Rebecca Minkoff on Quality Control: ‘Sometimes There Are No Shortcuts’
Rebecca Minkoff is all too familiar with the indispensable value of quality control.
At April’s Signifyd Flow Summit, the founder and designer of her eponymous brand Rebecca Minkoff recalled the early days when her company outsourced handbag production to its first overseas supplier.
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Since the facility already produced for incumbent luxury players including Kate Spade, Tory Burch and Michael Kors, Minkoff had felt comfortable taking a hands-off approach to quality control. But soon after the first bags shipped to consumers and retailers, upset customers complained about their bags featuring both the Rebecca Minkoff and Kate Spade logos.
The brand responded to the PR nightmare by giving affected customers a new handbag at no cost. But that sort of backfired as customers were once again shipped defective dual-logo bags. While the third time was the charm for Rebecca Minkoff, the experience taught the founder a valuable lesson.
“Sometimes there are no shortcuts. And if you don’t have quality control…well, in this situation, I should have gone overseas and checked the production myself,” Minkoff said.
Minkoff also addressed the use of technologies like 3D and augmented reality in e-commerce, saying she doesn’t believe the hype.
“We were paying a lot of money to have the sizing done—you know, what the bag looks like on a model,” Minkoff said. “We realized it’s really silly, and we could just shoot this ourselves. We just think it looks better when we do it so that the shadow of the bag is still in the shot. I think that sometimes, your tech stack can get so thick with all these different companies that we were trying to just lean it out. And that was one that had to go away.”
Minkoff noted the uncertainty that comes with introducing newer, higher-priced items into an assortment that includes luxury women’s fashion, handbags and shoes. But the founder said that recently, those are the items that are selling the best for the brand.
Even when selling through QVC, where it usually sells its lower-price offerings, Rebecca Minkoff reported success in this channel.
“We went out there with a bag that was $348 and that sold the best. We’re not seeing our customers push back,” Minkoff said, noting that the typical Rebecca Minkoff customer is further down her career path and has more disposable income than the average consumer. “We’ve done an excellent job of always making sure you have your $195 bag—the opening price point for this brand. And we’re just beginning to stack on more expensive products and we’re testing to see how far she can go.”
Abercrombie turns to robotic process automation
Hosted by online fraud prevention and payment compliance platform Signifyd, the Flow event touched on other areas of concern e-commerce today.
With all the talk about artificial intelligence (AI) and its increasing role in retail, the reason for its use boils down to driving profitability, according to Antonio Colicchio, vice president, customer care and automation, Abercrombie & Fitch Co.
But Colicchio said delivering net productivity gains is even more important today, thanks to inflation.
“Any business that is for-profit, you’re trying to increase your profitability, and you want to maintain or increase your competitive advantage. To do that, your year-over-year productivity gains have to grow faster than the rate at which your costs are growing,” Colicchio said. “In a low inflationary period of time, that’s easier to do. In a higher inflationary time, it’s incrementally more difficult increase productivity faster than the pace of cost. How do you increase productivity 6 percent to 10 percent per year? That’s a difficult challenge of any business.”
Abercrombie & Fitch is deploying AI via robotic process automation (RPA), which it uses to digitize claims made against delivery carriers if the order doesn’t reach the consumer. The retailer completely automated the process so a human does not have to download, populate and submit a claim form, before tracking whether a payment has been made.
A&F has produced “a couple of dozen bots,” some of which affect the customer experience. For instance, if the retailer doesn’t live up to Christmas delivery guarantees, a bot will inform the consumer that the gift will not arrive in time.
Colicchio said his company first began experimenting with RPA to fight chargebacks, and when that was successful, the retailer formed the Center of Excellence focused on creating automated solutions for human problems. After meetings with the chief financial officer, Colicchio and his team prioritized their AI deployments.
“The first [priority] is direct benefit. That’s where you point to a place in the PNL and say revenue went up or expenses went down. We said that’s going to probably be the majority of what’s going to drive value,” said Colicchio.
But there are also areas of “indirect benefit, which are essentially bots that create capacity,” he continued. “We may have automated a process or part of the process that saves 1,000 hours. The third bucket, which I don’t want to minimize, is risk mitigation and quality improvements. We built bots for our legal team that helped us to identify and categorize intellectual property so they can have faster access to it in the event of litigation.”
Retail’s reversion to the mean
Amid economic turbulence and recession threat tamping down consumer spending, Vera Bradley’s former president Daren Hull called the current state of retail a “reversion to the mean” from the Covid-19 pandemic.
“E-commerce was such a big piece of what businesses were doing. You had quite a bit of that stick, but we’ve also seen as stores reopened, the conversation shifted,” Hull said. “You saw Lululemon is trying to divest Mirror, because when gyms reopened, people wanted to go back to the gym in person. When shopping is happening, people wanted to go back to stores. I think we’re seeing a lot of reversion to the mean for customer groups that were spending a lot of money in the past. Some of that savings is gone.”
For e-commerce, the post-Covid environment has its ups and downs compared to previous periods of economic turmoil. Hull noted that in 2023, e-commerce has more visibility within the C-suite, which enables more productive two-way conversations to grow that side of the retail business.
On the downside, digital marketing costs have skyrocketed, prompting some C-suite executives to criticize the unit economics of online retail. Hull said this is similar to 2008-2009, when there was “really a call to question whether the economic model worked.”
“If you take a big step back from the situation, businesses all go through these periods of expansion and contraction. This is just a moment of contraction, and that’s where you need to start thinking about how to make processes better and more efficient,” Hull said. “Alongside these questions, be prepared and have money ready. The people who win in bad times are the people who really align and get ready to deploy money when it looks like things are turning around.”