Rachel Shechtman, CEO of STORY: Redefining the Retail Business Model and the Customer Experience

August 29, 2016 0 Comments

Rachel SquareOur team of experts conducts regular in-depth interviews with innovators and leaders to provide insights about the evolution of the marketing discipline. Rachel Shechtman, the Founder and CEO of STORY.  Rachel has created a highly successful retail concept that takes the point of view of a magazine, changes like an art gallery, and sells things like a store.  She treats her store as “the ultimate touch point” that delivers an all-consuming experience that is as much about the narrative and community as it is about the end product being sold. Every three to eight weeks, STORY completely reinvents itself – from the design to scents to the merchandise – with the goal of bringing to light a new theme, trend or issue.

Below, I followed up with her to get more insight into the evolution of the retail customer experience and what it is going to take to delight increasingly demanding, digitally connected and “omnichannel” customers in the future.

Stephen Diorio:  Most of the retail marketers we talk to are extremely focused on delivering a consistent and seamless customer experience in digital, social, and mobile channels. But in most cases, completing the experience means delivering a differentiated experience in the last 1,000 feet of physical retail.  You are in the process of completely redefining what the retail experience is.  How have you done that?

Rachel Shechtman: We really focus on experience per a square foot – looking at how each moment and part of the store experience can be engaging and provide surprise and delight!  Changing the store every 3-8 weeks enables us to give customers a reason to come back more frequently, but it also enables us to showcase and launch even more brands and new technologies in store.

Diorio:  Customer behavior changes so fast it seems to be a moving target. And the number of channels, media and technology tools to engage them are multiplying just as fast.  How have you been able to understand and tap into these changes, and how have you been able to stay a step ahead in defining what the retail experience should be, instead of reacting to what others are doing?

Shechtman:  We have never been one to really look at what others are doing as it relates to our own work.  My career has always been about strategies and opportunities that are a self-expression of different ideas or theories I have about doing business differently.  We are constantly experimenting and trying new things, but I would like to think the 15+ years’ experience I have had across various retail formats, brands and models has given me insights to take calculated leaps so as to mitigate the risk.

Diorio: A significant amount of the investment in customer experience is focused on customer analytics, targeted offers, loyalty programs, mobile applications, and social media.  But you’ve achieved great results by experimenting with the traditional retail marketing mix.  In your themes you’re mixing experiences, community, and all forms of content – from education to scent to entertainment – with traditional merchandising. And the mix can vary by season or theme. What can other retailers learn from your experiments?

Shechtman:  We have a handful of different strategic partnerships that range from our POS with Lightspeed to Perch Interactive for in-store display, to Prism Skylabs for heat mapping, to Yankee Candle Scent Systems for scenting the store.  In addition, we have an outstanding collaborative process for redesigning the store that is supported by Alu.  Each one of these partners provides a valuable service and the more relationships we add to the mix, the more detailed picture we can paint and the more we can learn about our customer.

Diorio:  Over two thirds of the retailers we studied are integrating a precise fragrance impression into the customer experience as an effective and durable way to complete the multi-sensorial experience for customers.  How are you incorporating scent into the experience you are building at STORY and how does it help you achieve your goals?Disrupt Story Wall

Shechtman: We work with Yankee Candle Scent Systems to create different scents for each one of our STORY’s.  Since each iteration and theme has a different point of view and voice, depending on the subject matter, it would make sense that it smells different!  For example, our Her STORY in partnership with Dressbarn smelled different than the Disrupt STORY in partnership with USA Network / Mr. Robot – and understandably so.  Our subconscious is affected in ways that we don’t fully understand, and testing new sensorial strategies has been fascinating.

Diorio:  A significant amount of the investment in customer experience is focused on technology –  customer analytics, targeted offers, loyalty and recognition programs, mobile applications, and social media.  From your experience, where does technology fit into the customer experience equation?  What is your point of view on where marketers should be investing to gain sustainable competitive advantage and deliver a superior customer experience at retail?

Shechtman: To build on what I mentioned earlier, I think it can be very useful to have technology as part of your retail experience.  That said, there isn’t a one size fits all approach.  What works for us isn’t necessarily what works for Macy’s at scale.   I also think we need to definitely stop and ask the question ‘is there a meaningful business action I can take as a result of the data that XYZ technology will provide?’  I often hear so much about different software and the data sounds impressive, but there isn’t much to do with it.

Diorio: In addition to blending more ingredients into the marketing mix, you’re also challenging the notion of what effective floor space means and that retail can be more than sales per square foot. And you’ve been profitable since year one.  In your retail concept, you seem to be achieving a much wider and more integrated set of blend of financial, merchandising, PR, branding and marketing goals. From a business model standpoint – does that require much more cross-functional collaboration and a different scorecard for success?

Shechtman: Yes!  Bye bye silos. It is imperative for our own mix of retail that marketing, merchandising, editorial and business development work together as one holistic strategy.  I actually think one of the biggest areas that is being overlooked in retail at scale is compensation structures and training.  Legacy systems and frameworks are dictating how people work and are rewarded, and I think that is a silent killer when it comes to innovation – especially in challenging times like we are in now.

Diorio:  To the digitally empowered customer and millennials, products and pricing matter less.  Experiences matter more. Many of the more advanced marketers we talk to feel there are only three currencies for engaging with these customers – emotional storytelling, entertainment, and thought leadership (education and insights). You have leveraged all three in your themes.  How do your marketing and merchandising teams, agencies and partners work together to come up with such compelling themes, content and curated experiences?

Shechtman:  We do everything in house!  It wouldn’t be possible to move at the speed we do otherwise.  In addition, we are constantly testing new models – so it is hard to look anywhere other than within when you are trying to figure out what game you are playing, at the same time you need to play it!

Diorio: You have pushed the envelope farther than most retailers.  What’s the next dimension to explore? How do you see the customer experience evolving from here?

Shechtman: The future of retail in my opinion is about entertainment and community!

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Rachel Shechtman is the Founder and CEO of STORY, a highly successful retail concept that takes the point of view of a magazine, changes like an art gallery, and sells things like a store.  She treats her store as “the ultimate touch point” that delivers an all-consuming experience that is as much about the narrative and community as it is about the end product being sold. Every four to eight weeks, STORY completely reinvents itself – from the design to scents to the merchandise – with the goal of bringing to light a new theme, trend or issue.

About the Author:

Stephen Diorio is an established authority in growth and go-to-market innovation with over 25 years of experience helping CEOs, Boards, and CMOs create new growth and enterprise value by leveraging advanced marketing practices and digital technology. He is the lead analyst in the Forbes Marketing Accountability Initiative and a Partner in Profitable Channels where he helps CEOs, Boards and CMOs create new growth and enterprise value by leveraging advanced marketing practices and digital technology. I've helped hundreds of marketing leaders take advantage of the most current marketing best practices and digital technology to grow faster, differentiate their customer experience, and reduce selling costs. He has helped over one hundred leading sales organizations drive net new growth—including Merrill Lynch, Intuit, Armstrong, American Express, CBS, DuPont, IBM, Janus Funds, Morgan Stanley, Ricoh, SunTrust Bank, Staples, UPS, and US Bank. He a Director of the Brand Publishing Institute, and Author of Beyond e: 12 Ways Technology Will Transform Sales & Marketing Strategy (McGraw-Hill). Mr. Diorio holds an MBA in Marketing from the University of Chicago and a B.S. in Engineering from Bucknell University.

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