How do Tory Burch and Valentino survive the sharing economy? By offering many happy returns.
Today, more shoppers care less about accumulating things; they’re exchanging ownership for convenience and fun. One only needs to look to the sharing economy for evidence.
The sharing economy, the term used to describe the burgeoning market that enables shoppers to rent products or services rather than own them, is expected to approach $335 billion by 2025. With its growth looms another unmistakable indicator of a shifting shopper value: the desire for pleasure through experiences.
Almost three quarters of people in their 20s and 30s prefer spending money on experiences over material things. This is leading more traditional brands, most recently DSW, to eyeball the sharing economy and join industry leaders such as Le Tote, ThredUp and Rent the Runway, the latter of which is doing well enough to have just added a new membership tier.
How do brands ensure shopper loyalty in a sharing economy? Let’s take a peek.
Matching, Borrowing and Babies: 5 Loyalty-Boosting Sharing Tactics
A key appeal of the sharing economy is that it makes some of the finer things in life affordable, but the success of the concept hinges on the experiential value it offers. A closet full of shoes and designer labels is, for many, being replaced by a storage of memories.
Following are a few of the key principles that retailers can borrow from the sharing economy to build their own customer loyalty.
Identify the match: A lot of sharing merchants are designed for an ideal shopper, identified not simply by age and other demographic boundaries but by personal challenges and needs. The shopper who rents clothes for practical purposes, such as a job interview, will likely want a different experience than the one who rents for luxury. The same guidelines can be applied to specialty merchants of all stripes. Shopper data, through an app or rewards program, can provide the insights to begin a conversation with the shopper that in turn leads to more information and better understanding. Merchant services like Rent the Runway, ThredUp and others require registration, so they gain a more accurate, timely view of the shopper’s preferences with each order (and return).
Zap the friction points: Once the brand has determined its ideal shopper, it can use the data to examine his or her thought passage to purchase. Those insights will help the brand locate friction points that could derail a good experience. Ikea’s recent agreement to acquire TaskRabbit, to remove the barrier of self-assembly, shows how traditional retail can take advantage of sharing services. Walmart’s effort to expand home delivery through Uber reflects similar thinking. The site Bag Borrow or Steal, by leasing (as well as buying and selling) luxury accessories such as purses, takes the pain out of making big investments in items of which the shopper is uncertain.
Take a stand: All brands should stand for something intensely relevant to the ideal shopper, and that mission should manifest itself in the experience. It could be expertise, quality or the comfort in knowing any mix-ups (even the shopper’s) will be handled neatly. The goal is to become the borrowing shopper’s go-to brand based on her priorities, which leads to powerful word-of-mouth. Vigga, a subscription-based provider of pre-worn organic maternity and baby clothes, answers the need of socially conscious mothers to affordably clothe children who will quickly outgrow their tops and bottoms, while saving resources.
Value little things: Shoppers do not equate value with price alone. Time has value, experience has value, and flexibility has value. This principle should complement what the brand stands for and define the brand experience — not just the service or product. Knowing what the shopper counts as important, merchants should ask: What does the shopper value in the experience? The British rental service Girl Meets Dress, for example, invests in expertise by offering personal shoppers who can advise on styles and the proper length of a gown, based on height. It also takes care of dry cleaning and accepts normal wear and tear (it offers low-cost insurance for larger mishaps).
Happier returns: In many cases, the shopper will be returning an item. Considering her needs and how she defines value, the return experience will determine whether she ever comes back to the brand. DSW, which is considering special-occasion shoe-rental service as well as shoe repair and storage, has to give this act considerable thought. How will it clean the shoes after use in a way that assures future renters? Will the process be neat and easy both in-store and online? DSW may benefit from an app that can help locate items, in the spirit of Walmart’s Mobile Express Returns app. It enables shoppers to initiate returns via mobile app and then complete the exchanges in dedicated express lanes.
These principles may appear especially shiny because they are offered by an emerging industry with sex appeal, but they are rooted in practical consumer preferences. Whether the brand is Tory Burch or Stride Rite, shoppers are seeking the same essentials, and those come down to ease, problem solving and satisfaction.