Thursday, November 13, 2008
Ravi Acharya, Director of eCommerce at Sears Holdings, says the company elected to launch the mobile application after “observing that certain customers were trying to access the website from a mobile device” and weren’t able to perform all of the functions they wanted. “More and more customers are using their mobile phones to shop online and Sears2go is completely geared for mobile devices with an emphasis on speed, usability and security,” Acharya says. “With the popularity of the iPhone and other devices, we are quickly seeing these devices emerge as the only point of contact you need. We want to make use of that trend and create a bridge to our other channels.”
An extension of Sears’ Fusion initiative, which is focused on making it easier for customers shop across channels through buy online, pick up in-store and other convenient services, the Sears2Go mobile commerce web site is the first on-the-go technology offered by a U.S. retailer which pairs mobile commerce with services such as in-store pickup.
Acharya says Sears will be testing different aspects of the mobile commerce site during this holiday season to determine which tools consumer utilize most often as well as how the application influences overall purchases.
To transfer the content and functionality of its online presence to a mobile device, Sears partnered with Usablenet out of New York. Acharya says the transition was fairly seemly and took only two to three months.
Jason Taylor, vice president of mobile products at Usablenet, pointed out that Sears built the Sears2go platform with a long-term view of cross-channel shopping. “It’s a very flexible platform to allow Sears to give access to promotions and product offerings via computer or phone.”
While other retailers have recently targeted mobile devices as a marketing medium, he says Sears now has a competitive edge by putting commerce functionality into consumers’ hands. “The one thing that we’re able to do for our partners is put purchasing on the phone,” says Taylor. “Before we have seen a lot of promotions on phones, but not the execution of purchases. We’re now putting that in the hands of our partners. They can now literally launch a site that offers full purchasing of tens of thousands of SKUs in the case of Sears. It’s integrated with Omniture so from day one they can see all revenues associated with mobile. I think that’s really the key aspect with regard to investing in mobile. You have to see revenue, especially in retail.”
Sears2go will offer much of the information available on Sears’ main website, including access to product reviews, comparisons, ratings, and store locators. The mobile site will only offer some product categories, however, focusing on apparel, electronics and computers, fitness and sports, jewelry, tools, toys and games with home delivery or in store pickup.
After purchasing an item on Sears2go, shoppers picking up their order in store will receive a text message alert when their merchandise is ready for pick-up. The mobile application also allows consumers to mix and match orders, choose different fulfillment options for different products. For example, if one item from a shopping list is available for delivery, but another is not currently in-stock, a text message will alert when the store has the product available.
In addition to researching products and making purchases directly from their mobiles device, Sears2go also allows consumers to opt-in to receive promotions from Sears to right their mobile phones. Users just need to text DEALS to 73277 to receive Sears Deals Alerts.
Acharya says Sears will also be promoting the launch of Sears2go via banner ads on high profile mobile sites through a partnership with AdMob and also doing targeted commuter marketing.
Thursday, October 30, 2008
The “one price” promise policy guarantees the same price for merchandise regardless of whether it is purchased online or in-store. It was announced in mid-October and is the focus of Circuit City's holiday marketing program. However, the policy has not been copied by any major retailer. In fact, Best Buy’s policy states that consumers will be given the lower price if they find that an online item is available in the store at a different price. Translation: Best Buy, and other retailers have priced in-store items differently than their website says.
Circuit City believes the policy’s need is backed up by research. SPSS, Inc. studies showed that nearly half of consumers surveyed (47%) believe retailers post different prices for the same merchandise in their stores and on their Web sites. Moreover, more than half of shoppers (51%) said they would place more trust in a retailer who offered the same prices on the Web and in their stores.
New research supports the consumer expectation of consistent cross-channel pricing. Greg Buzek, Founder and President of IHL Consulting Group, says his company will release a report in the coming weeks that quantifies it. According to IHL, consumer electronic stores over the past 30 days have seen 26% of their in-store customers leave without purchasing for various reasons. However, of that 26%, 21% left because the in-store price did not match online pricing, or other promotional pricing. That means 6% of all customers are leaving due to pricing differentials.
“Retailers who don’t align their pricing are hurting themselves,” Buzek says. “One of the most frustrating things a consumer will come up against is finding that the in-store price does not meet their expectations. It is completely within their expectations to get that, and retailers will lose sales if they don’t meet that expectation.”
George Lawrie, the Forrester Research Senior Analyst who wrote a study earlier this year on consumer cross-channel expectation, agrees that Circuit City is addressing a critical issue. “In general, guaranteeing the same price through all channels appears to fly in the face of common sense and even of customer expectations,” he says. “But there are good reasons that Circuit City and other retailers selling home computing and consumer electronics are obliged to offer ‘Internet prices in our stores.’”
Lawrie believes the “one price” strategy is a hedge against aggressive discounting by competitors. He says discounters use supply chain muscle to encroach on consumer electronics retailers’ territory, and then lack the in-store expertise to add peripherals or even enhance the customer experience. Smart consumer electronic retailers, will use the internet, he says, to drive in-store traffic because their competitive advantage is in the store.
“Consumer electronics purchases are complex and the decision making process is information intensive,” he says. “Consumers often spend hours understanding technical specifications and researching online even if they need to pick up the product for an urgent deadline such as a college start or a birthday. Window shopping now has an entirely new meaning: 54% of online consumers researched a product online and purchased it offline, and 37% researched offline and purchased online as long ago as 2005. Half of these consumers cited price comparison among retailers as the reason for researching online, more than any other factor. When it came time to buy, those who purchased offline cited immediacy, the ability to see an item in person, and shipping costs as the top deterrents to online purchasing.”
The pricing alignment will require infrastructure alignment as well. Any retailer who intends to promote their capacity to price consistently, and then have the ability to be agile with inventory, needs to be prepared on the back end.
“No doubt that Circuit City has raised the bar for expectations of consistency, and I give credit to them for that,” says Escalate Director Of Product Marketing Dave Bruno. “A lot of retailers would struggle with the need to have accessible information across all platforms. The technology is certainly available to accomplish that.”
Tuesday, October 28, 2008
“The big change this year is that retailers are moving their holiday campaigns forward in an attempt to close some sales early,” says Chad White Director of Retail Insights and Editor-at-Large for the Email Experience Council. “As of Oct. 19, 40% of the retailers I track had referenced the holidays in at least one email. Last year only 31% of retailers had referenced the holidays by that point. Last year we didn’t reach the 40% mark until Oct. 25, so retailers have moved their holiday campaigns forward by roughly a week. Based on this, I expect Cyber Monday to be huge again this year as retailers give customers another compelling reason to pull the trigger and not wait until the days right before Christmas. I also expect more Black Friday messaging this year.”
Some retailers have tried to take the high road as the season approaches, but most analysts expect speed and even desperation to rule the rest of the year. Circuit City, for example, has drawn some positive press for its “One Price” policy that guarantees the same price regardless of the channel it’s purchased through. Best Buy has pushed its ramped up mobile offerings. OfficeMax (see related story) has taken up cause marketing. But expect these all to be footnotes on Dec. 26.
“It is the nature of the economy to turn all consumers toward value,” says Lauren Freeman president of the e-tailing Group. “Expect them to look for deals across all channels. They will look for early season deals, and then look for late season deals. In the middle I expect to see a lot of limited time type of promotions and accelerating discounts.”
Last year, the main cross-channel issue was free shipping. This year most retailers would kill for that kind of simplicity. Consumers expected retailers to ante up free shipping for most any order regardless of value. This year, free shipping has not been promoted as heavily by e-commerce pure plays or cross-channel retailers. But it’s a tactic that can and will be broken out at any time.
Larry Freed, president of ForeSee Results, was one of the analysts that accurately called out free shipping as a competitive key last year. This year he calls it “a cost of entry” for e-commerce. “I expect it to be very important again,” he says. “Actually it has become more of an accounting issue than a business issue. It’s really part of the cost of goods online, and we all know the margins are much better for online sales. I think when gas prices were higher the potential hit for free shipping for retailers was bigger. Gas has come down substantially, so I say that if you can get customer to pay for shipping, all the better. But if you can’t, there are a lot of ways to accomplish it.”
Freed agrees that free shipping is among the aggressive tactics that will simply depend on who blinks first. After Halloween, he says, the game is on. Even the total number of e-commerce revenue is up for debate. Several reports issued over the past week call that number into question. Both Forrester and the e-Tailing Group expect 2008 to settle for a 12% increase over 2007. “Although US consumers are pessimistic about the health of the economy, they expressed a marked interest in the ability of the Web to save them money,” states the Forrester report. 48% of consumers surveyed, compared with 41 % in 2007, said that they can find the best values and deals online. Additionally, 36% of consumers said that they would be more likely to shop online due to high gas prices, compared with 22% who expressed the same sentiment last year. Forrester expects that the majority of holiday online sales will be driven by shoppers who have previously purchased online, rather than first time online buyers.
Freed says he expects a drive in online advertising and promotions to drive more web traffic and consequentially more purchases than is currently predicted. Brand Keys last week issued a report that warned of a possible five percent decrease in overall retail revenue, including online, based on the changing needs and expectations of key consumer groups.
Thursday, October 16, 2008
That means that video ads and rich media applications, which are expensive and buzzworthy these days, may not need to drain retailer’s holiday ad budgets. The new report from from web analytics company iPerceptions collected user-generated feedback from over 14,000 visitors to leading media sites during the month of August 2008. The data showed retailers can reach consumers through text and banner ads most efficiently.
In fact, consumers visiting media sites are most likely to click on simple text ads (25% of respondents). Display ads follow in popularity, with 20% of respondents likely to click on right banners and 12% likely to click on top banners. Video ads are not very popular among most consumers; only 11% of consumers said they were likely to click on them. And tech-savvy 25- to 34 year-olds show no special affinity for video, being just as likely to click on video ads as text, right and top banners. The only consumers who seem to be engaged by video ads are under the age of 25, a group that accounts for nearly one-third of the video-ad viewing audience.
Jonathan Levitt, marketing VP for iPerceptions, believes some of the survey data goes deeper than affirming text and banners. “The voice of the customer can be expressed through web traffic,” says Levitt. “We suggest that rather than starting with the conversion rate or last click attribution that retailers find out why their customer arrived in the first place. They usually arrive with an intention. They have a task to complete and retailers need to know what that is.”
Brand value is still determined by experience at the retail website, not by the experience consumers have in getting there. The iPerceptions report showed that once arriving at a site, the key to brand value and sales is task completion. 67% of visitors who completed their primary purpose reported enhanced brand opinion (vs. only 18% for those who did not). 60% reported higher likelihood to purchase either online or offline (vs. 14%). Visitors who completed their primary purpose were two times as likely to refer a friend and two times as likely to make a repeat visit.
Just as loyalty can be doubled by understanding and completing the customer task and intention, the study also found that advertising clicks come from loyal audiences. In other words, users that are loyal to a media site, have a higher propensity to become loyal customers. 65% of consumers who are likely to click on ads are weekly or daily media site visitors. Only 15% of those likely to click on ads are first time visitors and only six percent of respondents were “sporadic” users.
Levitt believes the report shows that last click attribution, which has become something of a holy grail among internet marketers, may not be as important as once thought. In spring 2008 iPerceptions looked at first-time purchaser data for a top consumer electronics retailer. “We found major problems with the standard practice of last-click attribution,.” Says Levitt. While most purchasers were arriving organically (typing in the URL, bookmarking) or through search, the factors that most greatly influenced their decision to purchase suggested that offline vehicles deserved much more credit. Specifically, 30% indicated that their decision to buy online arose from word of mouth/credible referrals, 11% indicated that they bought as a result of a direct mail campaign, and 9% indicated that they were motivated by a print ad.
In a multi-channel retail study from April 08 through July 08 involving more than 10,000 respondents, iPerceptions found that, among visitors who did not execute a purchase online, 60% indicated that their website session had compelled them to visiting a brick-and-mortar store as the next step. “This represents a veritable army of potential buyers who were driven directly from the online storefront to the tactile storefront,” says Levitt.
Thursday, October 2, 2008
AMR: Don’t Let the Early Predictions Lull You into an Unprepared State During the 2008 Holiday Season
While some of the forecasts indicate consumers are planning to spend about the same amount of money during holiday 2008 as they did in holiday 2007, retailers should be on the lookout for sudden shifts and changes. A presidential election, war, natural disasters, rising gas prices and the volatile current state of the economy should have all businesses on their toes.
“Retailers have to be prepared both for a normal shopping season and a highly abnormal one,” notes Janet Suleski, research director, retail at AMR Research. “Given the volatility in the stock market and uncertainty about the economy, I believe consumers can and will change their strategies very quickly as their personal situations warrant,” Suleski adds.
Additionally, if consumers take the advice of financial experts such as Suze Orman, they may decide to pull back on spending this year. In a recent appearance on Oprah Winfrey’s talk show, Orman asked consumers: "People, stop living the financial lies that you have been living. If you don't have the money to pay for something, can you just not buy it?”
To date, though, consumers appear to be planning a similar spending season to 2007. In a recent survey of 130 shoppers, AMR found that 73% of respondents are planning to spend the same amount in 2008 that they spent in 2007. That adds up to more than $900 per person, according to statistics from the National Retail Federation.
Agility Will Be Key
While retailers must prepare their marketing and promotional strategies well in advance of the holidays, recent technology improvements may help them adjust plans if necessary, says Suleski: “Retailers have gotten a lot more agile in the last five to 10 years, aided by better access to real-time information, better demand forecasting tools, and expanded collaboration with their suppliers. I am sure that many have “plan B” in place in case of an exceptionally difficult shopping season.”
Smart retailers will get a jump on promotional and sales activity to pull at consumers’ heart strings before they feel too much of a crunch. Wal-mart, for one, recently announced a price cut on specific toys and will open its holiday ornament and décor shops nationwide by October 10, Suleski reports. Many retailers also are taking precautions by limiting their inventory and beefing up assortment planning, she notes.
Internet intelligence A Must
No matter what the total spending number turns out to be, more consumers will be researching products and shopping online, and retailers need to be prepared for that reality. The AMR survey revealed that 26% of respondents plan to do more or a lot more shopping online in 2008 versus 2007, and 16% are doing so to avoid the spending money on gasoline to drive to stores.
But the competition will be fierce because consumers are shopping smarter. “Retailers’ strategies need to take search and price comparison websites into account and be very aware of how their key promotions stack up to the competition,” says Suleski. “59% of the shoppers we surveyed plan to use Google, Froogle, Yahoo, PriceGrabber, Shopzilla or other sites to locate the best deals for at least some of the items on their holiday shopping lists.”
Once consumers decide on a product, they need to know their product will be available when and where they choose — in some cases by shipping and in other cases by picking up their online purchase in a local brick-and-mortar store. “Those (retailers) who have developed strong cross channel integrated capabilities will be able to shift their inventory where the customer wants it,” says Kevin Stemeckert, research director, retail for AMR Research. “Order online/pickup in the store and other capabilities will also be helpful in increasing sales and capturing larger shares of the wallet.”
As retailers focus on consumers’ wants and needs, they are making better use of available technology. “The role of technology in satisfying shopper demand is increasing and will play a key role in the success retailers have in meeting consumers' needs this season,” adds Mike Griswold, VP and content lead, Retail at AMR. “Assortment planning, lifecycle pricing, and inventory management and visibility (particularly cross-channel visibility) technologies will play key roles in creating successful shopping experiences for consumers.”
Thursday, September 25, 2008
Researchers for the e-tailing group spent time in stores and online with more than 50 chosen retailers and has found a number that float to the top as successful cross-channel marketers:
• In-store pickup stars include Nordstrom, Sears and Circuit City. A recent entrant into the in-store pickup arena, Nordstrom is testing buy online/pickup in-store in apparel, shoes, and cosmetics to roll-out to all merchandise categories by September 2008. The retailer boasts online inventory of 83,000 SKUs and pickup in 159 stores across 28 states. Sears has been offering in-store pickup since 2003 and guarantees that if the customer does not get their package within five minutes of the in-store request, they get a $5 gift card, 10 minutes/$10 card, etc. Circuit City reports that more than 50 percent of 2007 online shoppers picked up in-store
• Store associates lift sales. Sales associates can make or break the shopping experience. Those that are knowledgeable about the products and cross-channel opportunities for consumers will boost the bottom line. Retailers employing some of the best sales associates include: Apple, Bass Pro Shops, Best Buy, Crate & Barrel, Finish Line, Orvis, RadioShack and Ritz Camera. In each case the associate was friendly, eager to help and knowledgeable. In many cases shoppers were greeted at the door.
• Multi-media features improve web site rating. While store associates augment the shopper experience in the brick-and-mortar channel, interactive and educational features make the experience more enjoyable online. Orvis, Pottery Barn and pets.com are among the retailers cited by the e-tailing group for successful use of online video. Orvis, a fishing specialist, offers “Hook TV” as well as “The Beginner’s Corner” and a live chat feature. Pottery Barn provides design tips at “Stylehouse” and houses a video library showing products in use at home. Consumers who visit pets.com can view pet care videos and expert advice.
• A plethora of product information helps sell merchandise effectively at Patagonia, Ritz Camera and Williams-Sonoma. The key to providing a lot of product information is presenting it efficiently and in an easy-to-read format. Patagonia lists the essential item information clearly at the top of the product page and displays graphics to the left. Customers are able to opt for buying or saving the item mid-page. Ritz Camera incorporates tabbed sections to clearly delineate product features. Williams-Sonoma displays product information to the left of item photos and uses bulleted lists for simplification.
• Cross-channel marketing leaders are successful for a variety of reasons but in particular because they promote across all channels. Babies “R” Us provides online postings for in-store events, sign-up for the Birthday Club and access to job openings. Borders offers a cross-channel rewards program, book promotions, and promotes the online experience at in-store cash registers. Linens ‘N Things has an online gift registry, promotes shop LNT.com anytime and displays in-store signage promoting “as seen on TV” and “as advertised” in other channels.
Other stand-out retailers include: Apple, Barnes & Noble and Crate & Barrel for their online retail locators; and Petco, Brookstone, Sears and Target for their merchandising and mapping within locators.
In the report, the e-tailing group lays out statistics for key trends including in-store pickup, product research online and in-store, online product information availability, use and effectiveness of cross-promotions, retail locator rankings, online order process, merchandise checkout practices, and more.
For more information including a list of surveyed merchants or to order the report visit the e-tailing group's web site at: www.e-tailing.com
Thursday, September 18, 2008
Several research reports released last week showed the undeniable reality check that awaits retailers this holiday season. Most merchants will be faced with the slowest sales growth since 1991. In order to remain solvent and competitive beyond this critical further quarter period, analysts stress retailers must get closer to their customers by adopting online tools and analytics capabilities.
The bad news about holiday sales predictions came from several fronts. TNS/Retail Forward estimated that retail sales this November and December will increase just 1.5%. Deloitte was a bit more optimistic, predicting a 2.5% to 3% increase. That would make the 2008 holiday season the worst for retailers since 1991. However, it is also not a sharp drop taken on an annual basis. Deloitte says holiday sales hit a 10-year high in 2005, surging 7%. In 2006, sales rose 3.8%, and last year, they were up 2.7%.
TNS senior economist Frank Badillo said that the economy is the culprit and will push consumer spending toward discount and mass retail. “Our top-line forecast separates into two distinct groups—the leaders and the laggards,” Badillo states. “Sustaining above-average growth will be non-store and mass retailers. They will see combined growth near 6.0% in the fourth quarter. Continuing to troll the depths will be the homegoods and softgoods retailers where growth is expected to decline 1% or more.”
In recent years, e-commerce has come to the rescue providing double-digit growth for retailers that were suffering offline. But that growth may not be so easy to come by this year either. A new report from Shop.org and Forrester Research shows “cautious optimism” among its members. The 25% growth rate predicted earlier this year may still be reachable from some companies the report says, but specific growth rates were noticeably absent.
About one-third (35%) of online retailers surveyed said they expect their online business to perform better than expected in the next 12 months, while another third (33%) anticipate their online business will perform the same as expected.. According to the report, 81% of online retailers surveyed reported that their eCommerce business was profitable in 2007, and 75% were also more profitable last year than in 2006. Almost half (49%) of online retailers said that their average conversion rate in 2007 was higher than in 2006, and that 36% of total sales for the online retailers were driven by repeat customers—higher than in 2006. However, due to their outlook for the US economy, 37% of survey respondents noted that they’ve lowered their expectations for their online business performance in the next 12 months.
The report also issued something of a profit warning: “Retailers must still execute well to capture possible sales. Additionally, it cautions that those sales may not necessarily be the highest-margin revenue due to increased input costs and the pressure to offer promotions such as free shipping,” it said.
THE NEW PLAYBOOK
For retailers looking for a way to combat these new realities, Aberdeen Group released a new research report focused on the strategies necessary for driving holiday business. The Aberdeen study, released just days before the slew of bad news on Wall Street, showed that “Best-in-Class companies optimally manage merchandise, customers, and data as key determinants for driving successful holiday business.” On average at least 50% of the Best-in-Class respondents focus on customer-facing and back-end technology tools that support online channel sales as e-commerce becomes more significant for topline gains during peak selling seasons, according to Aberdeen.
The data from the report, “The Complete Mantra for Driving Holiday Business in 2008, 2009 and Beyond,” shows that 55% of leading retailers see the need to counter competitive selling strategies as the top holiday pressure. To try and outpace their competitors, 50% of leading retailers are using such advanced online tools as search and comparative shopping tools, dynamic web content management, online analytics, and social marketing tools.
The report showed a fairly big divide between the Best-in-Class companies from the rest of the pack in terms of their approach to planning and measuring the key holiday period. 70% of Best-in-Class companies utilize standardized metrics to measure Holiday performance effectiveness versus 41% of Average and 33% of Laggard companies. Accordingly, a critical enabler for managing seasonal selling is the ability to measure key associated metrics like sales comp, product margin erosion, cost to serve, and total cost of goods sold, the report found.
The top action for holiday selling optimization was developing loyalty programs, which topped the list of best-in-class respondents. 40% said they were consistently evaluating commerce infrastructure to accomplish loyalty and analytics goals. The need for technology and infrastructure is driven by the increasing complexity of e-commerce applications, as well as increased cross-channel sales. Product inventory and customer data must be managed across- channels in order to drive customer loyalty for the future and maximize sales for the short term.
“These content-rich, immersive sites are compelling, but require more bandwidth than standard, static pages,” said Aberdeen senior analyst Ben Ream. “Leading retailers are taking a preemptive approach, and measuring system capacity against site application demands."
Thursday, September 11, 2008
While the EDGE initiative clearly comes to life on the sales floor, Dave Romero, senior manager of new concepts for Circuit City, points out that the strategy is anchored in a multi-channel approach. “[EDGE] allows full access to all the reviews on our Web site,” says Romero. “It’s a terrific multi-channel tool that combines all the great power and information on our Web site and all of the great information around products and details. And it combines the guest reviews on our site, and puts it all in the hands of [associates].”
After two years of testing, learning and iterating in multiple markets, Circuit City began using Table PCs running the EDGE application in all of its new-format ‘city’ stores and is already enjoying positive results. Sales associates are more confident in approaching customers with the knowledge to sell or discuss any product in the store. The mobile tool is integrated with online content for a seamless multichannel experience.
EDGE is designed to extract product information, inventory data, in-store promotion, third-party reviews, and other information over the Internet and from multiple back-end business systems. Once the information is extracted, EDGE is then optimized with decision-support intelligence and friendly user interface.
“We knew we had to create a more consistent approach to how we engaged guests in our stores, and Microsoft had the insight to show us where the industry was heading and provided knowledge and resources to move us in that direction,” says Romero, senior manager of new concepts for Circuit City. “We hadn’t seen anyone before bring together guided selling components (questions and answers) in addition to learning content.”
The EDGE technology is designed to speed the sales process by providing associates with immediate access to product recommendations, demos, usage questions, competitive pricing and other information for thousands of items across hundreds of categories.
The EDGE offers a series of guided selling questions and answers that are based on popular features of products. For example, if a shopper is in the market for a new TV, the EDGE will give the store associate a series of five-six questions to refine search. By providing answers, the EDGE offers a manageable list for shoppers to compare features and prices.
Once a shopper comes to a decision on the product they want to purchase, the EDGE prints out necessary information on the product, which can then be scanned in at the POS. Though the EDGE is not completely integrated with tendering system, it is a program Circuit City is currently working on as part of a new POS rollout, according to Romero.
“We try to avoid that ‘not-my-department’ scenario that can happen with other retailers,” says Romero. “Within retail things change very quickly, especially in our space, so we wanted to have the [city] store be something we could grow and flex with over time.”
In addition to remedying the reluctance store associates had to approach customers, Romero says the “Google it” mentality has a strong tie to the EDGE concept. “You’ve got to be able to look at the generation of the folks out there who have been raised on Google and appreciate that, and say, hey, ‘it’s okay to look up products and information over the Internet and share that with your guests and make sure they get you the right one and use the guided selling solution to get there.”
With a wealth of information now at store associates’ fingertips, Circuit City can hire from a broader talent pool and prepare them for the sales floor more quickly, according to Brian Leach, vice president of new concepts for Circuit City. The new hiring strategy has enabled the company to expand its hiring pool seeking friendly associates with strong team-building and communication skills, rather than searching exclusively for highly technical associates.
“We’ve done a lot of guest research with their perception of the device and how it’s changed their shopping patterns and habits… [Response] has been overwhelmingly positive,” Romero says. “Our guests really appreciate having access to the information.”
Thursday, September 4, 2008
Gap Inc. posting an 11% same store sales drop for the month of July wasn’t a huge shock to retail industry watchers, but one analyst in particularly has been extremely vocal that the dip points to much larger problems for the chain.
“The chain, which has been in a death-spiral of same-store sales for as long as we can remember, is opting to leverage a trend we identified quite some time ago: customization,” says Robert Passikoff, CEO of Brand Keys. “The Gap has fallen into this version of customization that should be presented more in-store through the product and the experience, but it’s not,” he says. “They’re giving us dramatic photos of actors we don’t know and expecting to reach sophisticated customers that way. And this is supposed to be the fashion attempt of the year. They have the same stuff with better photography. That’s all.”
Who is Robert Passikoff and why is he saying all these nasty things about Gap? No he’s not a disgruntled customer or bitter blogger. Passikoff is a market research expert, author, and CEO of branding consultancy Brand Keys. He has found in Gap a consistent problem that he believes pervades most retailers today as they work to embrace the cross-channel customer. Offline brands have failed to differentiate, he says, and cross-channel brands have failed to innovate. Both will be necessary to profit over the next year, according to Passikoff.
Passikoff’s provocations are based in data. The Gap ranked last among apparel specialty retailers Brand Keys’ Customer Engagement Index released earlier this year, behind Victoria’s Secret, American Apparel, J. Crew and others. The Gap is just Passikoff’s current poster child for ineffective branding. He has taken Microsoft, GM, and T-Mobile to task in the past. His current retail favorites are Victoria’s Secret, Nike, and Adidas.
“They deliver a seamless sense of what the brand stands for online and offline,” he says. “They allow customers to connect their own personalities to the product. They differentiate themselves and still they resonate with some value. All this combined with some buzz makes an effective cross-channel retail brand.”
After following retail brands as well as other verticals for three decades, Passikoff is surprised by the current comeback of the focus on the in-store shopping experience and in-store merchandising. Just a year ago he believed the online experience would become more important. It still is important to the brand, he says, but in-store is where customer expectations and satisfaction are bred.
Back to Gap, which has cut costs and tried to move the focus online. Passikoff says it’s not enough. He admits the retailer has done some good work to become more cross-channel focused, but same store sales are unfortunately a dominant metric. “It would be great if we could all focus on cross-channel results but it’s simply not what Wall St. looks at,” he says. “Until we find a new way to keep score, same store results will dominate.”
Thursday, August 7, 2008
By Tom Ryan, RetailWire
Editor’s Note: This article is an excerpt from one of RetailWire’s recent online discussions. Each business morning on RetailWire.com, retail industry execs get plugged in to the latest news and issues with key insights from a "BrainTrust" of retail industry experts.
Although consumers have long been involved in helping companies develop products and services through focus groups, some companies are looking to the internet to tap into consumer input on a much wider scale. In business speak, the concept is being called "crowdsourcing" and is yet another play on the "wisdom of crowds" theory.
For instance, Threadless, a t-shirt company, and Ryz, an athletic shoe manufacturer, are making it possible for consumers to design shirts and shoes, according to The San Francisco Chronicle. Consumers vote online for their favorites and determine the products these companies sell over the internet.
Crowdsourcing is particularly appealing, according to its supporters, because a new generation of internet users expects that kind of input and interaction.
"They were born digital," Frank Cooper, vice president at Pepsi-Cola North America, told the San Francisco Chronicle. "They get the process. It is not technology to them. It is another great experience to engage."
This summer, consumers were given the opportunity to vote at DEWmocracy.com to decide new flavors for Pepsi's Mountain Dew brand.
"Hundreds of thousands of people have given us feedback" on the flavors, Mr. Cooper said. "There is a wealth of information we can leverage. This is unprecedented."
Rob Langstaff, a former president of Adidas' operations in both North America and Japan, is putting $4 million into shoe startup Ryz because he believes there's too great a disconnect between businesses and consumers. Often, consumer input is only involved at the beginning of the product design process and little afterward.
Said John Butler, the creative director at Butler, Shine, Stern & Partners, which has worked on a project to get consumers to create their own Converse Chuck Taylors, "It's a smarter way to mass-produce things, getting them in the hands of people who want them, customizing products to meet individual consumer needs, and I think it is literally right around the corner for many businesses."
Web 2.0 tactics have been a hot topic in the retail industry. Some analysts say it’s the way of the future for retail. “We are increasingly embedding the consumer in the ordering and inventory process of distribution through the web; embedding them in innovation makes sense,” says Liz Crawford, president of Crawford Consulting. “Wise companies will learn to use the information effectively, however, using solid testing to ensure success.”
The input of customers is retailers’ best tool, according to one analyst. “Nothing is more valuable than consumer input as long as you are talking to the right consumers,” says Robert Gordman, president of The Gordman Group. “Your best customers understand your business and products and can provide valuable feedback. If you simply solicit feedback from random "crowds" you are likely to get information that is generic at best and misleading at worst. Any research should be limited to your Core Customers.”
“It isn't hard to segment the replies into demographic and psychographic groups, weighting the replies accordingly, says Mark Lilien, consultant with Retail Technology Group. “It's a lot less expensive than a failed marketing campaign or a failed product launch. Like any other market research, it doesn't have to be precise; it just has to provide a reasonable direction.”
Friday, August 1, 2008
By Amanda Ferrante, Assistant Editor
On a busy Saturday at young women’s’ apparel retailer Mandee, I didn’t expect much more from the storefront greeter than a simple welcome at the door. However, in addition to a friendly, “Hi- welcome to Mandee,” the amiable greeter told me I could text Mandee7 to 45566 to receive a 20 percent discount on one item at checkout.
I thanked her and made a beeline for the beautiful shirt just a few yards away. She followed adding, “And it’s the weekend, so you don’t have to worry about your rates! It’s this weekend only!”
That was the “Aha!” I was looking for. Not only did she inform me of the great deal going on, but she made sure to create the sense of urgency by coaxing me with a subtle, yet important, piece of information that would, ultimately, seal the deal. Following suit, shoppers left and right had their cell phones in one hand and their chosen garments draped over the other.
After texting, I received a message saying I’ve opted in for Mandee Mobile Alerts — and earned 20 percent off one item for today only.
This is a deal I hadn’t seen before as a consumer — and it was executed well because the retailer, though small and limited to the east coast, had its target consumer in mind: young women with relatively low incomes in search of the latest fashion. Text messaging is becoming a more integral part of shopping, and giving customers the information they need to make a proactive decision to opt-in for a discount is how to do it.
In the stores and on the floors
In addition to having its target consumer in mind, Mandee has its target consumers on the floor. Mandee employees are typically young women wearing the latest Mandee fashions. Getting information from a greeter about a promotion is like hearing from a friend or peer at school. She was friendly, easy-going, and seemingly trying to share the good news about a great deal.
Going shopping alone at Mandee is never an issue — I don’t even have to bother sending a picture of myself in a dress I’ve picked out to one of my friends; I can ask the fitting room attendant! After all, she is someone I can relate to. Not to mention the amount of times I, a loyal Mandee shopper, have seen an outfit on an employee and asked where she got it. Where else?
For the future
I have come to expect useful promotions from Mandee. For loyalty card holders, every $20 spent earns a “hole punch” on a Mandee club pass. Once shoppers rack up 10 punches, they receive 20 percent off a purchase of $20 or more. Not only is this incentive to shop, but it’s feasible for the Mandee consumer who’s on a tight budget. Promotion by text is a new arena for Mandee, and it will be interesting to see what’s coming next after the text messaging promotion.
Most likely, the next move from Mandee will be mobile. “As mobile end users grow more sophisticated, their overall expectations for performance for performance and content will rise,” says Manny Gonzalez, senior director of mobile technology at Keynote, a provider of on-demand test and measurement products for mobile communications and the Internet. “Even if a company’s service is at the top of the performance ratings today, its customers will expect more tomorrow…Keeping in mind that the performance and reliability of a mobile marketing campaign is just as critica l— if not more.”
Gonzalez says effective mobile marketing messages should provide a link to the company’s mobile Web site anytime a user texts to a common short code (CSC). “This helps introduce users to a company’s mobile offering and further extends the interaction with the company.”
One thing I know for sure: I will be one of the first Mandee customers in line to take advantage of the next great promotion.
Monday, July 14, 2008
Tapping into consumers’ constant desire for a successful weight loss program, Kraft FoodsSouth Beach Diet to introduce a new meal and snack product line. To jumpstart the launch, Kraft worked closely with online consumer groups to learn about their needs and educate them about dieting basics, through an internally developed health and wellness community. Delivering on the promise of giving consumers products that meet their dieting needs, the South Beach line boasted $100 million in sales in its first six months on the market.
Kraft Foods was not a novice when it came to working in a social networking community. The veteran food marketer was already seeking consumer feedback for its Nabisco 100 Calorie Snack Packs via the CommuniSpace community.
Online education effort
To research the potential for the South Beach line, Kraft enlisted CommuniSpace to invite 300 target consumers to participate in a private, branded community to help Kraft surface ad test attitude, emotions, ideas, and issues. Blending 150 women with the desire to lose or manage weight (with knowledge of the South Beach Diet) with 150 women considered Health and Wellness opinion leaders, the community served as place for the two groups to share their successes and failures that often defines “diet” as a ‘four-letter’ word.
The community members passionately shared insights and ideas about how they eat satisfying meals and do their best to lose weight. ‘Social glue’ formed as members shared their complex feelings and challenges. Knowing a company was listening and actively working on satisfying their needs, they passionately shared ideas, stores, and frustrations.
Pre-launch educational ad campaign
Kraft discovered that women had trouble maintaining their diets throughout the day, realizing consumers could succeed if the right food products were available to help them around the clock. In addition, Kraft harnessed the power of consumer education to successfully support the introduction of its new product line. As a result, Kraft initiated its first-ever pre-launch advertising campaign to educate consumers about the South beach Diet and how this line of soon-to-be-available products would suite consumer needs.
Kraft involved consumers in every phase of the product development life cycle from concept through post launch and beyond. The community members helped refine product concepts and packaging, were involved in the merchandising and test marketing — and then, just 16 months after the first community was created, the new South Beach Diet line of healthful entrees and snacks arrived on supermarket shelves.
Post launch, Kraft continued to enlist the help of community members, as they shared their retail experiences, like difficulty finding the products in store. In addition, members shared usage patterns that proved invaluable to refining and optimizing the South beach Diet product line and business across the Kraft organization.
Throughout the new product development cycle, the Kraft team relied on the community members’ perspectives and feedback to help them determine the proper marketing directions. Embracing and engaging consumers in the online community generated critical insights that allowed Kraft to realize success for South Beach Diet products. Real-time access to a passionate group of highly involved consumers meant that across the company, people could move more quickly than ever before to develop and market a new product line. According to Kraft, the community helped reduce the risk of new product failure as Kraft was able to test and understand all the elements before moving to a national rollout. partnered with
Monday, May 12, 2008
Social networking is on the rise across the age divide. Approximately 37 percent of U.S. adult Internet users and 70 percent of online teens engage in social networking every month, according to a research report by eMarketer.The same report revealed that social network advertising spending is expected to grow to $2.2 in 2008, up 81 percent from 2007. This presents a valuable opportunity for retailers to drive brand awareness and create buzz for their brands — and many retailers already have integrated social networking into their marketing and CRM strategies.
A New Era of Networking“Show me when the sales are, what you’re selling and pictures of what you’re selling. Those would be important things,” says Cory, a 17-year-old Myspace user from Chicago, Illinois. He took part in a study conducted by TRU (Teenage Research Unlimited) for a research report commissioned by Fox Interactive Media, Inc., Isobar, and CaratUSA. The report titled “Never Ending Friending: A Journey Into Social Networking,” sizes up the opportunity for marketers to use social networks as an additional advertising medium.
“I don’t want companies to advertise to me, I want them to be my friend,” says Rob, a 27-year-old Myspace user who also participated in the “Never Ending Friending” study. That’s just what some retailers are doing — taking a “friendly” approach and allowing consumers to combine their love of social networks with their shopping experience.
One in five young adults in the U.S. use social networking sites daily, according to a recent Forrester Research report. Like Cory and Rob, many of these social network users are consumers looking for the best deal but they are particular about the approach marketers take.
Sears is inviting shoppers to gather critiques of a potential purchase through its prom dress promotion on Sears.com. Using Facebook, users can share a photo of a model wearing the dress, along with a product description and message reading: “Look at this prom dress I found on Sears.com! Check it out and let me know what you think.”
The idea is for high-school girls to solicit feedback from their friends before making a purchase, says Tom Zanoni, group account director at WhittmanHart Interactive, the independent digital shop that crafted the Sears campaign. Agency research indicated that a prom dress is an important decision for girls, who believe it is important to get feedback from a circle of trusted peers before purchasing.
Sears is supplementing the option with an ad campaign on Facebook running through April, targeted to the site’s 2.4 million 15- to 17-year-old girls. The company also is using in-store displays and signage to promote its “Prom Premiere 2008.”
By Invitation Only
High-end brands can make waves in the social networking arena through more exclusive groups, such as aSmallWorld, a by-invitation-only network. Appealing to those consumers who want to be part of something that not everyone has access to, the “elite” social network, aSmallWorld, founded by investment banker Erik Wachtmeister, can be accessed by invitation only and stresses that it allows only “those who already have strong connections with one another.”
When Remy Martin was looking to drive sales of its luxury brand Louis XIII cognac — aged between 40 and 100 years and priced between $1,500 and $1,800 a bottle — it set its sights for aSmallWorld, which it considered to be a network that would attract a higher level of consumer compared to sites like Myspace and Facebook, which typically attract college-age or younger users.
More recently, Mercedes-Benz staked their claim in aSmallWorld to further expand its targeted, direct marketing to consumers. Mercedes-Benz is sponsoring the new ASW TV feature and will be the first brand partner to broadcast. This will make it possible for Mercedes-Benz and aSmallWorld to benefit from synergy effects with Mercedes-benz.tv, the Mercedes-Benz IPTV platform.
Reaching Teenagers and Beyond
For today’s youth, technology is no longer a luxury, but a part of life. The 12- to 17-year-olds in the U.S. spend 17 percent more time online than adults for personal use, and 155 percent more time instant messaging, according to the Forrester Research report, “Social Computing.” This creates opportunity for retailers to target shoppers where they’re easiest to reach.
With the social network scene growing, it’s not only teens who are surfing the Net. GetBack Media, a new social network targeted to people over age 35, launched recently stocked with age-appropriate music and TV content.
Social Networks are expanding by leaps and bounds — no longer limited to teens and tweens, but an open opportunity for retailers to reach a targeted audience and use the personal features to enhance CRM and brand awareness. “[Social Networks] offer another chance to gain visibility,” says Bob Phibbs of The Retail Doctor. “Much like multiple brick and mortar locations, people drive by and go, ‘Hey, they’re here, too.’ Assuming they have a good feeling towards the brand, it helps reinforce their good feeling.”
Tuesday, March 4, 2008
The survey, which polled more than 1,000 adults in January 2008, found that nearly 2/3 of all respondents went online before making a purchase in the past three months. The percentage was even higher for “high value” consumer groups, such as those with household incomes above $75,000 (81%), college graduates (78%), and consumers between the ages of 25 and 34 (77%).
Consistent with other industry research, the top 3 cross-channel activities cited as the most important by respondents were:
Ø The ability to return merchandise to a store even it was purchased via a telephone or online (cited as important/very important by 81%)
Ø The ability to pick up merchandise at a store after ordering online (56% for all respondents/69% for 25-34 age group)
Ø The availability of gift registry information in the store, online and over the telephone (56% full survey/66% for 25-34)
“As this survey shows, consumers are demanding new levels of convenience only found when different shopping channels support each other seamlessly,” said Jim Bengier, global retail industry executive for Sterling Commerce, an AT&T Inc. subsidiary.
The survey also highlighted the expanding use of the web as the first touchpoint in the shopping experience, with 57% citing websites as a research tool, 24% indicating they used a coupon or rebate found online, and 18% checking an online gift registry as part of the purchase process.
The growing influence of the Web is also driving consumers to expect away-from-home access to online sites, as more than 1/3 of respondents were looking for access to an online kiosk (37%) while shopping to conduct product research, 36% wanted access to their online account to see items they had previously tagged, and 32% found it important for call center personnel to have a record of what they have been researching online.
Friday, January 4, 2008
The battle ground in the video rental market is shaping up to be a full scale throw-down between the top two players, with BI tools playing a central part in their strategy. The story line features price optimization, customer segmentation, and promotion management-- and how it ultimately plays out could serve a textbook reference for years to come.
Before you write off BI tools as a minor factor in this match, consider the background of the key players involved. Reed Hastings, CEO of Netflix, was a high-school math teacher, and has been a vocal proponent of customer intelligence since the company’s early days. Illustrating its passion for behavioral analysis technology, the company launched the Netflix Prize last year. The contest, which offered a $1 million prize for building the best technology to predict customer preferences, generated more than 12,000 entries.
Blockbuster CEO Jim Keyes is also considered somewhat of a data junkie. While he was racking up 36 consecutive quarters of same store sales during his tenure at 7-Eleven, he reportedly relied heavily on BI tools to drive product assortment decisions. One of Keyes' first moves after taking over at Blockbuster was to shake up the IT staff and bring in Keith Morrow as CIO. Morrow worked with Keyes at 7-Eleven and is considered to be one of the brighter minds in the retail space.
To fully appreciate the complexity of the arena these two are competing in, you have to keep in mind that they are working with multi-tiered subscription pricing that has to factor in the fulfillment cost of serving the customer. The data layers get even thicker for Blockbuster when you add in the fact that Total Access members can return and substitute titles at store locations.
The battle between the two video rental titans has been shifting on a quarterly basis, with the edge apparently going to the company that better adjusts its pricing model based on consumption and customer behavior.
Building on its cross-channel Total Access marketing plan, Blockbuster appeared to be mounting a comeback in the battle by cutting into Netflix’s base of online subscribers. The company's online subscriber base reached 3.1 million by the end of September last year, but then the company abruptly announced that it was changing gears.
The company’s new management did some analysis and realized that those online customers they were spending big bucks to attract weren’t so profitable after all. After raising its prices on high volume subscription plans, Blockbuster lost about 500,000 subscribers and saw its stock price take a hit. However, Keyes made it clear that this was a calculated move, calling the price increase “a conscious effort to prune the tree, and in other words, we were willing to walk away from some of our subscribers, those at the far end of the usage scale who are not willing to pay a higher price for unlimited free exchanges,” adding “we were happy to see them move to the competition.”
Right around the same time Blockbuster was raising its prices for heavy users, Netflix was stepping up its customer acquisition strategy by launching a $4.99 subscription package. In July of last year, Netflix lowered the price on two of most popular subscription packages by $1. The change was expected to benefit the majority of Netflix’s customer database, which consists of more than seven million members, and hopefully stop them from jumping ship and moving over to Blockbuster.