The opening remarks of the ShopTalk Day 1 Keynote set the stage for the rest of the conference: the systems and strategies that today’s retailers and brands are implementing are designed to connect people and personalize interactions and experiences.
Courtney Reagan, retail reporter for CNBC, kicked off the keynote with the co-president of arguably one of the top brands in retail, Nordstrom. Reagan interviewed Erik Nordstrom.
Nordstrom’s Co-President on Blended Retail
Nordstrom is continuing to invest in its Local Market initiative. The company has strategically placed Local Market stores in cities like L.A. and New York City, which offer a long list of services: alterations, personal stylists, online order pickup, refreshments, and easy returns. Unlike their massive retail stores, the local stores range in size from 1,200 to 2,200 square feet. Nordstrom says, “It’s amazing to me how many customers have been in Los Angeles for a long time, and they don’t realize we have alterations; it can get buried in a big store.” He continues, “There are all of these activities that lend themselves to the connection point of physical and digital experiences.” From the local stores, Nordstrom has learned that smaller stores allow the sales associates and stylists to communicate the services to the customers better while building long-lasting relationships.
Returns are one of the most popular services used by the local store customers. Nordstrom tells the story of one customer who leaves her purchases in the trunk of her car. When she’s near the local Nordstrom store, she can easily pop in and return her clothes at her convenience. Especially for L.A. shoppers who deal with traffic, this is a huge benefit. When you can get those customers who want to return the items in the local store, this gives the personal stylists an opportunity to turn that return into a sale.
Free alterations are another tactic to revert the return into the sale. Something didn’t fit perfectly? Well, local Nordstrom stores can tailor it for your body at no additional cost. Nordstrom has the largest number of seamstresses on staff in North America.
Is the Local Market program a scalable initiative for Nordstrom? Nordstrom says that the local stores are cost-efficient and have high engagement and customer spend. Due to the nature of their product, returns are inevitable, but this store concept allows them to minimize returns, or get the customer in the door to exchange for another item.
When talking about the split of operations between Nordstrom’s ecommerce store and physical stores, Nordstrom notes that “the only time we talk about the breakdown of operation of ecommerce and stores is at things like this.” He adds, “It’s increasingly impossible to separate the digital journey from the physical journey. We know that more than half of all store visits start with that customer going online.” Just under half of Nordstrom customers pull out their phone to help with the journey while they’re in a physical store.
In the last couple of years, Nordstrom has been working with direct-to-consumer brands, such as All Birds and Away. Reagan asks Nordstrom if there is any plan to buy one of these direct-to-consumer brands. Nordstrom answered with, “That’s not our business. Our business is being the best brand partner we can be.” They focus on bringing brands to life and creating engaging experiences with the brands to enhance the customer journey.
To wrap up Nordstrom’s interview, Reagan asks if physical retail is going away. Nordstrom believes that they are not, but emphasized that the way physical retail is brought to life will look very different in the coming years. Nordstrom remained tight-lipped on their long-term plan for their physical retail stores.
Tips from Facebook’s VP of Ads
Next on the stage were Tanya Dua, Senior Advertising Reporter at Business Insider and Mark Rabkin, VP Ads & Business Platform at Facebook. One of the first things he said to set the tone for his interview is “people are hacking social media left and right to make commerce work.” They’re proving again and again that the number of ways to interact with brands is infinite. For example, Facebook has 500 million monthly Stories users on Instagram, 450 million monthly users on Whatsapp, and 500 million monthly users on Facebook Messenger. Two years ago, these numbers were nonexistent or near zero—proving how quickly consumer behavior can change.
Based on Rabkin’s perspective, consumers are changing their behaviors every six months. So, whether you’re a traditional retailer or a disruptor, being able to set up your organization to adapt to these changes quickly is the foundation of success. When you think about Windows 95 then the update to Windows 98, that’s a three-year wait for the next upgrade. Now we get upgrades almost daily.
Rabkin believes that brands need to take advantage of the shopping tools on Facebook and Instagram. He and his team is seeing more and more users open the Instagram app with the intent to shop and save items. The Custom Audiences tool allows brands and retailers to create control groups that work with their own custom attributes to A/B test and optimize ads.
Digital Transformation at Macy’s
Jill Ramsey, Chief Digital Officer at Macy’s, ended the keynote with Macy’s digital transformation. Ramsey joined Macy’s last year with the goal of reinventing the customer experience. In one year, Macys.com shifted its focus to personalization, inspiration, convenience, and choice. They now use algorithms for product recommendations that update in real-time based on the shopper’s behavior, all editorial content is shoppable, and they offer free in-store pickup.
In the mobile app, the Macy’s team integrated voice technology and augmented reality that allows customers to try on dresses and makeup through their mobile phone. Today, their strongest growth channel is mobile. Two-thirds of traffic and half of online sales come from such devices.
For Macy’s, changing the way they work allowed them to explore new ideas, test, and react to customer behaviors across channels. Ramsey says, “We know what you want, when and where you want it, whether it’s product, content, or assistance.”