At Shoptalk, CaaStle (Clothing as a Service) announced the launch of their platform, described in a press release as “a cloud-based managed service . . . [that acts as] a complementary model to traditional retail and eCommerce.” CEO and Co-Founder Christine Hunsicker, a bold thinker and disruptor, recognized the shift in consumer buying behavior that has been happening in recent years and saw the need for a more profitable solution to those significant consumer shifts.
Six years ago, Christine launched CaaStle with Gwynnie Bee, a plus size online retailer, to prove the concept of CaaS. CaaStle processes the flow, and software allows brands and customers to interact differently than with traditional retail and eComerce transactions. The platform allows customers to build a “closet” (collection of clothes), receive and wear garments, return worn garments at their discretion, and purchase favorite items as they choose. CaaStle provides a technical and logistic bridge between retailer and consumer, all with an eye to meeting the needs of the customer and building loyalty. The retailer manages inventory and — most importantly — protects and manages the brand DNA.
This modern, versatile business model has multiple positive effects for both retailers and consumers:
Fabletics: Predictability Breeds Profitability
The impact of the new retail paradigm could not be more evident than with the Fabletics business model — which traces back to its inception and early development as an online, membership-only business.
Before Fabletics opens a brick and mortar store, one million users must be registered in its VIP membership program and it must have a market share of 50%. Once those two KPI’s are met, Fabletics looks at where the high density of customers are and opens locations based on where customers live, not just where real estate is available. Because the membership model is established prior to opening, Fabletics already possesses a treasure trove of data about its customers. With this intimate knowledge (and proprietary POS system), the brand is able to manage the full customer experience much differently that other retailers.
For example: when a VIP customer comes into the store, associates can pull up the customer’s profile and see their buying habits, get an understanding of who they are, what they like, their size, their frequency of purchase, etc. Then the associate can begin to start a very purposeful, personalized relationship with the customer. Once the customer enters the dressing room, POS monitors in each room help track garments, address any style issues, and (here’s the best part) make it easy to request new sizes or colors. Forget the days of being half naked and struggling with how to exchange something you’re trying on! The customer just enters their request on the POS screen, and that engages an associate to help meet her needs quickly and easily.
From a business perspective, the brand knows almost immediately about fit/ sizing issues, identifies “home run” styles, and is able to re-merchandise the stores based upon real time data. If a style takes off after delivery, they can adjust their visual merchandising both in store and online to drive that style’s profitability. Additionally, Fabletics drives customer acquisition through personalized marketing efforts based on a customer’s data and stores’ up-to-the-minute information. They can retarget customers through email and Facebook, as well as change advertising structure to a more fluid model by monitoring data analytics and adjusting decisions accordingly. On Day 1 of a campaign, Fabletics runs approximately 50 different ads and monitor those ads to learn from their performance. Based on the data they gather, on days 2-15 the company tests 600 different ads with 30 different landing pages to drive customization and increase purchase rates and sell-thrus. This higher predictability model has given Fabletics a leg up in the market, with 29% comp store sales (versus a range of -1% to 3% for competitors like Gap, Urban Outfitters, and Target). Fabletics’ blended membership/ online/ brick and mortar strategy seems to be paying off. 
Google: Customer-Driven Needs
The customer is driving and dictating their needs openly though use of mobile, searches, content consumption, and social media platforms — and we need to hear them.
How has the landscape changed? Products are finding customers instead of customers finding products. Think about that for a moment. No longer do brands need to wait for customers to reach them; brands can now personalize products to find their best potential customers. The mobile phone has fundamentally changed the way we (as consumers) engage — and our expectations around speed and choice. We expect immediate answers and real-time information. We check our phones 80 times a day, gives us at least 80 opportunities for brands to engage with us. We query items, we post our goals (thanks Pinterest), and we are often more visually articulate than we are verbally. Every time we check our phones, we are sending our queries and broadening our digital footprint. Personalization is here. Data is being generated at a rate that is barely fathomable, and only a miniscule portion of if has been analyzed. That speaks volumes for the potential of innovation to come. Here are a few key innovations that are on Google’s radar:
The bottom line? Google is the #1 driver of traffic to retailers, and because of that has a responsibility (and opportunity) to be the front door for retail brands. Nike: Driving Experiences, Community, and Culture
Our day-to-day online dealings leave digital cues behind. Companies can use that data to drive profitability, customization, membership exclusivity, engagement, culture, and community — and Nike is a great example of a company that does it well.
Takeaways
We saw so much innovation at Shoptalk that is really changing the business. From new business models, the advantage of predictability, customer-driven needs, and community — times are changing, and companies are meeting the challenge by changing the way retail is done.
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