Whenever I speak to a group of business executives my opening words are that competition has never been greater and the need to implement a proactive repeat business strategy is paramount. I now have to add one more competitor to the list: slightly used. Companies are struggling. Products are turned into commodities almost the minute they are place them online. Ads for Amazon, Google and EBay pop up selling comparable products for less. The long-term results are less sales and profit.
Connected devices via our Apple Watches, Fitbits and smart phones provide any company’s competitors with the ability to reach and touch a company’s customer at any time. A loyal consumer can be walking into a brick & mortar location and receive a message from a competitive brand enticing them to shop in their store instead. If isn’t happening today, just give it 3 to 6 months to be part of consumers’ every day lives.
Start-ups such as Uber were unknown in 2009 and are now worth over $ 50 Billion. Now there is new start-up, The RealReal, which has become another threat to any company in the luxury brand space. However, as in any business concept, the idea might start off with wealthy customers and trickle down to the general population.
Julie Wainwright’s company, The RealReal, “is an online portal that shares its profits with consignors of everything from lightly worn Prada shoes to treasured Rolex watches,” announced that it has secured $ 40 million in funding, according to an article in USA Today. The RealReal offers consumers at-home pick up of lightly used luxury good and shares the profits from sales with their members. The site now has 4.5 million members and has sold 2 million items. The company has offices in 20 cities where sellers call The RealReal appraisers who evaluate and collect items. Consignors receive from 60 to 70 percent of the sale prices.
Last year, RealReal signed a deal with Neiman Marcus to offer their luxury shoppers in-store assistance to sell their older, “slightly-used” high-end items. When the program was first announced, Ms. Wainwright said, “this is the first time a major U.S. retailer is acknowledging a real shift by high-end consumers toward value.”
As a consumer, I like Julie’s business model and am confident that it will be extremely successful. Millennials especially are into sustainability. And as Julie says, “it gives these fantastic items a true lifecycle.”
Retailers are in the midst of a paradigm shift. More and more customers prefer to purchase online, free delivery has become the norm, faster is better, and in most cases customer service inside store walls has deteriorated. Now, you have a new company that is bringing consignment and buying slightly used “thinking” into the marketplace on a wide-scale basis. It will become mainstream for purchasers of luxury items to consider buying something previously owned – kind of like a used car; accessible and perfectly acceptable.
I repeat: competition has never been greater and our current business climate demands a new way of thinking.
However, there is no need to recreate the wheel. Customers are the basis and foundation to any company; they remain the gold standard. Businesses must focus on turning an accidental customer into a loyal customer. I am always surprised and disappointed that retailers don’t educate/train their associates to engage the customer in a conversation to find out what brought them into the store, and do they live in the neighborhood or are they just visiting? Simple, direct and a way to start a dialogue.
Creating and building a human connection one encounter at a time will never go out of style and should never be considered “slightly used.”Business & Finance Articles on Business 2 Community