Retailers Sustainability Strategies

Social responsibility departments used to be an addition that companies had in order to comply with governmental regulations and that ultimately worked as a marketing tool to make the company look good. However, that mind-set seems to be part of the past as more and more companies claim that social and environmental sustainability is part of their core businesses, and not just a superficial addition.

This trend is also present in the retailindustry. Big retailers in the United States all have some sort of goals or strategies that in one way or another show their approach to environmental and social sustainability. Many believe that those are still not enough and that especially big companies should be doing more to protect the environment. However, it is true that at least the issue is now more public than ever before and that companies are feeling the pressure to do better.

One example is Target, the retailer has set 4 commitments as part of its corporate responsibility strategy: environment, team member well-being, education and volunteerism. Offering more organic products, reducing packaging waste in their private labels, using energy more efficiently in the stores and buildings, are goals that the store chain has already met. But other critical actions, such as improving their sustainable sourced seafood selection is still a big challenge for the company.

Another example is Walmart, the biggest retailer world-wide, who has set its own goal of being supplied 100% by renewable energy and that also claims that have achieved a material diversion from landfills rate as high as 90% in countries like Japan and U.K, 81% in the United States and 70% in Mexico.

Similarly, Macy’s and Bloomingdales have entered this trend by creating a stronger and more creative online presence related to its sustainability strategy. The web-page macysgreenliving.com is solely dedicated to showing the work that these fashion retailers are doing towards achieving their sustainability goals. As an example, Macy’s own brand is part of the Sustainable Apparel Coalition, an international trade organization that works towards reducing social and environmental harm caused by apparel and footwear products.

The list of examples continues and from all the social responsibility reports it would be possible to argue that even big companies are trying hard to reduce their footprint on the planet. However, it is clear that these steps are very small compared to the long road that is still to be walked towards achieving a more responsible and sustainable general lifestyle. It will be interesting to keep an eye on what these companies can do to innovate and to turn the retail into a truly eco-friendly industry.

Bergdorf Goodman, a luxury goods store like no other

There are many luxury department stores, but only one Bergdorf Goodman, with just two locations, one across the street from the other, is that uniqueness what makes it so special and probably its key for success.

Located on the corner of 5th avenue and 58th Street in New York City, Bergdorf Goodman is one of the most iconic stores for luxury goods in the world. The store has been doing business since 1901, and its main building is still synonym of luxury and high end fashion. This is the place where shoppers from around the world buy their dream outfits, or where they come to be inspired by the new trends and see and touch exclusive collections from the best international designers.

Furthermore, designers also have to work hard to make their way into Bergdorf, and once in there, they have to be creative and put on those racks exclusive collections that will be on the spotlight of the international fashion elite.

But in times where people favor online shopping, what are some of the internationalmarketing strategies of this brick-and-mortar store? Is Bergdorf Goodman still a jewel in New York for luxury shoppers or is it facing hard times and maybe foreseeing an end to its exclusive business model?

The challenges are both related to finances and to customers’ taste. On the one hand, the store finances represent a challenge as part of the Neiman Marcus group (since 1987). The groupis currently considering selling in order to face a $5 billion debt as sales have declined in recent years. According to Bain & Co. sales of personal luxury goods fell 1% in 2016.

On the other hand, a big challenge for luxury retailers, is that consumers are increasingly mixing high and low fashion, for instance pairing sneakers from Adidas or Nike with an Alexander McQueen leather jacket.

To counteract these threats, the store offers different services that give additional valueto their customer’s experience, and focusing on an international market that can now reach Bergdorf Goodman from anywhere in the world.

 

Luxury goods shoppers can now shop online and the online Bergdorf Goodman store allows the customer to see the product’s prices in their local currency, which may be useful for clients that want to relate the store prices to their own country’s spending power. In addition, the store is proud to offer personalized services in 25 languages though their dedicated stylists, allowing shoppers from around the world to visit the store and enjoy a personalized experience.

 

The in-store personal stylists are fashion experts that put together a personalized selection for who requires the service, among the stylists customers can find experts on Channel handbags, casual clothing, tie and shirt combo for men, and even one that is on call 24/7.

Tourism in New York City also helps Bergdorf Goodman success. Walking down 5th avenue is a touristic attraction per-se, but few people cannot look at the Bergdorf Goodman windows without being amazed by the artistic decoration that the store carefully puts in each one of their window arrangements. These impressive windows have been a powerful marketing tool for the store. The store’s building is also well known in New York for being a dinning and tea time luxurious spot. It has one full restaurant on the 7th floor and a café for small plates on the Beauty Level.

Other highly personalized services include, the bridal salon that offers an exclusive selection of gowns and provide a comprehensive set of services for the entire wedding party: dresses, accessories, eveningwear, make-up and styling.

Furthermore, the store provides Fur Care and Storage. If customers need a safe space to store their fur during warmer months, the store have them covered. It offers a state-of-the-art, climate controlled vault, as well as pick-up, return, alterations, cleaning and glazing.

Finally, the store does not work completely isolated, it benefits from being part of the Neiman Marcus group. For example, by offering the BG credit card that offers InCircle points that are shared with other stores within the group.

In conclusion, offering exclusivity and personalized services are still the most important marketing strategies for Bergdorf Goodman. We should keep this store on the radar if we want to see what the future holds for luxury goods, both online and in-store shopping, because it seems like Bergdorf Goodman will keep thriving in the world or business.

 

Marketing a Sustainable Clothing Industry

The globalized clothing industry is producing and selling more than never before. However, its success is causing environmental damage. If the current state of the clothing and apparel industry is not sustainable, how can marketers manage to balance both sustainability and profitability in a global environment that is tempting us to sell more and more?

Clothing consumption is booming. New, hot, and affordable trends attract more consumers to stores both, online and physical, and as demand increases, production also increases. According to The Economist (April 8th, 2017) only between 2000 and2014 worldwide clothing production has doubled.

Main factors that have helped this growth are globalized brands that have expanded their market shares to many more countries, and cheaper and more efficient supply chains. Buyers around the globe are getting more options faster and cheaper than ever. Long gone are those days when fashionistas around the globe had to travel to the U.S or Europe to shop for new trends. Now, collections are released in many more countries at the same time and at affordable prices that suits budgets in both developed and developing worlds. This is a very inspiring and positive landscape for many players, those that love being trendy for less money, businesses that are expanding to both rich and poor countries, and fashion marketers that want to sell their products faster.

Yet, a trendy and ever changing wardrobe has a tremendous environmental impact. Let’s take only water consumption. According to ABC News (Sept 13, 2016) the clothing industry is the second-most polluter of clean water. It takes 700 gallons of water to produce enough cotton to make one t-shirt, this can be the same as the total of one person water consumption in one month. In terms of greenhouse gases, according to the consultancy McKinsey, the process of making 1kg of fabric generates an average of 23kg of greenhouse gases. Then these garments end up very quickly being discarded, and being very difficult to recycle or reuse they commonly end up at landfills.

The situations is critical not only because of the harm that the industry is currently causing, but also because looking into the future with clothing shoppers increasing consumption, this harm will most likely increase in the coming years, unless the whole industry changes. This is where marketers have a huge opportunity if they want to move towards promoting new alternatives that causes less harm to the environment.

Some successfull environmentally responsible brands have proved that demand for more eco-friendly products is slowly gaining momentum and some consumers are already moving towards a more conscious shopping or towards investing in higher quality products that last longer.

Therefore, marketers at many other fashion brands and start-ups have a real opportunity to make positive impact. Research and development into new materials that cause less environmental harm, innovations in terms of water and land use, and less CO2 emissions will be the key for a new clothing and apparel marketing to be successful. Furthermore, there will be a tremendous space to grown for more responsible brands in the developing world. Unmeasured consumption behavior is more deeply rooted in the consumers mind in countries like the United States, in some other developing countries this behavior is still new and thus has not become a habit yet.

Globalization helped promoting a growing apparel industry even when it is not sustainable. Globalization then can also help marketers catch the eye of consumers towards more responsible brands. Social media and e-commerce are powerful tools to promote those brands that can innovate and become more environmentally friendly, last longer and offer attractive designs.

Macy’s, a retail giant looking for a turnaround

Recover the customer’s experience in store is one of the goals of the Macy’s real state strategy goals for 2017.

The American retail industry has been suffering considerably in the last decades. New technology, fast changing consumer tastes and a market that has been making seasons shorter in order to sale more, it’s making big retailers such as Macy’s work harder to keep their inventories and businesses on track.

About new technology affecting the way retailers see their business, The Economist (February 11th, 2017) said that during 2016, one fifth of the trading happening online was generated by purchases of clothes and accessories. And analysts expect that Amazon will surpass Macy’s sales this year.

Additionally, the fashion industry as a whole has been speeding up change in trends searching more profit. In contrast, department stores suffer because of the slow pace that the business implies. Inventory stays longer on stores and discounts are heavily impacted by negotiations between retailers and manufacturers. When the stores finally put items on sale to rotate inventory, margins shrink and their performance suffer. This strategy has affected and seized the entire industry.

In January 4th, 2017, Macy’s, the biggest American retailer, announced actions to execute real state strategy which includes closing 68 stores in order to reorganize the company’s structure and reinforce the remaining stores, focusing on customer’s satisfaction with the in-store experience. In Southern California, the company had already close one store in North Hollywood and is expected to close three more in San Diego, Santa Barbara, and Simi Valley. In February 21, the WSJ said the company earnings for the quarter that includes the holidays seasons sales dropped by 13 percent.

To counteract the declining of their business, Macy’s is opening outlets called Backstage, most of them inside current stores. This strategy, still on an early stage, with most of the stores located on the East Coast, seems to be a successful but rather late answer to the market change. Additionally, online sales still offer room to improve for the company. A better online merchandise, and a wide variety of discounted products that appeal to younger generations may help the company in improving its online market share.

In conclusion, a smaller Macy’s, with less stores and a more aggressive online activity may be the marketing strategy to save the largest American retailer and keep it thriving as one of the industry leaders.

Zalando, shaping Europe’s online retail business

Zalando has become Europe’s biggest seller of shoes and clothing. The company started as an online site that sold flip flops in 2008, and quickly became the most important fashion online platform in the continent.

As the company’s website claims, Zalando goes one step further the traditional retail and catalogue sales by offering a broad selection of items with the benefits of their custom care process, company owned logistics centers, and unlimited opening hours.

Traditional retailers in Europe, as in the rest of the world, are seeing their customers walk away from their stores to shop online. In contrast, Zalando was one of the pioneers of the e-commerce and has grown into a giant, with increasing sales at a rate of 30% a year, in 2015 the company sold $3.3 billion. Zalando makes it easier to buy online even for customers in those countries where e-commerce is still a novelty. For example, in Italy and Poland shoppers can pay the postman in cash.

But not all retailers are racing against Zalando, some are starting to join the giant like the British retailer TopShop with whom Zalando started an alliance in 2014 and boosted sales with a popular tv commertial featuring Cara Delevigne.

Watch TV commercial: Cara Delevigne for TopShop and Zalando

Investors are also happy with Zalando’s performance, in the last three years the company’s shares have risen from €20 to around €40.

One key for this success was their TV commercials campaign that started in 2010 and quickly gained public attention. Using humor for the early commercials and then well-known models for the recent ones, the company reached almost 90 points in brand recognition in Germany.

Zalando’s competitive advantages are constantly underlined on their marketing campaigns: excellent logistic center that provides on time delivery, payment and customer care tailored to each country or market, and free returns are some of the constant themes not only on the tv commercials but also on their webpage and online ads.

With more than 5 million daily visits to its site, Zalando has also became a specialist in managing big data. The company uses this data to forecast change in fashion trends as well as to evaluate their marketing campaigns impact on sales.

The future for Zalando however, may not look as bright as their present. With big competitors entering the European market, such as Amazon and Alibaba, the company has to keep their customers engaged. Strategies that they may keep using are their very attractive online merchandising, and their ability to customize their operations in each different market to attract customers with different purchasing styles.