STRATEGY

Referrals Work, Pass It On

For brands whose products haven’t landed in the hands of skateboarding Stevie Nicks TikTokers yet, referral programs are an increasingly important growth magnet. 

Here’s the thing: Any brand can offer $10 off for each person referred, but that’s not enough to turn “I like these leggings” into “you must buy these leggings.” 

Stick, meet carrot

In theory...“The better referral programs let customers own the experience of introducing someone to a new brand,” Nik Sharma, CEO at Sharma Brands, told Retail Brew. 

In practice...it means brands build incentives that shoppers can’t ignore. Some examples?

Significant store credits. Rothy’s gives the referrer and the refer-ee $20 each for every referral—which puts a free pair of flats well within reach, SVP of Growth Marketing Matt Gehring said. 

Free product. At intimates brand Parade, shoppers can give friends a free pair of underwear with their referral code. Co-founder Jack DeFuria told Retail Brew the goal is to make it as easy as possible for new customers to try out Parade.

• The brand also ships gift cards with each order: “While customers don't earn any free pairs by giving these physical cards to their friends, it builds the viral loop and reinforces the behavior of sharing Parade,” DeFuria said. 
• Results: Nearly 10% of Parade customers refer a friend within a month of making a purchase. 

Unlimited options. At Lively, referrals net shoppers points toward discounts that are determined by their annual spend. This way, shoppers are incentivized to a) share the brand and b) try products from various categories, founder and CEO Michelle Cordeiro Grant told me.  

Community, now streaming

“In most cases, word-of-mouth customers have the highest LTV [lifetime value] when compared to traditional marketing channels for customer acquisition,” Sharma told me. 

Every brand I spoke to agreed that referrals built loyal AF customers—and they typically turn into obsessed communities. “We often see organic communities form [...] who love Rothy's and pass their referral codes around the workplace and in other social settings,” Gehring said.  

The most obsessed? When members-only discount luxury brand Italic launched this summer, referrals were the only way for shoppers to bypass a 20,000+ strong waitlist. “That was by design, since we only wanted [...] highly engaged members that are compelled to help build our early community,” said Italic product manager Derek Tu. 

• Currently, one in four Italic referrals become members.

My takeaway: Brands that haven’t yet built referral programs are missing out on a loyalty and community hack. But first, you’ve got to have a product shoppers can’t help but recommend—otherwise, it’s TL;DR (too late, didn’t refer). 

E-COMM

Diagnostics to Consumer Retail

Bulk items in my Costco cart: fruit snacks, running socks, and spit samplers. Costco has started selling at-home Covid-19 tests online, Business Insider reports. 

How it works: For $130/kit, Costco will ship saliva tests to members’ homes. Members then send their drool to a testing center in a pre-provided package; results come back in 24 to 48 hours. 

Most Covid-19 tests offered by retailers have been limited to drive-thru testing with deep nasal swabs. But Hims, the DTC telehealth brand, also sells a spit-sample Covid-19 test in the same price range. 

Why so few? Food and Drug Administration (FDA) approval is harder to come by than a blue checkmark on Twitter, for good reason. Saliva tests are a relatively new form of diagnostic testing, and some versions haven’t always delivered reliable results. 

When more are approved...big box pharmacy brands (CVS, Rite Aid, Walgreens) and big boxes expanding to healthcare services (Walmart) may consider carrying at-home tests. Health experts say that increased at-home testing options could improve virus tracing efforts.

Editor's note: A previous version of this story incorrectly defined the FDA as the "Federal Drug Administration." We regret the error. 

SPONSORED BY ORACLE NETSUITE

Manage to Make Physical Inventory Counts Easier

We’re not going to sugarcoat it: If you’ve got inventory, you’ve got to count it. And while nobody looks forward to manual or physical counts, there are ways you can make them less painful.

Oracle NetSuite has once again come to the retail rescue to help you understand the inventory and warehouse management systems that can turn inventory day into, well, not a holiday. But not the worst day, either.

In their guide, you’ll learn how inventory and management systems can make physical counts faster and less frequent, while also enabling businesses to:

•     Confidently rely on a demand-based production model
•     Keep less inventory on hand
•     Decrease overhead costs associated with storage

As always, you can count on Oracle NetSuite to help you overcome the issues with physical inventory counts.

Download their guide here.

SUSTAINABILITY

A Food to Table Movement

When I say “used couch,” you picture a lumpy Craigslist two-seater with mysterious yellow stains. But now, “used” is another word for “upcycled.”

Introducing Model No., a new brand that primarily 3D prints furniture from food waste. 

• Every item Model No. stocks is made to order—meaning the brand doesn’t hold (or later destroy) inventory. 
• Around 95% of Model No.’s materials are sourced in the U.S., CEO Phillip Raub told Retail Brew. 

Why it’s innovative: Apparel brands are increasingly experimenting with deadstock fabrics or upcycled materials, but furniture hasn’t quite caught up. Meanwhile, Americans throw out more than 12 million tons of nonrecyclable furniture in an average year, per EPA data. 

And Model No. wants every purchase to be a fully circular experience. It will later accept previous brand purchases to recycle and create new furniture from the same materials. Some furniture brands have tried similar programs: Ikea is currently testing a used furniture buyback program...but it’s not available in every market.

Bottom line: “We see ourselves as being the first zero waste furniture company in the world,” Raub said. Your move, West Elm. 

WHAT ELSE IS BREWING

• Dunkin’ Brands is in talks to go private. 
• McDonald’s asked a judge to dismiss a racial discrimination lawsuit filed by 50+ former franchisees.
• Guitar Center is nearing bankruptcy, per the NYT.
• GameStop launched a flexible payments program.

SPONSORED BY ITERABLE

We’re all ho-ho-hoping for a seamless, unique cross-channel experience this holiday season. The Strategy Santas at Iterable have shown up at our marketing chimneys to show us the best way to do so. To get your reindeer—we mean campaign gears—moving, download Iterable’s Retail Makeover Guide and learn how top beauty brands like Lush and Sephora are optimizing cross-channel experiences. Find the gift that keeps on giving by reading Iterable’s cross-channel marketing guide today.

HOT TOPIC

At the mall, it’s where I regrettably wasted a month’s allowance on Tim Burton merch. In Retail Brew, it’s where I outline a trending retail conversation and ask you to weigh in. 

Anyone who’s sat in the HomeGoods parking lot while someone else’s “quick errand” became a 45-minute trip will appreciate retail’s recent asphalt overhaul. With store capacity still limited in some places, retailers are building attractions in their parking lots.

• Shopping centers around the U.S. have converted their parking garages into extended outdoor stores and drive-in entertainment experiences, the WSJ reported.
• During the summer, Walmart screened drive-in movies; this week, Target and Lowe’s are hosting trick-or-treating. 

My questions for you: Should retailers keep offering parking lot activities post-pandemic—and should they start charging? How else can retailers convert empty parking spaces into new services? The inbox is open for your thoughts. 

SWAPPING SKUS

Brands often claim they’re the first to ID a trend or discover a new marketing tactic. But true originality is hard to come by, today’s selects show. 

• Naming products: It’s all pun and games, until it gets litigious. (The Fashion Law)
• Content + commerce + community is the retail trifecta du jour. These are the top brands owning the first bucket. (Best Ecommerce Blogs)

ICYMI

Catch up on the Retail Brew stories you may have missed.

• Apple and Target Introduced New Store Procedures for Holiday Season
• Gap Plans to Become an Off-Mall Brand
• Winter Is Coming—and Outdoor Fitness Classes Aren’t Ready