Some good examples of how Design is playing a strategic role in helping Big Box Retailers reset for the future.
Trends: A Strategy Made Visible
Design is helping to:
• organize intuitive and logical adjacencies and traffic flow
• break large scale presentations into smaller, more understandable ideas
• establish focal points as attractors and cross-merchandising collections of related product
• adapt the look and feel to the market served, and
• provide graphics that have the dual purpose of amplifying the store branding while communicating pathway.
Target, Toys R Us, Sears and Kmart are just a few of the big retailers that have launched mega-sales in recent weeks to tempt increasingly cost-conscious shoppers to their stores. This phenomenon -- known as the seasonal sales shift, or "Christmas creep" -- is not new. But in today's uncertain economic climate, it has bigger implications than ever, both for the retail sector's growth strategies and for consumer spending habits, say Wharton and other business experts.
Disturbing news but nonetheless sort of expected.
In what might be the latest sign of trouble for brick-and-mortar bookstores, the mega-chain Barnes & Noble announced on Tuesday that its board was putting the company up for sale.
…
For years, Barnes & Noble has been battered by large shifts in the publishing industry and the retail environment. Book sales have moved toward big-box stores like Costco, Wal-Mart and Target, and away from mall-based stores like B. Dalton, which Barnes & Noble acquired in the late 1980s.
“There’s been a long series of pressures,” said David Schick, managing director at Stifel Nicolaus in Baltimore. “The market has not been kind to bookstores, and it’s for new reasons like competition with Apple and Amazon, and it’s for old reasons, like what we believe has been a decline in reading for the last 20 years. Americans have devoted less of what we call media time to books.”
WSJ has a report on how companies are trying out new technologies such as interactive mirrors, interactive kiosks and others to increase footfall and customer satisfaction.
Marketing companies are experimenting with a new wave of digital technologies to pitch to consumers while they shop: interactive dressing-room mirrors, kiosks with virtual customer-service representatives, and shopping carts and digital scanners that offer personalized discounts.
These futuristic technologies are among the interactive tools on display at Interpublic Group of Cos.' new retail center at the advertising company's Media Lab in Los Angeles.
There, Interpublic is testing innovative ways for marketers to connect with customers as part of an effort to better understand what makes consumers buy and to encourage companies to rethink their approaches to the role of the retail store.
Connecting these futuristic concepts with social media takes it to all new level.
Another device is a mirror that enables a shopper to scan a dress and then project that clothing onto her body before going to the dressing room. She can also tap the mirror to view different colors, find matching shoes and send the image to her Facebook profile.
Wow, this really is Hi-Tech. Analysts are using Satellite photographs of Parking lots and derive market moving data using that. UBS Analysts have used this method for the retailer, Wal-Mart.
As part of a growing trend among hedge funds and Wall Street firms, Cold War-style satellite surveillance is being used to gather market-moving information.
As an example of how Wall Street getting in on this techhology, the UBS Investment Research issued its earnings preview for Wal-Mart'ssecond quarter, which publicly revealed that UBS had been using used satellite services of private-sector satellite companies to gather the comings and goings of the parking lots at Wal-Mart stores. “UBS proprietary satellite parking lot fill rate analysis points to an interesting cadence intra-quarter and potential upside to our view,” the report read.
UBS analyst Neil Currie had been looking at satellite data on Wal-Mart during each month of 2010, and he’d concluded that there was enough correlation between what he was seeing in the satellite pictures of Wal-Mart’s parking lots to the big-box chain’s quarterly earnings, that he was ready to incorporate that data into UBS’ report on Wal-Mart..
With the growing popularity of sites like Groupon and people using deal sites and forums to discuss prices of items, Retailers are getting pushed to lower their prices even when they don’t want to. Wall Street Journal has an article today which discusses how Retailers can get their pricing power back by using eight tactics to limit the ability of bargain hunters to find their deepest discounts and lowest acceptable prices.
Quantum Retail: Top 10 Ways to Pull Profit from Allocation
by Deepak Sharma on Saturday, August 21, 2010
Quantum Retail’s retail insights blog, The Profit Lab recently covered 10 different strategies to consider in the process of executing allocations. Allocation is one of the most often overlooked areas to optimize retail and gain profit margin. Definitely a MUST READ for every retailer.
Introduction: Why allocation is your best opportunity to improve revenue and profit
Strategy #1: Understand your demand to achieve better allocations
Strategy #2: Learn the unique behavior of each store before clustering it
Strategy #3: Make time to analyze your assumptions for like products
Strategy #4: Consider product life when creating allocations
Strategy #5: Overcome limitations to forecasting by using better data
Strategy #6: Update plans with changes in customer demand as frequently as possible
Strategy #7: Test the opportunity in a second allocation shot in short life merchandise
Strategy #8: Create product strategies to understand each store’s true need
Strategy #9: Go beyond sales and inventory units to factor in profitability and other metrics
Strategy #10: Use constraints that minimize work and maximize results
You can even download the complete series in one PDF here.
This ATKearney Report compares the usual and the new ways of thinking about Assortment Management and Replenishment for low-volume items.
When products don't sell very much, conventional wisdom calls for reducing assortments and tailoring them to local conditions. But the opposite approach—stocking small quantities of each product at every store and centralizing replenishment decisions—has been shown to increase sales and reduce inventories without raising costs.
US Retailer Gap just scored a home run with Groupon deal of the day. According to Techcrunch:
Update: Groupon reported Friday that it sold 445,000 vouchers for retailer Gap, bringing in $11 million in revenue.As of 11AM PST (the e-mail blast went out at roughly 6AM in each time zone) Groupon has sold 200,000 Groupons and is currently selling roughly 10 per second. Ten sales per second is an unusually high volume, Mason says, “several multiples above the average.”
If this trend persists, Groupon will likely sell more than 700,000 Gap Groupons by the end of day. Or, roughly $17.5 million in revenues for the daily deal machine. (That will buy you a lot of monkeys.)
Although Groupon has dabbled in multi-city deals, this is the first time they have partnered with a national retailer for a full countrywide roll out.
FreshDirect (an online grocer) CEO, Richard S. Braddock’s interview in NYTimes.com.
The lesson? “It really costs a lot of money to give bad service,” Mr. Braddock said.
Charles Darwin once said, “In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment.”. Walmart is doing just the same in India. It is going out of it’s shell and adapting new measures to first survive and then probably one day thrive against all odds. The odds include Indian Government’s Foreign Direct Investment (FDI) policy restricting Walmart to act as a wholesaler only, low efficiency/dependability of suppliers, expectation of free credit by the small time vendors (who are essential to Walmart’s growth given the restriction to act as Wholesaler). To counter these odds, Walmart’s India Angle includes the following measures:
- Inventory levels are kept high because suppliers are less reliable
- Goods are delivered to the buyer’s doorstep
- Regional focus: All suppliers in the same state as the stores
- Collaborative farming, on verbal commitments
- Free credit to buyers through credit cards
Read more. It happens only in India.
More and more retailers are adopting Facebook “Like” button. Facebook Like button provides an easy mechanism to share content you like with your friends on Facebook. Retailers like Best Buy, Sears, eBay are actively using Like button on their websites.
In recent weeks, a growing array of shopping sites have placed "Like" buttons on their pages, too, including those of eBay Inc., Best Buy Inc. and Gilt Groupe Inc., expanding Facebook's influence into a $140 billion industry in the U.S. that drives both online advertising and a growing portion of retail sales.
For e-commerce sites, adding a "Like" button lets shoppers quickly share a product or deal with their Facebook connections, potentially encouraging them to buy the product themselves.
"Customers are looking to other friends in their social network to figure out what product is right to buy," said Tracy Benson, senior director of mobility customer solutions at Best Buy.
While the Like button can increase traffic, there is not established case study/research which shows increase in conversions for traffic originating out of Like button.
Daniel Mandell, a director of business development at Wenner Media, the owner of Us Magazine, said the celebrity website soon will roll out the Facebook "Like" button after years of allowing its visitors to share content on Facebook through other sharing buttons.
Visitors from Facebook are valuable because they "are an extremely engaged audience," spending an average of three minutes on the US site, about 20% higher than visitors from search engines, he said.
For shopping sites, though, the key measure of success is sales, not traffic. After Gilt introduced "Like" onto its "flash sales" pages at the end of June, the site saw a 50% leap in sales coming from Facebook after the first week. "We are watching to see if it continues, beyond an initial bump because it is new," said Jag Bath, the company's vice president of product management.
"Everyone is hoping that the endorsement of a 'Like' button will be the thing that gets consumers from browsing to actually buying," said Fiona Dias, executive vice president of strategy and marketing at GSI Commerce Inc., which runs about 100 retail websites. But among her clients who have implemented "Like," there has been no direct correlation between top-selling and most-"Liked" items.
Read more: http://online.wsj.com/article/SB10001424052748703787904575403512335975240.html#ixzz0wKpmOExb
eMarketer reported last month a good increase in Retailers adopting Facebook Like button and other Social Plugins.
Mashable ran a story few days back showing How Online Retailers Can Leverage Facebook’s Open Graph. Good Read.
On a lighter note, customers do appreciate creative store fronts.
Grocery Shopping Just Became Awesome
Every husband or boyfriend would gladly do the weekly food march for his woman if all grocery stores had this. I think store managers should learn from the guys that built this beautiful display. If all of them did something to this extent I’m sure they’d get more business in a heartbeat (or a Koopa stomp).
Super Pepsi Mario in a Safeway Store
Retailers Flock to Coupa Cloud Spend Management to Cut Costs
by Deepak Sharma on Tuesday, August 03, 2010
With soft consumer spending, retailers are investing in process improvements and technology to more effectively control their spending and protect their profits. They are under constant pricing pressure from incurring costs associated with operating distributed store locations, warehouses, etc. Here is where company like Coupa comes in. Coupa provides a cloud solution that combines e-procurement and expense management into one platform which offers several advantages to retailers to adopt smarter spending practices:
- Enables companies to save money because they have greater visibility into the expense pool
- Can drill down and audit problem areas of spending, curb "maverick" spending
- Because it's cloud based, all this data is accessible in real-time and provides the ability to track spending behaviors, see trends both internally and against how other companies are doing/spending and set benchmarks, and then adjust practices moving forward.
Coupa just announced a significant uptick in the number of retail and franchise businesses selecting Coupa to more effectively manage and control their indirect spending. Here’s the complete news release:
Retailers Flock to Coupa Cloud Spend Management to Cut Costs
The Container Store, Michaels and Others Protect their Bottom Line from Slowed Consumer Spending
SAN MATEO, Calif. – August 3, 2010 – Coupa Software, the leading provider of disruptive and innovative cloud spend management (CSM) solutions for squeezing savings from business operations, today announced a significant uptick in the number of retail and franchise businesses selecting Coupa to more effectively manage and control their indirect spending.
Express, Inc., The Limited, Michaels, The Container Store, Dollar General, and a prominent specialty retailer of stylish home furnishings and high quality cookware are among the retailers leveraging Coupa’s platform for their e-procurement needs.
With soft consumer spending renewing worries about a fragile economic recovery, retailers and franchise businesses are investing in process improvements and technology innovations to more effectively control their spending and protect their profits. Coupa Cloud Spend Management offers several advantages to retailers eager to adopt smarter spending practices, including:
- Centralized control over procurement processes and greater visibility into spending at the store level, without having to deploy IT resources or professional buyers in each location.
- Broad adoption with an easy-to-use solution that requires minimal change management and training to learn or adopt, perfect for workforces characterized by non-office personnel, or that have high turnover or seasonal fluctuations in their employee base.
- Ability to segregate content and streamline store-level purchasing through content groups. For example, with Coupa, retailers can segregate catalog items, how to buy policies, contracts, punchout sites and more by region, store layout, or other logical grouping to standardize ordering processes in each location.
- Full budgeting support, including budget remaining checks before requisitions are approved, and roll-up reporting for store-level, and regional (or district) spending relative to budget.
- Universal access via any web browser. As the only true multi-tenant cloud company in the e-procurement category, the software can be accessed from the Amazon cloud via any web browser. There is no hardware to buy, or software to install.
- Fast time to value. Everything you need to get started is included in a single subscription price and standard implementations are free, perfect for organizations designed to be self-sufficient at the store level, without expensive IT overhead.
“Coupa’s traction in our industry does not surprise me at all,” said Scott Jones, Purchasing Agent and Coupa Project Manager at The Container Store. “The dynamics of the retail business model demand efficient and cost-effective operations. Coupa’s cloud-based e-procurement solution fits that need perfectly. We’ve been very successful with the software.”
The Container Store, a Coupa customer since 2008, eliminated stockpiling and supply over-ordering at the store level by integrating Coupa with its warehouse management and supplier systems. By managing its requisition and purchase order processes through Coupa, The Container Store can accurately charge supply costs to individual stores based on supply usage, instead of more arbitrary measures like cost allocation based on percent of sales volume. The company reduced the number of SKUs managed in-house by 60%, and now processes 50% fewer purchase orders per week. Time savings generated by improved processes allowed the company to act on the spend intelligence gathered to negotiate new contracts for greater pricing discounts.
“Brick and mortar retailers have certain advantages over their online counterparts, but they are also under constant pricing pressure from pure online competitors who do not incur the same costs associated with operating distributed store locations,” said Rob Bernshteyn, CEO of Coupa Software. “It’s absolutely critical that retailers keep a watchful eye over every dollar of spend. And industry leaders are doing so with Coupa.”
About Coupa Software
Coupa is the leading provider of disruptive and innovative cloud spend management (CSM) solutions that help companies control their indirect spending and generate savings that go direct to the bottom line. Coupa combines the best e-procurement and expense management capabilities in a single solution that is easier to use, faster to configure and deploy, and more cost-effective than anything available today. With deep domain knowledge in e-procurement and expense management, a best-in-class cloud computing platform, a fast-growing community of customers, and industry-first innovations like real-time benchmarking, intelligent expense report auditing, and crowd sourcing great deals on the Web, Coupa is leading the way in helping companies spend smarter and save more. For more information please visit, http://www.coupa.com or call 650.931.3200.
Retailers are spending millions of dollars on weekly circulars and its distribution along with Newspapers through mail. Taking this spend online can help Retailers save substantial dollars as well as increase usage/reach using social media features. MSN does exactly that and comes to their rescue with their new Local Deals site. MSN unveiled a new localized deals site through an interactive online circulars experience as part of MSN Local Edition – http://deals.msn.com. So far Kohl’s, Target, Staples and RadioShack have signed up on the site. The circular page features Silverlight and DeepZoom technology, which will provide an immersive consumer experience. The users will be able to:
- Rotate through various circulars all on one screen
- Browse and ‘flip’ through pages just like with traditional circulars
- Search for products across all the circulars at once
- Zoom in on products within a circular at a high resolution
- Hover over to learn more about a specific product, including reviews on Bing shopping
- Add items to a shopping list
- Find retailer locations using Bing Maps
- Share finds with others through social media like Facebook, Twitter, and Windows Live
- Link to a retailer’s site to purchase a product online
The circulars will refresh as often as retailers update information in ShopLocal (who is providing the back-end data for our circular experience) – usually weekly. Circulars that are not current will not be visible, ensuring that consumers are always browsing fresh content. Additionally, since the destination site is geo-targeted, only relevant circulars for a consumer’s location will be shown.
Read More - Microsoft Advertising Unveils Online Circulars for MSN Local Edition (U.S.)
