Aberdeen Retail Summit Revisits Familiar Topics

NEW YORK — Approximately 60 marketers and media members sat around circular tables in an exceedingly large conference room at the Westin Hotel in Times Square during Day Two of the recent Aberdeen Group Retail Summit 2010. Unsurprisingly, mobile marketing, social media, and customercentricity were the topics of discussion during the opening keynotes delivered by executives from Chico's FAS and Wet Seal. Despite the familiar material, both speakers offered interesting examples of how getting to know customers and then engaging them with relevant marketing is a perfect recipe for success.

Chico's

Jeff Jones, chief operating officer of women's clothing and accessories retailer Chico's, spoke about what he called the three essential P's of retailing: product, programs, and people. Jones spoke little about product and people but offered a great deal of information on how Chico's used its CRM program to improve sales.

In an attempt to make the 25-year-old brand more customer-friendly Jones tried to have SAP tools installed. The installation failed twice. Finally, after a $7 million investment, the company was able to get a combination of SAP and JDA software running.

The brand was able to retool their contact center and order process for e-commerce. Chico's found that 75 percent of its sales came from the top 25 percent of its customers. The next 25 percent of its customers accounted for fewer than 20 percent of its sales.

"In Chico's, a one-time shopper occurred about 34 percent of the time," said Jones. "We discovered that the top 10 percent customer spent more than five times than the average customer. Lose one of those top customers and it's priceless."

In order to lure and keep leads Chico's spends roughly $60 million in marketing and $30 million in direct mailing annually.

Jones also found that the demographic of Chico's top customers was exactly the same as the bottom customers - female baby-boomers. This realization meant that demographic data, typically the most important information in determining who to market to and how to market to them, was useless. Instead of trying to reanalyze on a macro level Chico's decided to profile the top ten percent of customers for each of its 1,074 stores.

Some of the company's findings included:

• In certain locations Chico's customers were more affluent and spent more for clothing. This allowed the company to establish a higher aspiration price point;
• Some store price points were too high and needed to be lowered; and
• Chico's missed $50 million dollars worth of sales because they didn't understand the variations in customer sizing from store to store.

The company sent personalized mailings to high frequency customers and called lapsed customers. Sales for the White House boutique brand increased 40 percent. In 18 months Chico's achieveda 100 percent increase in first quarter earnings.

Wet Seal

Jon Kubo, Chief Information Officer at North Carolina-based women's apparel retailer Wet Seal, offered an insightful examination of mobile marketing until he was interrupted by Aberdeen staffers because of time constraints.

Capitalizing on social marketing, Wet Seal created an online fashion community, which allowed shoppers to create outfits, tag favorite clothing, and share information with friends. This community generates 20 percent of the company's e-commerce sales. To date, 500,000 outfits have been created.

Kubo predicted that Facebook would continue to add users, unlike MySpace and Twitter whose numbers have both flattened recently. Using Apple as an example, he referenced the increasing rapidity with which mobile devices have been purchased as evidence of where the market is heading.

• It took two years for Apple to sell 1 million iPods;
• 74 days to sell 1 million iPhones; and
• 28 days to sell 1 million iPads.

Because people spend half the time browsing on mobile Web sites than they do on desktop Web sites, Wet Seal has three key mobile campaigns:

• Social/Viral;
• Real-time offers; and
• In-store coupons.

Since launching its Facebook fan page, Wet Seal has acquired approximately 380,000 fans, the 33^rd highest total for a retailer on the social network. 33^rd may not sound all that glamorous, but for a company that operates only 501 stores it's pretty impressive, especially considering that Banana Republic, which has roughly the same number of stores, has only slightly more than 116,000 fans.

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