Growing top-line revenues is a “Wall Street imperative,” according to Jim Neal, a principal with the consultancy Kurt Salmon Associates.
In outlining strategies to do that, Neal described current consumer behavior, saying recent growth in spending has outpaced growth in disposable income, 6 percent versus 5 percent, respectively.
“Unfortunately, that overspending has not been directed toward apparel or footwear,” Neal said. His prescription was for fashion executives to focus on across-the-board innovation in product, store environment, service and employees.
Regarding product, Neal revealed that KSA’s consumer outlook survey found that half of those polled would be willing to pay more for products they found innovative. “Too often companies spend time and money on innovations that merely end up swapping dollars with products consumers were already happy with,” Neal said. Instead, executives should concentrate on unique solutions to consumer problems. He cited Procter & Gamble’s Mr. Clean “eraser” product that removes markings from walls. “P&G took this innovation from Japan, showing that ideas don’t always come from within,” he noted.
He also mentioned elasticized children’s clothes from Gap as problem-solving products. “This idea addresses the frustrations of kids who don’t like to try on clothes,” Neal explained. “Look inside your company or elsewhere — just make sure to start with the consumer’s needs in mind.”
Store environment, Neal said, is equally important for top-line growth. He invoked the concept of a treasure hunt as a means of wooing shoppers through the door. “You have to create customer curiosity,” Neal said.
Third, he suggested going beyond the basics of customer service by bundling services around product offerings.
Finally, Neal addressed the importance of innovation in hiring. Quoting Starbucks’ chairman Howard Schultz, he said, “Happy employees unleash their enthusiasm, and that enthusiasm is infectious.”