While taking chances may be a well-known financial investment strategy, retailers should also be paying attention to the adage “the bigger the risk, the greater the reward.” That was the advice of Greg Petro, CEO of merchandising platform First Insight, during his presentation at the FN CEO Summit in Miami today.
“Whether you’re trading stocks or bonds — or shoes — the concept applies,” said Petro. “As risk increases, returns should increase.”
In particular, Petro emphasized that the men’s sneaker market had responded very positively to innovation and that brands should continue to explore that area of product development. Comparatively, women’s shoes are seeing a positive upward trajectory in full-price sales across the board, while kids’ remains consistent.
More broadly across footwear, brands should be strategizing so that their risk-taking creates a point of product differentiation. With many items sold on multiple websites — sometimes at a discount — and knockoffs abounding on third-party marketplaces, there needs to be a reason for consumers to visit the brand’s own website; Petro argued that this is product differentiation.
“If you don’t have a product differentiation strategy or reason for the customer to keep coming to you, you need to think about that,” warned Petro. “Otherwise, the customer is going to go somewhere else from a channel perspective.”
And taking risks doesn’t just apply to the products themselves. Exploring new channels for advertising and marketing could also result in powerful revenue rewards. Crocs, through a partnership with First Insight, invested in a social media strategy in order to target a younger demographic than its usual consumer. Through strategic social influencer partnerships and content, the brand saw a 400% increase in customer engagement in that demographic.
Looking beyond social media, 2015 marked the turning point of there being more smart devices than people on the planet. Petro suggested that retailers look at and optimize their digital sales channels, especially the newer ones like voice command, as this is where the consumer is moving. Shopping via smart speaker is a particularly growing segment, with 42% of shoppers already using the devices to compare prices for footwear.
“If you don’t know the words people are using to search for your brand, you’re at a disadvantage,” said Petro.
Watch the video below to see a footwear leader explain how to affect change:
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