March 29, 2023
As another jam-packed day of Shoptalk sessions comes to a close, our heads are still buzzing with insights from big brands like AEO, Foot Locker, and more. Check out our favorite learnings from the day’s presentations below (and don’t forget to check out Monday’s insights, in case you missed it!)
Michael Relich, Co-CEO of PacSun, and Craig Brommers, the CMO of American Eagle Outfitters, may head up brands that are technically competitors – but there’s one thing they can absolutely agree on: when it comes to the Metaverse, experimentation is key.
Why would a retailer even sink money into a Metaverse strategy? For Relich, it’s all about awareness: “Wherever the customer is, we want to be there,” he said. And PacSun’s Gen Z customers are in the Metaverse.
Case-in-point, PacSun’s latest Metaverse endeavor, a game launched in partnership with Roblox called PacSun Los Angeles Tycoon. “The game has had 4.8 million visits since mid-February,” said Relich, “and it continues to grow.”
But success in the Metaverse hasn’t come easy to the retailer. PacSun first tried developing a presence with Roblox in 2020 with the launch of PacSun Tycoon. “It was a little bit of a bomb,” admitted Relich. “In the couple years it was live we didn’t have as many engagements as we do now in the new game.”
Despite concerns about the program’s ROI, Relish managed to convince the brand’s CFO to “chill” (in his words) and applied the learnings of the team’s first failure into today’s second iteration of the game – which, by comparison, is wildly successful.
Ultimately, for Relich, the Metaverse is a “top of funnel” investment, and awareness counts. “After 43 years – especially with that Gen Z cohort that’s so finicky – we’re still relevant,” he said – and that’s something to be proud of.
For American Eagle Outfitters, the stakes are a little bit higher. “With a brand of our size we get to play around a lot. But at the end of the day, the CFO says, ‘show me the money,’” laughed Brommers.
For AEO, that means keying in on revenue-driving ideas. To that end, the brand has seen success actually selling product while leveraging Web3 technology and digital innovation.. “We’ve generated almost $10M in revenue in these AR pop-up stores that we have set up on Snap from time to time,” said Brommers. “These kids are excited to buy inside of these augmented reality shops.”
But just like PacSun, AEO knows the real opportunity lies more in the top of the sales funnel. “The real competition is for mindshare and attention span,” said Brommers. “We’re in the entertainment business in retail. We’d better have entertaining and engaging experiences in the real world and in the digital world as well.”
As a result, AEO has been able to stand out In a sea of retail sameness: with unique collaborations and giveaways in the digital space, they’ve embraced a strategy that’s not “physical and digital” but rather “customer first.”
Of course, leveraging the latest technology doesn’t come without risks. But Brommers believes his team takes the failures in stride: “If it doesn’t work, we call it, we own it, we learn from it, and we move on. My team is mostly made of Gen Z’ers and they know more about this space than I do. We’ve created a culture where a 22-year-old entry level Marketing Associate can call out the CMO and say, ‘you gotta trust me on this.’ We haven’t messed up too bad, luckily. We’re given the permission to fail, and that’s ok.”
Prior to the onset of Covid-19 in March 2020, brick and mortar stores had reached “peak entertainment:” they had largely become destinations focused on experience above all else.
Then, out of necessity, the pendulum swung all the way over – to convenience. BOPIS, curbside pick-up, and contactless payments took precedence over emotional experiences.
Today? Well, we can finally see the pendulum returning to the middle: a confluence of entertainment and convenience. A renaissance of the store experience, if you will.
Shoppers are seeking seamless experiences across online and physical stores – what Shoptalk speakers referred to as a “unified experience:” one that is continuous (moves from one channel to the next without interruption) and frictionless (free of painpoints along the customer journey.) A best-in-class unified experience will be one of the biggest unlocks for retailers in the years to come.
So, what does this look like in practice? Jason Bonfig, Chief Merchandising Officer at Best Buy, talked about the brand’s journey moving from omni to unified. “Our customers touch so many different parts of what we do (whether that’s through our app, website, physical store, or picking up an order),” he said. “Making sure all of those are threaded together in every single way for the customer is really the work of today.”
Bonfig talked about how that unified way of operating starts with the leadership team. “All of my peers that report directly to the CEO have to work together. The lines between who owns what are really blurred, and they need to be,” he said. All company goals are jointly owned. “There aren’t silos and divisions in the same way there may have been in the years past,” he explained.
At Best Buy, the focus on a unified experience also has implications down the chain of command. “We’re now looking for employees who are general managers and who have skills across the business,” said Bonfig. About 18 months ago, Best Buy significantly changed the operating structure of their merchandising org: “Buyers and inventory managers and .com teams were combined into one. Entry level analysts spend time in three of those functions to move into a ‘category lead’ responsible not just for buying and merchandising, but inventory and website too,” said Bonfig. “We think the general manager infrastructure is really the path forward.”
Even though Foot Locker plans to close about 400 stores, the brand is anything but shrinking. In fact, President and CEO Mary Dillon sees a ton of upside for the footwear retailer: “I believe we can drive category growth by introducing more people to the power of sneakers,” she said.
Foot Locker is “reshaping the portfolio to focus on the types of formats.” Part of that involves opening larger format stores. When all is said and done, the total square footage of the brand will actually be slightly higher than it was in years past.
To Dillon, 2023 is the brand’s “reset year.” She explained: “We have to invest in core technology to have a better, seamless consumer experience.” A lot of that involves upleveling the brand’s e-commerce presence, but it also means investing in store teams.
“Our stripers [store associates] are iconic,” said Dillon. “They are truly what differentiates us from every other retailer in the segment… When I visit stores, I’m not inspecting. I’m there to build culture and to listen and to learn. Every single time I get good ideas of things we can go and implement right away. And I find our leaders are very willing to tell me what’s working and not working if I just ask.”
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