How To Future-Proof Loyalty In An Economic Downturn

So now we are going to start our first panel session of the day and we're going to be exploring "How to Futureproof Loyalty in an Economic Downturn." We're going to unpack how retailers are dealing with shrinking resources, staying innovative, and investing to win in a cut back economy. For this panel session, please welcome up Emily Essner from Saks, Ana Andjelic from Esprit, and Amondo Redmond at Foot Locker. Thank you. Thank you all for joining me. Just to kick off, it'd be great if you could just say a few words about who you are and your current role. Starting with you, Emily. Absolutely. I'm Emily Essner, Chief Marketing Officer of Saks. So I oversee the marketing strategy for the overall Saks Fifth Avenue brand. So across e-commerce and stores. I am Ana Andjelic. I'm the Chief Brand Officer at Esprit. This role has a global remit and covers marketing, creative, and design. I'm Amondo Redmond, formerly of Foot Locker. Just left to start my next role, which I start in a couple of weeks, but I oversaw North America marketing for the glorious Foot Locker brand. Wonderful, thank you. Emily, I would love to start with you. I wonder if you could just share some of the main findings from the recent Saks Luxury Pulse and just talk us through how consumers are responding in the current climate. Of course. So we really view one of our roles as being an expert, certainly among our peers on the luxury consumer. And so as a part of that, every quarter we talk to about 2000 consumers, their shopping at Saks, their shopping at other brands. To really understand how are they feeling about luxury spending, how are they feeling about, what they're shopping for, etc. And so their most recent luxury polls, which we ran about six weeks ago or so; a couple of interesting findings that I think are sort of heartening especially given where we are vis-a-vis holiday. The first piece that we saw was the first time in about a year since we started running these surveys where we actually saw an uptick in consumers' interest in spending in luxury. So one of the key questions we ask is looking over the next three months, are you planning to spend more, the same or less in luxury? And we saw for the first time an uptick in that. We saw actually a bigger uptick when we looked at the higher income customers. So a customer with an income of $200,000 or more. That was one of the first pieces that was certainly heartening. I think the second piece related to that was in general, one of the phenomenons that we've seen is that for all of our consumers or our luxury consumers, especially a higher spending consumer, while they have largely felt very good about their personal economic situation, they have been more concerned about the overall macro economic situation. And really, there's a pretty meaningful correlation between their feelings on the macroeconomic situation and their interest in spending. What we saw is that they were feeling more optimistic about the macroeconomic environment which we think certainly correlates to their interest in spending more in luxury. Okay, great. Thank you. Amondo, just picking up on the current economic climate, I know when you were at Foot Locker, you helped to put together the 'lace-up strategy', which is really aimed at helping boost sales in this climate. Can you just talk us through some of those main initiatives and how they're really aimed at building brand loyalty? Absolutely. One of the most important parts of the lace-up strategy really was around getting back to the roots of Foot Locker. If you are a fan of the brand or have followed the brand over the past decade or so, you know that we have roots in sports. That is what makes Foot Locker, Foot Locker, specifically within basketball. And so when you look at some of our most important and most strategic objectives, whether it's with our top vendors like a Nike or Adidas or a Puma or on or a HOKA or some of our athletes, whether it's a Steph Curry or Anthony Edwards or a LaMelo Ball, is really getting back to the roots of what makes Foot Locker iconic? And usually that's through content. That's through content that not only speaks to sports, but similar to my days at Pepsi, where it was really all about pushing the envelope and getting the consumer to not only think of us first, but look at our content as best in class. So when I think of the things that I was really responsible for and the things that I think really helped the brand move forward, it was getting back to those roots and identifying the right athletes to make the right content to get us back to the Foot Locker brand that people know and love and want to follow, watch the content over and over, be one of our 20 million followers across our social media platforms, etc.. So, I mean, your role there was really about re-energizing the brands, which I know, Ana, you've been brought into Esprit to re-energize and reinvent the brands. Can you just talk us through some of the different strategies you have in place in Europe verses North America and Asia? Yeah, absolutely. I mean, Esprit is an American brand. In 1968, San Francisco, one year before Gap. So I don't know what they had in water in San Francisco, but they were finding all those quintessential American brands. Then in '80s or '90s, when you ask anyone from Gen X, they all were like, "Oh, I was a Esprit girl". And I'm like, yeah, pick a number. I hear that every single time. But they remember exactly the shirt they had. Like it's literally not, "Oh I love this brand" it's like, "Oh my god, I remember this sweatshirt that I wore in my second year of high school" and blah blah. So the memories are strongly with Gen X. So now the question is, how do you translate to Gen Z and what do you do with the brand? It hasn't been around in 20 years in North American market, a giant market. Again, American brand not present in the market but present in Europe. And then they were growing in terms of brand equity in the '90s and early 2000s in Europe. But then the investments shifted. It was like, let's become a fast fashion brand. And that is when you start using your equity and driving to the ground. So there's two completely different strategies. Strategy here is tackle that nostalgia, what people remember. Bring it back, like people are literally telling us what they want. They're searching for Gen X fashion. So our job is to bring that back. We don't need to do anything more than that at this moment. And at the same time, Gen Z, if it's all about second-hand shops, second-hand shopping, 90s nostalgia, inspiration, tap into that style wise, which is something that we already have. But then it's also about having operations, logistics, merchandizing, everything in place in a market where a brand hasn't been present. So brand marketing leads says the vision and present this is the image of the brand we want to go, but then everything else needs to fall in place. So in that sense we are going more slowly. We have e-commerce channel, we are opening slowly stores and in Europe it's kind of like, you're a decent customer, but now how are we going to convince you to buy €200 cashmere sweater? Well, you don't go for the same customers. You almost have to have a bifurcated strategy. Then you use your performance marketing to drive traffic to a lower priced customer while the same time elevating the brand with a new generation of customers. And then for a while you're going to have that split under the same brand aesthetic, but then over time, when the value is there, when that equation changes, you're going to be able to bring that along. It's a mistake to think there is always one customer, there is only one strategy, one pricing strategy, one marketing strategy, one product strategy. So that's what we are exploring. Right? Thank you. And Emily, talking about strategies, I'd love to just delve into the move in 2021 where Saks spun out its online operation into a separate business. Can you talk us through that move? What was behind it? What were some of the challenges and what have the results been of that? Yeah, so as Kate said about two and a half years ago, this in March 2021, we decided to split our digital business from our stores business. And that was really a recognition, I think, for those of you who are in omnichannel businesses, you may feel this push-pull, but that was a recognition for us that the stores are incredibly important. They are a huge part of our business. But when we look to the future, we really believe that the future growth driver for our business is going to be coming primarily from the digital business. And so, the reality is when you're in an omnichannel business and you have big stores with a lot of people who can literally call you. The reality is, while you know intellectually that the future is in your e-commerce business, it can be hard to really prioritize the business as much as you should to really make sure that it's getting the investment that it needs. And so that was sort of the infrastructure, the thinking behind the split out. Of course, the reality, and when I say I'm the Chief Marketing Officer of Saks and I oversee the Saks Fifth Avenue brand, that is because we know that consumers don't really care about our organizational structure. And so we took a very consumer first approach in how we've architected this. So, while we split out the business and we have separate companies that are running the digital business versus the stores business, we have a marketing team that is responsible for the overall brand. Sitting within the e-commerce business, but supporting the stores, doing the same thing within the merchandizing team as well. So we think we're really able to get the best of both worlds. And when we look at the results over this time we're really honestly thrilled with with the performance that we've had. For example, we had a real feeling. Look, this is an opportunity to supercharge our business. And we saw new customer growth and we acquired 3.5 million new customers. That was about five times, five and a half times actually, the new customers who we had shopping with us before the the split out and we became the largest luxury ecommerce platform in the United States, which was something we certainly could not have said. And so we really feel like it has worked and it is something that while it can sometimes be complicated to explain to people, it really, at least for us, has been very much an unlock and really candidly unlock for both businesses as we've seen the stores continue to perform very well. Amondo, Emily spoke about that push-pull between online and bricks and mortar. I know that Foot Locker recently announced its new power stores. So I'm curious to know what role you think bricks and mortar play in the current environment. It absolutely still plays a major important role, specifically for footwear. Footwear is one of those few items when it comes to clothing that you still want to, as our consumers say, want to feel, touch and smell. So if you look at our back to school campaign, it was all about unpacking the sneaker, smelling it, making sure it still had that fresh smell, which is something people have been doing for decades. Now, footwear, similar to other items throughout e-commerce, is something that people are starting to gravitate more to not wanting to go in store. We know that. We know that's a part of consumer behavior. But we also know people because they've become so accustomed to walking in a Foot Locker, even a competitor of ours, and being able to see the difference between, say a New Balance and a HOKA or a Nike and wanting to feel their running shoe before they actually make that purchase, is extremely important. And I think that's the major difference between, say, other articles of clothing where running is such a specific thing that you need to feel comfortable in. You want to try on different opportunities to make sure that that's the right one for you. So when you look at power stores, that's really the intent. It's to be able to really create a space where individuals can go in and really have that moment to try on what they believe is going to help them, whether it's an athlete or just a regular consumer that's looking for great exercise or a stylish option to be able to make sure you're walking away with the right purchase, which I think is very different from, say a suit or jewelry, etc.. And you're also using the new power stores to host events. So creating a community around those areas as well. That's right. One of the major differences I think that Foot Locker has within our top competitors, say like a JD's or a Dick's Sporting Goods is that very, very specifically the community is a part of who the brand is. So you look at Los Angeles, where I live, where we have three stores between Irvington, between Compton, where these are low income neighborhoods that we know love footwear. And the opportunity there is not just to provide them with more opportunities to spend money. That's not the opportunity. The opportunity is to create a space in which we can have students come after school to have extracurricular activities or invite athletes like we've done with, say, Lonzo Ball and others where they can come in and talk to students and inspire them to be great at what they do. So when you think of the power stores or even the community stores, again, the intent is not to get low income communities to spend more money. It's really to have a safe place for them to come and inspire them to want to be the best that they can be, whether as an athlete or as a student or as a community person. And Ana what are you doing at Esprit to builds brand love? You talked about playing on nostalgia, but how are you also modernizing the brand to attract a new generation of consumers? Yeah, I mean, nostalgia is not enough. It's only going to get you so far. It's always good to have that latent love that can be activated among certain generation of consumers. But this is a brand in 2023 and beyond. So it's always the thing that you need to go back as a Chief Marketing Officer. What made the brand successful in the first place? What is the DNA? If Esprit was born as a baby today, how would it look with that DNA? So that's really like leading us to the new generation of consumers when you look at playfulness, that rules don't apply attitude. When they brought Oliviero Toscani, famous photographer who also showed Benetton and who started shooting people in movement. Before that, 80s was very staged, very poised. It was not fun, movement, jumping, moving and it was not something that you would that you would expect from fashion photography. Then they used real people. Remember, now it's like table stakes. But it was the 80s when they used real people in their campaigns. First their employees, then they had a nationwide survey among American teenagers. What would you do if…? So you kind of have that history of your irreverence of breaking the rules of playfulness, of being very modern, socially aware, being cool in a sense of aesthetic. So you bring that playful, modern, cool, you bring that back. Then, what I said before, people are telling us what they want. You kind of do a sequel, you do a remake of what was really successful. Then you need to stay loyal to that aesthetic, but then you build the brand pyramid, product pyramid, and then you have what are our foundational products? What do we want to be known for? When someone walks down the street and is wearing Esprit, how do you know that it's Esprit? What are your different trends? Basically, how do we participate in a shorts trend or in a soccer t-shirts trend, or how do we participate as Esprit? That's not Zara, that's not chasing what's there. It's basically looking what does it mean for us through our filter of the world? Through Esprit language. So that is our approach, having a mix of vintage clothes for that nostalgia and for Gen Z for second-hand, and then having foundational items, signature pieces that we looked at what Esprit is known for. It's very layering, very masculine-feminine, unisex, very oversize, very metropolitan outdoor look. How does that look today? What is that urban sport? What is it, comfortable or cool? How does that look? And then obviously then having maybe trendy items and then collectible items, expensive items, signature parka in shearling and so on. So that is overall product approach that we're adopting. And Emily, how do you turn shoppers into fans? What are their personalization strategies you have in place? Because I know you also talk about the Saks DNA. Yeah. So personalization is really core to our strategy. It is core to how we think about one of the themes certainly of today is around building brand love, personalization. In the end, demonstrate to our consumers that we know who they are, that we know what they're looking for and making their lives easier and really serving them is one of the ways that we do that. Our personalization strategy starts with what we call our Saks customer DNA, which is about 250 plus prescriptive and predictive attributes that we have for every known customer across the Saks ecosystem. So across e-commerce, in stores. This is a combination of observed data, data that we've modeled. So we're able to predict what we believe is going to happen with a consumer. Let's say we have a consumer who we believe within the next, let's say, 18 days is going to purchase in the handbag category. And we know that she likes to be communicated to via email and we know that she is affiliated with one of our digital stylists. That sort of information then allows us to be able to craft exactly the right communication to her around handbags with the right timing coming from her digital stylist so that we're able to really make her life easier, really serve her well. And of course drive retention, drive that next visit. It spans for us beyond even just marketing. And so we are able to actually inject this Saks customer DNA offsite, but also to some of our operations. So how we think about some of our customer care contact center, some of our after care fulfillment center as well. So candidly, a lot more to do here. We do feel like certainly from an own communication standpoint, we're on the forefront, but we know that this is very much customer expectation. And there's just frankly a ton more to do here. But we think having the strong foundation that we do really enables us to be able to leverage it even further going forward. And Ana, you talked about the Esprit brands becoming more elevated, more premium. So what are you doing to drive those personalized 1-to-1 engagement across all channels? So what we are doing is we're basically opening a series of pop ups and we have bottoms up approach. So we're looking where our community is, where our fans already are and amplifying there. We do have mass media buys as well because our audience right now is like, Hey, this is the vision. We are back as a brand, so this is what we stand for. This is how we look. But actually our customer strategy is localization and having those local fan communities connecting with them, understanding them, and then localizing the product, the merchandizing visual merchandizing website, email, communication, performance, media for those. Great. Thank you. Amondo, we know that a lot of marketing teams in the current climate are having to deal with shrinking resources, shrinking budgets. And I know that before working at Foot Locker, you Forever 21's first global CMO. You joined the company shortly after it was bought out of bankruptcy. So what were some of the most valuable lessons you learned in that role that really resonate in this environment? You know, one of the things that was really interesting for me joining Forever 21 was, you have a brand that's been around for more than 30 years. And that brand prior to bankruptcy had really been led by the founders and everything from a button on a shirt to who gets a printer, was decided by the founders. So you had a marketing team who really just needed to be galvanized and a marketing team that really one needed to be inspired and to also just really understand process. How do you take inspiration from the merch team and then develop that into a campaign that drives business? When I sat down with Daniel Kulle, who used to be the CEO of H&M for 20 years, and when we were sitting down talking about the opportunity to join him at Forever 21, one of the most important things, similar to what Ana talked about, is really how do we capitalize on that nostalgia? And that is really the Forever 21 consumer. So you look at all of the partnerships we have, whether it's Disney, whether it's Hello Kitty, whether it's FUBU, those are all things that drive tremendous business for the organization and really capitalize and offer that. So in a time similar to your question where budgets are scale and that's true for any company but also a time where, as we know, individuals at corporations now are no longer wanting to show up for a 9 to 5. They want to be inspired. They want to know that they're respected, that they want to know that their work is value and that they're valued as a human being. So I think more so than any of my career, being a CMO, I think that was the most important time for me to pull out those skills in myself to know that we're here not just to drive e-commerce, we're not. We're here to continue to thrive on who we are as a brand, but also galvanize the team so that they can do inspiring work because that's where inspiring work comes from. The employees being inspired. So I think that's what I learned the most, specifically at Forever 21 and was able to take that to Foot Locker as well. What are your tips on galvanizing a team? Because I know you walked into that company without any kind of preconceived ideas, without a marketing plan. And so what your tips? I think first is listening. And oftentimes as marketers and I'm guilty of this even starting out at Foot Locker, you know exactly what you want to do day one. You know the marketing plan, you know what you want to do with the athletes. Your first meeting with Nike, you're in the back of your mind, you're very clear what you want to do. But there is a reason that a Forever 21 or a Foot Locker or a Gap or Oakley has been around for as long as they have. And for me, coming in and those first 30 days and really listening to the organization in terms of how do we get here? How do things work? Even if they need to be changed. Even if they are out of sorts. Having an understanding is extremely important. Two, we talked about this a little, it's really being close to your team and being able to connect with your team and being able to not only listen, but understand what are their goals and how can you, as a CMO, Head of Marketing, help them achieve that, not only within the organization but overall? And then once you have listened, once you have an understanding of how did this organization get here, Forever 21 a perfect example, understanding how the marketing team has been run for 30 years, understanding how we work with our partners, whether it's a TikTok or Instagram, etc. Once you have that down packed, then it's all about connecting with your peers and top to bottom, working with your team to inspire them and pulling out that great work so that you can move forward. And I look at the team now, they're still there, whether it's my friend, our friend I've read and some other people that I was able to bring into the organization. They're doing tremendous work there and I think a lot of it had to do with giving them the ability to listen and inspiring them, to bring their authentic selves to work and do great work. And Ana, I know you've described yourself as a disruptive CMO. What do you mean by that? Well disruptive CMO doesn't have 30 days to listen. Prior to Esprit was Banana Republic and those are usually organizations where the clock is ticking. So disruptive CMO literally comes in, sets the vision, and then reorganizes the organization to deliver on that vision. So it's more about bringing in and then seeing who is part of this plan, who wants it, who's energized by it, and then who wants things to stay the same. And this sounds like, yes, ideally, you would have a lot of time to understand where everyone is coming from but then at the same time, when you have a mandate to achieve year on year growth, that is not an option. So disruption comes from setting the vision, setting the strategy, and executing unbelievably quickly. At neck-breaking speed. If the site needs to be redesigned, it needs to be redesigned in three months to be fully operational. The entire e-commerce operation. If we need to have a new aesthetic that is already implemented, if it's new visual language that is already implemented. If it's new product strategy design, if everything is new, the results need to be immediate. That's disruptive. Thank you. I'd love to hear from all of you about the essential tools that you're investing in right now. What would be your tips to the brand leaders in the room? I can start. Certainly personalization for us, that continues to be a big focus. It's a big area of investment. But I think especially, to your question around in challenging economic environment, a choppy economic environment, I think there can be a sort of natural inclination to pull from the top, move to bottom of funnel, pull back investment in brand. And I think that's very natural. And I think inevitably some of that is going to happen. But I think it is incredibly important to make sure that you continue to invest and you really find the ways to scrimp and save and figure out how you continue to drive the brand. In the end, that is going to be how you are going to at the highest level drive brand love. So I think it is something where knowing you're going to have to make trade offs, of course, being really thoughtful about we can't sit out very long. We have to get back in there and really being mindful of that. I think there's been a lot of research done in prior moments of economic challenge, economic downturns that brands that continue to invest in their brand tend to perform much better once the economy recovers. And so I think that's something we are very mindful of, we are very careful about. And it's something I certainly would suggest to all of you. Ana?. Two things. First one is staying close to customer. That means having customer data, understanding what they like, what they don't like, what they buy, and then quickly pivoting to deliver on that. I mean, that transparency needs to be there, that visibility of what is working, what is not working. And the second is the narrative approach. That means storytelling, always. Even if you have to cut the budget, even if you're just doing e-commerce photography or just marketing, or if you're thinking about an event and in-stores, it's only what story you are telling. Humans are storytelling animals. That's never going to fail. If you go for transactions, yes, as much as you spend money, that's how much transactions you're going to get. But you invest in telling your story. What are you about? What is the cue one, if you say in terms of storytelling? If you say, "Hey, we are planning to go back to our roots, but then go forward", so it's a little bit of a Esprit museum, but we're about breaking the rules. So it's a night in the museum. You're not supposed to be there. You're having fun. It's mischief. So you kind of start creating an anchor, a narrative anchor, to tell you how your stores are going to look like, how you're going to shoot, how you're going to style, which models you're going to choose, which communities you want to activate, how is your event gonna look like, which influencers you're going to work for? And that's unbelievably important. Rather than throwing money at saying "Hey, big is best" no, be considerate. Tell your story because that same relic light bulb was in crickets you know synchronization? All of a sudden you create a frequency and wave that is hearding culture. So I believe in that. Right? Amondo? I believe Emily and Ana, both were on the mark. But one thing I just want to reiterate from what I talked about before was really invest in your team. And we know now, right now is probably the most prolific time where your teammates are actually your biggest influencers. You can go out and pay as many influencers as you want. You can go out and spend as much as you want to the top of funnel and ensure that that is creating some type of magic. But this is a time where your employees have their own social media following. They have the voice that really determines how the brand is seen from an outward perspective, not the influencer that you're hired, but the one that's on the inside. So for me as a leader, I'm constantly thinking about my team. How do I inspire them so that when they are out, whether you're in a store or on the marketing team, how can they go out and really be our number one cheerleader and really give people that feeling of what it's like to work for our company? And that's something that should not always be done by a paid sponsor, but by someone who is there on the front line for the company. So make sure you turn your employees into your biggest brand ambassadors. Yeah. Thank you. Any questions from the audience? So with all the changes in digital marketing with like cookie tracking, it's going away. Apple AMP, Apple TV and so on. And we're slowly losing some of the info that we were able to gather from our customers and therefore first party data. So, relevance now, I'm curious to understand how are you currently collecting that and leveraging it and what tools are in your MarTech stack at the moment to do this? I can take that. So certainly first party data is incredibly important, more important to your point now than it's been continued to be important. We because of, when I talk about we're really focused on personalization this is why. Because we have the infrastructure that enables us to be able to collect data points across the entire journey, across our site, across stores, combine them all, and then actually be able to use that not just to reflect it, but to be able to actually predict and prescribe specific things. And so it's certainly for us very, very important. And I think it sets us up nicely in a more privacy oriented world. The other piece I would note is, first, our data is super important. Zero party data is great, too. And so that something whether it's through explicit preferences, preference and or all of those sort of places, surveys, etc., zero party data is also a place where especially if you have an engaged, loyal customer that wants to invest with you, make sure that you know exactly what they're looking for. That's another place, where obviously that data is incredibly rich and super powerful. And so that's another opportunity.