Peekaboo Beans (CSE: BEAN): Using Omni-Channel Branding to Capture the Children’s Apparel Market
The retail landscape is rapidly changing, with more than 9,000 convention bricks & mortar stores closing in 2017 and 12,000 expected to close in 2018 when final data is reported, according to Cushman & Wakefield, a commercial real-estate firm. On the flip side, e-commerce and omni-channel sales models are on the rise, as shopping goes digital and the experience becomes more intensely personalized.
In fact, a recent study of a major U.S. retailer’s customers found that 73% of customers followed an omni-channel purchase journey, which seeks to provide customers with a seamless shopping experience across different platforms. The advantage for companies is that it gives them a certain amount of control over shoppers’ experiences, and a competitive advantage over more static brands. This is creating opportunities for smaller retailers and lesser known brands, such as Peekaboo Beans (CSE: BEAN) to establish themselves in a niche market in the retail space.
Peekaboo Beans started like many great small companies: with an idea and entrepreneurial drive and has since expanded into a social impact brand that creates sustainable, functional and affordable clothing for children. Beyond the draws of the product itself, the company has created a unique brand that connects the customer to a larger community of values. In this sense, Peekaboo Beans is positioning itself similar to how the Lululemon brand achieved success: by connecting with the customer on deeper levels than the product itself, creating a strong collective link between consumer and brand.
Companies like Peekaboo are disrupting the retail space according to McKinsey & Company, who in a report with Business of Fashion discussed how established brands are giving ground to smaller, “challenger” brands, due to their ability to better communicate their values and engage with their online communities.
The company did $2.75 million (CAD) in sales in 2018, with $295,758 in gross profits, and looks to improve upon those numbers in 2019. The company also recently announced cost-cutting initiatives, including decreasing payroll, cheaper manufacturing and lower software expenses, that is expected to reduce annual operating costs by more than $450,000. They have over $2.5 million (CAD) between cash and inventory, which is significant when you consider their $4 million valuation.
Also like Lululemon, Peekaboo Beans emphasizes sustainability and corporate responsibility, two dominant retail trends that have emerged, particularly among younger demographics of consumers. Peekaboo Beans has secured this market by ensuring all products are ethically-sourced and designed to last— eliminating the toxic cycle of ‘fast fashion’ – and establishing themselves as a socially responsible brand. The Company campaigns with local charities— most recently teaming up with Mamas for Mamas, providing them with a winter coat for every purchase of one.
Initially just a direct sales company, Peekaboo Beans made a critical pivot at the end of 2018 to an omnichannel sales model, creating multiple new “touch points” for customers, including a newly redesigned and enhanced online store, social media and “pop up” locations in major retailers and shopping centres. Also unlike traditional wholesale, omnichannel sales contain no middlemen, giving the company greater control over inventory, the brand and ultimately higher margins.
Social media in particular is playing an ever more important role in influencing how consumers make their purchases. In fact, according to Cooler Insights, 90 percent of social media users have used a social network to communicate with a brand 63 percent of those users expect companies to offer customer service on social channels.
“The marketing landscape of the retail world is fundamentally changing and people are really looking to influencers, to social media, to Instagram, who are providing their value-based referrals on products, so we really wanted to tap into this affiliate-type model”, says CEO Traci Costa. Peekaboo Beans is leveraging this with an expanded social media presence (they have nearly 9,500 Instagram followers to date) and making a greater use of this “influencer” marketplace, in which products are promoted via social media personalities with large followings, the strategy being to translate certain aspects of lifestyle into purchasing decisions.
“Retailers are making it easier, is what it comes down to — they’re breaking down the historical friction between inspiration and purchase,” said Rob Garf, Vice President of Industry Strategy and Insights at Salesforce Retail in an interview with Retail TouchPoints. “What this is telling us is that consumers are visiting social media to discover, to research, to get inspired, and they are then actually clicking through to go to a retailer and purchase,” said Garf.
In fact this is representative of a broader trend gripping the retail world. As John Zealley, Senior Managing Director of Consumer Goods at Accenture puts it: “consumers are looking – and expecting – for every brand interaction to be connected, personalized, and convenient.” This is the logic behind Peekaboo’s Social Retail model, in which they use influencers and brand ambassadors to promote the product and interact with customers in change for product-based rewards.
Peekaboo has gone a step further in its attempts to expand its offerings by introducing its Bean Club Membership program, which customers can subscribe to for $49 per year in exchange for discounts and other incentives, which creates recurring revenues for the company and strengthens connection to the brand.
“What we’ve seen with this loyalty program is, for example in November, we had an 85% returning customer rate. So what that means to us is when somebody joins the Bean Club, they build a loyalty to the brand and they will continue to come back to the brand because they will get their member discount and free shipping. And 85% returning customer rate is phenomenal,” says Costa.
Building and sustaining this brand loyalty has been important for Peekaboo in capturing the millennial demographic, a group that represents a significant portion of consumer spending and whose values are most closely in line with the company. This demographic is beginning to have children and establish families, creating a well-timed opportunity. While the market is niche, a close analysis of Peekaboo Beans reveals impressive fundamentals and a compelling growth story within a radically changing space.