Finding a bright spot in the parade of dim second-quarter earnings reports from major retailers is difficult, however, the common thread of hope is a deeper focus on personalization and loyalty, leveraging omnichannel to its fullest in a quest for motivating customer engagement.
Reporting Q2 2022 earnings Tuesday (Aug. 23), Nordstrom CEO Erik Nordstrom told analysts on a call: “We also continue to advance our digital capabilities working to further extend our heritage of customer service and personalization to a digital world.”
Digital sales were up 6% in Q2 for Nordstrom, moving to 38% of total sales during the quarter, with Nordstrom Rack outlet stores taking a heavier hit than the department store fleet.
On the call, Nordstrom spoke of “scaling our styling program and offering a range of digital services, including stylist-inspired looks, virtual style boards and online styling appointments. While we still see the highest number of customers engaged with our in-person styling, we are seeing rapid growth within these digital services. Digital styling customers are also highly engaged, spending five times more than an average Nordstrom customer.”
Nordstrom continues to play to the value of styling — virtual or in-person — to deepen engagement with its upscale clientele, especially since sunsetting the Nordstrom Truck Club subscription box program earlier this year.
That aligns with data finding that more shoppers are gravitating to personal service from merchants and brands. According to “The Tailored Shopping Experience: Meeting Consumers’ Online Expectations,” a PYMNTS and Elastic Path collaboration, 67% of consumers who said they are “very” or “extremely” interested in tailored online shopping experiences “are likely to switch merchants, compared to just 10% of online shoppers with a lower or no interest.”
It’s powerful motivation for inflation-hammered retailers in discretionary categories like high-end apparel and accessories to accelerate and expand these services as they continue to be in demand from engaged consumers despite the retail slowdown deflating retail stocks.
On its Q2 earnings call Monday (Aug. 22), Macy’s said much the same, with Chairman and CEO Jeff Gennette telling analysts, “we are continuing to ramp up our digital capabilities, including personalization, that increases engagement with our customers and optimizes our omnichannel experience. We are optimizing our online platforms to provide better digital experiences, following the redesign of our mobile app in 2021.”
Saying there’s been “strong conversion and growth with active app customers up about 17%,” Gennette added: “We continue to see strength in our most loyal and engaged customers. Our Star Rewards active members totaled 29.5 million and accounted for 70% of our total owned-plus-licensed, which is a 5-percentage point rise year over year.”
“Our highest loyalty tier, Platinum, was particularly strong,” he said. “And we’re continuing to grow our active accounts, primarily new Bronze accounts, our most diverse and younger customer tier.”
Moves like this designed to deepen relationships are a winning strategy for merchants and brands, especially in the current economic climate and particularly in cases like Macy’s, which saw digital decline of 5% and conversion down 3% compared to 2021 as more shoppers ventured back into physical stores in the quarter.
It only intensifies the focus on omnichannel relationship building for merchants as shopping patterns shift and seek a balance between pandemic-era eCommerce dependence and the strong desire to engage with physical retail experiences.
The study “Relationship Commerce: Building Long-Term Brand Engagement,” a PYMNTS and Ordergroove collaboration, noted that “on average, 75% of consumers with commerce relationships will buy more products from the companies they partner with, and a striking 90% who believe these companies understand their buying preferences are likely to purchase more products from them.”