Pajamas and Popcorn: Retailers Face a Less-than-Festive Holiday Shopping Season - Knowledge@Wharton

As Wall Street unravels and the economy confronts its crucial holiday spending season, consumers cannot be expected to prop up retailers as they have in past downturns. Even luxury stores, whose customers have been immune in recent years to retail price sticker shock, are expected to take a hit this time, according to Wharton faculty and consumer analysts.

Timely Reality Check. Tough times call for smart innovative measures.
Sam’s Club Offering Short-Term Memberships

Sam’s Club here said yesterday it plans to hold in-store events over the next two weekends to sign up families and businesses for $10 memberships good for 10 weeks — the first time it has offered short-term memberships. According to Mike Turner, vice president, membership, for Sam’s, “We know we can easily demonstrate the value at Sam’s Club in just one shopping trip. With a temporary 10-week membership, we’ll be able to give those who sign up a good chance to see what we can do for them everyday and through the holidays.” Sam’s is promoting the weekend sign-ups with a national radio campaign plus print ads that feature 10 reasons for joining, including U.S.D.A. Choice meats; $4 generics; low-cost trim-a-tree merchandise; and low-priced holiday photo cards.

IDTechEx, the leading independent research and consulting firm specializing in RFID technology is reporting that RFID Industry has followed the Gartner Hype Cycle. While the growth has reduced, it will still forecasts 23% growth in 2009 over 2008 and by 25% growth in 2010 over 2009.

These applications will eventually prevail, but probably not fast enough to create a profitable business for tag makers in the short term. For example, IDTechEx has recently surveyed RFID chip makers, and we find that in 2008 approximately 1 billion UHF chips will be made. The largest single order is by Marks & Spencer for 150 million tags for apparel, but the number two behind that is much less. Indeed, it is still rare to hear of orders of more than 1 million UHF tags - in other words, the applications of UHF RFID are many and small, reaching a wide range of different markets. Almost all are closed loop applications.

Timely Reality Check.

Online Consumers to Spend Less, Use Coupons This Holiday Season

Nearly half of US online adults (45%) plan to spend less money on gifts this holiday season than last because of the state of the economy, and one in five plan to spend significantly less, according to a Harris Interactive survey commissioned by RetailMeNot.com.

Fully 89% of online adults think coupons are a great way to save money, and about a third (35%) of those who will be spending less money on gifts this holiday season will use coupons, the study found.

Stark Reality Check.

A new survey finds that shoplifters and dishonest employees stole more than $6.7 billion in property from just 24 major retailers last year.

The 20th annual retail theft survey found 24 retailers, with more than 19,000 stores, apprehended a record 708,962 shoplifters and dishonest employees in 2007 and recovered more than $150 million in stolen property.

One in every 28.2 employees was caught stealing from their employer last year, based on over 2.3 million employees.

Survey: Retail theft skyrockets

Innovations in the Point of Sale Advertising.

Point-of-Sale Advertising Goes High Tech

New in-store digital ads are using the latest technology to target messages to individual buyers, boosting sales and even helping to manage inventory.

When you order a morning coffee at a café owned by Israel-based Aroma Espresso Bars, an image of a croissant may suddenly appear on a digital display next to the cash register. Stop by for a sandwich or salad later in the day, and the display could flash a picture of a suggested beverage.

Aroma Espresso says sales of desserts and drinks featured on the screens have increased as much as 68% in outlets where it has installed the display systems, starting about a year ago. The company has about 100 cafés in Israel, the U.S., Canada, and Romania. Besides boosting sales, the system aids inventory control—for example, by encouraging customers to buy Danish sweet rolls when muffins are running low.

Welcome to the future of point-of-sale retailing. In-store digital ad displays have been around for a few years already. But stores and restaurants are now starting to use the technology for real-time promotions, instantly tailoring their sales pitches to match individual customers' selections or variations in product availability.

Wal-Mart showing it’s eco-conscious face, gives customers the ability to trace the path of their Love, Earth jewelry from mine to store.

Wal-Mart praised for ethical gold service

US retail giant Wal-Mart's new ethical gold initiative has been hailed by green campaigners.
Customers can track down the mine where the gold for their Wal-Mart Love Earth jewelry was sourced by entering a product code online, according to website Ethical Corporation.
They can also discover where their bracelets, rings and earrings were refined, polished and set, the site added.
It is hoped that the measure will reassure customers about the credibility of the chain's environmental standards.
Wal-Mart aims to have ten per cent of all its jewelry traceable in this manner by 2010 and wants all of its mines and manufacturers to meet sustainability criteria, the news provider noted.
Ethical gold has become a popular choice for couples having environmentally-friendly weddings, according to the Press and Journal.

If you want to trace the gold in your piece of jewelry purchased at Wal-Mart, head out here: www.loveearthinfo.com.

Recently I had blogged about what happens when technology and culture collide. The article pointed out in the blog talked about a new Workforce Management System (WFMS) deployed by Ann Taylor and how it is reducing the opportunities for store associates with less success by giving them fewer and less desirable hours while giving the busiest and most desirable hours to associates with higher sales numbers.

Now an article from Knowledge@Wharton, criticizes the Ann Taylor WFMS by comparing it with “squeezing blood out of a turnip” and by describing the initiative as "a case of something that has its roots in a good idea [but that has been] taken too far."

On the Clock: Are Retail Sales People Getting a Raw Deal? - Knowledge@Wharton

Wharton marketing professor Stephen J. Hoch says the Ann Taylor system is like "squeezing blood out of a turnip" and goes a long way toward alienating employees. Erin Armendinger, managing director of Wharton's Jay H. Baker Retailing Initiative, describes the initiative as "a case of something that has its roots in a good idea [but that has been] taken too far."

'The Worst of Dilbert'

While the softening economy may give employers a stronger hand in employee relations, retailers historically have difficulty attracting and retaining qualified workers because the industry pay scale is so low, Hoch points out. "Ann Taylor, and the retail environment in general, is not the only place where people can work. This system potentially creates a hostile working environment. It's the embodiment of the worst of Dilbert."

Hoch acknowledges that Ann Taylor's new scheduling system may be one way to reduce labor costs. "It can be self-fulfilling. If you give people just a few [off-peak] hours, they will look for another job. Maybe that's what [corporate executives] want." He also acknowledges that technology-based information can be valuable to managers, but only if the value is clearly understood throughout the company. Without consistent buy-in, technology-driven management tools will result in adversarial relationships across all staff levels.

Information technology is not a way to overcome weak management, he suggests, noting that human capital management systems must be sold to workers as a valuable tool for all employees and should be accompanied by training sessions. "It should motivate everybody, not just the best sellers. It would be nice to couple it with training to bootstrap people who are not as effective as the top performers."

The article goes on to state, unlike other retailers like Wal-Mart, Payless Shoesource etc who have also deployed WFMS that puts more workers on the floor at the busiest times, Ann Taylor has added the dimension of individual sales productivity to the equation. This additional dimension may backfire by a way of unhappy workers leading to a drop of sales.

Retailers who anger their staff risk major consequences, Armendinger notes. "To your customer, your store's people are your brand," she says. Those "in the corporate office sometimes forget that people on the front line mean more than any strategy you come up with at the corporate office. To treat them as if they are numbers is a little bit disturbing," especially given that employees have their own fixed costs, such as mortgages and car payments, as well as fixed responsibilities which don't always lend themselves to sharp fluctuations in schedules.

Armendinger suggests that rewarding employees with prime working hours based solely on sales numbers is not necessarily the way to generate better sales over time. The Ann Taylor approach is likely to encourage sales associates to put such a premium on sales that they overpower customers with high pressure techniques that will backfire.

"When customers feel a sales person is not genuine, they feel as if they are a piece of meat," she says. "Women do not want to go into a store and be viewed by salespeople as 'a dollar sign'. They want salespeople who will say, 'That color's not right. Here, this is better.' Now, if it takes an extra five minutes, the salesperson will just say, 'That looks great.'" The new scheduling system erodes the relationship between salesperson and client which is particularly valued by older women, the demographic that makes up much of Ann Taylor's customer base, according to Armendinger. "Why [would these customers] go into the store? They can just stay home and shop online."

…

Successful technology-based management practices must be embedded in social relations, according to Yakubovich. Even sales agents working from their homes in far-flung locations wind up forming spontaneous virtual networks -- for example, going from company chat rooms to private conversations. These networks can work both toward and against the firm's goals, Yakubovich states.

Very good read. Every person touched with WFMS development or deployment needs to read this article on how

In the past, I have written how Retailers use the Social Media sites like Facebook, MySpace (1, 2, 3) for Marketing. A new report from eMarketer reinforces the same.

Consumers' use of social media is altering the way they make purchase decisions. To stay relevant, retailers must determine how to incorporate social media, such as social networks and blogs, into their marketing strategies.

Generation Y (those born after 1979) online buyers are more immersed in online and mobile activities than any other generation, according to 2008 research from shopping comparison site PriceGrabber. Some 85% of Gen Y respondents said they participated in social networking, and 57% reported involvement with blogs.

To reach this demographic segment, Web retailers are marketing to them on their own turf. Data from an August 2008 survey of Web merchants sponsored by Internet Retailer found that, of the 39.3% of retail respondents that use social networks, 32% have a page on Facebook, 27% on MySpace and 26% on YouTube.

Read more.