What Beauty And Technology Have In Common — And Why It Matters For Multi-brand Retail
When you think about everything you might buy as a consumer, and how similar or different those products are, what comes to mind as being on opposite ends of the spectrum? How about lipstick and phones? They don’t seem to have much in common, do they?
Now, think about how and where they’re sold.
Consider Nordstrom (JWN +1%), Bloomingdale’s, and Sephora. Picture their cosmetics floors or navigate to their web sites and take note of the brand overlap you see. Clinique, NARS, even Yves Saint Laurent appear at all three stores. More than half of the beauty brands and individual items sold at one of these retailers are sold at the others — and it’s a similar story at Saks Fifth Avenue and Neiman Marcus. Even Ulta Beauty (ULTA +2.2%) has joined the fray, winning increased prestige brand distribution in recent years.
Next, consider the options you had last time you were in the market for a new smartphone or tablet. If you were buying through your carrier, be it Verizon, T-Mobile, or AT&T, you probably could count on your options being similar; these companies all would’ve had the latest devices from the dominant manufacturers, such as Apple (AAPL -0.4%) and Samsung, which collectively make up 86% of the US smartphone market. Of course, Apple and Samsung have their own stores which, except for occasional exclusives, stock the same phones and tablets as their carrier partners.
So, why would a consumer choose to buy a beauty formula or a technology device from one store instead of buying the same item from another store, and what does this mean for the products or services any multi-brand retailer whose selection overlaps with another one’s is selling?
Location is critical: The retailer needs to be on a street - or on a figurative street (digital channels spanning web, mobile, third-party apps, and wholesale) - where it’s easy for target customers to spot it and convenient for them to visit. They also need to have the right forums for communication readily available.
Money talks: Sellers must closely examine the price. Not just the MSRP, which may the be same as at competitors with a similar selection, but the price the customer is paying after various incentives and promotions, spread across time, including the value of loyalty programs and gifts with purchase.
Differentiation makes it… different: If a retailer is selling a brand also available elsewhere, it should angle for an exclusive run with the vendor, such as a size or color competitors won’t be able to carry. Even if the negotiation is unsuccessful, marketers should strategize about how to talk about the product or service in a way - or on a platform - that’s unique to one company and distinct from any other.
Environment matters: The store - again, both physical and digital - needs to be uniquely designed to represent the product in ways that are distinct from competitors’ representations. Customers have to be able to find the product without friction while engaging in a pleasant, if not downright exciting, experience. The activity of shopping should be so compelling that customers will visit even if they’re just browsing. At Verizon, the retail experience team I led spent time re-envisioning omnichannel conveniences and piloting Verizon Express stores to deploy those new customer journeys in streamlined ways.
Service sells: If done right, the team - humans working in stores or service centers - is additive to the customer experience. Staff should be helpful, educating shoppers and guiding to the appropriate products based on an authentic enthusiasm for what they’re selling, perhaps showcasing a brand personality that isn’t easily replicated. Working on the sales floor at Nordstrom, I learned to walk a customer to what she needed and not just to point, and to carry her shopping bag around the point-of-sale rather than to end the transaction simply by passing it over the counter. It's also important to look for ways to provide tips and tutorials in a way that competitors aren’t, such as by deploying live technology. Bobbi Brown’s own e-commerce site sells the same merchandise as its wholesale partners, but offers augmented reality makeup try-ons that many of the latter don’t.
Follow-up is memorable: Post-sale, the marketing and support provided should be worthy of repeat business in a commodity category, when it’s just as easy for a customer to replenish from a different retailer.
This article was originally published by Forbes on 2/23/23.