Industry Insights - Retail TouchPoints - Retail TouchPoints Fri, 22 Jun 2018 14:48:12 -0400 RTP en-gb Shoptalk 2018, Distilled Into 16 Quick Quotes From Retail Leaders Shoptalk 2018, Distilled Into 16 Quick Quotes From Retail Leaders

The speakers at Shoptalk 2018 represented a “who’s who” of industry leaders from retailers including Amazon, Target, ULTA Beauty, Poshmark, Tapestry, Mizzen+Main, Macy’s, Pizza Hut, Sephora, Google and Nordstrom. Retail TouchPoints Editor-in-Chief Debbie Hauss and Executive Editor Adam Blair have gathered 16 of the sharpest quotes to provide a quick tour through the 100+ presentations.

“We broke down the journey and identified what was and wasn’t working.” — Jeff Gennette, Chairman and CEO, Macy’s

Gennette talked about “tough times” for the retailer in 2015 and 2016 before telling the story of the company’s transformation in progress. Macy’s will be redesigning the site and app in 2018. The brand also is “editing to reduce the sea of sameness” in the stores. The brand will spend more time going live on Instagram Stories and is offering beauty advisors as micro-influencers via #MacysBeauty.

“Our guests had decided for us – their expectations changed; technology was the accelerant.” — Brian Cornell, CEO, Target

Today, the “Target Run” is easier than ever, according to Cornell. It is “completely done on our guests’ terms.” Shoppers can order online and drive up to have their orders delivered to their car trunks within two minutes; or they can skip the trip by ordering online and getting deliveries to their homes. To improve the in-store experience, Target associates are receiving higher pay and more working hours.

“At Shipt, the same person that’s picking your avocados and selecting your eggs is the one showing up at your door. That’s what members love about Shipt.” — Bill Smith, Founder and CEO, Shipt

Smith, presenting a keynote with Target CEO Brian Cornell, revealed how Shipt has been able to scale up to 50,000 shoppers while maintaining customer loyalty. Shipt was acquired by Target in December 2017. “These are moms shopping for other moms.”

“Think like a butler, not like an advertiser.” — Rudy Anggono, Creative Director, Google

It’s all about knowing when to intervene at the right moment to deliver a seamless experience. “We have noticed a shift in consumer behavior in the past few years, from ‘tell me where to find an item’ to ‘help me figure out what to buy.’” In a recent promotion, Google transformed a Valentine’s Day ad to make it more advice-oriented. The new ad read, “Today is Feb. 14. Guys, DO NOT FORGET. Get her something nice. 50% off.” The old ad read, “50% off – Special Valentine’s Day Sale.”

“With our voice app, we still need to evolve our conversation flow. We might even bring in comedy writers to help us determine what Panera Bread’s personality is in voice.” Mark Berinato, VP, Digital Experience, Panera Bread

Panera Bread already has had success with voice ordering: “The app, which leverages Google Assistant, is very fast,” said Berinato. “We can cut order times down by 80% compared to ordering on our mobile app or web site. Voice is a powerful way to add speed.”

“We didn’t realize how many people would stop at the end of the Amazon Go shopping experience and ask, ‘Is it OK just to leave?’ We wrote over the exit, ‘You’re good to go.’” — Gianna Puerini, VP, Amazon Go, Amazon

Because the behavior of stopping at a checkout before leaving a store is something “we’ve done all our lives,” first-time visitors to the newly opened Amazon Go store were uncertain that they could literally just walk out. “But we’ve been delighted by the customer response, because the store is very geared to people who are hungry and are in a rush,” said Puerini.

“If you show a child a can of Coke once or twice, it’s easy for them to identify it. But computers, while they can recognize items in general, don’t have the inbuilt knowledge that humans have.” — Dilip Kumar, VP of Technology, Amazon Go and Amazon Books, Amazon

Amazon is “still trying to solve” some of the computer vision challenges of the Amazon Go store, said Kumar: “It’s a deep learning issue — how to teach computers to recognize items or activities where very little information is available.”

“Quick and Dirty.” — Dana Randall, Head of Innovation, Tapestry

That’s the description of how Randall approaches new technology implementations, especially when the Board or other key stakeholders are hesitant to commit. “Make a smaller investment to test: learn what you need to learn; validate what you need to validate” in order to gain confidence across the organization.

“A lot of brands look at wholesale as just another sales channel, but we look at it as an extension of us.” — Kevin Lavelle, CEO, Mizzen+Main

A digitally native brand producing performance fabric dress shirts, Mizzen+Main has developed strong partnerships with retailers and wholesalers. Recently, the brand quickly moved from a two-door test at Nordstrom to 80 doors, and the brand is now sold in all Nordstrom stores. “We regularly prioritize shipments to wholesale partners versus our own online business. That commitment is how we’ve been able to grow to sell in 500 stores. We are agnostic to where our customers are buying.”

"Pizza Hut customers “want it now and hot; and mistakes are not an option.” — Helen Vaid, Chief Customer Officer, Pizza Hut

Pizza Hut has uncovered “13 moments of truth” that define the customer journey. To deliver an exceptional experience during every moment, the company is focusing on seamlessly connecting the dots end-to-end. The Pizza Hut digital team, based in London, is empowered to try new strategies in real time without testing first.

“Taking channel out of the equation.” — Mary Beth Laughton, EVP, Omni-Retail, Sephora

Helping to define a new way to do business, Laughton’s role recently was transformed to ‘Omnichannel.’ “It has been a huge unlock for our organization. We have a team focused on omnichannel experiences, so we don’t fall back into channel silos.” With an omnichannel customer experience as the goal, Sephora has launched a number of initiatives, including: Sephora Virtual Assistant, Beauty Insider Community, Store Companion and Digital Guide.

“Invest to innovate,” and “Fund with efficiencies.” — Mary Dillon, CEO, ULTA Beauty

ULTA is testing a partnership with Facebook designed to help connect the shopping journey between the social channel and the stores. The retailer also is working with Spruce Labs to enable easier service check-in and help salon professionals better manage their schedules. “We center everything we do on our guests and associates.”

“Fashion mall for the social media generation.” — Manish Chandra, CEO, Poshmark

Taking advantage of the fact that the average person engages with their smartphone 80 times per day, Poshmark has more than 25 million items for sale from 5,000 brands on any given day. Approximately three million “seller stylists” curate product assortments on the platform and build communities of like-minded shoppers. Live daily Posh Parties, held in cities across the U.S., augment the excitement of the social commerce marketplace.

“Focusing less on one visit and more on engagement.” — Ken Worzel, President,

To further cement long-term loyalty with its customers, Nordstrom is focusing on experiences and different types of services. Nordstrom Local, a pilot project in Los Angeles, is a small space for the retailer, just 3,000 square feet. No products are sold in the space, but it offers services, including alterations and styling. Nordstrom also is working to engage shoppers via community and collaborations with industry influencers.

“Our brick-and-mortar retail stores are a bit of a Trojan Horse, because every part of the fit process there is about gathering data.” — Ben Fischman, Founder and CEO, M.Gemi

“If we can implicitly gather information [about customers], it makes digital onboarding that much better,” said Fischman. M.Gemi, which began as an online-only Italian shoe retailer that introduces a new style every Monday morning, has opened a variety of brick-and-mortar store types and sizes. Fischman believes a big part of their value is in gathering in-person customer data, and the numbers bear him out: “80% of people that buy in our physical stores repeat in digital.”

“How difficult is it to get a 360-degree view of the customer? If one is flipping on a light switch and 10 is putting a woman in Mars, it’s a seven or eight.” — Eric Messerschmidt, SVP Strategic Marketing, CRM and Loyalty, ULTA Beauty

Messerschmidt believes personalization and omnichannel must go hand in hand: “I don’t know how you can drive personalization initiatives and not think omnichannel. All the customer journey stages — awareness, consideration, purchasing, fulfillment, post-purchase, customer service — have to be part of your thinking.”

]]> (Debbie Hauss & Adam Blair) Industry Insights Wed, 21 Mar 2018 10:34:31 -0400
Exclusive Q&A: Why Women In Retail Struggle With Work-Life Balance 1suehawkesWork-life balance is top-of-mind for many people, whether they’re white- or blue-collar employees, males or females. For some — especially females — it’s a constant struggle. These issues have come into sharper focus recently, particularly around gender equality and sexual harassment in the workplace, as the #MeToo and Times Up movements continue to spread awareness about these concerns.

As a female entrepreneur, author, business coach and CEO of YESS!, a company that has designed and delivered dynamic, transformational programs for individuals and businesses, Sue Hawkes knows a thing or two about work-life balance and female-related concerns in the workplace.

Retail TouchPoints spoke to Hawkes to learn about the state of work-life balance in retail, the pressures women face today and how she trains businesses to maintain equality in the workplace.

RTP: What is the current state of work-life balance within the retail industry? Is it better or worse compared to other industries?

Sue Hawkes: In its own special way, it’s worse, just because the hours tend to be a little more chaotic. Retail doesn’t sleep and I think the advent of digital marketing and online shopping has only made it more extreme since it’s always on, and I think that’s tough. My brother, who also works with me, came out of retail and he said, “I have to get out of here. The hours are nuts.” I work a lot. But when you’re an entrepreneur, it’s more flexible; it’s your choice you’re doing it. Whereas I think with retail, it’s not. It’s “This is when customers would be here, and so we have to be open.”

I worked at Target headquarters when I was young, and I remember them saying, “Well, we have to work the day after Thanksgiving because our stores are open, and we have to be available until 10 PM.” This was back in the 1980s. You think about it and you go, “Wow, why does the corporate entity need to do that?,” but they felt very strongly that if the retail outlets were open, we needed to be accessible, and I think that still holds true.

RTP: Do you believe that women feel more pressure to achieve work-life balance compared to men? Does it seem to be a task or obligation that only women are faced with, and particularly working mothers?

Hawkes: Absolutely, 100%. This is going to sound archaic, but I’ve had this conversation many times with men and women. What the men will say is, “You know what, when I need time off, I take time off. I don’t have guilt over that.” I’ve never met a woman that says, “I need a day off. I’ve worked too hard.” It’s never occurred.

Most [women] say the only time they relax is if they’re away from home because their to-do list is too long. So even if you’re home, you’re trying to do the house projects and the things you couldn’t get to during the week. I just think men have been in the workforce a certain way. Men designed the game of business for men. I think that’s really normal and it’s a presupposition we forget.

With the advent of the 1960s when feminism first took over, women didn’t give up anything even though they added all these different choices around work, because we were excited about the opportunities, and being driven to work.

RTP: Why do you think it’s difficult for women to move away from that mindset?

Hawkes: I think a lot of the guilt is, “Well, I have these perceptions. I should be a great homemaker. I should look like a million bucks.” All the airbrushed images don’t help. I think we look up and we try and live up to some sort of ideal and I just don’t think men are faced with that on a regular, day-in-day-out basis.

[Women] don’t know how to choose and say, “I’m probably not going to have much of a social life at this phase in my life if I want to be that kind of mom, and I can't compare myself to the stay-at-home moms or dads because they’re going to be making homemade treats, not stopping at the local donut shop to buy whatever for their kid’s class.” I think we get in confusing situations where we’re trying to compare to others rather than what really works in alliance with us, and how we want our lives and family lives to go. Again, there’s an internal feeling of balance, and then there’s external time management. People equate balance with the time management part, which is actually the easy part.

RTP: How do you train businesses to maintain equality in the workplace? What tips can you share?

Hawkes: [Businesses] have to think of people as humans [and not as specific genders or based on their marital status]. Much as that’s generic, I think that’s the case because, often, men get left out [of the equality conversation], and that’s changing. Paternity leave and things like that are starting to catch up. I also see people being taken for granted if they are single and without children. Oftentimes, I get questions from people saying, “Because I’m single, people assume I should work more because I don’t have school events and I don’t have these other things.” I will tell you, I’ve talked with people; it’s a real thing.

We just have to be better to say, “Here is the outcome we need. Do you have enough time to do that? If not, can you get other resources? Can you get help and support from other people? How do you more strategically go about it?” The advent of smart devices and all the accessibility we have to one another has really blurred when people work and how they work, in good ways.

RTP: It’s been a rollercoaster of a year for women, particularly around the current issues with sexual harassment and misconduct. How do you see this with regard to women and men in the workplace, and what do you think will be the longer-term impact of changes that are happening now?

Hawkes: I can tell you what I hope.

I hope that we are waking up to the fact that there are some things that are just not okay. There was a rambling dissertation [on Facebook] and I don’t remember who wrote it, but it discussed “what women should” — and it goes on and on about not showing cleavage, not wearing too short a skirt, and not doing this. And then it’s, “Oh, you shouldn’t wear sweats. You look old. You should color your hair.”

I think all of the sexual harassment stuff for some people is shocking and for the majority of us, we’re going, “Well, duh. Finally.”  There’s a level as a woman where you’re like, “Oh, please, this is just the way it’s done and it has been hell, but we’ve learned to navigate it.” There’s a level where you’re angry, and you’re outraged, and you’re frustrated, but then behind that, I think there are conversations that can be had that could change something. I hope to talk about it and move forward in a healthy way and correct it, rather than react to it. I think this first wave is the reaction to it.

My hope, and what I think the door is open for, is dialogue and learning, and bringing forth a different kind of awareness where it doesn’t have to be fought for as much as accepted and changed. I think that’s a long road away, but I think that’s the key to all of this. There are just too many hurdles in this. It’s not going to go away because we have a surge of people that are waking up and challenging it.

RTP: What advice do you have for young, aspiring female entrepreneurs or business leaders?

Hawkes: You can have it all, just not all at the same time. I think you have to do enough soul-searching and calibrating of your own life that as you add new things, whether that be a significant other, or a home, or travel, or a bigger career, or children, or whatever those milestones are throughout your life, that you consistently recalibrate your life — which I don’t think most of us do. When I say that, it means realigning what your priorities are right now, where your time should be spent to make yourself whole, and then everything else. Then say “yes” and “no” to things based on that.

RTP: Did you have any mentors that you looked up to during your career? Is there any particular person that stands out to you?

Hawkes: One would be my mom. I think she was a phenomenal example. I had another woman named Ruby who is still in my life in later years, and she basically was my professional groomer. My mom was the person who got me to create values and I think all good things of who I am. I think Ruby was the person who said, “Oh, you can’t dress like that. Here’s what women do in the workplace,” because my mom was not that person. Ruby helped me at makeup and image, and running meetings. I think it really helped me in my first iteration of being an entrepreneur and someone who presented concepts on stage. Then, later in life, I now have a woman named Rhoda Olsen who runs a billion-dollar-plus company called Great Clips. She really has been my CEO mentor and dear friend. She is someone who, in how she conducts herself, how she runs just a very multifaceted large company, I learned from her by watching, by sitting, by talking. Everything she does is what a real-time, big time CEO does.

Being mentored and mentoring someone else are things I advocate, because I think it’s always a reciprocal learning adventure. It’s not just they teach you, or you teach them. If it is, something’s wrong. 

]]> (Klaudia Tirico) Industry Insights Thu, 25 Jan 2018 09:34:04 -0500
NRF 2018: Secrets Of Rockstar Entrepreneurs NRF 2018: Secrets Of Rockstar Entrepreneurs

What does it take to launch a disruptive brand that develops a cult following? A great idea and good timing are important, but the personality, attitude and work ethic of the entrepreneur are also “make or break” elements.

“Every great idea, in my mind, is an experience driven by founders who are relentless,” said Dan Levitan, Co-Founder and General Partner for Maveron, a company that backs entrepreneurs and has raised $1.3 billion to invest in more than 100 companies. He added that every entrepreneur needs to:

  • Work ridiculously fast;
  • Be an all-star recruiter;
  • Be obsessed with the product; and
  • Balance brain and heart.

“Great brands resonate emotionally,” said Levitan. “Yet, at the same time, they need to be analytical and use data in this virtual world. The ones that just use heart never scale, and the ones that just use brain never integrate fully into customers’ lives.”

During a session at NRF 2018: Retail’s Big Show, Jan. 14, 2018, titled “Rock Star Entrepreneurs And The Next Generation Of Retail,”  Levitan and moderator Rachel Shechtman, Founder and CEO of STORY, featured entrepreneurs from disruptive brands in retail and hospitality, including:

  • Marcia Kilgore, Beauty and Footwear Entrepreneur, Beauty Pie and Soaper Duper;
  • Michael Lastoria, Co-Founder, CEO and Creative Director, &pizza; and
  • Manish Vora, Co-Founder, Museum of Ice Cream.

“You need a direct connection with your customer,” said Levitan. “The best brands of today are about heart, [something that] Amazon isn’t really in touch with. The company and the brand have to have a direct relationship with the customer and know their core customer, and make sure they’re catering to her.”

Read on to hear the panelists’ brand stories.

Museum of Ice Cream Answers To A New Generation

Manish Vora and his partner and Co-Founder of the popular Museum of Ice Cream, Maryellis Bunn, sought to visit ice cream shops around the country as a hobby. They noticed lines and lines of people and found that Millennials actually will wait in line to get ice cream. The two entrepreneurs continued on their quest for ice cream experiences and even visited ice cream festivals in the U.S. They ended up wanting to build their own ice cream experience, and what started as an experiment turned into the Museum of Ice Cream, an interactive experience of ice cream-themed art installations that sells tickets faster than ice cream melts on a hot day.

During the presentation, Vora highlighted some key takeaways explaining what makes the Museum of Ice Cream so successful:

  • Transforming Spaces: “This is all done by our internal team — operations, production and creative.”
  • Answering To A New Generation: “We are that generation. They’re creative; they’re not looking for passive experiences. This generation wants to participate.”
  • Igniting Imagination: “It’s about sparking creativity and you see that in the way our visitors dress.”
  • Exploring The Senses: “We use taste, touch and smell as ways to harness the power of creativity. We also use them as tools to get people off their phones and to open up and converse [with us].”

Ultimately, the Museum of Ice Cream is about playing like kids. “This experience was built for adults, not just Millennials,” he said. “It’s about bringing people together. Ice cream is universal and we make it our mission to bring people together.”

&pizza Creates A Social Movement 

Only a true entrepreneur would come up with the idea to disrupt the pizza chain industry, and that’s exactly what Michael Lastoria did. But &pizza is more than just a pizza chain, it’s a community of like-minded individuals that are design-first and design-forward. “[We’ve] created a social movement where influencers are not just consuming pizza to fill their bellies; they’re also doing it as an extension or reflection of who they are,” said Lastoria. “We call it ‘accessorizing our brand.’”

With a sleek, black-and-white aesthetic, each shop is designed to reflect the different neighborhoods it serves, according to Lastoria.

“Every shop has a name, shop number and design story,” said Lastoria. “We wanted to promote one of our core values, which is about celebrating oneness and celebrating the individual — allowing people to be comfortable in their own skin when they walk in, whether they’re working there or there to buy pizza.”

Aside from the shop design, &pizza lives at the intersection of technology and retail. Each &pizza location has digital screens on the wall to show when the order was placed, when the pizza is being made and when it’s ready to be picked up.

“We believe that technology is not just how you win through accessibility and convenience, it’s also about dynamically communicating with our guests throughout the production or ordering process,” said Lastoria.

Beauty Pie Offers Luxury Beauty With No Middleman

As an entrepreneur with many successful brands under her belt (Bliss, Soap & Glory, FitFlip, Soaper Duper), Marisa Kilgore knows a thing or two about how to develop the next big idea.

“New ideas are about connecting the dots through experiences and new things happening in the marketplace in a fresh way,” said Kilgore. “Most new ideas are obvious, but no one has put them together with rigor or discipline to make it exciting for the customer. Take your ideas to execute them with a brand — something that is elevational and improves customers’ lives.

Kilgore’s latest venture, Beauty Pie, is a cosmetics company that brings luxury beauty products to the masses with no middleman, at start-off-the-production line prices. At $10 a month, the company gives customers access to the factory in a sense — “It’s a buyer’s club for beauty junkies,” said Kilgore.

The key to her success is transparency. “Transparency is the new cool,” said Kilgore. “Show your customer where you’re getting the products from and what it costs you to make.”

]]> (Klaudia Tirico) Industry Insights Wed, 17 Jan 2018 09:20:42 -0500
Amazon-Target Prediction Attracts Media Attention And Industry Skepticism Amazon-Target Prediction Attracts Media Attention And Industry Skepticism

Like almost any other Amazon-related sound bite, Loup Ventures’ prediction that Amazon might acquire Target this year garnered a lot of attention in the media. Some retail experts, however, expressed doubt about both the prediction and the rationale behind it.

In an interview on CNBC’s Squawk Box, Managing Partner Gene Munster doubled down on the “boldest” of the eight 2018 predictions he posted on New Year’s Day. However, neither Amazon nor Target has made any public comments on Munster’s prediction since then.

“Getting the timing on this is tough, but we think there’s a 60% to 70% chance Amazon will buy Target this year,” Munster told CNBC. “If you’re going to [look ahead] three years from now, I think it’s a 90% chance because it fits right in line with what Amazon wants to do and how they see the future of retail.

“Amazon really values two things,” he added. “One is the high-end customer and, second, they value offline. What they’re doing with Whole Foods is a big tip of the hand” indicating that Amazon sees its future as a mix of mostly online and some offline.

The acquisition of 1,834 Target stores, plus Whole Foods’ 470 units, would give Amazon approximately 2,300 brick-and-mortar locations, which Munster considers a “manageable but comprehensive” store count.

Target stores could act as distribution centers that would help Amazon cost-effectively execute same-day delivery to Prime members, an initiative the e-Commerce giant has been rolling out to a growing number of metro areas and smaller cities. Through its acquisition of Shipt, Target is poised to provide same-day delivery to the majority of its stores within the year.

However, Munster contends that the last-mile distribution synergy is only part of Target’s appeal for Amazon. “They really see a future offline. It won’t be as big as online, but it would be a measurable part” of the Amazon offering, he said.

Munster explained that Amazon would have no problem funding the deal. Assuming a 15% premium to the present value of Target shares, the acquisition would cost in the neighborhood of $41 billion, less than 10% of Amazon’s market cap. “Amazon doesn’t care about profitability. What they care about is gaining wallet share,” he noted.

Credible Prediction Or Clickbait?

While the business media generally accepted Munster’s arguments and expanded on it with conjectures from editors and various experts, there also was some backlash in the retail community — partly about the soundness of his prediction and partly in response to what is seen primarily as a PR play.

“His rationale does not seem credible to me,” Paula Rosenblum, Managing Partner of RSR Research told Retail TouchPoints. When it comes to the media coverage, she added, “I am really tired of one person’s voice becoming clickbait.”

“I’m skeptical about this prediction — which seems aimed in part to generate clicks and buzz — but Amazon has already proven through the Whole Foods acquisition that it wants more physical locations,” said Dick Seesel, Principal of Retailing In Focus LLC, in a RetailWire discussion. “Keep in mind that Amazon and Kohl’s are also collaborating on some in-store tests of ‘smart home’ shops and return centers.”

“There is logic to an Amazon-Target deal, not least because both players share customers and are operating across multiple categories,” said Neil Saunders, Managing Director for GlobalData in the RetailWire article. “However, for any acquisition to work, Target needs to bring something to Amazon that Amazon cannot achieve itself. As much as Target would bolster Amazon’s top line, Amazon can grow organically without resorting to expensive acquisitions.”

More than advancing Amazon’s retail business, Saunders sees Target’s logistics and supply chain as a greater value. “Target’s shops would give Amazon a ready-built distribution network through which it could offer services like collect-from-store and return-to-store. This is an area of potential weakness for Amazon, especially as Walmart ramps up its efforts in this area,” he said. “Data is arguably another play. Through its loyalty and card schemes, Target has a significant amount of data that Amazon can use and integrate into its systems.”

Nikki Baird, Managing Partner of RSR Research, echoed the view of many RetailWire contributors when she pointed out that Amazon is only four months into absorbing the Whole Foods acquisition. “Amazon has to chew and swallow before it can really take another bite of anything else,” she said.

]]> (Marie Griffin, Managing Editor) Industry Insights Wed, 03 Jan 2018 16:06:20 -0500
Mobile Helps Break Black Friday Records; Walmart, Amazon, Kohl’s Win The Day blackfridayThe biggest shopping day of the year continues to wow. Online Black Friday sales totaled $5.03 billion in revenue, compared to $4.3 billion in 2016, according to Adobe Digital Insights. But it didn’t all go down without a hiccup: retailers including Walmart, Amazon and Kohl’s scored big, but Macy’s and Lowe’s ran into technical issues with payment and web site performance.

Overall, e-Commerce and mobile proved to be the biggest winners of the day, as more consumers chose to shop from the comfort of their own homes versus visiting brick-and-mortar stores.

A majority of digitally savvy consumers skipped the chaos of doorbuster sales and turned to their mobile devices, which drove 54.3% of visits and 36.9% of revenue. Smartphones led the way, garnering 44.6% of visits and 26.0% of revenue. 

“The strong online performance of Black Friday this season shows that consumers are moving further away from leaving their homes to do holiday shopping,” said Taylor Schreiner, Director of Adobe Digital Insights in a statement. “Mobile, in particular, has ramped up in a significant way, driving $1.4 billion in online revenue on Black Friday alone. The fact that nearly a billion dollars of this came through smartphones shows that hesitancy around shopping on smaller screens has begun to dissipate.”

Insights from Adobe also revealed a variety of high-performing products during Black Friday. The top five items included:

  1. Nintendo Switch
  2. Hatchimals & Colleggtibles
  3. PJ Masks
  4. Chromecast
  5. Roku

But consumers weren’t just “window shopping” on their phones: Salesforce noted that 42% of Black Friday orders were actually placed on a phone. Desktop computers — for the first time — accounted for less than half (49%) of all orders, Salesforce reported.

Walmart, Amazon And Kohl’s ‘Win’ Black Friday

While Black Friday brought its usual windfall to the industry, a select few retailers “won” the shopping day. A majority of them are the usual suspects, including Walmart (76.5% of holiday shoppers), Kohl’s (55.6%), Amazon (68.5%), and Dollar Tree (46.6%), according to research from Gordon Haskett.

Amazon and Walmart, in particular, continue to battle it out on the digital front, with 68.5% of consumers buying from Amazon versus 57% purchasing items at Walmart.

“While we admit, the gap is still wide, it’s important to note that the next most-often cited online retailer on Black Friday Weekend was at roughly 35%, 22% below (plus,” the Gordon Haskett report stated.

Despite the continued struggles of department stores throughout the year, Kohl’s (at 55.6% of shoppers), JCPenney (54%) and Macy’s (52.2%) all attracted more than half of shoppers, either visiting their stores or buying online. Kohl’s CEO Kevin Mansell revealed the retailer fulfilled approximately 40% more orders that were bought online and picked up in stores compared to Black Friday 2016.

Shoppers’ desire for apparel and accessories may have skewed the numbers in department stores’ favor. The category accounted for the largest share of products purchased on Black Friday by far, with 66.3% of shoppers buying apparel and accessories. Other major product categories include:

  • Consumer electronics (54.0%);
  • Toys (40.8%);
  • Home décor (36.9%);
  • Home appliances (28.3%); and
  • Gift cards (24.1%).

Thanksgiving Beats Black Friday For Browsing And AOV

Some retailers may have kept their doors closed on Thanksgiving Day, but e-Commerce activity was still high, as consumers browsed on their phones while relaxing on the couch after a hearty turkey dinner. Mobile page views, for example, were up 30% on Thanksgiving compared to 2016, according to Monetate, indicating that consumers may have researched products on their phones and made their final purchases elsewhere.

Additionally, analysis from Spring showed a surge in traffic later in the day on Thanksgiving that was sustained throughout the night. In an interview with Retail TouchPoints, Marshall Porter, President of Spring, indicated that there were subdued levels of activity in the afternoon as consumers gathered for dinner, but the company saw traffic really take off around 7 pm.

In terms of average order value (AOV), analysis from Monetate showed that Thanksgiving Day came out on top. For the second year in a row, e-Commerce activity on Thanksgiving Day surpassed Black Friday with an AOV of $154.15 on Nov. 23, compared to $142.86 on Nov. 24.

“Essentially, people have started shopping on Thanksgiving now,” said Lucinda Duncalfe, President and CEO of Monetate in an interview with Retail TouchPoints. “We’re seeing crazy increases in page views, for example, on mobile on Thanksgiving, but they are not necessarily converting — and that’s driven by phone use after Thanksgiving dinner. One of the things we think retailers have taught consumers is that Black Friday is not Black Friday anymore; those deals start way before Black Friday and they don’t end right after. You’re seeing lots of browsing, but no longer the same push in conversion. That’s the top lesson: it’s not a day anymore; it’s the season.”

Duncalfe noted that cart abandonment is high, which she thinks is “directly tied to the season being longer.” Consumers are using their carts as “wish lists” by adding items to their mobile phone carts but not purchasing right away — sometimes, going back to the cart on their desktops later in the season.

A ‘Dark’ Black Friday For Macy’s, Lowes

For some retailers, Black Friday brought unwanted issues. Macy’s experienced a credit card payment glitch at an inopportune time, while the Lowe’s web site dealt with a temporary outage.

On Friday, Macy’s confirmed troubles with its credit card systems, leaving some consumers to literally abandon their carts at the point of sale. Twitter user Meghan McCollough wrote to Macy’s on the social media network, stating: “Hey Macys, just left $300 of items on counter because your credit card machines are down at State St Chicago.”

The company began responding to complaints on social media after 1 pm ET. The issue wasn’t completely resolved until Friday evening. At that time, a Macy’s spokesperson said, “We have fully resolved today's system issues. We highly value our customers and sincerely apologize for any inconvenience today's system slowdown may have caused during their shopping experience.”

While less disruptive, Lowe’s also experienced some e-Commerce hiccups on the shopping holiday. Consumers said that the web site noted it was “currently offline and will be available within the next hour.” Shoppers also took to Twitter to address concerns, and the retailer responded by saying the “web site was down for maintenance.” However, the site was back up and running by 11 am ET. 

]]> (Klaudia Tirico) Industry Insights Mon, 27 Nov 2017 14:01:21 -0500
Insights From Dreamforce 2017: How Adidas, Party City & Suit Supply Get Personal Insights From Dreamforce 2017: How Adidas, Party City & Suit Supply Get Personal

“Personalized, connected and fast” have been the recurring themes from Dreamforce 2017, as retailers seek to gain a competitive edge in a quickly evolving industry. Consumers no longer walk into stores uninformed; they are empowered, and distressingly, only 4% think the brand knows them, according to Salesforce.

“This is complicated; most of our customers are sitting on top of legacy systems that are a circulatory center of any retail operation, but they’re not helping to connect retail with customers,” said Shelley Bransten, SVP of Retail for Salesforce during the retail keynote at Dreamforce, being held November 6-9 in San Francisco. “We have to bridge the gap with intelligence — it’s about making sure things are personalized, connected and fast.”

Personalization is critical in today’s retail environment, and customers demand it. Research from the Salesforce Connected Shopper Report revealed that 79% of consumers want a personalized offer delivered to them, and 67% want to share their data to get faster service in the store.

During the keynote, Bransten highlighted a use case from Adidas, which is making moves to provide more personalized and informed experiences to customers. Retail TouchPoints also spoke with Dwight Moore, Senior Director of Product Marketing, Retail at Salesforce, to get a closer look at the trends the company is seeing in retail and how retailers like Party City and Suit Supply are tackling them.

Adidas Launches Personalized Shopping App

This week, Adidas launched a new shopping app through Salesforce in response to its research around consumer needs. The app will act as a “hub” for digital interaction with the brand and features a personalized newsfeed, a chatbot and a complete online store. The personalized features are provided based on the user’s shopping history and additions to their profile, such as birthday and gender.

As for the chatbot component of the app, the interaction will first be one-on-one with a human. However, Adidas is looking to leverage artificial intelligence to handle easy inquiries, such as “What colors or sizes do the sneakers come in?” The bot will hand over the conversation to a human when questions become too complex.

Adidas is using a digital approach to create direct connections with consumers and support their journeys. The brand has created a premium experience that inspires love for the brand and desire for the product, connected it by creating a seamless experience across touch points, and personalized it to give consumers what’s interesting for them and what they need in the context of that moment.

“[Many retailers often say] ‘yes, yes, we design for the consumer,’ but how do you actually, fundamentally, put the consumer at the center of how you’re organized as a company so that the capabilities you design are based on their needs?” said Joseph Godsey, head of Digital Commerce at Adidas during the keynote. “We spent a lot of time understanding what the consumer needs were so we can design the experience around them.”

Three Hot Retail Trends From Dreamforce 2017

The biggest challenge retailers are facing today, according to Salesforce’s Moore, is getting the right information to the right audience in a personalized manner, where they can then take action based on that information. This strategy needs to work for both stakeholder groups: shoppers and employees.

“For a shopper, it’s presenting them with a relevant offer to entice them to learn more and go online or to the store,” said Moore. “For the employee, it’s about giving them the right insight, so when the shopper comes in the door, they have the right product knowledge about what they’re selling and they can serve the shopper intelligently. In a lot of cases, having insight to where the shopper is, their browsing behavior or prior purchase behavior helps to serve them in a more relevant way in-store.”

Moore highlighted three key priorities that will benefit from new technology implementations: 

  • Employee enablement and empowerment;
  • Customer service; and
  • Data management platforms (DMP).

Party City Mobile Devices Give Employees Inventory Insights

A key trend revolves around employee enablement and empowerment because employees often are not as well educated as they could be about a retailer’s products. A majority of retail employees today are Millennials or Gen Zers — both digital natives who are attached to their mobile devices. “There’s an expectation when [Millennials and Gen Zers] go to the workforce, they want to use their mobile device,” said Moore. “What we see now is retailers empowering their associates with mobile devices.”

For example, since the price of employee mobile devices has decreased, Party City has added more devices in stores, up to four from one previously, according to Moore. In part, the devices are giving employees better insight into inventory location and shelf availability. Party City uses an app to help employees keep shelves stocked more effectively.

“It starts with enabling employees to collaborate with one another in the store and across the stores, and to send that insight of what’s happening up to [departments] where merchandising decisions are being made,” said Moore.

Service Is The New Marketing

Moore described service as “the new marketing.” Savvy brands are now using the service center to learn more about their shoppers and engage them intelligently. This includes driving transactions and turning inquiries into sales, learning about the shoppers’ likes, dislikes and preferences, and using that insight in marketing to personalize their experience. “We see chatbots enabling that,” said Moore.

Suit Supply uses its service reps — called agents — to capture these types of insights. The retailer leverages a dashboard that showcases the customer’s past purchases, lifetime value and more. Equipping the agents with this data gives Suit Supply an advantage when it comes to product recommendations.

“There’s data we know, data we can infer and data we can buy,” said Moore. “And then there’s data that we’re only going to know if we ask the shopper. So savvy retailers are looking for the pieces of information that, in the limited time they have, allows them to use it to learn more about the shopper and help personalize their experience the next time.”

DMPs Combat The Amazon Effect

Adidas, along with other Salesforce customers, is using the Krux DMP, which Salesforce acquired in 2016, to power its app. DMP is designed to intercept the shopper “before they even have to think about the product,” according to Moore, who also said the platform is a hot trend among customers.

“It’s important for retail because 55% of product searches start on Amazon today,” said Moore. “So if I’m a shopper, I know a product I’m looking for, and a majority of the time, I’m going to go to Amazon where they have product selection, different opportunities around how quickly I want something, and different prices. DMP is about highly targeted, digitally relevant ads that are presented to that shopper, whether it’s online, on mobile devices or a social site. DMP inspires retailers to take action to drive awareness, so now I’m going to go on that retailer’s web site or their store instead of searching for it on Amazon.”

]]> (Klaudia Tirico) Industry Insights Thu, 09 Nov 2017 09:06:37 -0500
Marketing To Millennials: Exclusive Q&A On Generational Brand Loyalty Marketing To Millennials: Exclusive Q&A On Generational Brand Loyalty

For retailers, the Millennial generation can be a tough nut to crack, as it is now the nation’s largest living generation (surpassing baby boomers) and the first one to grow up in the digital age. Understanding Millennials’ wants and needs in terms of shopping experiences is essential to retailers’ success, but their unique demands can stump even the savviest brands.

Retail TouchPoints spoke to Norty Cohen, CEO and Founder of creative agency Moosylvania. You can literally say Cohen “wrote the book” on Millennials and what makes this generation loyal to their favorite brands. Cohen has been evaluating Millennial consumers for the past five years and shares his findings in a new book called The Participation Game: How The Top 100 Brands Build Loyalty In A Skeptical World.

Cohen’s research began when his clients at Moosylvania began asking him what they should do with Millennials. He partnered with one of his vendors to help him figure out how and why this generation of consumers adopts brands. The first round of research was published in 2013. It was then followed by a ranking report of the top 50 brands, which later turned into a top 100 report. Cohen has collected 15,000 responses over a five-year period, and then “really dug through those and started doing case histories on all of the top 100 brands to try to understand what they were doing to get onto that list,” he said.

Retail TouchPoints (RTP): What are your biggest takeaways from the research about Millennials?

Norty Cohen: When I look at the top 100 brands and I look at the type of brands that consumers consider to be their favorites, I think retailers have a humongous advantage. It comes down to the fact that in many cases, they have the ability to have a personal interaction with the consumer. I look at it almost as a double hit because they can connect with them online, do all kinds of social activity and pay attention to them. On the other side of it, when that consumer comes into a retail store, they have the ability to win them over. When we looked at the top 100, I would say 40 out of the 100 were either retailers or clothing/fashion brands. In my mind, what that’s saying is: “It’s about me. You’re telling me how to do something for me.”

So one of our key takeaways that we have in the book is: Make me look good, make me feel good, keep me entertained. We could look at those three concepts/practices and say that’s going to work across the board for this target audience.

RTP: Given that the Millennial generation is quite large, did you find any differences between “older” and “younger” Millennials in your research?

Cohen: In January, we asked Millennial consumers how they connect with brands. We did it by breaking them into two decades: ages 17 to 27, and 28 to 37. A lot has been said about the fact that it’s such a huge target that it doesn’t make sense to talk about them as one big group. But when you break it down, the commonalities were pretty much there in terms of how they connect, how much time they spend online and how loyal they are to brands.

We actually found that older Millennial consumers are even more connected than younger Millennial consumers in a lot of cases. For example, in terms of loyalty, one of the things we saw was that more than 50% believe they have a connection with their favorite brand beyond just buying its products or services. In the 17-to-27 age range, 50% agreed or strongly agreed with that statement; and in the 28-to-37 age range, 53% of that group agreed or strongly agreed. So it was even more prevalent in the older group.

RTP: What makes Millennial consumers so loyal to specific companies? What are the criteria retailers should be focusing on to generate more loyalty from this generation?

Cohen: One of the things I studied all summer is the ability to create brand communities and enhance participation. There are a couple of rules of thumb. One is that we talk about this as being the attention economy — you can constantly try to get attention and it gets harder and harder. There is a lot of media theory about where and when to do the most with consumers. There’s also the context that you don’t have to just get attention, you can give attention. The more time you spend doing that — such as spending time with the consumer, creating some sort of relationship — the easier it is. This is a group that really wants it to be about them.

RTP: What do Millennials want to see from brands in terms of communication and engagement? What characteristics does a brand need to have in order for a Millennial to adopt them?

Cohen: I look at this in two different ways — from a qualitative group, where I went in with a white board and said, “You tell me what characteristics you need to see to adopt the brand.” Then I took the same statistics back out to a quantitative group and what came back was:

  • High-quality products;
  • Would recommend to a friend;
  • Fits my personality;
  • Is socially responsible;
  • Shares similar interests; and
  • Says important things to me.

High-quality products came out number one each year in the ranking, but all these pieces come together under the question: “What does it say about me?” That’s a big piece of it in terms of where their focus is and what they’re centered on.

RTP: Which retailers stand out for doing a great job marketing to Millennials, compared to examples of those that are not?

Cohen: I think there are a bunch of clothing retailers that do a really good job. Gap has been doing some cool stuff; I’ve seen a lot of their programming played back to us from consumers. They did a campaign called “Mind The Gap,” which was about the pay gap for women. H&M has a program where you can turn in used clothing [for a discount].

Michael Kors did a charity piece that people really responded to. Even JCPenney showed up on top in terms of execution. Old Navy had a program called “Never Basic” that also showed up with consumers talking about what campaigns they remembered.

We saw this ability of these retailers that say “Hey, we’re with you in your lifestyle and we’re doing it with you.” 

In terms of a retail situation that doesn’t make any sense, think about the last time you had a good experience in a phone store. You probably had a decent experience at an iPhone store in terms of getting the product sold to you. But in terms of your hookup and all that, you might not have. No one says they went to the AT&T store and it was the greatest time of my life. What doesn’t make sense to me is you take an industry like that, that spends well into the billions on television advertising, yet they don’t spend on creating an experience for the consumer when they go into the store.

RTP: Are there ways the Millennials are similar to older generations?

Cohen: One of the points we like to make is that it is 2.5 times more likely for a consumer to adopt a new brand based on what friends and family are saying than from what advertising — whether it be TV, YouTube or Facebook — would do for them.

]]> (Klaudia Tirico) Industry Insights Thu, 28 Sep 2017 09:54:00 -0400
Say It Isn't So: Pirch Closes Majority Of Showrooms Say It Isn't So: Pirch Closes Majority Of Showrooms

Pirch, an upscale appliance and kitchen retailer that was hailed as an avatar of experiential retail, recently announced it would be closing most of its stores as it seeks to overhaul its operations. Joe Hasenzahl, Principal Consultant for Retail Technology Strategy at HighStreet, provided this exclusive analysis of the Pirch phenomenon, as well as its strengths and weaknesses, to Retail TouchPoints.

Those of us who’ve been evangelizing, proselytizing and preaching “experience” as the savior of brick-and-mortar collectively gasped when the news broke last week that one of the industry’s shining lights, Pirch, was shuttering stores. The announcement of the impending close of most of their much-lauded luxury showrooms both shocked and confounded us. How? What could possibly have caused such a rock solid, industry-inspiring store experience to suffer the same fate of their less enlightened brand brethren?

Pirch is different. We 'experience design' people beat our drum at a near constant rhythm, never missing an opportunity to hold them up as the model of the future. No one — either in the headlines or in our own heads — could have seen this coming. They apparently did everything right and the industry joined us with their accolades. Together, we had exalted them as the answer to retail’s ills, treading first where most hadn’t dared. To find a chink in their armor required some serious investigation, but to not do so would be a travesty. They deserve the respect of our time and we have much to learn from their lessons.

Was it the store?

  • Gorgeous showrooms that obey all of Paco Underhill’s strategy sensibilities, as well as the most important tenets of outstanding customer experience;
  • Expansive decompression zones that give shoppers a moment to catch their breath and take in the Pirch corporate values, artfully inscribed on the architecture and clear that they are about one key emotion: Joy. There is actually a small plaque with the CEO’s name and his direct phone line to call if they don’t deliver on their commitments. Last time we asked, only a handful had taken him up on it;   
  • A dedicated barista delivering a coffee-infused greeting ensures a welcome free from the dogma or dread of a salesperson’s rote cold-opener;
  • High-end stoves, refrigerators and sinks plus bathtubs and faucets you can touch, try out and test. Even making available private showers accompanied by the softest robe imaginable. Water runs out of faucets, flames come out of stoves and themed scents secure the mood of the season. Was that the smell of bread baking? Or roasted leg of lamb? Of course, one of the executive chefs on staff whipped up something delightful or was with a customer leading a hands-on tutorial of that fabulous stove;
  • A management team plucked from luxury retailers, not the home improvement category, to ensure that the in-store experience sets the tone for excellence and personal care;
  • Talented salespeople, many from backgrounds such as interior design or architecture, genuinely driven to provide knowledgeable solutions and accurate answers;
  • Subject matter experts ready to help with a snap, never making the shopper feel stupid or declassee;
  • A legendary linger-time within the showroom that averages two hours and a sales-per-square-foot second only to the Apple store; and
  • Service after the sale delivered by in-house installation and project management teams, many of whom were recruited from the U.S. military's elite and installed, literally, with “white gloves.”

What about the business infrastructure?

  • Investment by L. Catterton gave them breathing room to get a U.S. expansion strategy right;
  • A new store in Austin, Texas opened the door to explore a smaller footprint;
  • Back-of-the-house systems were being migrated to a new ERP to standardize…well, all the things an ERP is supposed to standardize;
  • A digital agency was brought in to work some in-store technology magic;
  • A difficult decision was made to re-centralize project management and support services back at the corporate office in San Diego, indicating only bigger plans and how important strategic scale was to the growth plan;
  • AND…a new CEO. Fresh from a renowned luxury brand, Luxottica, Andrea Dorigo was brought on board to stabilize and grow the business.

Seemingly, nothing could have been done differently to improve on either.

That leaves the business model…

Great experiences in retail can’t recover from a bad product much in the same way a great waiter can’t recover from bad food. So we must ask if the store shone, the support was rock solid, and the product + experience ecosystem was spot-on, was the cancer much deeper?

Pirch has always positioned itself as a brand experience. The products, while not necessarily exclusive, are still expensive and come from all the right pedigreed brands.

Did Pirch gamble that shoppers who could afford these high-end product lines would not be price-sensitive and avoid showrooming? Would affluent shoppers come to a mall to buy appliances? Who was the ultimate decision-maker, not the check-writer? Unpacking their customer profile to try to reverse engineer their business model certainly provides us clues.

  • According to the Houzz Renovation Barometer for 2017, clients purchasing high-end products dropped from 35% in 2016 to 30% in 2017 — that’s still a substantial slice of the pie and squarely in Pirch’s customer acquisition profile;
  • Kitchen and bathroom renovations still account for almost 50% of projects, so it feels like the market can definitely absorb the volumes Pirch would need to be successful; and
  • In all of the markets that Pirch has a presence, reports indicate that backlogs for designers linger at four weeks, architects around six weeks and general contractors at a whopping seven weeks. This shortage of professionals to meet the ongoing demand evidence that the renovation market is thriving and renovation professionals have the opportunity to be selective about the projects and customers they want.

So, if Pirch’s model is to target their showrooms for homeowners specifically, how does that reconcile with the business reality that drove their sales teams to designers, architects and contractors rather than to the end consumer? The average transaction in Pirch is a little over $8,000. It’s hard to see how the traffic their stores generate could justify that kind of showroom — and the army of salespeople required to hit the right revenue targets. The math simply doesn’t compute.

Wait…come again?

Let’s break it down.

Pirch’s salespeople have to go to the decision makers to get business — follow the money, so to speak.

Pirch’s model has always been to go after homeowners who could not only afford a designer but also wanted one. A customer who covets the finest, latest and shiniest, but not the burden and drudgery of multiple resources to debrief, direct, decide and deliver. They want to outsource it. To their designers. You know, the people Pirch wasn’t exclusively targeting or supporting. The showroom was designed for the end user, yet the Pirch model works best when they’re not the ones being served.

Think about it. Does the design professional really care whether the stove lights and the faucet works? Are they coming in for free cooking classes? Likely, no. Conversely, would they gravitate to a workspace with free coffee, helpful sales staff and plenty of co-working space? You bet. Would they have still bought from Pirch simply based on their legendary service and installation — but without the overhead-heavy showroom? Definitely worth considering.

But let’s get one thing straight — customers have loved Pirch like a duck loves water. They upped the ante of exactly how much someone can love a store; the everyday visitor just doesn’t buy enough to support such a monumental per-square-foot cost.

Applauding A True Brand Braveheart

Frankly, we admire Pirch’s co-founder, Jeffery Sears, as the Steve Jobs of retail store experience. Go read any of his articles, interviews and thoughtful musings. We’ve spent time with him and shared sincerely that he should document his philosophy towards customer experience with tomes that would one day be referred to in college textbooks. His dream hit a speed bump, but his philosophy ignited a movement.

So what now? Should Pirch follow suit with Nordstrom’s new product-less showroom launching next month and open tiny galleries where the shopper and designer can easily stop in to evaluate specific products curated just for them? This may work for dresses, shoes and earrings, but will it drive stove, bathtub and refrigerator sales? Not sure, but we’ll be watching.

Experience Evangelists take a breath. All is not lost. We mourn the loss (or at least the diminished reputation) of our beloved Pirch as a muse, but we are still on the right track. Instead of espousing “experience” as the answer to all of brick-and-mortar’s ills, we must include it in the ecosystem of successful retail. As much as we are sick of the dogma of Price, Product, Promotion and whatever the hell that last P was, Experience without product and a successful business plan is just a spit in the wind — much like a dream without a plan is just a wish.

But Jeffery, thank you for going first. You’ve inspired us like no other and we hope to walk proudly in your footsteps.

]]> (Joe Hasenzahl, HighStreet) Industry Insights Wed, 20 Sep 2017 10:41:14 -0400
The Off-Price Retail Boom: Lessons For All Retailers The Off-Price Retail Boom: Lessons For All Retailers

The thrill of the in-store hunt is still going strong within the retail industry, as off-price retailers such as T.J. Maxx, Marshalls and Burlington Coat Factory continue to build momentum and outperform traditional department stores. In fact, according to a 2016 report from Moody’s Investors Service, off-price retailers are “anticipated to experience apparel revenue growth of 6% to 8%, outperforming the broader apparel segment by a collective 4% in the next five years.”

"TJX Companies, Ross Stores and Burlington continue to outpace overall apparel, which are growing at a much slower pace,” said Christina Boni, VP, Senior Analyst for Moody’s in a statement. “In contrast, the department store industry is losing share to off-price and other areas of apparel spending, as online competition increases and mall traffic continues to decelerate.”

So besides the excitement of finding an unexpected bargain, what draws shoppers to off-price stores? Experts point to a variety of factors:

  • Consumers have become more value- and experience-oriented;
  • Off-price offers a unique pricing structure that reveals the full price, the discounted price, and the amount of savings on tags; and
  • Off-price stores are a one-stop-shop offering of apparel, home goods, beauty products and more.

Off-price retail success relies heavily on customers shopping in stores to hunt for treasures within the constantly-changing influx of inventory. Yet, industry experts agree that omnichannel must be top-of-mind and off-price retailers should start capitalizing on its potential.

While many off-price retailers are looking to keep a majority of their focus on physical stores, there is still a place for an online channel that complements the physical store experience. 

“I don’t think anyone can avoid the omnichannel phenomenon,” said Paula Rosenblum, Co-founder and Managing Partner at RSR Research. “[Off-price retailers] may not put the entire assortment online and in stores, but a good portion of it must be synchronized. Omnichannel isn’t a ‘nice to have’ anymore. It’s table stakes. And treasure hunts are well and good, but they have to be synchronized.”

Creating An Omnichannel Strategy That Complements Physical Stores

T.J. Maxx reportedly isn’t terribly concerned with e-Commerce because of its reliance on the in-store treasure hunt experience; and the fact is T.J. Maxx e-Commerce sales “hover at just 1% of the business’ total sales,” according to Bloomberg News.

But even though the retailer doesn’t rely on e-Commerce sales, the brand still maintains an online presence. The retailer re-launched its e-Commerce web site following a hiatus, which now plays a complementary role to its physical stores.

“While [e-Commerce] is a small part of our business, we see it as highly complementary to our physical stores,” said Ernie Herrman, CEO of TJX CEO said in May as reported by Bloomberg. “We are being methodical in how we grow this business.”

T.J. Maxx’s take on “complementing” physical stores with some form of e-Commerce is something experts highlighted as necessary in creating a unified customer experience.

“I still think that the idea of finding personal treasures at the store is something [off-price retailers] need to capitalize on, and that can drive e-Commerce as well if executed in an online-friendly way,” said Mike Kim, Director at AArete, a global management consulting firm, in an interview with Retail TouchPoints.

Some ways off-price retailers can keep the fun of the in-store hunt alive include:

  • Offering exclusive promotions from the e-Commerce platform to drive people to the stores;
  • Having an easy to navigate store locator; and
  • Developing unique content that inspires consumers, such as how to style items, tips on finding treasures in stores, etc.

Kim also asserted that an imaginative retailer could create an online version of a treasure hunt. “If off-price retailers are to expand their omnichannel strategy, it’ll be about improving and aligning inventory, figuring out how to price for physical and mobile offerings, and continuously engaging the customer, which is best done with data analysis to help map the customer journey.”

Of course, there are challenges to having a seamless online and offline off-price business. Aside from the inventory’s velocity, the need to align prices across channels and show the levels of inventory at brick-and-mortar stores in real time isn’t easy for any retailer, according to Kim.

“I would suggest a hybrid approach, where a consistent supply of certain items utilized by an e-Commerce approach, while also maintaining the personalized level of treasure hunting at the brick-and-mortar store for items that are highly fluid,” Kim said. “Focus on the distribution of brands that are high margin consistently over time and adapt that inventory to the omnichannel approach. That way, it minimizes disruption, given the speed at which items move.”

Off-Price Department Stores Flourish 

Off-price retail as a segment has expanded significantly within the last several years, with almost every major department store introducing its own off-price brand, including Nordstrom Rack, Saks Off Fifth and Macy’s Backstage. As more traditional retailers introduce off-price brands, the off-price-only retailers are now faced with some heavy competition.

But according to Deborah Weinswig, Managing Director at Fung Global Retail & Technology, consumers are more drawn to off-price-only retailers. “Around half of U.S. consumers buy from off-price retailers; the proportion is slightly higher among the subgroup that also shops at Kohl’s and Macy’s,” she said. “Off-price specialist retailers such as T.J. Maxx continue to be shopped more heavily than off-price or discount divisions of department stores, such as Nordstrom Rack and Saks Off Fifth.”

Experts agree that while the models are very similar, both can coexist without feeling the heat. It essentially comes down to their customer demographics.

“Some of the success of off-price-only retailers so far is due to their conscious efforts to target a different customer demographic,” said Jared Wiesel, Partner at Revenue Analytics. “It’s rare to see the off-price-only retailers in the same areas as the name brand ones. Given they aren’t associated with a full price counterpart, they are not faced with concerns about customers shopping across full-price and off-price locations and potentially trading down. Thus, they are less constrained with the inventory they choose and how aggressive they want to be on price.”

It’s safe to say off-price retail isn’t going anywhere and has the potential to grow and expand into different markets. While omnichannel is still important, the physical store will stay at the forefront of off-price strategies to cater to the demands of their customers.

“We believe that the store will continue to be an integral part of the consumer experience,” said Michael Brown of the A.T. Kearney Consumer Products and Retail Practice. “The off-price sector will be a strong performer in retail going forward because of the opportunity that it offers customers to discover new products in an exciting and surprising way.”

]]> (Klaudia Tirico) Industry Insights Tue, 15 Aug 2017 08:00:00 -0400
48% Of Consumers Abandon Brands That Locate Ads Near Offensive Content 48% Of Consumers Abandon Brands That Locate Ads Near Offensive Content

Brands and retailers beware: if your advertisement appears on a “fake news” or “inappropriate” web site, your customers will notice and judge you for it. A new survey from the CMO Council revealed that 48% of consumers said they would abandon brands they love if their ad runs alongside objectionable online content.

The study surveyed 2,000 adult consumers in North America and the UK and asked participants their feelings about ads located near objectionable content or on fake news sites. The study found that:

  • Two-thirds of respondents said they would hold a dimmer view of brands that provided negative advertising experiences; 
  • 63% of respondents respond more positively to ads run in trusted media channels; and
  • 37% said placement of ads on objectionable content or fake news sites would change the way they feel about a brand.

“CMOs and brand advertisers are increasingly concerned about various aspects of digital and programmatic advertising, including concerns about their ads showing up next to offensive content,” said Donovan Neale-May, Executive Director of the CMO Council in a statement. “This consumer survey demonstrates that those concerns are well founded. Advertising placed next to objectionable content is damaging to a brand while ads that accompany more trusted content and media are more accepted.”

The survey also found that:

  • 86% of respondents are either extremely concerned, very concerned or moderately worried about how easily they are directed or redirected to hateful or offensive content;
  • Annoying digital advertising formats include intrusive pop-up ads (22%) and auto-playing video ads (17%);
  • Only 14% of respondents always engage with digital ads, while 58% said they pay attention only when the ads are of interest to them; and
  • More than 40% of respondents said they have ad-blocking software installed on their devices. 

Ask Uncomfortable Questions To Get To The Bottom Of Ad Placements

Today’s consumers have a heightened awareness of unpleasant advertising and marketers must be aware of their sensitivities in order to maintain trust.  Marketers also can avoid these situations, but they need to put themselves in potentially awkward conversations with their media partners, ad agency partners, vendors and any other people involved in the customer experience ecosystem, according to Liz Miller, Senior VP of Marketing at the CMO Council.

“Marketers need to be asking those hard and potentially uncomfortable questions to mandate a conversation,” she said in an interview with Retail TouchPoints. “It’s unfair to say the agency isn’t paying attention.

“We need to ask, ‘Have we done an audit of the ad exchange in placing the ad? Have we put limits on where the exchange can place our ads?’ Marketers also need to question whether or not it makes sense to invest in this type of open exchange that may not have any limits. Does your really need to be associating with these media outlets/channels that don’t have similar view points or beliefs as you do?”

Miller said that Soul Cycle is a great example of this. She once spoke to the company’s Head of Brand about a speaking opportunity at one of the CMO Council’s events. Before agreeing, the Head of Brand asked who the other speakers would be because “It’s really important for us as a brand to associate with brands who think like us.”

“Marketers must think the same way when it comes to social media, brand partnerships, and who they are associating with because that reflects on the brand,” said Miller. “That becomes a conversation and mindset we all have to have because the reality is and it’s very clear from this research — our customers definitely have it.” 

]]> (Klaudia Tirico) Industry Insights Fri, 14 Jul 2017 08:00:00 -0400