“Most retailers see returns as the part of the supply chain they don’t care that much about,” Hyman said. “Rent the Runway had to pioneer 100 per cent reverse logistics of physical goods.”
It’s a process that has only become more complicated as the business has grown. Today, Rent the Runway receives millions of returns a day and dry cleans, inspects and repairs every item so it can be sent back out within 24 hours. It’s a remarkable feat, but, as Hyman noted, consumers are always wanting more.
Last year, in the course of implementing a new warehouse system that was meant to increase capacity, the company experienced shipping delays. The customer service team was inundated with queries and complaints, causing long wait times and leading many customers to post frustrated messages on social media.
This kind of crisis is often defined as much by the response as the actual blunder, and Hyman made the decision early on to be transparent about the problem and financially generous to the affected customers.
“Rent the Runway as an innovator is never going to be perfect; there’s going to be a time when we innovate on behalf of our customer and fail. But we’ll aim to always do the right thing,” Hyman said.
This mentality has emboldened Rent the Runway to push the boundaries of fashion rental. In August 2019, it launched a new delivery option in partnership with W Hotels that allows customers to send clothes directly to a hotel room, so all they have to pack for their next business trip or vacation is a toothbrush.
According to Hyman, nothing is off the table for Rent the Runway going forward.
“Ski gear, home goods…anything someone doesn’t have to use 365 days a year is fair game,” she said.
Crate & Barrel’s Neela Montgomery on reaching the next generation of consumer
Christmas 2019 marked a significant turning point for US-based furniture and homewares brand Crate & Barrel. It was the first time the retailer declined to advertise on television, instead diverting its spend to Instagram and other digital channels, and it was the first time the majority of its holiday sales (51 per cent) occurred online.
These two facts are inextricably linked, of course, and indicative of the retailer’s broader efforts to reach the next generation of consumers.
Founded in 1962, Crate & Barrel has more than 100 stores in the US and Canada and franchise partners in nine countries. It enjoys a reputation for quality products and globally inspired designs, but the company doesn’t take its standing in the industry for granted.
“We’ve been around for 58 years now, but we don’t have a right to be around for the next 58 years,” said Neela Montgomery, Crate & Barrel’s CEO since 2017.
“Our challenge today is to tell our story to a new generation of consumers when we have so many different media in which to do so.”
The company has become increasingly active on social media channels like Facebook and Instagram, not only for storytelling purposes but also for customer acquisition. And it has found it much more efficient to identify new customers on these platforms than using traditional methods.
“Before, you had to rely on the fact that you’d chosen the right location [for a bricks-and-mortar store],” Montgomery said.
But Crate & Barrel isn’t just investing in its digital presence to reach millennials and Gen Z; it’s also reimagining the purpose of its physical presence and product offering to suit their preferences.
For instance, the retailer recently teamed up with a restaurant group and an acclaimed Chicago chef to open a full-service eatery within a Crate & Barrel store called The Table at Crate.
“For us, it’s a great way to experience the brand in a different context,” Montgomery said. “Obviously it’s driven a lot of growth in traffic to the store, which is something we all need to think about.”
The company has also partnered with leading wedding website Zola to allow users to add Crate & Barrel products to their gift registries – a risky move, since the retailer operates its own gift registry, but one that Montgomery believes is in the best interest of its customers – and worked with startup subscription service Fernish to explore the burgeoning furniture rental market.
“We really believe the high-touch, high-value services are a great way to create customer loyalty,” Montgomery said.
Starbucks’ Kevin Johnson on fostering innovation in an industry giant
When the first Starbucks opened in Seattle in 1971, it was one of a few places selling dark roasted coffee beans in the US. But nearly 50 years, one NASDAQ listing and more than 31,000 international stores later, Starbucks is no longer an industry disruptor, it’s part of the establishment.
And as CEO Kevin Johnson (pictured) pointed out, there are some downsides to such unmitigated success.
“The cycle of innovation was getting longer and longer,” Johnson said.
When the former Microsoft executive took the reins from Starbucks’ owner
Howard Schultz in 2017, he knew he needed to speed up the development
of new ideas to ensure the company stayed relevant.
“One of the problems I had to solve was the frustration about how long it took to get things done because people were working in silos,” he said.
In late 2018, under Johnson’s guidance, Starbucks quietly opened an innovation lab in its Seattle headquarters. Called the Tryer Center after the part in a coffee roasting machine that allows you to monitor the darkness of beans, the lab is a 1860sqm space where small cross-functional teams can build prototypes and test products before they make their way into stores. The company also adopted a policy of going from idea to action in 100 days, then learning and adapting.
“There was a culture of fear of failure,” Johnson said about Starbucks’ previous way of working. “Something that should have been simple took two years to accomplish.”
Now the company is empowering its employees to take risks.
“We don’t measure something as a success or failure,” Johnson said. “Even if it doesn’t work, we talk about what we learned.”
Nordstrom’s Erik Nordstrom on making the case for stores in 2020
When US department store chain Nordstrom first committed to opening a flagship store in New York City back in 2012, it built its business case on the sales it expected to generate within those four walls.
Just a few years later, but still well before the store opened in October 2019, the company realised the store would not only draw offline shoppers, it would likely drive a significant uplift on the retailer’s online sales in the area.
“The synergy between the store and online is super-important and it became a very specific part of the business case,” said Erik Nordstrom, the retailer’s co-president and CEO.
This realisation can be seen in many of the digital features and services included in the flagship, such as 24/7 pick-up for online orders, easy drop-off for returns, free WiFi, cell phone charging and connected fitting rooms, just to name a few.
According to Nordstrom, however, the flagship is also the company’s most experiential store to date, with styling and beauty services, free gift wrapping, personalisation and repair studios and multiple food and beverage options on offer.
“The purpose of stores has changed,” he said. “They can’t just be about the convenience of picking up something.”
Walking around the main shoe department on opening day was proof of this, he said.
“To see how many customers were sitting on the couch, trying on shoes with a drink in their hand, there was just a different vibe. People were smiling, strangers were talking to each other. I don’t know why it took us so long to put drinking and shoes together, but it’s a great combination.”
Heather McIlvaine travelled to the National Retail Federation as a guest of Intel.