Learn about the retailer’s nomadic leasing strategy, community, and seamless consumer experiences

Our guest is Allie Egan, President and CEO at Cynthia Rowley, a leading global lifestyle brand sold in over 60-freestanding collection boutiques, as well as in department, specialty, and online stores worldwide. Allie’s experience with high growth consumer businesses includes growing digital-first prestige and luxury brands through e-commerce, retail and wholesale. Join us as we explore Cynthia Rowley’s nomadic leasing strategy concept, community with its customers, and seamless consumer experiences.

Episode
14
of RETHINK Retail was recorded on
June 28, 2019
TRANSCRIPTION

Paul Lewis:

Welcome. Today we're kicking off another episode of RETHINK Retail. My guest today is Allie Egan, who's the president and CEO at Cynthia Rowley, a New York-based global fashion and lifestyle brand. Before leading Cynthia Rowley, Allie held global roles with esteemed brands like La Mer and Clinique, specializing in areas spanning product marketing, e-commerce and consumer engagement. Allie, tell us a little bit more about your background and your current role.

Allie Egan:

Well, yeah. Hi Paul. First of all, thank you so much for having me. So I actually began my career in finance, so investment banking and all that that entails, and then that led me to a role in consumer retail investing where I worked with promising small high-growth companies across the consumer retail industry. You know, really loved that experience, but felt much more passion behind building a brand myself and be more on the operational side, and so shifted and began my career with Estee Lauder and worked across various roles within digital marketing, product, etc., but found my way to Cynthia Rowley, which is just so exciting because we have such an incredible brand and now we are working diligently on shifting our model from what had been more of a wholesale licensing-driven business to a direct-to-consumer business with e-commerce being our number one channel as well as our retail stores.

Paul Lewis:

Wow, that's really interesting. And so that changed from going to direct to consumer and your e-commerce being your number one store. Has there been any unexpected challenges or what have been some of the challenges in making that shift?

Allie Egan:

Yeah, I mean I think the main challenge, and companies are facing this all across the board, is now we have to be the tellers of our own story, right? Where in the past, and especially in apparel, that was always done by the retailer, the Neiman Marcus's, the Nordstrom's of the world. And really, that isn't enough. But the good thing for brands like our brand, where we have a real distinctive point of view, is we're not short on the ability to tell stories and to connect with our customers. That being said, internally, obviously, that shifts from a sales driven organization to people who are focused on content creation and e-commerce and digital and what have you. And so there's definitely been a lot of moving pieces and will continue to be as we evolve and stay nimble and ahead of the curve hopefully. But all for the better and just help us to not only just make beautiful products, but then to really connect with customers who sort of bring them and see the whole lifestyle. You know, we've built our brand on what we call the perfect combination of pretty and 40 and find that that really helps empower women to lead their best active lives. And there's so many things to talk about there, but we're just taking every opportunity we can to tell those stories and connect with our customers and potential customers.

Paul Lewis:

Yeah. When you talk about connecting, and I love the discussion of e-commerce, but one of the things I was excited to have you on the show is that Cynthia Rowley has talked about this concept of nomadic retail. And I think it's really interesting how that might correspond with your e-commerce strategy. So to start with, tell us a little bit about how you define a nomadic leasing concept.

Allie Egan:

Yeah. We thought what we were doing was different enough and that we needed to give it a different term, right? It's not just opening normal retail stores, and to us it's not a pop up strategy. The whole idea is to put the customer first and be nimble and meet them where they are and really create a beautiful environment where we can meet more people. And we needed to do that in the right context for us. Being realistic about our business, we are not a beauty brand or some other kind of company where you can open a pop-up for a weekend and sell a bunch of products and get a big email list or what have you. But we're selling beautiful, high-quality dresses and that's the longer term sale and cycle.

And so for us the notion of doing a weekend pop-up just didn't help us serve any purpose. It doesn't help us necessarily drive sales in the moment, doesn't help us acquire customers for the long-term for our e-commerce business. And so what we crafted was what we call nomadic retail, and that is based with the goal of acquiring customers either because they don't know the brand at all or because it is their preference to look and feel and experience the brand and the product before they purchase.

Then from a business perspective, it is built off of the principle that we want to do everything in a 'test and learn' sort of environment. I know that's a buzzword these days, but really where we can go and enter new markets for a relatively short-term commitment, call it like 12 to 24 months, but then if it's working and we really create the community environment that we're looking to have and the long term customer relationships, that we intend to stay and have that flexibility. We've done that in several of our locations so far, such as Palm Beach and really have a faction there which helps drive the physical retail stores as well as our e-commerce business in those markets.

Paul Lewis:

Yeah, I think that's really interesting. I had Indochino on the show recently and they said some similar things, that it was really important to be able to test markets. It was important to, the same sort of phrasing of reach customers where they are, and they talked a lot about using data to figure out where to locate those stores. Is that something that you do as well?

Allie Egan:

Of course, of course. I think we can use data in several different ways. We obviously look at our own e-commerce sales and see where do we have traction in market already so that if we come there, we have a base of people to start to create that community. And then we also look at just more general market data. And we do this both for retail as well as for our general business, is saying like anything from demographics census kind of data as well as to data on social. Where is our target consumer showing up in different areas that maybe we don't have, our income sales wouldn't tell us we should be in those kind of locations. But there are huge opportunities for us.

An example is our store in northern California in Carmel, just south of San Francisco where, if you looked at all of our e-comm data it wouldn't say, oh Carmel is the number one next market you should be in, but for us it hits our target consumer. It has the coastal surf environment, so allows us to speak to and address all areas with our brand from our pretty dresses to our incredible wetsuits, and it's an amazing community. We just opened there but already that's a great location for us. So we definitely use data in multiple ways to triangulate and try to determine beforehand where the best places to go are and where we should be. But then obviously analyzing our data once we have a location to understand how we can improve and grow the business.

Paul Lewis:

Once that data has helped you find the location, one of the things you mentioned earlier was it was important to tell your own story and to connect and build connections with consumers. I noted in a BRP consumer study that eight out of 10 customers thought that personalized service from a sales associate was important factor in determining where they shop. How do you approach in your physical stores? What do you do to make that experience exceptional for your consumers?

Allie Egan:

Yeah, for sure. For us it's really about creating those personal relationships with each and every one of our customers, both online and as well as off, and especially offline. You think about why do people come into stores today, right? They can get anything delivered. They have all product information at their fingertips, on their mobile phone, on their desktop, etc. You look at where physical retail is most vibrant and interesting. And I think it has been in, in more experience led things such as boutique fitness, etc., Where people are coming together for a purpose broader than just something transactional. We keep that at our heart.

Fundamentally it's who we are as a brand. I always joke with Cynthia and say that she's a host at heart and the environment that we're trying to create in our stores is as if you're coming into Cynthia's living room and you're welcome. It's like shopping with your best friend where our sales associates are there primarily to help people find the right style for them and help them kind of navigate whatever's going on. Hopefully train our managers to start all conversations, not about what product people are interested in, but about getting to know the customer, what's going on in their day, what's on their mind, etc., so it's about building that relationship first and then dealing with specific product and sales issues.

Paul Lewis:

And when you mention building relationships and connecting and community, one of the things that Cynthia Rowley is known for is cultivating that sense of community with customers through events and your open studio concept. Can you tell me a little bit more on how you build a sense of community with your audience?  

Allie Egan:

Yeah. Well first, I guess I'll talk about the open studio because that's pretty new and pretty exciting, and I think one of our core... We're known for being innovative, both in our product designs as well as I think our company from nomadic retail to now what we've just piloted is our open showroom. So we've said we've changed our business to be direct consumer focus and less built on wholesale. And we have, for us it's still important to work somewhat within the fashion calendar, showing ahead of season. That's where we are able to connect with editors and really get buzz for a collection. But we were doing our shows and then having a showroom that buyers came to for a couple of weeks right after the show and then kind of is dormant. We're like, that's not really, we wanted to be much more open and transparent because I think that's what customers are sort of demanding from brands, especially luxury, high-end brands. They want to know what's going on, how is stuff designed, etc.  

And so we moved our corporate offices about two months ago down in Tribeca, and we have now our open showroom, so we can have both buyers as well as influencers and normal everyday customers come in and see everything from the upcoming collection that's not even available for sale to our currently available products and shop. That really allows us to, myself and Cynthia, sometimes they're directly speaking to our customers in our place of business, and they can sort of see how the secret sauce is made at the same time. So that's a super exciting way that we're building community and we'll continue to do so.

And then in our stores we have events all the time and we try to customize them somewhat for the local market and what people would be interested in. But we're not trying to do things that are just flashy or sales-driven, but really add value to people's lives. An example of that is a collaboration we did to make a mommy and me wetsuit with Maisonette. We did a mommy and me surf lesson at our store in Newport. That was hugely successful in really helping to teach both our current customers as well as our young, future customers how to surf and be brave and get out there and stay active.

And then we'll have also more serious events. We had a panel with an organization called The Chain in our Bleecker Street store that helps women in fashion and retail dealing with eating disorders. That was so impactful for me personally being there and, and hearing the issues that women are dealing with and examples like that are what we're trying to do more of to not only connect between the brand and the customers, but have our customers connect with one another.  

Paul Lewis:

Yeah. I think leaning in on those types of issues and opportunities are important for... So many brands today define their brand as their products. I think people need to understand that the brand is a bigger halo of that. It's what you represent in the world. And so being able to go out there and demonstrate that and also interact with your customers in that in a meaningful way is really important to differentiate. Because I think that that's some of the challenges we're seeing with what I would call traditional or classic retail is it is very much the inventory, a price-purchase thing, and that solved more elegantly online. Right? If that's all a store delivers is the basic fundamentals of where we were 20 years ago, those stores I think are struggling today. I think you have to have that next level of community, of experience, of personalization in service to really excel in today's environment.

Allie Egan:

Yeah. I mean you definitely see that across the board. What I call it is more merchant-driven businesses are dying. That doesn't mean merchandising isn't important, but it means that that's sort of the baseline expectations of customers, that you'll have an assortment of categories of great products that fits their need to walk away. But that's not what, with all the choice that people have, especially within the prestige luxury world, that there has to be something else there, both from an in-store perspective as well. Even just from a brand and having, we like to say we use our customer data and market data and trends, but then we really have a point of view and you can't be afraid of that as a brand to put that out there.

Paul Lewis:

Yeah, absolutely. One of the things you said earlier in the podcast was that e-commerce was a big factor for you, but we've also talked about the physical stores and the experiences. How do you blend that together? Do people typically start digitally with you and move to physical? Do they start in physical and move over? Is it sort of both ways? How do you see that and how do you see them working together?

Allie Egan:

Yeah, I mean it's definitely both ways and all about. I think in general, I always hear businesses quote that their omni-channel customers are, are their most valuable customers, and of course that's true because it's someone who's just shopping with you more frequently and we want that as well. But the truth is a lot of, most of the time those omni-channel customers are probably 10 to 20% of the business and they're everyone's most important customers. But I think it's also totally okay, and we were happy to have people that are online only or retail only. And that's just about us as an organization, knowing our customers, keeping that information on them and following up with them and clienteling with them in the way that works best for them, whether it's just getting them to click through on an email or text to see our latest styles or having their personal store associate, call them when something new is in, etc.

We try to run our business where we're not force-feeding the customer journey in a way that from a backend perspective looks better for our financials, but in a way that's actually how people want to shop. That being said, I think why retail has been important and will continue to be important for us is there a definitely people, especially within luxury who want to touch and feel and see and experience that product and try it on and know more about the brand and what we produce, and then they feel much more comfortable buying online after that. So we've seen both in markets where we've opened a nomadic store that creates a big halo for our e-commerce business as well as some stores that we've moved on from, we continue to have a more significant e-commerce presence there after we leave.

Paul Lewis:

That's really interesting. I wonder if some of the metrics, the classic metrics for measuring the success and the impact of a retail store are starting to change. Because when you start to think about, especially in this nomadic concept of being in a location for a period of time, but then seeing that halo effect, maybe the metrics... I mean, clearly we still have dollars per square foot and things like that, but those aren't the only metrics that need to be used because now it's not just are they buying in store, but are they becoming more brand loyal? Are they becoming more brand aware and that translates to later, greater lifetime value. Do you think about the, are the KPIs changing in your mind?

Allie Egan:

Yes, 100%, right? Because it's no longer just about...for us, we don't want to focus only on customer acquisition, number of customers acquired, or whatever. We want to focus on long-term customer acquisitions. And what we know for a fact is customers that come in through the retail channel, especially those who come in through the retail channel and then move to online, they have a greater customer lifetime value over time. It is worth our investment to open stores and potentially pay a higher upfront fee to find people and connect with people in a way that they then feel in a relationship with the brand going forward and purchase with us more frequently in the future. And I think the challenge for any business leader is how do you, that sounds really great, but how do you actually measure that and keep track of all those things? Operation, we have to design our business to make sure we're doing that. And then I would say the other supporting factor that we've established is being smart about nomadic or temporary or potentially temporary locations to say we can make our payback just on this location, but that's not our true return on investment. That's sort of how we've built our retail customer acquisition strategy.

Paul Lewis:

That makes a lot of sense. I always like to ask my guests are there technologies that you feel are core today that you need to create that and to measure that or if there's new technologies that you're starting to see that have caught your eye or interest. Are there any technologies that Cynthia Rowley's using to stitch all those different components together?

Allie Egan:

Yeah, I would say that that's been our biggest focus from a technology standpoint is on this more behind the scenes stuff so we can both understand our customers better and give them the best experience possible, and not just investing in technology for technology's sake. More of our investment has been focused on backend analytics and making sure our store data ties to our retail data and that everything is accurate from a clienteling perspective. And that enables us to provide way more value to our customers because we know what they might be interested in over time. And we'll continue to get better at this, know what their personal style is more like. We know that we have a really diverse customer base from what we call super high-end fashionistas, like what you would think of as quintessential New York City woman, to tons of really amazing, loyal customers in markets such as Texas and North Carolina. They're just as important, but they might tend to style something different. And so sending them content and things that is more relevant to them is how we've focused our investments from a technology standpoint and not things like smart mirrors or dressing rooms or things that are kind of cool and a little funky, but don't really provide any longterm value to the customer.

Paul Lewis:

So in your mind, the technology is a bit in the background, making the experience for your customers seamless and easy, but it's not necessarily the latest whizzbang gizmos that are interesting maybe for technology's sake, but aren't necessarily moving the ball forward with your consumers.

Allie Egan:

Yeah, exactly. That's definitely specific to our brand. If I was running Apple retail, I might think about that a bit differently. But what people are coming to Cynthia Rowley for, it's not going to be crazy fit-finder things that don't help because it is an emotionally-driven purchase. I think every business leader needs to be smart about, I like to stay really on top of what all that stuff is because I think the customer is evolving and will continue to evolve and we want to evolve along with it. But being honest with yourself about what customers are coming to you for and then what that means for what technology that would be valuable to them and enhance their experience as a brand.

Paul Lewis:

Great. I think those are wonderful insights. Well Allie, it has been great talking with you today. Thank you for sharing some of your thoughts and wisdom on this space. I hope that we can connect in person in the near future.

Allie Egan:

Yeah. No, thanks so much for having me. It was great. I love talking about this stuff, so it's always fun. Looking forward to chatting again in the future.

Paul Lewis:

That sounds great. All right. Take care.

Allie Egan:

Okay, thank you.

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