The rise of online shopping has been crushing traditional retail because of the value it offers to consumers. Over the internet, shoppers can easily compare prices, discover new brands, purchase on the fly, and receive goods quickly for little to no extra cost. Arguably, online retail has not meaningfully increased the size of the pie (people still have the same need for clothing and accessories), but rather made the pie more competitive.
So, how can traditional retailers evolve their model to attract and retain customers at their physical stores? Rebecca Minkoff, a NYC based contemporary fashion retailer, is leading the industry in blending of best of the digital and physical worlds. Rebecca Minkoff’s “connected stores” deliver value to customers through a VIP experience tailored to the customers’ needs and to the company itself through improved data collection and increased revenues.
Rebecca Minkoff’s digital store experience is comprised of 2 main elements: the “connected wall” and the “smart changing room”. Every other element of Minkoff’s stores: clothing racks, stockroom, sales associates etc. are the same as the competitors. A shoppers’ digital experience starts with the “connected wall”, a large mirrored wall with an embedded touch screen computer that allows a shopper to engage with the Rebecca Minkoff brand. Through the wall, shoppers can browse social media content, watch videos of runways shows, order a complimentary beverage, or swipe through pictures of products in the store to begin her shopping experience. By entering in her phone number, the client will receive a text notification when all items she selected to try on have been sent to her dressing room. Operationally, capturing a cell phone number is key for Rebecca Minkoff because the company will facilitate future interactions with the client (inside and outside the store) and collect data on the client via the cell phone number.
The shopper’s digital experience continues upon entering the “smart changing room”. Each changing room is outfitted with RFID technology through which each item brought into the room is “scanned” and listed on the smart mirror (similar in design to the connected wall) inside the changing room. The shopper can use the digital mirror to browse customized styling suggestion, contact a sales associate, or even change the lighting in the dressing room to simulate day or night. Before checking out the shopper can choose to have her activity linked to her personal profile. Shoppers are encouraged to link their activity because it will allow sales associates to reach out to them when new products come in or let them know if a previously sold out size is back in stock.
The sales results of Rebecca Minkoff’s connected stores prove that value is being delivered to the customers. Rebecca Minkoff’s CEO Uri Minkoff noted that, “since opening the store(s)…we’ve made triple the amount of clothing sales than we thought we would.” Customers actively used the interactive mirrors, on average 30% of customers requested an additional item via the fitting room mirror.
The data collected by the RFID technology will also boost Rebecca Minkoff’s sales. Since every item brought into the fitting room is tracked, headquarters is able to see which pieces are tried on but not bought, which pieces are styled together, and which pieces never even make it to the fitting room. This information is invaluable for the merchants as they decide what styles to produce next season. For example, if a particular product was frequently brought into the fitting room but never purchased it can be deduced that there was a fit issue with the product. The team can then study the fit and correct it for the upcoming season.
Is there any downside to this new operating model? Putting the discussion of costs aside, I see two main threats to the model. First, the technology used in the store is not proprietary to Rebecca Minkoff as it was developed through a partnership with eBay’s innovation team. In fact, Healey Cypher, a former member of the eBay innovation team, founded a new firm called Oak Labs, which helped Ralph Lauren put similar technology into its stores. Second, while customers may enjoy novel shopping experiences, they will almost always base a purchasing decision on product alone. If Rebecca Minkoff wants to be a cutting edge digital brand it should work on innovating its product, not just innovating its stores!
 “How tech in Rebecca Minkoff’s fitting rooms tripled expected clothing sales”, Digiday.com, 9/23/15
 “Inside Ralph Lauren’s connected fitting rooms”, Digiday.com, 4/12/16