility, introspection and insight. In order to localise their product offering and consumer experience, it’s vital that retailers and brands understand both completely. The Warby Parker and later Tesco models succeeded because the companies looked exhaustively at the composition of their desired customer base, and took great pains to tailor their in-store, online, and brand lifestyle experiences accordingly. As Tesco’s earlier attempts at “imperialism” demonstrated, there is very little margin for error where thinking globally is concerned: your product inspiration can arise from a host of different regions, and your collections and marketing efforts need an inbuilt robustness and flexibility as a result. As a retailer or brand looking to serve the unique needs of multiple regions, your product data – whether it’s a sketch or a swing ticket – must be accessible and understandable at a local level in every territory you hope to serve.
So, although small-to-medium businesses have a natural advantage over their larger, lumbering brethren, they are still faced with the same challenges when they are both at a domestic and international level. They, too, must capture the voice of the consumer early in the design process; they are equally pressured to diversify and reduce the lead times on their products, and, like other apparel companies of all shapes and sizes, their supply chains become more complex and fragmented with every passing day.
The much-vaunted agility of not-so-big business allows those companies to respond to shifts in demand more quickly, true, but this same flexibility should also be carried upstream from local offices to headquarters – all without overriding the existing, compelling corporate identity. This is an extremely delicate balancing act, and one with challenges that are only accentuated by the ever-quickening pace of consumer demand.
When we consider how rapidly consumer tastes evolve on an international level, it’s easy to forget that these changes are reflected and amplified a thousand fold in existing and emerging markets around the world. Even for the SMB, as agile as it may be, the need to manage collection and assortment planning (not to mention other product development processes) in a sophisticated but accessible product lifecycle management (PLM) solution becomes more than just a competitive advantage. It becomes a necessity.
This can be a difficult message to swallow when it comes from a vendor with a vested interest in selling a solution, but the claim is supported by the International Data Corporation’s eighth prediction for the remainder of 2014: that as product assortment refresh cycles quicken, an additional 25% of mid-sized retailers will initiate new PLM or sourcing projects in 2014. This is on top of market research from analyst publication WhichPLM, which revealed in 2013 that the mid-market (defined as retailers or brands with revenues between $500m and $1bn) now accounts for as many PLM sales as the upper and lower markets combined.
Retailers and brands in the mid-market need innovation, intelligence, intimacy and inspiration in order to conceive an effective globalisation strategy; they also need the expert-level technological environment in which to execute it. And this is where the Fashion Collection for SMB, by proven PLM vendors Dassault Systèmes comes in.
Comprising 2 key components – My Simplified Development and Sourcing, and My Analytics – Fashion Collection for SMB has been designed from the ground up, incorporating feedback from apparel customers around the world, to provide a single collaborative environment in which SMB companies can manage their entire global lifecycle, from product to consumer.
As is the case with their approach to market, not-so-big businesses are increasingly seeking technological solutions designed with them in mind. Like international retailers approaching a worldwide market, many PLM vendors develop a one-size-fits-all solution and price it accordingly. Selling a single environment for both multi-national and fast-growing domestic brands provides the best environment to neither, which is why Dassault Systèmes’ Fashion Collection for SMB is specifically tailored to close the gap between what SMB companies can produce and what their consumers – whatever channel they take – demand. And unlike their larger counterparts, small-to-medium businesses lack the substantial resources (time and monetary) to purchase, customise and train their users on complex and unwieldy technology. This is why Fashion Collection for SMB is designed to be fast, intuitive, and to deliver rapid implementations at comparatively low cost.
As an SMB company, the global marketplace is now firmly within your grasp, and in recognition of that fact, Dassault Systèmes have created, with the Fashion Collection for SMB, a 3DEXPERIENCE that’s both designed and priced to be within your reach.
The right PLM and extended-PLM environment for an SMB company should comprise the entire concept to consumer lifecycle, which is why Fashion Collection for SMB includes: season and line planning, component and standards development, product development, artwork, sample management, calendar management and more. The right solution, too, should be built on a foundation of well-established results, and have delivered value to its customers in the shortest possible timeframe. Fashion Collection for SMB can deliver:
- up to 40% reduction in product launch costs;
- up to 30% reduction in cost of samples;
- up to 75% reduction in Bill of Materials errors; and
- up to 75% reduction in searching for information, rekeying data, copying, printing etc.
Each of these can have direct impact on the way that an SMB company approaches the market, whether they choose to do so through more traditional avenues, or whether they buck tradition entirely and place themselves at the forefront of the new wave of retail and consumer experience.
A growing number of leading small-to-medium brands are already using components of Fashion Collection for SMB, choosing a product development environment that understands their need to do things a little differently – and do them right first time – whilst delivering the same kind of returns as solutions designed for larger enterprises.
A medium lifestyle brand using the solution reported the following key benefits: increasing style count without increasing headcount; reducing time to market; enabling effective change management; eliminating data duplication and human error; and providing an executive-level view of the business, its suppliers and collections.
Indeed, it’s precisely those kinds of results that provided the framework upon which the SMB Collection is built. Small-to-medium brands like Mammut and Haglöfs leant their experience to its creation, allowing Dassault Systèmes to gain a first-hand understanding of the challenges and processes that are particular to the needs of not-so-big business.
The starkest endorsement of the potential of Dassault Systèmes’ solutions comes from Johnny Claus, General Manager for Product Creation at Scandinavia’s premier outdoor equipment supplier, Haglöfs: “We wouldn’t be where we are today if it weren’t for [our Dassault Systemes solution]. We consider it essential to our business. It helps us sustain good product quality and good customer service”. And after all, what more than good quality and good customer service – both with due consideration given to their surroundings – does modern retail need?
The results certainly support their conclusion, and increasing numbers of new proponents of not-so-big business agree: with Fashion Collection for SMB, Dassault Systèmes has developed a 3DEXPERIENCE that meets the needs of the modern, social SMB enterprise of the twenty-first century – however and wherever it chooses to approach its customers.
*This is a featured advertorial from Dassault Systèmes, and does not act as an endorsement from WhichPLM.