Sarah Gale has worked as a buyer for retail giants including Sportsgirl, Target, Witchery and Jacqui. She now operates Fashionista Business Consultancy Group.
As a consultant to retailers over the last five years and previously as a buyer for many of Australia’s high street fashion brands, the most common question people used to ask me was “how do you pick the winners?”. Oh how the times have changed. The queries that are now pressing the lips of retailers in this ‘interesting’ economic time have largely simplified to a somewhat bewildered “how do we stay in business?”. Interestingly enough, the answer to both these questions starts with the fundamental basic rule of retail: Know your Customer.
It sounds a simple and obvious task of retail, but clearly it alludes many.
To know thy customer is to know thyself! Well that’s what many believe, and this is where most businesses get themselves into trouble, especially the smaller retailers. Buying for your own company or a larger retail brand should not be an extension of your own likes and dislikes. Objectivity is crucial to picking winners, and really knowing your customer is the starting point. One of my rules along the way of my buying career was, if I liked it too much it didn’t make the range. Although it is hard for most of us in the fashion industry to fathom, we are not the general retail consumer! We have a love for fashion, we understand fashion and therefore we will buy very differently to the majority of the mass market out there. (Clearly, for some of the smaller design labels this may be a different scenario).
I have often consulted to sizeable companies who have been trading for many years, and I am astounded at the little knowledge they have of their true customers. Broadly speaking, we have four major customer types in Australia, not withstanding a few smaller sub- sections. I class them as Mainstream, Mainstream Fashion, Contemporary and Fashion. Most businesses cross over two to three of these segments and only in the contemporary designer areas do we see some retailers servicing only one particular customer.
It is often easier as a consultant to see the mix of customer segments within a business than it is for those working the detail on a day to day basis – they tend to be clouded with history and what they are ‘aiming’ at can often misdirect them into thinking they know who their true customer is. When helping a team to truly discover their mix of consumer I probe further into the activities of their customer; their likes and dislikes, their daily routines, their holidays, cars etc. The buzz in the room and the discussion that takes place with the merchandise and financial teams is inspiring as they start to feel the connection they have been searching for.
Financials don’t lie – once a team has discovered the differing segments of consumers within their business then uncovering the disconnection between the perceived major customer and the actuality can be quickly brought into the light through a Post Seasonal Review (a dissection of product sales and profit figures to create an overall picture of season performance). It is vital to analyse the performance of product from the previous seasons. In most medium to large size companies these reviews are common place, however even there, all too often businesses analyse within product category, colour, price, fabrication etc, and completely ignore analysing these areas within the context of the different Customer Segments. Thus the buyers confidently march into the following season, equipped with their percentage increases and decreases per categories, boldly selecting their products, although calamitously neglecting to take into account the percentage and number of options for each particular customer segment.
A simple switch to emphasising customer segments as a measuring and planning tool can see an increase in sales and a minimization of markdowns. One of the positives about the current financial situation is it asks everyone to have a good look at their business and where they can improve. If we dwindle in today’s market we will not survive. Closing down unprofitable stores and concentrating on obtaining more sales share on the internet are smart moves – and only come about from digging deep into the crevices of our business. I liken it to a relationship – if there is unsteady ground, you know you need to do something about it; pouring pink paint on top of it and pretending all is well inevitably leads to further trouble down the track. This is the time for retailers to expand in their way of thinking; research and rethink their business, re-align with their true customers and think out of the box as to how to engage with them.