Betting On Your Product

Betting On Your Product

Would you be comfortable betting millions on a horse just because you had a good feeling about it and it had done well for you a year before? What about spending hundreds of thousands opening a new restaurant without having any potential customers taste the food you’re planning  to serve? Or spending tens of millions on a new advertising campaign having refused to get anyone's opinions on it before it goes on TV?

Do any of these seem like a good idea?

In pretty much every sector thanks to technological advances and the ability to harness opinion data or run small scale tests these approaches have been consigned to history, but for some reason it’s the one trend that fashion has been slow to adopt.

It sounds crazy but every year brands and retailers spend huge amounts of money and pin their fortunes on buying stock, making their decisions based on industry knowledge, historical data analysis, trend analysis and gut feel but the one thing they don’t fully understand is what their customers actually think of the new products they’re bringing to the market. Why?

Because they’ve often been designed in a fashion orientated bubble without involving the customer early on in the process.

When fashion retail was a push market with brands/retailers deciding what people should be wearing and provided it to the high streets every couple of months then this strategy worked well but now in a pull market with consumers having overwhelming choice this is a strategy that is no longer fit for purpose.

How do we know? Well, you can see how often consumers turn their nose up to new products by the percentage of products being discounted by brands. Last quarter this level rose to 62% of products in the market being discounted at some point in their life cycle according to the data we generate every month via the Mallzee app.

It’s our belief and our main focus at Mallzee that to help companies reduce this rate customers need to be involved in the development of products through product testing. Focusing on getting the right product, in the right quantity for the right customer is the key to strong results in the difficult retail market. Just look at the success this has driven for boohoo and Zara!

Profits follow the product!

What could fashion retailers learn from other sectors?

Whilst fashion retailers undoubtedly incorporate various forms of testing and evaluation into their buying and marketing strategies there is still lots they can learn by examining other industries.

For example;

The advertising industry has some of the most established testing practices - a quick Google search highlights that advertising research was being conducted as long ago as 1879. Every stage of the advertising process is tested with consumers to maximise effectiveness and ROI of all spend - from initial brand market research to creative testing and post implementation feedback loops - absolutely everything is measured and evaluated.

Fast Moving Consumer Goods (FMCG) - as their name suggests - are high volume, low margin consumable products, often with a short shelf life. FMCGs are undoubtedly one of the main advocates of user testing and market research - their high volumes and low margins mean they really can’t afford to have products left on shelves or discount.

Successful FMCGs are based on strong products but also having strong visibility and being top of consumers minds.  Businesses rely heavily on consumer research and taste tests to develop the perfect product and then they spend heavily on brand engagement and product placement - all backed up by focus groups and consumer surveys.

Even on The Apprentice teams have to get consumer feedback on their products in most tasks! And that’s not exactly cutting edge business…

How could fashion retailers introduce testing?

Fashion retail is obviously less mass market than FMCG and any testing has to be focused on the specific demographic of potential wearers. This can be done via focus groups bringing together a representative group of consumers and showing them potential products to get their feedback.  The drawback of this type of market research is that whenever you are incentivising people to give feedback it becomes skewed and it also rarely correlates to what happens when the products are brought to market, falling victim to the test-group being to small or the loudest voice in the room taking control of the group. The approach is also extremely time-consuming and expensive.  

You could take the approach of Mango and start to showcase a products as pre-release on Instagram with consumers leaving comments on what they like and what they don’t, but this has the issue of creating an echo chamber of just your current fans and not your aspirational customer.

If you’re bringing hundreds of new products to market a year it’s nigh on impossible to undertake these approaches at scale.

Testing products in fashion is hard.

This is why we’ve seen such a great response to our Product Future offering in the last 12 months. Product Future enables companies to test pre-release products on the Mallzee app, compare their performance to over 3m historical products and understand how they perform.

2018 has been hard for fashion retail, 2019 isn’t going to get any easier. We can blame external factors in the form of increased competition or the worries of Brexit but first and foremost as retailers we need to stick to the mantra - right product, right customer and right price!

The quickest, simplest and most effective way is to introduce product testing into your process, let us help you and joining the range of companies now generating 2.81-6.11% increases to gross margin thanks to Product Future!

Cally Russell

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