It’s no secret that the retail landscape has changed recently. Thanks to the influence of Amazon.com and other retail disrupters, customer expectations today are at an all-time high, and this puts economic pressure on legacy retailers, which generally have very different business models and as such can’t always meet these expectations.
So, what are legacy retailers to do? David Jaffe, chairman and CEO of Ascena Retail Group., parent company of leading brands such as Ann Taylor, LOFT, Lane Bryant, Justice, and more, told 150 attendees of the Retail Leaders Circle conference yesterday in New York City that it’s time “for the empire to strike back."
"All of us legacy brick-and-mortar retailers must develop a new business model because as our customers’ expectations transform and as new competitors enter the industry, we’ve got to stay ahead of them,” said Jaffe.
According to Jaffe, legacy retailers have three strengths going for them that they should leverage to help them re-emerge as strong leaders in the current retail environment.
One is huge customer databases. "At Ascena, we have 25 million active customers, and another 25 [million] that are recently added," Jaffe noted. "We have a huge database of customers that know us, like us and spend money with us, so we can take her on this journey.”
Second, legacy retailers have iconic brands. “Our Lane Bryant business is over 100 years old,” said Jaffe. “Many of our brands are household names.”
Finally, legacy retailers have solid infrastructures. “If you’re starting out, you don’t have that," Jaffe said. "You’re using a third party. We have these strengths. How do we leverage them?”
As such, Jaffe said, “I believe that we, as legacy retailers, are all in a very strong position to take a lead in reinventing retail. It’s going to be hard. There are going to many bumps along the road. But in every market disruption, there are winners, and new models emerge. The key is not to view these shifts and challenges as barriers, but as opportunities that inspire us.”
Jaffe also discussed how legacy retailers should focus on great product and outstanding personalized experiences to meet changing consumer needs.
As for developing great product, Jaffe said Ascena is focusing on “more fashion and less on core or basic products. You’re not going to win competing against Amazon, Kohl’s or Target on basic product. [The products] must be differentiated. [Customers] have to come to you for something they can’t get anywhere else.”
As for creating outstanding personalized experiences, it all starts with omnichannel services, according to Jaffe. Retailers with a hybrid model like Ascena, Jaffe explained, must make sure that all of their channels — stores, mobile, social, website — are linked together, and that the customer is having one experience with the brand.
“We have to be able to recognize the customer and give her the opportunity to connect with us in the store and carry that relationship online and in between through social,“ Jaffe said, adding that Ascena is rolling out a new app shortly that will do just this.
Trust is also an important part of creating personalized experiences for customers. Ascena does this though unique in-store experiences, such as bra fitting events at the company’s Lane Bryant stores.
“Sixty percent of women wear the wrong size bra," said Jaffe. “So if we get that woman into a fitting room, and she takes off her shirt and we put her in the right size bra, then she will trust us. It’s about building that relationship based on trust.”
Another way that Ascena Retail is working to be better, faster and more efficient to meet the needs of changing consumers is by developing a shared services model.
“We’ve been able to leverage our size and standardize and centralize virtually everything that's not directly customer-facing, such as marketing, merchandising and store operations,” said Jaffe. "In so doing, we've announced publicly that we will save $250 million and are working to drive that number significantly higher.”
Lastly, Ascena Retail is taking some of the cost savings that it has generated and investing it back into the company. “We’re not going to win by cutting costs or by trying driving sales alone,” Jaffe said. "It has to be that combination.”