OK, that’s a bit of hyperbole perhaps, but I think she is up there not for the usual reasons (business success, industry vision, charitable contribution, etc). My journey of realization of DVF genius began at a semi-intimate dinner about the future of the fashion industry sponsored by Mayor Bloomberg’s office. There was a large group of the CEOs of the major retail companies, publishing types (Anna Wintour, etc) and CEO’s of brands. As I recall, the event took place back in late 2009 when the economy was in turmoil and the industry was coming through a very hard time. It also marked the beginning of the huge amount of hype around flash sales – in fact, Kevin Ryan from Gilt was one of the panel speakers along with DVF. Several of the CEO’s talked about things that were more or less the party line by the retail industry and were fairly banal and uninteresting. Then DVF got up and said something that has been running through my mind since: “We need to go back to the days when promotion meant theatrics, not discounts. No more discounts!” It was wonderfully presented with incredible flourish and arm-waving (including a classic dismissal of all online discounting with a flick of her hand at Kevin Ryan). Everyone in the room clapped wildly.
I’m embarrassed now by how wrong I was.
My immediate thought was that it was one of the dumbest things that I had ever heard (despite it being magnificently said). It was if that by waving her arms and declaring “no more discounting” that the industry would get out of the brand death spiral that had been facilitated by their addiction to the crack cocaine of flash sale sites (click here to see an earlier blog post I wrote on my take on flash sales). Just stop discounting and it will all be better! I left that dinner that night wondering when the asteroid would hit that would wipe these dinosaurs off the face of the planet.
I didn’t then and I still don’t think that the retail industry really gets the web. While their stores and their products are incredibly presented in their physical and print manifestations, their websites often look more like the circulars that P.C. Richards puts in the NY Post. Their tweets and Facebook pages are fairly purposeless, communicating little of their brand or their point of view. I find this amazingly surprising given their ability to present their brand as such an indelible experience in their stores. Sure, they are selling product successfully, but most of them are selling like Amazon sells (product next to product, just like the old Sears catalog). And, in a competition with Amazon, they will lose.
So back to DVF. One day, I was telling this story to a brilliant friend who has built several successful manufacturing companies supplying the industry and his response was “she’s right”. It was like a lightning bolt striking me – it was so shocking that it made me rethink my entire position. I suddenly realized she was right and it was I who was the dummy. I was mistaken in thinking that she was simply cajoling her fellow CEO’s into stopping the practice of discounting on the web. What she was really doing was admonishing them to do on the web what they already do so well: amaze and engage and delight their customers with an incredible and unique experience like they do in their stores and with their brand advertising every day. Create an experience that gives the customer the same feeling as when they walk through the door at Saks or Bergdorf or any other retailer during the holidays.
Where I think the retail industry struggles is that the web is not a physical experience, so the experience that creates that feeling needs to be different. Moreover, it has to be different and unique for each brand. A brand is a relationship between a customer and a company, so what it says and how it says it and how it engages its customer needs to be unique and different too. There is no checklist (Did we tweet today? Check! Did we get more Likes on Facebook? Check! Did we post to Tumblr? Check!). Why are you on Facebook? What are you trying to say to your customer with your tweets? How did you amaze and excite your customer today? Those are the tip of the iceberg of questions each brand needs to ask itself. If all you have is stores, then that is the lens through which you look at everything.
We are starting to see some interesting things, mostly by start-ups, but some established brands are starting to get this…More or less. Most still look at the web as another store in its portfolio of physical locations. It’s not – it’s the fabric that is the backbone of that relationship you have every day with your customer. Are stores irrelevant? NFW! They are the cornerstone of that brand relationship in many cases. But what they are and how they fit in a holistic view of your relationship with your customer may be different.
By the way, while I am throwing stones, let me throw some at the web-centric companies that have been formed over the past few years. Most of these are terrible for one reason: the entrepreneurs don’t understand the retail industry.
In creating innovative business models of discovery or sharing, they miss the magic that a brilliant merchant creates. What is needed is the next generation of merchants who understand both the web and the physical store and can take the best of all worlds to create a truly unique experience for their brands. They are out there and more will form (If you are one of them – email me. My firm has a lot of money to put to work!). In my mind, the best company on the web is ModCloth. If you don’t know them, learn more about them – they are the future. I’ll give you my opinion why at some point.
So, in my mind, DVF was making a call to action for her industry: view the web simply as an extension of your stores where you present a list of products and you will be forced to discount because that is the only way you can differentiate yourself. If the choice is between two apples, the cheaper apple wins every time. But if you can embrace the web as the backbone of your brand that is the relationship that you have with your customer and how you engage with that customer, you can mitigate the need to discount. Don’t compete with a cheaper apple, compete with a banana. Or a watermelon. Or anything that you want to be and stand for as your brand. DVF was right: promote through theatrics in your experience, not on price. Discounting as an everyday strategy is an exercise in brand destruction that will destroy the magic of this incredible industry.