Marketers sound off on tariffs and retail strategies, plus how Hanna Andersson built its loyalty program

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0:50Hi, everyone. Welcome to this week's episode of the Modern Retail Podcast. I am senior reporter Gabby Barco, and I'm here today with executive editor Ana Hensel. Hello, Ana. How are you today? I am good. We just got a few days in person, which was exciting. We just came back from our Modern Retail Marketing Summit, which was very fun. Yeah, exciting stuff. We're going to get right into it. So this week, we're going to be doing something a little bit different where we are both just going to weigh in on what we really saw at the Modern Retail Marketing Summit, which took place in New Orleans this week.

1:31We had Top marketers with sessions from Aura, Chomps, Chobani, all of the brands that attended. And yeah, you and I are just going to kind of do a little bit of a rundown of what we heard from them, other little tidbits we overheard or spoke about with other attendees. So I'm excited. Yeah. And then later in the episode, we'll have an interview from the summit with Lisa Perlmutter, who is the chief customer officer at Hannah Anderson. And she's going to be talking about how they designed their loyalty program. It was a great session. Okay. So first things first, tariffs, of course, had a big presence at the marketing retail summit where everybody was pretty much seemed like they were talking about it around the clock.

2:21I guess it didn't help that there were a lot of updates throughout the three days that we were there. Yeah. Yeah, this event started on Monday. And of course, Liberation Day was on Thursday. And so I was very curious to see what the mood was going to be at the event. And, you know, we definitely had a lot of people had to be called into last minute calls with their C-suite, I feel like, to be to talk about how they were going to respond to it. But it was also great. It was good to bring people together during that time because at our events, we do something called the Challenge Board where we ask everyone to write on a Post-it note what is the biggest challenge they face in their job, and then we talk about it.

3:10And tariffs, of course, were the hot topic. So then people could talk about what kind of things their brands were testing, what they had found so far. So that proved to be a really interesting conversation. Yeah, I feel like a big one was a little bit of a debate or outlining pros and cons of how exactly to present price increases to customers. You know, how do you package that, especially after a few years of price increases across the board, pretty much. So, yeah, that was a big one. We heard some creative solutions, I guess. Should we get into it? Yeah, some brands debated whether or not they should present a tariff surcharge at checkout.

3:53So basically, the idea would be rather than baking that into your total costs when you would keep your Shopify MSRP the same, and then when you check out, it would be a line item for taxes and then tariffs. So I think some companies are really interested in that because then you are basically letting the customer know this is not our fault, why prices are increasing. But the concern was that if you add this last minute fiat checkout, so let's say you add something to your cart, you think it's going to cost$30 and then you get to the checkout page and then you see that cost$35. dollars is that going to turn customers off you know that's something we've heard in other retail scenarios i think of um resale apps trying to like tack on more fees so yeah we had a really good debate about you know whether or not that would be the right approach other brands were just trying to said that they were really focused on like slicing and dicing and figuring out which SKUs would be most impacted by tariffs and then just cut those.

5:08This is a time where, okay, if we see that these few SKUs that don't really perform well anyways, there would be a huge tariff increase to those products in particular. Why don't we just cut them? So yeah, there's a ton of ways that brands can approach this and it made for an interesting discussion. What else did you hear from attendees about Tariffs Gabby? Yeah. So one of them was because this was a marketing summit and a lot of marketers are, of course, I feel like they're always worried about their budgets to begin with. So when you hear tariffs, it's like, oh my God, do I have to come back even more?

5:43You know, we do generally hear that ad spend PR, general marketing is usually cut whenever things are tight. We saw this the last few years with, you know, supply chain and like layoffs and all of the, you know, everything that was going on. So there was there is worry that am I going to be forced to cut my ad spend in order to offset some of these additional costs. Now we have some coverage on that coming up next week. But yeah, it seemed like maybe some brands said that, no, this is maybe not a good idea right now. While others said, you kind of have to, I think, at least find pockets to save.

6:25Yeah, I had a session with Erin Potempo-Wall, who is the founder and COO at the Beach Waiver, which is a hair tool. That's what they're known for. And she actually, it was really interesting. I had a question for her at the end about, you know, just how are you responding to this kind of economic environment? She mentioned something about cutting back. And I said, well, you know, What are you looking to cut back on in particular? And she actually said that she didn't want to cut back on marketing. Basically, she viewed it as, you know, this is a time when a lot of other companies might cut back on marketing.

7:04So this is the time for us to actually, you know, keep pushing forward on that, keep building brand awareness and remind customers we exist at a time when, you know, they might be considering cutting back on a lot of things. And so she said that actually what I would prefer to do is respond to this environment by keeping inventory lean, you know, maybe purchasing only as much inventory as we need and do that rather than cut back on marketing. So I thought that was pretty interesting. Yeah. The other argument for actually maybe even doubling down on marketing is that, you know, there's so many brands doing this that you might actually have an advantage by buying some ads right now.

7:47So I guess it just all depends on what your budget is and how much you can spare right right now. So there was a lot of different opinions, I think, on that. Made for a healthy discussion, for sure. Yeah. And then, of course, you know, retail, wholesale, physical retail was a hot topic. I think it usually is, especially among digitally native brands. But I had one session with Aura, which makes, you know, the Aura ring about just how they mapped out their current retail expansion. So in the last year or so, they've expanded into Best Buy, Target, and of course, they're on Amazon. And I talked to them about what exactly does that do?

8:35You know, like there is a rhyme or reason for it. It's like, OK, well, Best Buy really leans male, for example. So we want to really tap that audience to be able to bring them into the aura fold, whereas Target actually skews more female. And then Amazon, you know, that's just convenience. Any customer that is prioritizes. Want something quickly. Yeah, they're going to take their or they're going to buy their aura from there. But then, you know, there are also challenges because how do you navigate all of their different advertising programs and retail media networks? And so, yeah, that was a really interesting discussion on even though you're a buzzy brand with a subscription and built in loyalty, you still have to figure out how to reach all of these different customers.

9:22Yeah, I think that's a really interesting approach. And I think it's one, you think of a company like Aura, it's very different than, I don't know, a beverage play or something where you have to expand into retail very early on. I think that Aura has built a very loyal DTC business. And so a brand like Aura can perhaps take a bit more of a surgical approach to wholesale and thinking through a bit more strategically. Okay, these are the different types of customers we want to reach. what wholesale partners should we expand into to reach those customers? Yeah. Speaking of trying to navigate that, I think Samantha Fodroski from Tekovas also had a lot to say about this because, you know, they make cowboy boots and Western wear, which can, you know, is showing up in some unexpected markets.

10:13I think a brand like Tekovas is really interesting because to your point, people think Western wear, oh, you're only going to show up in Southern or Western states, but they are expanding into some interesting markets. Yeah. For example, in March, they just opened their New York store. That one got a lot of buzz. Last year, they opened in Philly. I remember talking to them about Philly in particular, and they said that store actually is performing really well. So it's all about figuring out where your customer is investing in that. With physical retail specifically, with a brand like this, I think Samantha talked a lot about, you know, this is a$400 pair of boots that can be kind of intimidating.

10:55I know I wouldn't really know where to start when it comes to cowboy boots. So going in and getting help with trying on, you know, getting the right fit of the boots really helps with conversions versus just seeing an Instagram ad and kind of following that thread. Yeah. Yeah, that makes a lot of sense. One other interesting session I had, I think going back to startups, it's just increasingly important when they expand into wholesale that they marry their DTC insights with other data sources to kind of tell the most compelling story to retailers about why a retailer should carry their product.

11:36So I had a session with Michael Black, who is the chief revenue officer at Bark, who gave an overview of what their company's pitches to retail partners like Target and Walmart. So Bark, which is known for a subscription service that you can get pet toys through other things now. Now, it's a really interesting company because it is more of a discretionary product. You don't necessarily need to buy all these dog toys. So what does a company like that, what does their pitch have to be to retail partners? So basically, Michael said that Bark is really focused on combining its own DTC data with other data sources like Nielsen and Numerator.

12:21And with that, they're able to tell retail partners a few things. One is that Bark claims it is the largest basket size in the category it sells in by far, and that the Bark shopper shops within the category more frequently. It's more brand loyal. It has a more brand loyal customer base of any brand within the category, and it tends to over-index with younger shoppers like Gen Z. So this ties back to what I hear a lot more from these brands that started DTC. See, as you get into retail, it's not just about what's exciting about our products. Why should retailers carry this product? But it's really more about telling a story about how do you help a retailer achieve some of the goals they want to hit right?

13:12If they want to reach more younger shoppers, our brand helps you do that. If you want to build the basket, our brand helps you do that. So I just thought that was a really interesting overview from him. Yeah. And then lastly, you know, I want to just touch on consumer insights. That's something that I spoke to Emma Giles from Chobani. She's the VP of marketing there about how do they utilize, you know, just thousands and thousands of data points that they now have. They're about 20 years old now from their retailers, from their customers on how to tap different trends. So of course, they make Greek yogurt, but now they've expanded into a lot more categories.

13:54They also acquired the coffee brand La Colomb last year. So there's a lot going on. And so, you know, you have microtrends and microtrends that a brand like Trevani really wants to own, especially with Gen Z, of course, are really important. So seeing how something like the high protein drinks cell or the low sugar RTD coffee cells is, yeah, it's just kind of vital right now because there's just more competition than ever. So that was a pretty good discussion and I think builds on a lot of what we've been covering when it comes to better for you food and beverage. Yeah. And I think all these examples are just really interesting.

14:36I mean, if you are a brand that starts DTC and then you expand into a bunch of big box chains or you open a bunch of stores, it just, I mean, it makes the business more complicated. It's going to grow sales, which is great. But I feel like kind of the through line between all of these things is like, you know, just having a why, of course, behind why you do each one of these things and figuring out as your business grows, okay, like, how can we kind of marry all this data and then use that to tell a story that will keep helping us get more customers or get us into more retailers? Yeah, for sure.

15:15Yeah, so a lot of different, I think, depending on where the brand is in their life cycle, or even just the category they're in, it really varies there. But speaking of, We did also talk a lot about, I think more than ever, loyalty and community seems to be just table stakes for a lot of brands because when people cut back on spending or just shopping in general, what brands do they actually gravitate towards? Who do they just absolutely cannot go without? this is something that you spoke to brands like by heart, which is the formula brand, actually, which, you know, you wouldn't think formula loyalty community, but actually, that's a category that really lends itself to that because moms and parents, of course, want to trust this product.

16:05Yeah, so I always have, sometimes I have trouble talking about like, community and loyalty, because these are terms that are very important. Yes, to your point, Gabby, this is especially important at a time when a lot of people might be cutting back on spending. But I also feel like there are terms that can be kind of nebulous. You know, people tend to use a lot of buzzwords when talking about community and loyalty. It's all about meeting the customer where they are. But one session I had that I thought was really interesting was with Nicole Williams, who is the VP of brand and product marketing at Buy Heart.

16:43So Buy Heart is a formula brand, and it's a really interesting category. I think parents in particular, they tend to do a lot of research. And so how do you break through, especially when you're a startup like Buy Heart, let them know, hey, this is why our product exists, and this is why you should try us. so she mentioned for them they're really focused on trying to make inroads with mom groups and to do so they hired a community manager who is actually a former doula and i just thought that was so interesting of course not every brand it would it would not make sense for them to hire a former doula to lead their community but just when it comes to again this kind of nebulous thing about like, how do you build community?

17:36It really depends on what your brand is. And just having people at your company who can like speak authentically to that group, which again, sounds so broad in practice, but I think that's a great example of it. Yeah, of course. I think someone in the audience mentioned like Facebook groups are huge for parents. Yeah, they really trust each other. I think if another parent told you this is the formula, it's clean and has better ingredients, you're more likely to trust them. And so they're really leaning into that. It makes a lot of sense. It is also on the other end of the spectrum from a brand like, let's say, Hannah Anderson, which is also geared towards kids and parents, but they've been around since 1983.

18:22So they almost had to go the other way where they really refashioned themselves into a direct-to-consumer brand and now are trying to build that playbook into, you know, this sort of digital presence. Yeah. So this tees up the featured segment for the week, which is my interview with Lisa Perlmutter, chief customer officer at Hannah Anderson. We spoke at the summit again about how they're kind of, they've positioned themselves as a D2C brand, even though they've been around since 1983. And they only just launched their first ever loyalty program in 2023. And so as Lisa laid out, the challenge for Hannah is twofold.

19:07How do we use our loyalty program to both retain existing customers and attract new ones? And I wanted to include her conversation in full because, again, I feel like when you talk about loyalty programs, sometimes the goals of the program can be so broad to the point where they almost seem meaningless. But I feel like Lisa really got in the weeds about how Hannah thinks about it. They say, okay, we want to use this loyalty program to attract the best customers. What does that mean? It means that our loyalty program should be attracting customers who are not just coming into the brand during sales periods like Black Friday.

19:50They're also looking at things like how frequently do customers who come into the brand through the loyalty program, like how often are they buying? So it was a great conversation, I think, about how brands can tangibly do some of these things that we talk about that seem like platitudes. Attracting the best customers, building more loyalty, building a better following with your customer base. So I'm excited for everyone to listen to it.

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21:19My first session is with a really interesting brand, Hannah Anderson. So we're going to be talking about Hannah Anderson's loyalty program, diving deep into that and how it uses it to both acquire new customers and retain its longtime customers. So with me, I have Lisa Perlmutter, who is the Chief Customer Officer at Hannah Anderson. So Lisa, please join me on stage. I'm glad we kind of coordinated. We did. Totally coordinated. Lisa, so tell us first, what do you do? I feel like Chief Customer Officer, it's one of those titles that can be very broad. What do you do as Chief Customer Officer at Hannah Anderson?

21:56Yes. Well, I don't run the call center, so just in case anyone has that. I run all of our digital business. And so at Hannah Anderson, that's all of our e-commerce, our performance marketing, our loyalty program, which we'll be talking about, and of course, all of our customer analytics. Nice. Yeah. So we're diving deep into the loyalty program today. And when did you join Hannah Anderson? I joined right before holiday 2023. OK. And so when you joined the company, did you have a loyalty program already? Was the company getting ready to launch one? What kind of was that conversation like? We had just launched the loyalty program.

22:32And for those of you who don't know who Hannah Anderson is, just want to take a beat, because we are 40 years old. We like to call ourselves the, if anyone knows or has kids, nephews, nieces, whatever, we are the original family matching pajama company. So for those of you who probably remember, more Instagram, more Instagram, for all that 40 years old. And we were the OG, like literally the OG family matching pajama company. Now we're so much more than that. We are the premium children's apparel business in the market. And so we really stood up the loyalty program right before I joined Hannah.

23:08So people had foresight into it and really wanted to get after that. And, you know, very important as a heritage brand in particular, heritage just means old to older, is to really make sure that we are speaking to those longtime customers as well as engaging a new demo every year, every day. Right. So do you, I mean, granted conversations were happening before you joined the company, but like, do you remember what was the impetus? Why is now the right time to launch a loyalty program? What do we want to achieve from this? Yeah, we were, the company was really at an impasse and thinking, how do we continue to engage this base, this very loyal grandparents buy it, grandparents pass it down to their kids and they pass it down to their kids.

23:52How do we engage that base and yet how do we really activate new customers and I think we already started talking about the rise in performance media costs and how do you really attract and retain the best customers for our brand and so we really wanted to set out and build a loyalty program from the ground up that was truly uniquely HANA and really differentiated we just we didn't want just something akin to what you see in the competitive space yeah so there was something interesting you said there that we really want this to attract and retain the best customers. And I feel like for a lot of both retailers and consumers, loyalty programs can be kind of an afterthought.

24:32It's like someone at checkout's like, hey, do you want to sign up for this? And you're like, why not? So I'm curious if you can talk at all about the design of the program and like how you thought through, okay, we really want this to attract and retain the best customers. How do we set up a loyalty program to do that. Yeah, I think that's a great point. So what we did first, we talked to our customers. Yes, very important. And we really wanted to say, what do you want? What would make a loyalty program attractive? And that doesn't equate to just discounting, just to say that out loud. But we really wanted to say, like, what would really attract these core moms, which is our core shoppers.

25:13And so we first looked at, hey, they really want exclusive and early access to our key product drops, exclusive products, making sure they have like first rights in there. They really wanted to feel connected. And look, they wanted their perks to be more personalized towards them. So we really wanted to build this loyalty program from the ground up of making sure we were connecting with our customers in that way. So how early access do some of, well, actually, maybe we should give an overview of kind of, are there different tiers? Like what are, how would you give the overview of what you get through the loyalty program?

25:50Yeah, great question. So from a customer perspective, they're not seeing the tiers. Okay. I'd say that yet. That is a, let's see, about 15 month old program, maybe 16 month old program. We're still kind of tweaking and working on it, of course. But in the background, we do look at customers by cohort. We activate that in all sorts of ways. and so what but what a customer is seeing is they're seeing really an amazing experience for themselves and really driving that shopping frequency and our share of wallet within the industry yeah why are you not showing the tears yet is it you want to figure out how to break down the tears or you think that might be like intimidating to the customers um great question we debate that a lot um we we're not quite ready to activate the tears from a customer facing standpoint.

26:39But we are on a path to do that. Yeah, because I always wonder, I mean, sometimes, you know, I wonder how much customers remember that. Or sometimes when it's point-based, if it's like, oh, you need a thousand more points to get to this tier, it can be very intimidating. That's right. And also customers don't always want to be reminded how much money they've spent to give the brand. So we're really, really cautious about that as well. Yeah, very true. So what have you learned so far from the loyalty program? Well, we've learned a lot. I would say we look, and we're really strict on having kind of core KPIs, because if you try and measure a million things, and try and do a million things, it's just not going to cut through.

27:19So we look at a few things. One is, are we getting the right new customer acquisition? And we think about that of our existing base joining the program, and then as new customers come into HANA, How many of those new customers, again, of the right customers are we at? So how do you, are there certain, like, do you look at, like, what they spend to determine if they're the right customer? Or, like, what attributes do you look at to determine that? Yeah, we look behind the scenes of what's their spend levels, when in the calendar year. Look, we're a D2C retail business, very heavily back-weighted.

27:56I'm sure a lot of other retailers are here. and so we want to make sure we're getting their business earlier in the year. We're really thinking about that acquisition earlier so we can continue to communicate them in a really personalized way. Yeah, and I cut you off there. You mentioned some of the core KPIs you're looking at beyond are we acquiring the right customer? What else do you look at? So we look at shopping frequency. Are we driving her to come more often and are we driving a larger share of wallet within this competitive children's apparel market? And are we doing that in a really both personalized and brand additive way?

28:34We don't want to do it through discounting. We want to do it through like a really amazing product. Like you see here, I can't tell if everyone can see. Oh, it's on the edge right there. That's not the Hannah Anderson if people knew it from like 15 years ago. This is very modern, very really brand forward aesthetics. Yeah. Are there any? Can we give one more KPI? Yes. Oh, yes, I love it. I love KPIs. Because the last one, which we are really passionate about, is our NPS score. And I know people are scratching their heads like, how does a loyalty drive NPS? We want to make sure this loyalty program is driving the value overall for our brand.