I think StitchFix is one of the most interesting eCommerce companies to study. While the company looks to serve fashion lovers looking for their “Fix,” they’ve found a high portion of the demand for their brand isn’t coming from fashionistas at all. The company has found tremendous success styling women who either a) don’t enjoy shopping b) don’t feel like they know what to pick out c) don’t have access to the stores/styles they want based on where they live or d) don’t feel confident in themselves and feel more comfortable trying things on at home. The company claims the magic sauce is their algorithm that matches people with the right items, but in reality the company relies of thousand of remote pay-by-the-hour employees who rarely, if ever, see the clothes in person and “shop” for each customer virtually, choosing items from available inventory online and writing personalized notes and styling recommendations. In a way, this model is returning to the original retail model, with retailers paying stylists to give personalized styling services to customers. Will StitchFix ever be able to rely on the algorithm? Do customers enjoy the personalized touch that stylists give and cannot be recreated by a computer? It will be interesting to see how much the retailer will be able to use technology to bring down employee costs as they scale.
It’s so interesting to think about the role of these types of devices in the future and if they are merely a technological stepping stone, or part of every future household. I often wonder if we are in the height of visible technology presence in our lives given that so many of these innovations are new and as technology progressives it will actually become less visible as we integrate it more seamlessly into our lives. This is a perfect example of how consumers moved from physical offline shopping, to digital shopping to now a mixed experience.
I agree that your pricing concern is a real one for consumers. Even if Amazon sends a consumer the lowest cost Tide item available per ounce, consumers used to price comparing over the internet may still be skeptical. A distrust could form, which I agree is against Amazon’s consumer-first mentality. Another issue I see is in these buttons being limited to one brand per category. I understand it from a competitive standpoint for Tide, but if Tide has a major scandal next year or if Amazon sees The Honest Company rising, do they suddenly switch the brand on the buttons? It essentially establishes Amazon as a “king maker” or “king keeper” that breeds a lack of competition amongst brands on the platform.
I like your analysis and am impressed with Nordstrom’s recent moves to keep up with a changing retail environment. However, one of things they are currently doing and one of the things you suggest they are doing seem at odds and I would be interested in hearing your take. You mention their push to increase store pickup and cost effective express delivery that leverages inventory at physical stores. I agree that both of these are things the consumer will want. You can see that curbside, a company that enables curbside pick up raise $25 million last year from prominent investors, signaling interest in the consumer service (https://techcrunch.com/2015/06/25/same-day-shopping-app-curbside-picks-up-25-million-more/). However, for Nordstrom to execute on these things, they will rely on keeping a high level of inventory in stores. Another thing you suggested was to lower retail store rent by creating smaller footprint “showroom” like stores. This attractive new retail model relies on little to no inventory in store, with orders shipping from centralized fulfillment centers. While both models are attractive, their very different methods will likely force Nordstrom to make a decision in one direction or another, at least in the short term.
I enjoyed reading your perspective on the company. I think one solution to your brick and mortar capital expenditure concerns could be to partner with department stores to create a RTR store within a store. Just this week, the company announced a partnership with Neiman Marcus. http://www.pymnts.com/news/retail/2016/rent-the-runway-opens-up-shop-with-neiman-marcus/
Not only will this be less expensive for RTR than company owned stores, they can leverage Neiman Marcus’ preexisting retail footprint, customer base brand halo. Neimans can benefit by giving customers a more unique experience through the rental model and hopefully get customers to “rent” from designers they’ve been hesitant to try given the price point.
One of the greatest costs to RTRs business is that often dresses don’t fit the customer so they ship you two sizes instead of one. Also, if a customer is unsatisfied with the dress she receives, the company allows a full refund. By allowing a % of customers to try dresses in store before renting, RTR can essentially double the number of dresses that can be rented (since only one will be out at a time) and reduce costs from returns. Also, RTR currently does not allow customers to keep a dress if they fall in love with it. I suspect this is due to that dress already being committed to another customer’s rental. This is a revenue opportunity that RTR is failing to capture. I believe a partnership with Neimans could be an opportunity to try out adjacent business models more centered around “try before you buy” model that caters to an affluence customer who may be able to purchase the dress instead of returning it after the rental period.
Wow! This is a fascinating opportunity. I never knew it was so much more sustainable to harvest than wood and of course it would be much lighter to ship. I feel like there are so many other applications for cork that could be realized beyond even insulation. While I was reading I kept thinking about IKEA and their interest in using particle board. I’ve actually been googling around for cork furniture in response to your post! There are a few items out there, but it doesn’t seem to be the most aesthetically pleasing material. I wonder if it could be used more as an internal or backing material, rather than the exterior. For particle board is most often placed on the back of ikea products where its not seen. Thanks for writing on such an interesting topic!
You paint an interesting relationship chain here between suppliers, Clif Bar and its consumers. As you noted, as ingredients become more scarce or expensive, could Clif Bar be forced to alter its recipe or source its products from producers that use unsustainable business practices. What role do you think pricing plays into this? Do you think that Clif Bar could potentially raise its prices to accommodate the rising costs of its ingredients or do you think that consumers in this category are less flexible on price and not motivated to spend more to support sustainable companies? Does Clif’s sustainability story play into consumer purchasing decisions right now?
I wonder if there are cost savings to be found in some of the actions you proposed such as energy efficiencies in manufacturing facilities. This could help subsidize rising prices on the sourcing side.
I find this post interesting because it’s a case in which the environmentally friendly steps being taken are likely to result in tangible cost savings for the company. The steps will also require a substantial upfront investment in many cases to reap these cost savings later. I am impressed that as a public company, Vail Resorts is able to take a longer term approach to its own energy consumption.
It’s very interesting to think about how sustainability affects such a large organization and the different areas of their value chain that can be used as levers to improve environmental friendliness. I am curious to know what angle you are taking in your suggestions to the business. Are these purely actions you think would help the environment? It seems like General Mills would be more likely to implement these if they either 1. produced costs savings for the business or 2. these measures in particular are likely to lead to strong backlash from interest groups. Do you think that either of these apply to any of your suggestions? Or do you think that consumers would positively react in their purchase behavior if GM implemented these measures? Or do consumers in this category look primarily at price?
It’s very interesting to think about how sustainability plays in to the future of the luxury industry. I find it especially interesting because you mentioned sustainability as becoming “a more important purchasing consideration for luxury goods going forward,” while Stella’s view is that “I love that people come into the store and don’t even know that something is organic or in faux leather. That’s the biggest challenge, having people not notice.” This raises a few questions 1. are consumers really incorporating sustainability into their decisions? If so, why would Stella want to hide it entirely? Perhaps it is more Stella’s personal mission and fears that drawing attention to her practices could draw attention away from her skills as a designer. 2. Are consumers only incorporating sustainability into their decision it if they are deterred from a purchase due to hearing about environmentally unfriendly business practice rather than encouraged to make one because of it?