Go ahead and get started I know all of your time is very important
Customer journey in circular retail uh feel free throughout to drop any questions that you have in the chat box and we will get to all of them at the of who we are so sld is a strategic design agency that specializes in cpg and Retail think blink is sld's core philosophy we believe that Brands build emotional Bonds in the blink of an eye and we help Brands make these and my name is Sydney I go by she her pronouns and I'm the marketing Communications intern here at sld and my background is in Communications and public relations and my name is Scott I have a background in service design and strategic foresight and I'm currently the strategy intern here at sld just going over some of the background information about our study
These days particularly because humans are over consuming microplastics are found everywhere on earth now from oceans to air to even in the human blood with one garbage truck of plastic entering the ocean every minute there is a need to change how we consume so here the linear and circular business models so the circular economy is an alternative an alternative to the linear take make waste model that's on the left there uh circular models provide Innovative designs and solutions that expand the product lifespan this in turn lowers resource consumption diverts waste from entering landfills and the oceans and reduces greenhouse gas emissions so it has proven extremely effective yet only 8.6 of the global econ 8.6 of the global economy is actually circular know that with 76 percent of Americans
Expecting companies to take action against climate change and 66 percent of consumers being willing to spend more to shop sustainably so that we know that there is a high consumer demand
Actually shopping sustainably so as specialists in retail strategy this prompted us to explore why retailers think that this low engagement is due to a low inclination or Genuine desire but in reality brands have not reduced customer friction points within the customer Journey so circularity requires customers to change their linear shopping habits which is particularly why retailers must identify and address common barriers within the customer journey to enhance customer engagement
Approach and methodologies we used for our study so we will be exploring three circular business models to better understand how businesses can mitigate these common friction points within customer Journeys the first one being refill Services where consumers reuse and refill containers with Home Goods the second being return Services where consumers re uh bring back used brand Goods through buyback or trade-in programs and the final one being repair services where companies offer in-house repairs of brand goods for upkeep so our study aims to prove three key hypotheses about the circular economy first off the majority of consumers would participate in circular Services if they were made more convenient for them to navigate second circular services with Innovative store incentives tailored to Consumer needs
Are more successful in influencing sustainable shopping habits and lastly investing in circular services will result in increased brand loyalty and customer retention qualitative and quantitative methodologies so first off we surveyed over 600 respondents hacking from Canada and half being from the United States we also participate in five stakeholder interviews where we interviewed small circular business owners to understand issues that organizations are facing during these Transitions and lastly we completed 13 store audits where we tested out stores with circular services
In our study first off we wanted to identify common challenges that businesses are facing while transitioning to closed-loop business models second we wanted to understand barriers and motivations that influence consumer engagement with circular Services third we want to establish key business opportunities that will enhance the customer Journey while engaging in circular services and lastly we wanted to create a strategic outline for businesses that will help retailers enter their refill repair and return markets with a strong position
Um the first retail model that we will explore is refill so um to refresh your memory stores with refill Services aim to eliminate single-use waste in their packaging and this is most commonly used for grocery store items such as dried Goods however some stores are adopting them in other use cases such as products in the Cosmetics personal hygiene and home cleaning category and the service often requires the consumer to bring in their own packaging to fill up or to pay a deposit fee for a container from the and now before we jump right into our insights we'd like to know a little bit more about your experience with refill um so in your experience what do you think is the largest barrier when it comes to using refill Services I'll give you guys about a minute or so to answer the poll
Sanitation concerns which is actually um from our research a large concern that a lot of circular business retailers had however when it came to Consumers the largest the largest barrier in their perspective came to inconvenience so package free shopping is often associated with planning in advance however this has proven to be a challenge amongst most consumers especially for those who shop impulsively when it comes to what they buy and when they buy and there is a larger opportunity for retailers to accommodate for impulse Shoppers by either supplying them with compostable packaging we're also finding creative ways to eliminate the deposit fee for regular customers from our store audits we tested their customer Journey for shopping in zero waste grocery shops from the perspective of someone who shops impulsively and one
Who plans ahead and brings their own containers we found that the impulse customer Journey caused anxiety for the Shoppers as they had a higher upfront cost of deposits and from the already expensive cost perceptions a lot of the items The Shopper wanted to purchase were already deemed unaffordable so accumulated deposit fees remain a large barrier for impulse Shoppers reducing their desire to really purchase items in the moment from our survey we found that people want to use refill services but the login locations make it difficult and 60 of respondents said that they haven't used the refill Services as none are located near them and the majority of package free stores are usually located in highly populated urban areas as consumers in more rural regions have to go out of their way to access these
Stores even the ones located in the city are a few and far in between as it's much easier to go to a big box grocer if it's closer in walking distance so impulse Shoppers particularly are unlikely to go out of the way to shop at these stores another opportunity that was consistently mentioned in our stakeholder interviews was that consumer intimidation is a large barrier that prevents people from using refill services for the first time our research revealed that the best intervention for this problem area is clear visual communication in-store and customers will often look up a store's website before entering especially if you haven't been to a package free store before and if the how-to is in clear or concise then it'll prevent a new customer from even walking into a store this was a problem area that we noticed
In our audits whereas summary filters didn't have any guide on how to use our services on their website and if they did it wasn't too clear or obvious to us a best-in-class example that we discovered from our audits was unboxed Market located in downtown Toronto and from immediately walking into the store there is a floor-to-ceiling visual graphic that lets customers know at a glance how their services work and the placement of the cash register is also right at the front of the store as the first step in the customer journey is weigh in your containers so the visual in-store layout and signage is highly effective and well thought out as it mitigates any intimidation when it comes to using their services audits was the refill station at The Body Shop which they've just implemented recently they adopted refill stations
Into the business model and implemented these inspirational refill stations at the center of all the stores where their customers can come in and replenish their body care products with their own branded reusable packaging we thought this was a great example of strong visual communication as the instructions on the signage are very clear in the graphics on the reusable container are well branded and inspirational as well
Is a high demand for loyalty programs at refill storage that offers points rewards and other incentives this is a large opportunity as close to none of our refill stores are offering any loyalty-based programs and incentives for the regular customers from our consumer survey 50 of respondents who have used a refill service weighted a loyalty program as the best way to improve their experience so developing a program to track sales manage containers for return and potentially reward returning customers with deposit free purchases will provide a great incentive for customers to use their services and loyalty programs can be as creative as possible and cater towards your unique customer profile and business needs as well so to recap our refill insights our key takeaways are number one the desire for
Refill Services is prominent amongst consumers however location proximity remains a large barrier number two refill stores that are lacking ineffective signage and instructions both in-store and online need stronger visual communication to ease first-time intimidation and also allow new Shoppers to prepare accordingly um and over number three over 50 percent of server respondents emphasize a demand for loyalty programs yet very few refill stores offer this incentive to their customers and number four refill stores must carry alternative packaging that adheres to sustainable refill initiatives to accommodate impulse
Um to refresher memory return services or stores that allow customers to bring in their used products back into the store where they're often repurposed into new products or resold as secondhand products in return most stores offer the consumer a store voucher in exchange um according to thredup's 2022 fashion resale marketing Trends report they outline how 2022 is the fastest growing year for the second-hand clothing industry and that the resale Market is expected to be twice the size of the fast fashion industry by the end of the decade and with consumers reselling their purchase goods online using secondary platforms such as the real real or depop brands that are not participating in resale initiatives are missing out on a huge opportunity and like costs here for example um they've initiated a resale program
Where customers can buy and sell used cost products in line with costs this brand as an intermediary making sure that they're capitalizing on the uh the resale industry so before we jump right into our insights we'd like to know a little bit more about your experience with return services and like before what do you think is the largest barrier when it comes to using return services
Highest amongst all of the categories which also result was also in our research results as well which I'll get into in Opportunity number two when I share my instance so similar to refill insights our refill insights stores with return Services have an opportunity to integrate their buyback Services into their loyalty programs this can be this can help improve customer retention as Brands can take advantage of their time in store and incentivize them to make repeat
Buy-Back programs it's important to create strong incentives that make customers feel it's worth their time to do so many of the buyback programs that we audited didn't offer flexible vouchers and required the consumer to use their voucher on the spot in particular from our survey one-third of respondents who have used return um have these return Services particularly at a cosmetic sperm weren't satisfied with the value that they received in exchange so Services where customers have to bring back empties for cosmetic brands would prefer to receive more value in the return our store audits revealed that most retailers that offer return Services have an opportunity to amplify how customers can navigate their services so particularly many stores didn't have any in-store signage to guide us through
Their buyback programs so instructional signage that is detailed yet simple on both physical and digital platforms is critical to increasing consumer engagement especially for those utilizing these services for the first um from our store audits Lush Cosmetics is a great example of how to effectively help customers navigate a return service on top of the digital signage in the window they Place small science throughout the store to remind customers to bring in their black pots for a voucher which was these little signs were merchandise beside every single black part in the store so it was constantly on the consumer's top of Mind as they were purchasing as well this was also emphasized on the website with clear visuals that it's consistent with the Cyanogen store from one of our stakeholder interviews
One of the stories with a trade-in program incentivized their customers to return their use or damage goods for Value in exchange through email follow-ups and they notified past purchasers after a certain amount of time to bring back their used products we found this to be a highly effective way to communicate these services to customers as it follows the customer journey and the product life cycle as they wait until the likely chance that their products are ready to be returned so to summarize our return insights our key takeaways are number one brands that don't participate in return initiatives are missing an opportunity to enter the resale Market so strong incentives can persuade customers to come in to them rather than reselling their goods on a secondary platform and number two retailers need to design enticing
Incentives for the return services that directly caters towards their consumers desires and number three retailers need to enhance their instructional design and store and online to improve how they communicate their return services and increase visibility and finally number four with many stories lacking strong incentives leveraging existing customer data through analyzing purchase patterns and consumer interactions is critical in designing the right incentive for their
Repair insights so repair services are in-house upkeep of branded products such as Rip clothing or broken electronics that extends the lifetime of this
We will ask you as familiar questions so in your experience what do you think is the largest barrier when it comes to using repair services
Here take two takes too much time is the winning one which definitely came up um in our Insight so we'll get to that
Largest barrier in repair services is actually upfront costs such as buying into warranty programs like AppleCare so this presents an opportunity to integrate repair services within a tiered loyalty program that caters to customers who either can't afford to or don't want to pay The Upfront costs of these repair services
Is the reason that they have not used a repair service people will either a look for cheaper third-party repair services or B participate in premature product disposal so complementary repairs have proven to be successful in many Brands including Patagonia and architerics which have both now achieved a cult-like status for environmentally conscious consumers this can improve Revenue in the long run in comparison to an upfront cost that turns people away from their
A lack of in-store visual communication with brands that are offering lifetime warranties and complementary repair services so this presents an opportunity to use visual communication to stand out amongst the competitive crowd and make sure that these warranties and services are being communicated effectively to customers and Prospects to increase so an in-store repair station is actually one of the newest trending visual communication displays that are catching media attention so uh shown here on the left we have arcterics rebird station that opened in Toronto's Eden Center just this past summer rebird is actually a collection of sustainable brand initiatives but they are communicating these initiatives and their commitment to sustainability through the station and these visual initiatives are helping
Consumers actually shift their buying behaviors and attracting new customers and Prospects
People who haven't used in-house repair services is due to inconvenient pickup and drop-off options so through our audits we discovered that most repairs can take anywhere from two to eight weeks sometimes even more and more complex repairs are actually sent to third-party facilities for fixing and despite the repair type stores require these Goods to be picked up in store resulting in even longer return over
Have not used repair services said that they would if they were made more convenient for them retailers can mitigate inconvenience by expanding drop-off and pickup options and this actually shows an opportunity to find new methods to mitigate unnecessary
Best way to improve repair services for those who have not used them before is to shorten these repair times well understanding that routing repairs to a secondary facility creates longer turnaround times this isn't really avoidable but Brands must find new ways to enhance the convenience so there is an opportunity here to send repairs directly to the consumer rather than back to the shop to shorten the wait time and remove the Obstacle of the
So uh Lululemon's like new program buys back their goods and resells these brand products this same packaging and delivery system can effectively be used in repairs to refresh products seamlessly and deliver them straight to the customer in addition the message on this package rethink revive discover demonstrates their commitment to
The key takeaways from repair so first off long turnaround is one of the greatest barriers resulting in premature product disposal so it's important to find new ways that we can help limit this barrier for customers there's also significant barrier of cost which presents an opportunity for retailers to actually leverage alternative engagement uh third improving in-store visual signage will emphasize repair services and increase customer and Prospects motivation to buy and lastly convenient pickup and drop-off options such as home deliveries will improve consumer
Quick summary of the opportunities and identify some emerging themes that came up amongst all three categories in our research and just also noting off the webinar we'll share the white paper study with everyone here and you'll get more in-depth details on our insights and the research that we conducted as so after completing our research we identified three common gaps amongst all categories that we evaluated number one most customers are willing to participate in the circular economy but Brands must strategically reduce barriers to maximize convenience as much as possible number two effective loyalty programs that provide store incentives are in demand and maybe one of the most successful ways to influence sustainable shopping habits and engagement and number three simply offering circular Services is not enough and
Brands must leverage Dynamic models of visual communication to inform their customers and new prospects of how to navigate their services in addition to cutting emissions reducing resource use and minimizing waste the growth of circular systems has proven to be a winning business formula in the past year alone sales of brands with sustainable initiatives have grown four percent while those without have grown less than one percent from our survey over 90 percent of respondents who haven't used a circular service communicated a willingness to participate but why is it that they happen the weight a sustainable decision making is often put on the consumers however it is up to retailers to better support their customers when it comes to making sustainable choices the top rank barrier from our survey was consistently
Ranked as convenienced amongst all three categories and businesses need to better support the consumers by making the customer journey in their circular Services as frictionless as possible our research proves that there is enough evidence to support that consumers will engage resulting in a more sustainable and profitable business model so overall the good news is that integrating circularity in a retail business model is attainable but the dots need to be connected simple things like communication convenience and loyalty programs need to be enhanced and connected to develop a seamless narrative within the customer Journey this reveals a huge opportunity for businesses to not only drive generational climate action and make a difference but also um uh grow profit wise as well
So I guess we'll go through some questions if you guys added any into the Q a I haven't seen yet but let me see if I can open this up if you have any
Opinion based on your store audits what was the most effective circular service program you discovered and why um I don't know we might have different opinions on this but for me I really um luscious circular Services they really embedded that circular model into their entire customer experience and it's just super consistent on all platforms whether it's their website in-store signage and even when you buy the products it's written on each one that you should bring it back for um effective incentives also the incentives are really good so I would say lush had a great example of that as Scott pointed out as well in the yeah I would say the most data went to me in our audits was arterics for sure um just their Repair Station that's really highly emphasized and plays smack right in the center of the store I found
Super inspirational and made me want to engage with what the service was about and also like I as I was shopping around the store I kept on top of my mind that anything I purchased at the store um could be repaired and will last a longer time so I thought it was a really effective and inspirational way to communicate repair services
So when it comes to in-store replenishment like Body Shop did you evaluate the absolute cost of pre-packaged versus replenished I.E is replenished pricing a premium or discount pre-packaging well that's an interesting thing that we noticed because the whole notion of sustainability is really people avoid it for one of the big reasons being cost because it often is more expensive but when it comes to packaged Goods like that you do have to pay The Upfront cost of the container but if you go back I think if you refill it at least twice you end up making your money back so it ends up you know being a more a more like an option where that you can save money from in the in the long run as a consumer yeah I also came up in our research um our interviews as well one of the largest um challenges that circular refill
Stores had was um upfront costs versus extended value where the perception of upfront costs and refill stores is often that is too expensive but a lot of the times they're purchasing in bulk or they can also purchase the amount that they want as well so if you don't need that much laundry detergent you can buy less and save our money as well so there's lots of ways to counter cost perceptions as
Your research as inconvenience is the number one reason that customers don't use circular Services how can stores become convenient for customers that's a big question it really depends on what type of circular service you're offering and um essentially you want to make sure your consumer has makes as minimal changes to the routine as possible people need to see how easily a service could fit into their everyday routine and lifestyle for example for refills stores like we talked about they really need to emphasize how they can support impulse Shoppers and you know support the way they normally shop without planning ahead and supplying them with compostable packaging or eliminating deposit fees for regular customers is a great way to support their shopping habits so I think it's hard to answer
That one but the key one is to make sure that the shopping experiences really familiar with them and reflects their everyday routines eat naturally
Um oh all right okay so converting to a circular economic model compared to traditional model can be a big change for a large retailer what are some ways that retailers can Implement them without losing who they are shifting towards a circular economy model shouldn't happen right away or overnight there are many factors that play into discovering the right way to implement a circular service and each are unique to the specific brand and consumer needs um from our research I would recommend building an implementation timeline and break it down into different phases having a full-service circular business model should be the end goal and maybe in the preliminary stages a brand could start by having a small portion of the products be circular or start by just doing it online to engage consumer
Interest which is kind of what a lot of brands are doing right now and I think the key is slowly introducing circularity is integral to gaining consumer trust as you need to build familiarity with customers in order for them to change the way how they shop so you know doing it slowly on small batches building that familiarity with that customers kind of giving that education slowly and then before fully integrating your services with them and The Body Shop is a good example of that as well yeah as they're only starting with I believe it's just shampoo and hand wash and I think they're you know evaluating how consumers interact with those services and building it on from there on what type of product should be circular what shouldn't and you know um really catering it towards your unique business needs
Looks like the answer is everyone's question so far um and just to remind you guys you will um a white paper that outlines more of the research that we conducted and kind of goes into our insights more in depth and then I believe we will also receive a copy of this presentation as well so thank you guys also so so so so much for attending our webinar and listening to what we discovered in our research
