Sephora has entered a multi-year partnership with the WNBA’s Golden State Valkyries, the league’s newest team, that include naming rights to the team’s performance center in Oakland, Calif. In the digital realm, Sephora will offer behind-the-scenes access through the Valkyries’ digital and social media channels, including a dedicated season-long content series spotlighting the players on game days throughout their inaugural season.

“We are thrilled to support a team that is committed to women’s empowerment, self-expression and excellence,” said Zena Arnold, Chief Marketing Officer at Sephora U.S. in a statement. “Joining forces in our shared Bay Area home underscores the strong alignment between our brands, and we are proud to see Sephora represented in both a physical space and with an organization where confidence and performance thrive.”

The 31,800-square-foot Sephora Performance Center will feature Sephora-branded elements throughout its spaces, including the three professional-grade basketball courts, locker room, strength and conditioning areas, recovery zones and a player lounge. Sephora’s branding will also be visible on the team’s practice jerseys.

In the Chase Center, where the Valkyries will be playing their home games, strategic in-arena placements of Sephora-branded elements will including a Sephora Kiosk, offering a curated selection of beauty product offerings available for purchase, as well as a branded Sephora Sounds DJ booth spotlighting the retailer’s music collective, which supports underrepresented emerging artists.

Sephora joins the growing list of Valkyries founding partners, which include JPMorgan Chase, Kaiser Permanente and CarMax.

You may think shopping online for a car (especially a used car) is overwhelming, even frustrating. But Jim Lyski is trying to change that.  
 
As EVP and Chief Growth & Strategy Officer for CarMax, Jim has helped drive the company’s AI efforts, which span various touch points and all stages of the buying journey. Listen to get details into how CarMax is:  

• Evolving its value proposition to align with the new needs and expectations of consumers;
• Investing in chat agents that provide proactive and reactive support to shoppers;
• Creating opportunities for virtual, high-touch discovery and customization; and
• Embedding personalization into the entire journey.

RELATED LINKS 

• Learn more about CarMax 
• See CarMax coverage on Retail TouchPoints 
• Download the ultimate guide to Gen AI

The editors of Retail TouchPoints are sharing our picks for the seven most consequential stories of 2023. As usual, there were lots to choose from — that’s standard for such a dynamic industry — but these were the topics that had “legs” (and are likely to continue to be important in 2024).

1. Resale Continued its Rise but Came Under Financial Scrutiny

Consumers’ enthusiasm for secondhand goods, as well as other forms of more sustainable consumption like rental and repair services, showed no sign of slowing in 2023. Retailers heeded the call by entering resale in droves; Crocs, J.Crew, Kate Spade, The Container Store and American Eagle are just a handful of the brands that launched new resale or reuse initiatives this year.

But in the midst of this rampant sector growth, public companies operating in resale, like ThredUp and The RealReal, found themselves under increasing pressure from investors and shareholders to make not just headlines but actual profits. The sector’s money woes aren’t because consumers aren’t spending — ThredUp’s latest annual report predicts that secondhand sales will double by 2027 to reach $350 billion globally — but because online purveyors of secondhand goods face a number of unique challenges that make resale complicated and expensive, including single-SKU inventories (CarMax’s Jim Lyski described resale inventory as “snowflakes”) and complex reverse logistics needs.

While resale can give companies a nice brand image bump, if these programs don’t make sense financially it’s doubtful that they’ll last. Which is why this year (and likely next year as well), the focus for resale operators, and the retailers that employ their services, was on tightening up operations as much as expanding them. — Nicole Silberstein

2. Media and Advertising Became More Contextual (and Measurable)

Marketing teams are feeling more pressure to perform. Although they have no shortage of channels and tactics to use, they need to ensure they’re prioritizing the right methods for their ever-evolving consumers. Some brands, like Anthropologie, have masterfully blended traditional tactics (like catalogs) and new digital channels to reach new and loyal customers alike. Other brands are exploring how to embrace more contextual advertising vehicles — such as retail media, CTV or even shoppable TV — that allow them to reach consumers in a more contextual way.

But these new media and advertising channels don’t just help create seamless and personalized brand experiences, from the sofa to the store. They also offer more robust measurement and attribution for teams that need to prove the impact of their investments. In 2023, we even saw social players, from Meta to TikTok, strive to offer the same depth of reporting and insights to empower brand partners. — Alicia Esposito

3. Accessibility Moved into the Mainstream

The fight for inclusion by people with disabilities saw some key victories in 2023, as retailers and brands began to recognize the buying power of this sector: Market Reports World has forecast an annual CAGR of 5.74% for adaptive apparel from now through 2030. Kohl’s and Nine West launched an adaptive apparel line, and QVC leveraged some star power by launching an accessible fashion line in partnership with Selma Blair and Isaac Mizrahi.

However, accessibility and inclusion aren’t just about the products retailers sell, but also the experiences they provide. Walmart set an example for the industry by initiating “sensory-friendly” hours on Saturday mornings (including tuning display TVs to static images, turning off the radio and lowering the lights where possible) during the back-to-school season. The retailer got such a positive response that it expanded the program to all its U.S. stores in November. — Adam Blair

4. Bed Bath & Beyond Said Goodbye & Hello

The one-time “category killer,” Bed Bath & Beyond (BB&B), founded in 1971, breathed its last in 2023 — sort of. BB&B had been in decline over the past few years, fueled in part by an ill-fated foray into private label that began in March 2021 along with store closures and layoffs following disappointing financial results in August 2022. Ad exec Ellis Verdi identified several structural weaknesses in BB&B’s operating model that, along with changes in consumer shopping patterns, finally caught up with the retailer.

But even though its brick-and-mortar stores have closed, the BB&B name lives on: Overstock.com, which purchased the retailer’s IP, renamed its website Bed Bath & Beyond in early August, part of CEO Jonathan Johnson’s plan to marry the retailer’s name and reputation with Overstock’s “asset-light” operating model. In an ironic twist, Johnson himself had to say “goodbye” to the new Bed Bath & Beyond in November. — Adam Blair

5. Marketplace Competition Drove Ecommerce Innovations

The last few years have seen a veritable explosion of online marketplaces, and a number of these are becoming sophisticated enough to threaten Amazon’s dominance in the U.S. In 2023, that’s exactly what they did.

Among the biggest challengers were Chinese-based discount shopping apps Shein and Temu. The latter had always been based on a marketplace model, and Shein added a marketplace in May to expand its reach beyond fast fashion. Both companies regularly made headlines this year not just for their meteoric rises but also for their numerous legal challenges (including against each other) and questionable business practices. But negative press didn’t stop either app from drawing U.S. consumers in droves, thus striking fear in the hearts of established players, both digital (read: Amazon) and physical (with consumers shifting some spending away from discount and dollar stores in light of this new alternative).

The form and function of marketplaces continues to expand rapidly, and many other companies used them in innovative ways this year: Macy’s to broaden its consumer appeal; NBCUniversal to enable its shoppable TV ambitions; Hearst to evolve beyond affiliate marketing; and Party City to expand into services. We expect marketplaces will continue to drive innovative new ecommerce experiences, and intensifying competition among retailers, in 2024. — Nicole Silberstein

6. All Things Gen AI

The surging popularity of ChatGPT made generative AI a mainstream topic of discussion — and debate. While many industry practitioners, especially store design teams, have eagerly turned to tools like ChatGPT and DALL-E to facilitate research and ideation, others have warned that these platforms are brimming with copyright and privacy issues.

These conversations will undoubtedly continue, especially as politicians and pundits weigh the future of AI legislation. However, that certainly will not stop retailers from testing generative AI to drive business productivity and revenue. Some retailers, such as PUMA and 1-800-FLOWERS, have eagerly tested gen AI capabilities to create more personalized customer experiences at scale. — Alicia Esposito

7. Crime Stats Got a Second Look

Crime, including shrink and more violent offenses, is a serious and perennial problem for retailers, but exactly how big the problem is became less certain this year. In early December, the National Retail Federation (NRF) had to retract a statement about the impact of organized retail crime (ORC), saying that a report issued earlier in 2023 had mistakenly reported that “nearly half” of 2021’s $94.5 billion in retail shrink was due to ORC.

The perception that retail was suffering from a rampant crime wave was bolstered by statements from executives at Dick’s Sporting Goods, Target and Lowe’s, all blaming shrink as one of the factors negatively affecting not just their financial results but the safety of employees and customers.

Were these retailers just looking for a convenient scapegoat? Count on more conflicting data next year, particularly if this often politically charged issue becomes a factor in the Presidential contest. — Adam Blair

No, they won’t arrive on your doorstep in a giant box cushioned by packing peanuts, but Amazon customers in the U.S. will be able to purchase Hyundai cars online next year. Customers will be able to shop for available vehicles in their area based on preferences including model, trim, color and features, check out online and then either pick up their car at a local dealership or have it delivered to their home.

Additionally, Hyundai has selected AWS as its cloud provider, paving the way for the inclusion of advanced voice-activated Alexa functionalities in next-generation Hyundai vehicles in 2025.

“Hyundai is a very innovative company that shares Amazon’s passion to make customers’ lives better and easier every day,” said Andy Jassy, CEO of Amazon in a statement. “Our broad, strategic partnership should do just that, from changing the ease with which customers can buy vehicles online, to making it simple to use Alexa in Hyundai vehicles for entertainment, shopping, smart home adjustments and calendar checks, to enabling Hyundai to transform their customer experiences and business operations by moving to AWS.”

The automaker’s multiyear agreement to use AWS as its preferred cloud provider will allow it to migrate current on-premises applications to the cloud. Hyundai plans to prioritize business cases like manufacturing and supply chain to help optimize production and minimize costs, support security and disaster recovery for resiliency and continue to develop connected vehicle solutions.

“Partnering with one of the world’s most customer-centric organizations unlocks incredible opportunities as we continue to expand our portfolio, grow our sales network, transition to electrification and realize the future of smart mobility,” said Jaehoon Chang, President and CEO of Hyundai Motor Company in a statement.

Online car sales have been dominated by marketplaces focused exclusively on autos, such as CarMax, Carvana and Vroom. Healey Brothers Auto Group worked with Pinterest to promote autos to “Pinners” in June 2022, and Alibaba features used cars on its site.

Although we’re taught that it’s not polite to talk about money, many people can’t resist crowing about what a great bargain they got by buying via resale. (Some are just as eager to tell you how much they sold a used item for.) But for those companies in the business of resale, money can be a touchy subject. That’s because, despite resale’s increasing popularity with consumers, these firms are finding it incredibly difficult to generate profits.

These money woes are not because consumers aren’t spending — ThredUp’s latest annual report predicts that secondhand sales will double by 2027 to reach $350 billion globally — but because online purveyors of secondhand products face a number of unique challenges.

With the ecommerce boom days of the pandemic now behind us, the heat is on — public companies operating in resale, like ThredUp and The RealReal, are finding themselves under increasing pressure from investors and shareholders to not just make headlines but actual profits. At the same time, traditional retailers are entering resale in droves, oftentimes in partnership with platforms like ThredUp or solutions like Trove and Archive. In addition to the competition of a more crowded field, these retailers are likely to face the same profitability pressures as their tech forebears. And while companies can “earn” a nice bump in brand image, if resale programs don’t make sense financially it’s doubtful they will work in the long term.

“[Resale] is a double-edged sword,” said Andy Ruben, Founder and Executive Chairman of recommerce solution Trove in a recent Retail TouchPoints podcast. “It’s a channel that has to be built out on its own and integrated with other channels. Is this a one-time story that you’re going to get a headline for because you’re going to sell 35 items? Or is this something that you’re able to build by keeping customers close to you? Is it happening at good profit margins? And are you able to scale the platform to millions of items, [to a point] where this can become a meaningful percentage of your business? Brands need to navigate the business model underlying how they’re doing resale and ultimately, they should make sure that they are building a growth channel; [otherwise] it’s just a marketing program called sustainable.”

Easier said than done, so we’re taking a deep dive into the challenges of turning resale into a revenue-generating channel and how some platforms are tackling them in this two-part series. [Read Part 2, focused on the tactics brands are taking to make resale financially viable, here.]

Challenge #1: SKUs of One

“There are a number of barriers to profitability for anybody in this space, and the first is efficiently acquiring quality supply,” explained Matt Kaness, CEO of the new resale marketplace GoodwillFinds.com in an interview with Retail TouchPoints. “Whichever marketplace you’re talking about, if you don’t have sellers who have a continuous supply of products that consumers want, you don’t have a marketplace.”

Even with reliable supply sources, the reality is that you’ll be dealing primarily with items that are one-of-a-kind “snowflakes,” as CarMax’s EVP of Strategy and Product Jim Lyski described them.

“Most formal retailers are built around a parent or child SKU, and then you have maybe 100,000 units — every unit looks the same and you can process every unit in the same way,” said Ruben. “Whereas when you’re buying items back from customers, you’ve got to understand what the condition of that unique item is, because you might hand a customer [for example] a larger gift card or a smaller gift card depending on the item. Either way, you could either lose money with too large of a gift card, or you could end up missing the best options because you’re not giving enough money.”

While Trove’s partners typically offer payouts in the form of branded gift cards, the same dynamics around accurately grading and pricing items hold true for managed marketplaces like ThredUp or The RealReal.

Challenge #2: Receiving and Processing

When it comes to handling the supply of secondhand goods, platforms currently use one of two models: peer-to-peer or managed marketplace. Peer-to-peer platforms like eBay, Poshmark or Depop essentially push the logistics onto the individual sellers, who create listings, set pricing and handle fulfillment themselves. No physical infrastructure is required beyond the platforms’ technology, which offsets a lot of costs.

Managed marketplaces like ThredUp, Rebag and The RealReal enable a much more consistent, streamlined consumer experience by buying products from sellers and managing everything from listing to fulfillment themselves. Of course, that requires much more physical infrastructure, which as Kaness pointed out is “hard to scale profitably until you get to a certain critical mass.”

The scalability factor is also very different across these two models, according to Ruben: “Peer-to-peer has been a real innovation that’s allowed a lot more brands to launch, but the experience for brands and customers is very different. The brands have a lot less control of their brand, and there’s a lot less [scalability] in the model. What we have always favored, and what the brands that we support do, is owning these items just like they own first-sale items. We believe that for [resale] to really scale, it’s got to be as easy as it is to walk in and buy [anything else] you want. And when you’re no longer using an item, it’s got to be just as easy to hand it back and get value back out of it.”

Scaling customer uptake is one thing, but scaling a profitable business out of it is another beast altogether. ThredUp, which runs one of the country’s largest managed resale marketplaces, has invested millions in building and automating the facilities and technologies required to do this at scale. But profitability, or even just reaching break-even, has remained elusive, prompting a “meaty experiment” (as CEO James Reinhart put it) in pulling new levers to optimize the unit economics.

“When you’re processing hundreds of millions of SKUs a year, there’s a reasonable amount of complexity in understanding what are the right items and how to shape your marketplace to be efficient,” said Anthony Marino, President of ThredUp in an interview with Retail TouchPoints. “We’ve used the past several quarters as an opportunity to really hit that hard and get it right, and we’re seeing a really promising response from our seller community and from our buyers.”

More on exactly how ThredUp is doing that in Part 2 of this series, but first, there is one other often overlooked expense for managed marketplaces…

Challenge #3: What to do with the Stuff you Don’t Sell

Ken Goldstein is the Chairman and CEO of ThriftBooks, a managed marketplace that focuses solely on selling books and other media. “We’ve had conversations about going into other categories, and when we do the test metrics, they don’t look as good,” he said in an interview with Retail TouchPoints. “One of the reasons is that right now everything we have is recyclable — it’s 100% clean, dry paper, and that will always bring us some remainder value. Whereas if you look at apparel, not all of that is sellable or recyclable, so then at the end of the day you have a disposal cost.

“I don’t have disposal costs because everything we do can be turned back into something useful, but if I wound up with a whole bunch of chemically coated materials or acrylics or other things, I would legally have to pay a disposal cost for that,” Goldstein added. “You have to build that into the business model.”

But…Resale Isn’t Just About Money

Creating a profitable resale business model is vital, but not all benefits can be measured in dollars. Resellers’ ability to burnish their sustainability profiles can help them attract and retain the growing contingent of bargain-seeking and eco-conscious customers.

And there’s no doubt that customers, especially younger ones, are demanding more sustainable options. U.S. consumers bought 1.4 billion secondhand apparel items in 2022, according to the ThredUp report, an increase of 40% from 2021. Perhaps more important is that the percentage of consumers who said those used items replaced products they would have purchased new is also up 40% year over year. “The consumer is making the connection in their mind that there’s a smarter, more sustainable way to consume,” said Marino. “It’s better for the environment and better for my wallet, and I’m going to seek it out and do it.”

“This is the single most important retrofit on a sustainability topic anywhere in retail, bar none,” said Ruben. “For any brand that really cares about sustainability, you have to have a strategy to get more money out of the things you make. And what I’m most excited about is the platforms that are supporting the brands that have the opportunity to really change the way we shop. When Patagonia themselves sells a Nano Puff [jacket] for the fifth time to a fifth child, that is three to four jackets that are never made. That is a brand that is gaining customers, gaining market share, gaining loyalty and making money from existing items, not from new production.”

[Want more? Check out Part 2 of this series, where we take a look at how companies like ThredUp, Thriftbooks and GoodwillFinds.com are working to make their resale initiatives financially viable.]

A car is one of the biggest purchases most consumers make, but the process of buying one, especially used, has long been one of consumers’ most dreaded retail experiences. From the moment it debuted in 1993, CarMax set out to change that with a focus on honest sales interactions and simplified processes. Thirty years on, CarMax has become the largest used car retailer in the U.S., with 240 locations across the country and more than 800,000 cars sold in its last fiscal year.

But the rise of online-only used car dealers like Carvana and Vroom — which also set out to evolve the car-buying process albeit through digital solutions — threatened to chip away at CarMax’s dominance. So in 2018 the retailer embarked on a five-year digital transformation journey aimed at making every stage of the car-buying journey omnichannel.

“Five, six years ago the consumer was in most aspects of their life getting a better level of service — they were getting personalized experiences at Starbucks, they could buy online and pick up at the store at Target,” said Jim Lyski, EVP of Strategy and Product and Chief Marketing Officer at CarMax in an interview with Retail TouchPoints. “The result was that instead of just comparing things within each category, they started saying, ‘Well, if I can have it here, I want it over there too,’ and we saw that sweep through retail. Automotive retail was slower to the party, but once the consumer starts getting into that mindset, they start thinking, ‘If I can get a personalized experience for a $5 cup of coffee, I better be able to get a personalized experience for a $20,000 vehicle.’ And they’re right.”

So Lyski and his team set out to give it to them. Now, every step of buying or selling a car at CarMax can be done online or in-person — including many processes that most other retailers never had to worry about digitizing such as buying back products and financing purchases.

The result has been not only a more personalized buying journey, where customers can pick and choose what parts of the process they do from their home or at the dealership, but also a streamlining of the experience itself. For example, if a customer completes their financing approvals and selects their vehicle online, what used to be an approximately five-hour experience at the dealership turns into a 30-minute exchange to sign some paperwork and pick up their new car, said Lyski.

The process has taken years of investment and effort, but from Lyski’s vantage point it was absolutely critical to the future of the company.

The Unique Challenge of Making Car Shopping Omnichannel

In reality, most consumers don’t actually want to shop for their car wholly online, said Lyski, and in fact, the portion of completely online sales CarMax makes are still relatively low (14% in the most recent Q4 earnings, up from 11% in the prior year).

What customers do want is the ability to complete parts of the process online, said Lyski, “for example, applying for financing. Nobody wants to sit in a dealership and try to remember all their income data, their tax returns, their credit history, all with somebody breathing down your neck trying to sell you a car. They want to do that at the kitchen table when they have a little bit of time and can access their computer. And more and more, they also want to do much of the purchase journey online at their own pace. They want to start and stop, revisit it later, bring in their spouse.

“[We said] we already have the best brick-and-mortar experience, now we’re going to build out the best ecommerce experience and then the hard part, we’re going to seamlessly integrate those two so you can do any percentage via any channel and still get a world-class experience,” Lyski added. “That’s our vision and that’s what we’ve been executing against.”

Dealing with the Unique Nature of Each Used Car

Easier said than done, especially because the process of buying and selling used cars presents a number of challenges that most retailers haven’t had to address. First, “every car is a snowflake,” explained Lyski. “Each car has a different history, different mileage, a different way it’s been driven, so I only have SKUs of one.”

The second major challenge is that every consumer is a snowflake too when it comes to auto financing. “Less than 10% of people can just say, ‘I want that car,’ and write a check; 90% are going to require financing, and the fact that everybody’s personal credit history influences their financing rates” means that the end price for each car will be different for each consumer.

Add to that the issue of fulfillment when dealing with a product that weighs more than 3,000 pounds and takes up quite a bit of space. “All of our cars are available nationwide,” said Lyski. “If you’re picking out something very common, you probably just pick one [at a dealership] close to you, but if you’re looking for something unique, we’re probably going to have to ship it to you.”

Transformation Takes Time

The first step in solving for all of this was getting CarMax’s data in order, said Lyski: “We knew that there was no way could create the seamlessness we wanted without accurate, accessible data. [When we started] we had a data swamp, it was just nasty to get to the information. We turned our swamp into a nice data lake, and then we took the data lake and we put it in the cloud, so now it was accessible by whoever needed it whenever they needed it. That was a massive endeavor. I just explained in 60 seconds what took us more than two years to do, but it was fundamental.”

The next step was to create the ecommerce framework for shopping CarMax’s national fleet online, which included another massive investment in digital merchandising. This was critical because “the website is our showroom now,” Lyski said. “Nobody comes to the store without going online first, I mean nobody.”

But the real game changer was bringing the financing process online. CarMax started small, with online pre-qualification, but the actual loan approval still had to be completed at the dealership. Now CarMax has brought the entire loan approval process online.

This capability rolled out nationwide earlier this year and means that customers shopping the CarMax site will see the exact rate that applies to every car online across multiple finance partners. More importantly, this also means that customers can now shop the site, filtering by monthly payment amount.

“A lot of dealers have these claims about, like, 2.9% financing, but everyone knows that only 1% of people get that 2.9% financing, for everyone else it’s significantly higher,” said Lyski. “What we’re able to do now is say, ‘These are the numbers.’ If you gave us correct information, you’ll see the exact monthly payment you’ll be making.”

About one year earlier, CarMax also digitized the processes around customers selling their current vehicle, which for many people is a crucial first step before they even think about which new car they want. With Online Instant Offer, customers can now get a quote for the value of their current car within seconds. The result has been another significant reduction in the drawn-out dealership experience. Where the on-site appraisal experience used to clock in at one hour or more, if a customer uses Online Instant Offer before bringing that car in, it can now be as quick as 15 minutes (assuming everything the consumer put in online was truthful and accurate).

The final big piece of the puzzle was taking  the equivalent of a traditional retailer’s POS infrastructure and re-platforming those legacy systems to fit into the cloud-based architecture that makes it all possible.

All of these digital optimizations have helped CarMax not only streamline the process but also personalize it. “Now we let you decide how much of the process you want to do online or in-store; it’s totally up to the customer,” said Lyski. The result is a car-buying experience that is attuned to individual purchasers’ needs — which, after all, has been the brand’s mission from day one.

Sephora and 27 other retailers, along with the Open to All nonprofit, have signed the Mitigate Racial Bias in Retail Charter,  marking their commitment to concrete steps that will improve equality across the industry. The charter is designed to create a more welcoming environment for all by reducing racially biased experiences and unfair treatment of shoppers.

The Mitigate Racial Bias in Retail Charter was inspired by the Racial Bias in Retail Study, a national study commissioned by Sephora that explored the ways in which BIPOC (Black, Indigenous and People of Color) shoppers experience discrimination in retail settings. The report found that two in five shoppers have personally experienced unfair treatment on the basis of their race or skin tone, and that BIPOC retail shoppers were three times more likely than white shoppers to feel most often judged by their appearance.

“The study underscored the pervasiveness of unfair treatment of BIPOC shoppers in retail spaces throughout this country,” said Calla Rongerude, Director of Open to All in a statement. “We believe the retail industry should have a zero-tolerance discrimination policy. With the commitments from these companies, we can begin to address the problem, act, and start to make shopping more inclusive. Our goal is to create an environment that is truly open to all. We hope companies across the retail sector will join us, sign the charter and work together to create meaningful impact and share best practices.”

Retailers that sign the charter are acknowledging that racially biased and unfair treatment exists broadly in our society and can impact the retail experience. They have all pledged to design and implement actions that mitigate racial bias within the shopper experience, help foster inclusive shopping experiences and work together to share best practices that can drive change. Ways retailers can support the charter include:

• Increasing diversity across marketing, products, branding and the workforce to help prevent exclusionary treatment before shoppers enter a store;
• Providing critical employee training on the experience of shoppers of color to help address the disconnect between how BIPOC shoppers and store employees interpret interactions; and
• Creating a feedback mechanism to improve service and report back on any meaningful actions and progress toward fostering more inclusive experiences for BIPOC shoppers.

“At Sephora, diversity, equity and inclusion have long been core to our mission since our U.S. debut more than 20 years ago — but we recognized that the retail experience has not always been welcoming,” said Jean-André Rougeot, President and CEO of Sephora Americas in a statement. “When we first commissioned the Racial Bias in Retail Study in 2019, it was our intent that the findings would serve as useful insights for the entire retail sector, including Sephora. Today, we are proud to have this work resonate in such a deeply impactful way via the charter, and with the commitment of so many retail signatories, we can collectively work to change the retail experience on a much faster and broader scale. We celebrate those that have joined and encourage others to sign on, as it’s not about perfection, it’s about a commitment to progress for shoppers today and tomorrow.”

The other retailers that have joined the charter to date, some of which encompass multiple brands, are: American Eagle; Ascena Retail Group; Ben & Jerry’s; Capri Holdings; CarMax; Crocs; DICK’S Sporting Goods; Gap; H&M; J. Crew; Levi Strauss & Co.; Michaels; Movado Group; Tapestry; rue 21; and Zara.

The retail industry continues to pave the way as a leader in LGBTQ workplace equality, according to the Human Rights Campaign (HRC) Foundation’s 2021 Corporate Equality Index (CEI). The 2021 CEI, which measures company policies and practices related to LGBTQ workplace equality, ranked 1,142 major U.S. businesses, and 51 are retail companies that earned a 100% ranking, designating them as a Best Place to Work for LGBTQ Equality. 

The retailers are:

Abercrombie & Fitch Co.

Amazon.com Inc.

Barnes & Noble Inc.

Best Buy Co. Inc.

Brooks Sports Inc.

CarMax Inc.

Clorox Co.

Conagra Brands Inc.

Designer Brands

Diageo North America

Estée Lauder Companies Inc.

Fossil Group Inc.

GameStop Corp.

Gap Inc.

GE Appliances

Genesco Inc.

Giant of Maryland LLC

Groupon Inc.

Hallmark Cards Inc.

Hasbro Inc.

IKEA Holding US Inc.

J. Crew Group, LLC

Kohl’s Corp.

L Brands Inc.

Lowe’s Companies Inc.

Macy’s Inc.

Mattel Inc.

Meijer Inc.

Mitchell Gold + Bob Williams

Mondelez International Inc.

Newell Brands Inc.

Nordstrom Inc.

Office Depot Inc.

Patagonia Inc.

Peloton Interactive Inc.

Pernod Ricard USA LLC

Procter & Gamble Co.

Qurate Retail Group

Replacements Ltd.

S.C. Johnson & Son Inc.

Samsung Electronics America Inc.

Sephora

Sony Electronics Inc.

Starbucks Corp.

Tapestry Inc.

Target Corp.

Tiffany & Co.

Unilever

Walgreen Co.

Walmart Inc.

Wawa Inc.

“From the previously unimaginable impact of the COVID-19 pandemic, to a long overdue reckoning with racial injustice, 2020 was an unprecedented year,” said Alphonso David, President of the Human Rights Campaign in a statement. “Yet many businesses across the nation stepped up and continued to prioritize and champion LGBTQ equality.  This year has shown us that tools like the CEI are crucial to increase equity and inclusion in the workplace, but also that companies must breathe life into these policies and practices in real and tangible ways.”

The CEI criteria are reviewed annually and periodically changed, raising the bar to reflect best practices for LGBTQ inclusion and to drive companies to improve upon their commitment to the community. The criteria fall under four central pillars:

• Non-discrimination policies across business entities; 
• Equitable benefits for LGBTQ workers and their families; 
• Supporting an inclusive culture; and
• Corporate social responsibility. 

Progress for Transgender-Inclusive Initiatives

The most considerable progress, as measured over the 19-year history of the CEI and continuing in 2021, has been the wide-scale adoption of transgender-inclusive initiatives across businesses. 

• A full 94% of the Fortune 500 and 99.7% of all CEI-rated businesses have gender identity protections in their nondiscrimination policies — up from 3% and 5% respectively since the launch of the CEI in 2002; and
• 71% of the Fortune 500 and 91% of all CEI-rated businesses offer transgender-inclusive health insurance coverage, up from 0% in 2002, and 22X as many businesses as 10 years ago (97 new employers offer this coverage, according to the 2021 report.).

Other key findings revealed in the 2021 CEI include:

• The 767 companies that earned a 100% ranking on the CEI represent more than 13 million employees nationally and another 13 million globally;
• Of all Fortune 500 companies, 458 have sexual orientation in their U.S. non-discrimination policy, and 448 have gender identity; and
• The average CEI score for all Fortune 500 companies increased from 73 to 76 in the past year — with actively participating Fortune 500 companies having an average score of 91%, up from 89% last year.

The full report is available online at www.hrc.org/cei.

CarMax may be best known for a traditional in-store buying experience, but the used car retailer is delivering on a concept that blurs the lines of when and where consumers can shop for, and even test drive, their desired new car.

In October 2016, CarMax launched a home delivery pilot in North Carolina using a one-hour process involving four employees. Findings from the pilot enabled the company to streamline delivery down to a 15-minute process requiring just two employees to drop off the customer’s car. In December 2018, the company launched a “customer experience center” in Atlanta, designed to enable shoppers to buy a car as well as consult over the phone or online without ever having to enter a dealership, and even to test drive the prospective purchase in their own neighborhood.

In an interview with Retail TouchPoints, Jim Lyski, CMO of CarMax reveals:

• How CarMax gives consumers confidence and control over the buying process by educating them on products and prices, even offering the option to test drive at home before they commit to buying;
• Why CarMax looked to companies like Starbucks, Amazon and Netflix as it developed its omnichannel strategy and evolved with shopper expectations;
• The goal to scale the customer experience center business model to more than 50% of all U.S. shoppers by February 2020; and
• The role CarMax “customer experience consultants” or “CXCs” play in the new buying process, and how they affect the roles of traditional in-store associates.

Retail TouchPoints (RTP): Given that cars are such a high-consideration purchase, one that often needs to be made in person, how has CarMax built a model that boosts shopper confidence about online purchases?

Jim Lyski: This is definitely a significantly considered purchase and one that most consumers do not make with any frequency. It can be four, five or six years between purchases. Given that consideration, it feels like a high-risk proposition to the consumer, so what we try to do to alleviate that feeling is give them both confidence and control over the process.

To boost confidence, we try to educate them. We provide the content on the web site, and information at their fingertips that allows them to self-educate and alleviate some questions that they may have. They may wonder how many of the available cars they can afford, so we have online appraisal and financing tools that allow them to get a ballpark figure of what level of monthly payments they can afford.

On the control side, we give them tools like our checkout hub that allows them to see where they are within a buying journey, and to start and stop whenever they want without losing any of the work that they’ve done. They can go at their own pace and they don’t feel pressure to hurry up and make a decision. That leveraging of confidence and control have helped that consumer get through the car-buying journey and feel good about it, instead of having that buyers’ remorse that most people have after purchasing a used vehicle.

Also, we’ve tried to give the consumer the option to test drive before they buy. Let’s say you do everything at home and you’re pretty serious about the car. We don’t make you buy it first, and then deliver it to you. We’ll actually deliver it to you in the states that allows us to do so, let you drive it around the block and then decide whether you’re confident in the car.

Since our founding we have focused on having high integrity in all our interactions, and at the center of that is being super transparent. That transparency calms the waters, and gives the consumer a sense that they are dealing on equal footing versus being at a disadvantage — which is the feeling consumers generally have at a used car retailer. 

RTP: What was the research process like as far as developing an online presence? Were there any tidbits from other e-Commerce success stories that you took when crafting an omnichannel business model?

Lyski: There’s a couple angles to that. The way we do research now is very much behavioral or observational research. We don’t ask customers lots of questions of what they think. We put experiments out in the marketplace and we watch what they do. We are big believers in this experimentation approach to honing our products and services.

As far as what we’ve learned from other world-class retailers, the primary thing we discovered is that the consumer used to evaluate retailers in a silo: ‘I’m buying shoes so I’ll evaluate all the shoe retailers against each other. I’m buying used cars so I’ll evaluate all the used car retailers against each other.’

What’s flipped over the past four or five years is that the consumer now evaluates all brands across all industries. If I’m getting this exceptional experience at Starbucks where my mobile app is totally linked into my in-store experience, why can’t I have that everywhere? I’m getting that for a $5 cup of coffee, but why can’t I get that with a $15,000 used car?

We’ve looked at those experiential moments at great online and physical retailers and assumed that that’s the new expectations of our consumers, and built against that.

With great companies like Amazon and Netflix driving shopper expectations, personalization of the experience is super important. We’ve taken our massive data advantage and turned that toward the consumer. We want to make sure we’re giving them an experience that is unique to them, so that they can do as much or as little online or in the store, or a combination of both, as they want. That’s something else that sets us apart.

RTP: How many markets is the omnichannel buying experience in now? What did you take away from the Atlanta experience implementation as far as best practices as you continue rolling out the experiences elsewhere?

Lyski: We started in Atlanta, and you could view Atlanta as the beta version of our omnichannel experience. We didn’t have everything completely built, but we rolled out the overall experience there to see what the consumer’s receptivity was to that, as well as discover how effective we were operationally in delivering an exceptional experience.

That started at the beginning of this year all the way into June. In June, we rolled out 1.0 of our omni operation to all of Florida, and now we’re in Florida, Georgia, Virginia and North Carolina. Our intent is to give more than 50% of all of our consumers access to our omnichannel experience by February 2020.

It’s all hands on deck. Unlike a software company where you can do an update and ‘boom,’ everybody has it, we had to really do this well. We had 25,000 field associates working in our store and customer experience centers that we have to hire, train and educate on the new experience. That’s why we have to pace it out a bit. We’re going at a very quick speed to get this across the nation as soon as we can.

RTP: What role do the CarMax ‘customer experience consultants’ play, particularly in ensuring that going from one channel to another is seamless?

Lyski: Our customer experience consultants, called ‘CXCs,’ who are located in our customer experience centers, play the linchpin role in the whole process. One thing we discovered is, very few consumers want to stay within one channel throughout the entire process. Very few consumers want to start online, stay online and get their car delivered to their home, and very few want to only work through the store environment.

More than nine out of 10 consumers want to start online, do part of the transaction offline and then do the balance of transaction in a store. To be able to bridge all those activities and to ensure that the consumer is really feeling the seamlessness of the experience, the CXC is there to answer questions and provide guidance whenever the consumer wants throughout the process. It’s a really important role for us.

RTP: How do the roles of traditional in-store associates change now that the CXCs are in place, particularly if they have to work with shoppers who have already started the buying process online? Are they given tech to supplement this?

Lyski: The previous experience was that a consumer would walk in a store, and the sales consultant in the store would basically know nothing about them, whether they scheduled an appointment or not. We knew that to deliver a great seamless experience that we would need the sales consultant in-store to know as much as the customer experience consultant online.

We re-platformed both the customer experience center technology as well as the store legacy systems on the same CRM platform, Salesforce. Leveraging Salesforce across all environments allows us to capture information regardless of location, and then you share that across all associates so that consumer never has to repeat their story, they never have to re-enter data they have already entered. We can create something that’s location-agnostic to deliver a real world-class omnichannel experience.

Rich Hanks never set out to be a business author, guru or academic superstar. As chairman and president of automated feedback solution provider Mindshare he simply wanted to publish a book that contained usable information for executives struggling with the practical applications of customer service and how that service hits or misses with customers.

Now that “Delivering and Measuring Customer Service” has hit its second printing, and counts Stephen Covey, Harvard’s Clayton Christensen and CarMax chairman Bill Tiefel among its fans, Hanks is applying his simple approach to a complex set of economic conditions.

“I feel more strongly than ever, regardless of the economic conditions, that simplicity is needed,” he says. “Sometimes we want to do the coolest stuff or try thelatest marketing fad, but maybe we need to stay with the basics right now.”

However, don’t mistake Hanks for a Luddite. He was an EVP at Marriott, where he led the marketing strategy, sales, distribution and revenue management efforts for Marriott’s 13 lodging brands and $18 billion in sales. He led Marriott onto the Internet, prompting Bill Gates to refer to him as an “important Internet champion” in his book “Business @ the Speed of Thought”.  He also spent several years at PepsiCo’s Frito-Lay Division in Strategic Planning, and with Price Waterhouse as a CPA and Management Consultant.  His book, which is self-published, strides between customer feedback, satisfaction, data analysis, employee motivations and management advice.

For retailers, he comes back to three main customer strategy tenets that he firmly believes will provide the best chance to compete and win.

The first is customer retention. Regardless of the numbers consulting companies will apply to this concept, such as McKinsey’s famous “customer acquisition is ten times more expensive than retention,” Hanks believes the overarching importance of this argument involves loyalty. Current customers have the potential to become loyal customers. Loyal customers will be more profitable and generate new customers through their recommendations. Even in the current retail environment in which customers have most likely shopped outside of their patterns to hit discounts, he stresses retention above all.

“Do everything in your power to keep current customers,” he says. “If retailers are looking at spending money on TV for example to get new customers, I would say you need to revisit that spending. Don’t be extreme about it, but unless you’re a brand new company, that customers you have are going to generate the stories and recommendations that become your best acquisition tool.”

His second principle is the imperative of delivering customer service and measuring its effects. Unless a retailer is at the low end of pricing (WalMart) it’s the only way to win. Surprisingly, Hanks recommends a mix of qualitative and quantitative information to measure customer satisfaction. The automated part of that data equation must be accessible to everyone in the company, he says. The qualitative part can be delivered by empathetic executives.

“At Marriott every new hire worked in a hotel for two weeks,” he says. “Empathy means you have the ability to see something from the other person’s perspective. It’s an essential skill.”

Hanks’ third takeaway is based on execution. Good strategy is fairly common when it comes to customer service; good execution is not. The key is front line employees, who make $10 per hour and are the face of your company, are the key to that execution. “Hire friendly and teach the skills, as Bill Marriott used to say,” he says.