Retail markets are in stark difference to what they were almost a decade ago. The manner in which the consumer is making purchases has changed vastly. The onset of smartphone age has created an entirely new way of shopping. Smartphone apps have made comparing products prices, reviews so much more convenient while simultaneously social media invasion has opened the option of friends and family input in every shopping decision consumer makes. He barely has to set his feet into the retail store. Such shifts have led industry observers to forecast the end of brick and mortar retail as we know it. The retail market for shoes is obviously no exception to that shift. But our view is far less harsh if we keep in mind that the retail market can thrive on the very factors leading to its demise by embracing this change.
To put things in perspective, we can have a look at the case of Clark Shoes in UK. The brand has been the British high street mainstay since forever. They weathered the decline in manufacturing sector of the British shoe industry in the 80s and adapted to booming retail expansion by keeping their focus on developing portfolios of branded stores. Now that the retail sector too has become unpredictable they are once again faced with the option of adapting to the modern trend. With 65% reduction in profits, Clarks has started whetting its 550 store strong retail empire to cut down on expenses.
So where does the problem lie? It lies precisely where stated previously, the online shopping trend that has gained momentum in the last few years. In 2014, The USA brand Cross sales were over $1.2 Billion worldwide. In India organized retail's reach extended only up till 5000 Zip codes whereas the penetration of the e-commerce companies was reported at 25000 postal codes. Moreover, the recent feature of designing your custom shoe, with material, color, and size of your choice has been a breakthrough for shoe retailers.
Personalized shoes, though not new is the current market trend, thanks to the surge in availability of custom shoe design software. Earlier the custom shoe market was synonymous with extravagant pricing and unending wait. The market was singlehandedly dominated by brands like John Lobb. Custom shoe designer software has not only the markedly increased convenience of creating custom shoes but also made it extremely affordable and reduced the waiting time to almost nothing.
Retaining Customers: A Challenge
Retailers are starting to discover that via personalization customer loyalty and engagement can be elevated and used as an engine to power the reason for them to buy more. A recent survey covering 1200 global executives showed that customers are becoming lesser and lesser brand loyal according to 67% of them. Customization is crucial for companies for differentiating their products from those offered by their competitors. This is particularly significant at this time as rising internet dominance is creating high price transparency and thus enabling consumers to compare standard product features easily. A study has found that consumers are prepared to pay 20% more than standard prices for a customized equivalent. Many firms are indeed making good on this fact. For instance, Nike has embraced this trend by introducing their own online customizing software. NikeID is the feature provided by Nike to its consumers to design their own shoes from a selection of choices and get it deliv.... Almost 25% of the shoes in the US in 2016 were customized shoes amounting to $2 Billion.
A Whole New Consumer
Not only would it help in retention but customization can open the market to a consumer base to which was earlier inaccessible to shoe retailers, namely the millennial generation. It's a growing consumer force. Their annual spending is reported to be $600 billion, which is 28% of all consumer spending and is projected to grow to 35% by 2030. They demand more personalized products. Bluntly put this new consumer is not the "one size fits all" camp. Supplanted by the proliferating online publishing and social media, the changes occurring in trends, styles are blindingly fast. This has forced retailers to keep pace with shuffling preferences. Companies offering customization have modified their consumers to function as merchants as well, whence they continually receive feedback and gain insight from the personalization of their products creating a circuit of feedback which helps them keep competition at bay.
Customization is the key to keeping the customer hooked on a brand at this time. The customer seeks gratification in exchange for his loyal and exclusive association with a brand. A brand can provide what the customer asks for via customization. In fact, it checks every box, from ensuring customer loyalty to providing the insight into the most recent market trend without the extra investment, to opening up new markets. Concisely stating, not only is customization key to shoe retailers keeping their consumers loyal but also for their significant expansion in the market.