2012 Top100 : Retailers, Issues & Trends that are making an impact in Retail
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2012 Top100 : Retailers, Issues & Trends that are making an impact in Retail Document Transcript

  • 1. 2012 100TOP
  • 2. DRIVECUSTOMERENGAGEMENTAND BUILDLOYALTYToday consumers and businesses rely on smartphones, tabletsand other Wi-Fi enabled devices for a wide array of personal andcommercial applications. Now Motorola’s Proximity Awareness& Analytics Solution makes it possible to use these devices toimprove consumer engagement and improve associate productivityin WLAN environments. Use your Wi-Fi infrastructure to captureshopper attention with personalized promotions and in-storecoupons. Enable applications that help drive employee productivityand service delivery. Get the data you need to turn browsing intobuying – and prospects into profits.Learn more at:motorolasolutions.com/shopperengagementMOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLCand are used under license. All other trademarks are the property of their respective owners. © 2012 Motorola Solutions, Inc. All rights reserved.
  • 3. WELCOME to the 2012 edition of Marcus, Nordstrom all inthe Retail Customer Experience Top 100, sponsored the top 30? And multichan-by Motorola! nel and m-commerce initia- tives, which have been talkedOnce again, our team of retail experts sat down to about for years, are actuallyidentify the hundreds of trends, technologies, brands, starting to happen in mean-strategies and people that are having an impact on re- ingful numbers.tail. They then assigned them numerical votes basedon their influence and impact on customer experi- There has been a lot of fearence, and the resulting rankings are collected in the and uncertainty in retail these past few years, anddocument you’re now reading. more than enough “sky is falling” blog posts about how everything is changed and nothing will ever beThis year’s Top 100 highlights how very different retail the same, retail is dead, the kids these days only buyis today from just a few years ago. Look at the top two things online, yadda yadda yadda. Those kinds of arti-on the list — Amazon has turned bricks-and-mortar cles certainly get a lot of page views – which of courseretail on its ear to the same extent that Apple gutted is the point – but they don’t really add anything mean-the retail music industry. Social media remains a huge ingful to the conversation. We present this Top 100influence, even as it remains a moving target that re- in the hope that it starts any number of meaningfultailers are trying desperately to figure out. Last year’s conversations with your team.No. 1 — the economy — is still in the top five, and stillcasts a shadow over everyone and everything beneath it. James Bickers Senior EditorBut there is a new air of optimism in retail, and we Retail Customer Experiencecan see hints of that in the list as well. Tiffany, Neiman Joseph Grove, executive editor Tom Harper, publisher josephg@networldmediagroup.com tomh@networldmediagroup.com James Bickers, senior editor Kathy Doyle, senior vice president sales jamesb@networldmediagroup.com and marketing kathyd@networldmediagroup.com David Henry, contributor Scott Slucher, account executive Jan Shrode, designer scotts@networldmediagroup.comTop 100 2012 ©2012 Networld Media Group. 13100 Eastpoint Park Blvd., Louisville, KY 40223. (502) 241-7545. All rights reserved. No part of thispublication may be reproduced without the express written approval of the publisher. Viewpoints of the columnists and editors are their own anddo not necessarily represent the viewpoints of the publisher. 3
  • 4. 1 AMAZONFor those who remember Amazon as areally cool online bookstore, the viewfrom 2012 shows just how far the re-tailer — and the world — has come.What once seemed a promising fad isnow an accepted way of life. Amazon’srevenues more than doubled in thepast four years, from $14 million in2007 to $34 million in 2010, and showlittle sign of slowing down.In the past year, Amazon introducedno fewer than four potentially game-changing products: Amazon Cloud,AmazonLocal, Kindle Fire and thePrice Check smartphone app. Investment Research analysts Brian Amazon rolled out its new line of Kin-Amazon Web Services set the pace for Pitz and Brian Fitzgerald predict it dle readers, and the Kindle Fire tabletthe year in March with an aggressive could capture as much as $2.5 billion in September. The latter was pointedlyrollout of cloud products that included by 2014. positioned as a direct rebuke to theElastic Beanstalk, CloudFormation, iPad 2 and its hefty price tag, as if toAmazon Cloud Player and Amazon In June, AmazonLocal launched, and the suggest that Steve Jobs’ parting gift wasCloud Drive. Users can store music daily deals service with region-specific essentially a $199 device dressed up inand other digital content in the cloud deals delivered by LivingSocial quickly a sleek design and seductive logo. Theand play cloud-hosted music tracks became the sixth most-visited website 7-inch Fire received near-universal ac-via players for the Web and on An- in the U.S., according to comScore. It claim as a fun and versatile, easy-to-droid. Although AWS represents just a racked up 97.1 million unique U.S.- use tablet that links seamlessly withsliver of Amazon’s total business, UBS based visitors in July alone. Amazon’s impressive collection of digi- tal music, video, magazine, and book services. In December, Amazon once again got under the skin of brick-and-mortar merchants by offering discounts to us- ers who took its Price Check app into stores to comparison shop. The deal was that in-store shoppers could earn a 5-percent discount (up to $5) by scan- ning the barcode of an in-store product and then buying it from Amazon. The howls of protest were hardly confined to abused shopkeepers. Senator Olym- 4
  • 5. pia Snowe called the incentive “an at- Amazon’s third-quarter profits for 2011 million to “technology and content,”tack on Main Street businesses that were down an alarming 73 percent — up 74 percent. Founder and chief ex-employ workers in our communities,” yet reported revenues went up 44 per- ecutive Jeff Bezos has increasingly usedand called on Amazon to cancel the cent to $10.9 billion, powered in part Amazon’s cash to expand the businessprogram. “Small businesses are fight- by the new generation of Kindle book into the digital domain and invest ining every day to compete with giant re- readers and preorders for Kindle Fire. backend infrastructure to support alltailers, such as Amazon,” she said in a So where did the money go? Amazon the digital media he expects users tostatement, “and incentivizing consum- invested it for the future and appar- consume on their new Kindle Fires.ers to spy on local shops is a bridge ently intends to keep doing so. For one Toward that end, Bezos struck dealstoo far.” Pundits, commentators, late- thing, Amazon invested nearly $1.6 with Twentieth Century Fox and PBSnight comics and principled consumers billion — double what it spent the year to stream movies and TV shows fromwarned of a future in which the entire previous — toward “fixed assets, in- their vast libraries. (This is in additionphysical world would serve as Amazon’s cluding internal use software and web- to deals previously inked with CBS,showroom. site development,” and another $769 Sony, Warner Bros. and others.) 2 APPLEDespite Amazon’s steady march of progress throughout 2011, Apple, true to form,managed to out-dazzle the world’s biggest online retailer every step of the way.The company continued to lure consumers and business users away from desktopcomputers to the more manageable environment of iOS devices such as the iPad,hastening the day when general-purpose computers are the province of softwareengineers and tech enthusiasts.The year began with an effort to broaden the iPhone market beyond a single carrierby terminating Apple’s exclusive partnership with AT&T and announcing that theiPhone 4 would be available through Verizon. January also saw the launch of theMac App Store, Apple’s effort to remake its Mac OS ecosystem in the image of iOS,and thus collect a 30 percent cut of Mac app revenue in the process.In February Apple became the first computer maker to introduce Intel’s Light Peakdata transfer technology under the name Thunderbolt. The iPad 2 came out inMarch even as competitors were struggling to deliver an answer to the original.In October Apple announced a breakthrough set of free cloud services that keepstored data up to date across all devices, including PCs.The company sold 72 million iPhones (nearly double the total for 2010), 32 million iPads, 17 million Macs and 42.6 millioniPods, generating $108 billion in revenue in 2011 — up 66 percent from fiscal 2010.However, Apple’s many marketing, business, and technology achievements through the year were overshadowed by the death ofSteve Jobs on Oct. 5, the day after Apple introduced the iPhone 4S. Under the guidance of corporate America’s most high-profilepracticing Buddhist, Apple made function not merely inseparable from form, but indistinguishable from it. In Jobs’ hands, thetwo truly became one. 5
  • 6. 3 DISCOUNTINGDiscounting dates back to the days ofopen-air bazaars, but the proliferationof e-commerce and smartphones nowputs the neighborhood boutique in di-rect competition with the biggest dis-counts offered by any vendor anywherein the world. And vice versa.The practice is bleeding profits fromtraditional retailers, with daily dealsand online rivals inflicting most of thedamage. Best Buy, to cite but one high-profile example, saw its shares plungemore than 15 percent after reportinga steeper-than-expected drop in 2011 according to Bob Welch, senior vice discounts — and nothing but discounts.third-quarter profits and margins — president of manufacturer practice Cynthia Jasper, a consumer science pro-the result, Wall Street analysts said, of client solutions at dunnhumbyUSA. fessor at the University of Wisconsin,fierce price competition from Amazon. Meanwhile, he says, “manufacturers warns that pursuing discounts can be- feel that retailers are driving promo- come an addiction. Or as James DionOnly 20 percent of new customers lured of the retail consultant Dionco puts it, tional strategies that do not make sensein by daily deals ever return to make many discount hunters “don’t bother to for the category and are eroding theira full-price purchase, according to a eat what they kill,” citing research find- brand’s equity.”study conducted by Rice University. ings that 30 percent of Groupon dealsDespite this, the vicious cycle is per- While strategic discounting can be an are never redeemed. “That really leadspetuated by retailers who feel the need effective quick-fix for moving volume me to believe that it’s the thrill of theto promote, “but know that increasing in a struggling economy, the fix leaves hunt. For some consumers, it is justdiscounts are eroding category value,” consumers craving ever bigger, deeper scoring the deal.” 4 THE ECONOMY/UNEMPLOYMENT The numbers say the Great Recession ended way back in June 2009. Somebody needs to tell the economy that. Growth isn’t accelerating as it normally would dur- ing a recovery. The U.S. economy in 2012 is expected to grow a scant 2 percent (unchanged from 2011). While 2 percent may keep us from dipping back into re- cession, it won’t make much of a dent in unemployment. It follows, of course, that with more people out of work, fewer people will be buying, and thus the retail sec- tor will decline. Consumer spending, which accounts for about 70 percent of GDP, has been posi- tive but shows no signs of driving a sustainable recovery. The economy will remain vulnerable to possible shocks, such as war, terrorism, oil price hikes, or natural disaster. Any one of these could tip the U.S. into recession. 6
  • 7. Retail sales are expected to grow about10 percent in 2012, a slightly optimisticuptick from the 8 percent expected in2011. One unpredictable factor thatmight lower 2012 sales is the sovereigndebt crisis in Europe, which could keepmarkets volatile and consumers con-cerned about the future. Still, a reliabledisconnect between consumer confi-dence and actual spending bodes wellfor retailers. Sales began to climb inOctober 2011, due in large part to a 3.7percent jump in electronics sales (thelargest monthly increase in two years)even as confidence fell to its lowest lev- 5 MULTICHANNEL INTEGRATIONel since 2009. It no longer matters, really, whether the customer is always right. The customer is in charge. He decides when, where, and how he will interact with the retail landscapeIf the euro crisis spins out of control, through whatever channel, device, or touchpoint he wants. Such an environmentfear of a new credit crunch may deter has made multichannel, by default, the new standard operating model for retail.spending by business owners. Anotherfactor that could lower next year’s fore- While it can be argued that mobile devices and multichannel commerce have madecast is slower-than-expected growth it easier than ever for retailers to reach customers, they have also made it easier toof personal income, which hasn’t been lose them. Retailers will need to use a combination of channels to attract and con-keeping up with the rise in retail sales. vert consumers going forward, says e-commerce and multichannel consultant KeesIf lower wages and high unemploy- De Vos, “rather than focusing on channel-centric approaches. Companies relyingment persist during the second half of on selling goods and services to their end-customers have to recast their operation-the year, expect retail sales growth to al and technical infrastructures to compete or even survive in the years to come.”slow even further. Best Buy CEO Brian Dunn, for example, is committed to making the chain’s physi-Retailers have the power to drive cal presence “more reflective of all the possibilities that are available to customersgrowth, though. Noting that new eco- today.” That means creating a web of experiences around the customer in all the dif-nomic realities have resulted in a new ferent channels in which he operates. “Customers don’t think, ‘I’m going to behaveorder of buyers who are more price- in a multichannel fashion today,’” he notes. “They say, ‘I’m gonna go online andconscious and careful about the pur- check it out, I’m gonna call and check it out, I’m gonna stop by and visit the store.’”chases they make, Deloitte LLP ViceChairman Alison Paul believes that Early multichannel adopters are now thoroughly vindicated and firmly in the driv-delivering compelling in-store experi- er’s seat. Indeed, multichannel has been so roundly embraced that some, such asences could drive profitable growth for blogger and principal analyst at Forrester Research Brian Walker, argue that mul-retailers in 2012. tichannel is already passé. “Customers no longer interact with companies from a channel perspective,” he says. Customers now interact through touchpoints that in- clude not only channels such as “stores, branches, call centers and websites, but also emerging interactions, including apps, social media, mobile sites, SMS messages and interactive advertising across smartphones, tablets, cars and even appliances.” “It is time for organizations to leave their channel-oriented ways behind,” he says, “and enter the era of agile commerce.” 7
  • 8. rounds of this fight. M-commerce 6 M-COMMERCE may prove to be the salvation of brickTechnology companies and retailers and mortar after all. Cyriac Roeding,alike have hailed 2011 as the year of founder of the location-based mobilemobile shopping. Consumers are fast shopping app Shopkick, believes mo-approaching the tipping point in their bile commerce provides merchantsembrace of smartphones and tablets to with unprecedented opportunities toaccess apps, discounts, price compari- bring personalization and one-on-oneson information, and payment mecha- personal treatment back to the in-storenisms. According to Email Marketing purchase experience.Reports, mobile devices such as tablets Jani Strand, a spokeswoman for teenand smartphones became the highest- apparel chain American Eagle, said,selling consumer electronic device cat- “Our customers are rarely without theiregory in 2011, amounting to 115 million smartphones, so any engagement thatunits in Q3 alone — beating out PC, used their phones to make a purchase connects with them through these de-laptop and netbook figures combined. at least once. In fact, more than one vices tends to be effective.” Indeed, to- in three purchasers have used theirA much-cited report from comScore day’s shoppers are so umbilically tied smartphones to make a purchase whilefound that two-thirds of all smart- to their phones, according to Master- in a store, according to a less-notedphone owners have performed some Card executive Mario Shiliashki, they finding from the same report.sort of shopping activity on their are more likely to leave home withoutphones, including comparing prod- Thus far, e-commerce companies have their wallet or cigarettes. “And I men-ucts and prices, searching for coupons, had the upper hand in using mobile tion cigarettes,” he adds, “because thetaking product pictures, or locating a technology to inflict blows on physi- phone has become more addictive thanretail store, and that 38 percent have cal stores. But we are still in the early the most addictive substance out there.” 7 ASSORTMENT LOCALIZATIONAs consumers continue to trim spend- proactive retailers are utilizing sophis- rebel against the one-size-fits-all retail-ing and do more of their shopping on- ticated communication tools such as ing models. By utilizing the conceptline, big-box retailers are moving to assortment planning, flow modeling, of store assortment localization, Seidlsmaller stores to reduce under-utilized price optimization, promotion opti- notes that retailers have been able tospace and stay profitable. At the same mization and size optimization to cre- boost sales by 40 percent to 50 percenttime, consumers are treating retail ate custom assortments based on each and carve out a solid competitive ad-stores as showrooms where they can store’s local characteristics and demo- vantage for themselves.test-drive merchandise before making graphics. By capturing information Assortment localization can be an ef-a purchase. Whether or not they pur- about the specific buying patterns of fective way to build intimacy withchase in-store, shoppers will increas- their shoppers, they can efficiently ca- customers as the economy puts moreingly turn to their mobile devices to ter to each store’s particular needs. pressure on retailers to manage theircheck for better pricing or selection John Seidl, a partner at Kurt Salmon inventories closely. Scott Welty, vicebefore making that purchase. Associates, argues that, as U.S. consum- president of retail industry strategy forAs a counter to both of these trends, ers become more diverse, they tend to JDA Software Group, notes that the 8
  • 9. trend toward shoppers using brick-and-mortar locations as showroomsrequires retailers to stock the opti-mal localized assortment range andmaintain appropriate quantities foreach store. “Having the right item inthe right store at the right time helpsmaintain and improve customer loy-alty,” says Welty. “Providing a superiorcustomer experience by ensuring that‘available to promise’ meets the de-mand and geographic location of thecustomer, no matter how or where theyultimately buy the merchandise.” 8 EXPERIENCE DESIGNIn theory, experience design — or user UX design is a highly multi-disci- Emerging trends in UX design includeexperience (UX) design — operates plinary field, incorporating aspects of designs that can adapt and performfrom the premise that consumers wish everything from psychology, anthro- within various media devices, gesturalto engage in a meaningful interaction pology, sociology, computer science, and touch-based interactions, loca-when purchasing a product or service. graphic design and cognitive science. tion/proximity-based mobile experi-In practice, experience design involves Depending on the product, UX may ences, smart real-time user interface,the creation of culturally relevant also draw on content design disciplines and designs that can adapt and per-products, processes, services, events, as varied as communication, instruc- form within various media devices.and environments that focus primar- tion and gaming. The rise of social media has increasedily on the quality of the user experience the importance and impact of eachrather than functionality. This emerg- customer experience. Because custom-ing trend in “user-centered” design er expectations and experiences areinforms the latest in everything from rapidly shared and distributed betweenintelligent buildings to Facebook apps, peers, it is more important than everiPhone games and digital equipment. that retailers engage in meaningful interactions with customers to makeMobile adoption in the retail and fi- them truly empowered participants.nancial sectors is fueling the drive to-ward smoother, more intuitive designs. UX designer and blogger WhitneyApplying experience design principles Hess’s 10 guiding principles can beto mobile, for example, would strive to applied to both physical and virtualeliminate clutter while requiring fewer, world projects irrespective of goals,simpler steps to accomplish a task, thus constraints, or resources. Her firstproviding a more streamlined and tar- principle is: “Stay out of people’s way.geted experiences. Pave the road for an easy ride.” 9
  • 10. that, over time, iTunes has morphed 9 iTUNES and bloated into an increasingly con-Apple has benefited mightily in the fusing and compartmentalized hodge-past decade from the shift from CDs podge of products jerry-rigged as one.to online music services — a shift it In terms of ease of use, iTunes is thehelped set into motion with the unveil- least Apple-like piece of software theing of the iPod in 2001. Two years later, company produces. While version 10.5Apple launched the iTunes music store brought support for iOS 5 and iCloud,offering songs for 99 cents apiece. as well as some small changes to the Sony Corp.’s music unit and EMI Group user interface, most observers agreeDuring the past year, iTunes has faced Ltd.) in assembling an offering of some the software must trim down and getsome stepped-up competition fromboth Google and Swedish-based Spot- 13 million songs that users can share back into fighting condition in prepa-ify. Google introduced a music service on its Google+ social network. Spotify ration for the coming challenges to itsthat lets users buy songs through the is coming at iTunes from a different market dominance. Besides GoogleAndroid Market, and the European angle than most other sync platforms, and Spotify, iTunes is also facing on-music-streaming startup Spotify offered starting out with a strong inventory, slaughts from San Francisco startupan upgraded shopping system that al- more than a million subscribers and a DoubleTwist and a Seattle-based outfitlows users to purchase entire playlists war chest estimated at $100 million. known as Amazon.com.of MP3s with a single click and sync Thus far, Apple has fended off com- The victor in this struggle will claimthem directly to their music players. petitors by issuing frequent upgrades the hearts and payment methods ofGoogle has partnered with more than of the media-management software a user base that, in the last fiscal year,a thousand record labels (including to thwart third-party iPod synching. generated $6.3 billion. It will be inter-Vivendi SA’s Universal Music Group, One downside of that strategy has been esting to see how Apple does it.10 MOBILE COUPONSAccording to a study by Group SJR and Liz Claiborne Inc. conducted among 8 0 1smartphone and tablet owners between the ages of 18 to 64, half said theyplanned to scan barcodes more often to get additional information abouta product, suggesting that barcode scanning is poised to go mainstreamwithin the next few years. Citing an increase in mobile payment systems,better targeting technologies, and budget-friendly marketing techniques,Juniper Research analysts believe mobile coupons will be key to driving in-storepurchasing with potential for exponential growth that could result in a market worth$46 billion by 2016.According to a survey commissioned by AT&T, 66 percent of respondents agree that mobile barcodeswill drive new mobile marketing campaign concepts in the next year. The majority of executives surveyedbelieve mobile barcodes represent the greatest area of potential for innovation in 2012.SpyderLynk CEO Nicole Skogg believes mobile barcodes “offer unmatched opportunity to increase brand value by adding mea-surable interactive functionality and richer consumer engagement.” 10
  • 11. Prosper Mobile Insights has found venient and useful,” while 42 percent facing QR code acceptance has beenthat a majority of survey respondents had used their smartphone or tablet to that most mobile phones do not comehad used their smartphones or tablets scan a barcodes or present a text mes- equipped with the requisite scanningfor some type of shopping behavior. sage or promo code to a cashier. Forty capabilities, although marketers ex-Of the 348 smartphone and tablet us- percent had made a purchase directly pect that 2D barcode readers will beers surveyed, 67 percent agree that on a mobile device, and 36 percent had standard issue for smartphones begin-location-based coupons are “very con- scanned a QR code. A major hurdle ning in 2012. 11 BEHAVIORAL TARGETING As yet another example of how the Amazon model continues to shape theevolution of the Web, the deluge of user-generated content — from productreviews and comments posted on news stories, to the glut of unguardedpersonal information offered up by users of Facebook, Twitter, YouTube,et al — amounts to a behavioral marketer’s dream come true. All thatdata, freely given, is rich in the sort of detail that behavioral marketersprize in selecting which advertising messages are displayed to that in-dividual. The algorithms Amazon developed to suggest items of interestbased on a particular user’s browsing habits and purchasing history maysoon permeate the entire Internet. The challenge is to find the appropriate opportu-nities without seeming too invasive or behaving like a virtual stalker. 12 ZAPPOS Seeking to drive home the point that Zappos offers “more than shoes,” the online retailer last summer launched a uniquely inter- active print ad campaign that invited consumers to dress naked models using QR codes. The ads depicted naked models (mostly women) doing outdoor activities, such as jogging or riding a scooter through Manhattan locations, with strategically placed censor bars emblazoned with the campaign’s tagline. The QR codes lead the user to a website where a video shows how the sce- nario depicted in the ad plays out. Consumers can then choose an outfit for the model and go to Zappos to buy it. While some Zap- pos brands declined to participate in the campaign, fearing the photos were too risqué, Nathalie Binda, marketing vice president for women’s active wear manufacturer of Lolë, did not hesitate to sign on, calling the campaign “gutsy” and “very Zapposesque.” “If there’s one brand out there that can do it,” she said, “it’s Zappos.” 11
  • 12. REED HASTINGSOn the night of Sunday, Sept. 18, 2011, Netflix co- tumble that erased approximately $12 billion from thefounder and CEO Reed Hastings sent an email to company’s market value.the company’s 24.6 million subscribers that began: “Imessed up. I owe you an explanation.” Hastings ended 2001 by an- nouncing he would take aThe blunder had come three months earlier when cus- 33-percent cut in pay, whiletomers who opted for the company’s DVD-by-mail assuring investors that “weand streaming services learned that their subscription are done with pricing chang-rates would jump by as much as 60 percent if they re- es.” An SEC filing revealed that Hastings’ stock optiontained both. allowance for 2012 will be $1.5 million, half of what he received for 2011, and his salary will remain $500,000.Hastings’ mea culpa also included the bubbly news In a January 2012 posting headlined “Reed Hastings:that the company’s DVD-by-mail service would 2012’s CEO of the Year?” Rick Aristotle Munarriz ofhenceforth be a separate entity called Qwikster, ac- The Motley Fool marveled that Netflix shareholderscessible via its own website for an additional fee — had seen a remarkable 25 percent surge in the firsta move that drew comparisons to the launch of New week of the new year. Munarriz speculated that sharesCoke from the instant Hastings clicked “send.” Hast- had bounced back following some well-deservedings was roundly mocked in the business trades and tax-loss selling, and the company’s revelation thaton Saturday Night Live for his arrogant, if not outright it logged some 2 billion hours of streaming contentincompetent, disregard for his core customers. He during the last quarter. Netflix may have received aneven neglected to acquire the @Qwikster handle on unexpected and counter-intuitive boost when TimeTwitter, which was then being used by a man named Warner announced a 56-day waiting period (doubleJason Castillo, whose profile pictured the Muppet the previous 28 days) before offering its DVDs toElmo smoking a joint. No word on whether Castillo rental companies at bulk discount prices. While thismanaged to cash in on the urgent offers to buy his will hamper the DVD-by-mail side of the business,handle (“idk who to trust,” he tweeted) during his the same constrictions apply to its chief rivals Block-three-week window of opportunity before Hastings buster and Coinstar’s Redbox which continue to relywent back to the confessional to renounce Qwikster primarily on physical rentals. Netflix’s emphasis onas a non-starter. In the meantime, the company(s) had streaming may yet put Hastings on the shortlist forshed 800,000 angry subscribers, and saw a 76 percent Comeback CEO of the Year. 12
  • 13. 13 RETAIL CRMThe future of retail CRM — both its potential and pitfalls — is writlarge on the walls of Facebook. Amassing more than a trillion pageviews per month, Facebook is an immense source of CRM data withunlimited potential, but it appears in an unwieldy mix of text, graph-ics, geospatial and other formats that, thus far, retailers have been un-able to wrap their arms around. In the past couple of years, the indus-try has been aswirl with rumors of impending CRM breakthroughs,with speculation ranging from artificial intelligence supercomputerssuch as IBM’s “Jeopardy!” champion Watson to applications devel-oped by CIA-friendly organizations for monitoring potential terroristactivities. However, with the release of its Gateway for Facebook CRM solution this past summer, retail business analytics leaderMicroStrategy has positioned itself as first-mover in what some observers have already dubbed the “Facebook CRM era,” poten-tially the biggest development in retail technology and marketing since the invention of the Web.14 FACEBOOK 15 MOBILE POSIt’s no exaggeration to say that Facebook Point-of-sale systems have be-represents an unprecedented leap in come the true command centersthe history of human interaction. As of in-store operations, providingof September 2011, Facebook has more a host of applications that lever-than 800 million active users, with age customer search histories,more than 50 percent of those logging generate cross-selling recom-on in any given day and amassing more mendations to prompt add-onthan a trillion page views per month. purchases, streamline inventoryFacebook traffic to retail sites increased functions, schedule employees and al-an incredible 92 percent year-over-year locate store resources. Yet “traditional”for August 2011, yet that traffic showed POS technologies — if it’s not too soona conversion rate of only 1.2 percent, to use that term — are already facingsuggesting that Facebook also repre- threats from mobile POS platforms 2011 released by RIS Newssents the world’s richest source of un- such as smartphones and tablets. The Mobile, transaction systems providetapped CRM data (see No. 13 above). migration to mobile is particularly a way for retailers to reduce checkout evident at independent restaurants lines without adding expensive check- and start-ups, where less-expensive out counters or staff. Automated sys- options are more readily embraced, tems that use mobile computers and says Greg Buzek, president of research printers add speed, security and pro- and services firm IHL Group. Adopt- fessionalism to transaction-processing ing mobile devices within a POS sys- operations. The results are greater cus- tem requires a lower initial investment tomer satisfaction and fewer carts and offers a “cool” factor for custom- abandoned by customers who leave the ers. According to Store Systems Study store discouraged by long checkout lines. 13
  • 14. 16 IN-STORE WEB ACCESSIn an effort to draw customers into stores as the primary means of merchandisedistribution, some retailers are offering in-store Web access through self-servicekiosks and workstations to engage customers, provide convenience and increasesatisfaction. This past year, JCPenney refined its Findmore technology with 42-inchinteractive plasma-screen kiosks linking shoppers and sales associates to its 250,000online products. The media-rich kiosks provide editorial content and highlight keyseasonal trends while incorporating social-media-like features, such as permittingshoppers to add items to an online “dressing room” and email their choices to them-selves or friends. Customers also can use Findmore to finalize the sale, either bypurchasing items online and having them shipped to their home or to the store forlater pickup, or by printing out a receipt and purchasing an online item at an in-store register. 17 DIGITAL PRODUCTS Representatives from major music labels EMI, Universal, and Sony have, at the time of this writing, all declined to comment on claims from various music industry insiders that they all have timetables in place for phasing out their production of physical CDs by the end of 2012. While no one is stepping up with such bold predictions on when the last movie theater will shutter its doors, a steadily growing number of viewers are con- tent to stream movies online, with Netflix alone reportedly accounting for 30 percent of all evening Internet traffic. Newer devices can handily stream movies on ever-larger and less expensive TV screens. The demand for deluxe edition CDs (and vinyl sets) loaded with extras is expected to remain for the foreseeable future, as are venues for projecting the occasional must-see, special-effects-laden blockbuster. The fate of any products capable of being delivered digitally seems clear. The handwriting has been on the wall ever since the first MP3 was posted to Napster back in mid-1999. 18 MILLENNIALSFinding themselves with more time than money and armed with total pricing transparency and unlimited selection, Millennialshoppers (those born between 1980 and 2000) are taking Depression-era frugality to a whole new level. In the process, Millen-nials are pushing retailers to learn new tricks. According to a study from Deloitte, Web-savvy Millennials treat each shoppingtrip as a mission. They research online and know exactly what they’re going to buy when they arrive at the store. TechCrunchsees in this trend the “Death of the Impulse Shopper,” while Bloomberg hails the “Rise of the Surgical Shopper.” Whether re-tailers see the glass as half-empty or half-full, the trend increases the importance of every customer who comes in their stores.Retailers can no longer rely on impulse buying to pay back the cost of loss-leader promotions, and rewards for store loyalty.Efforts, instead, must be dedicated to converting every shopper into a buyer. 14
  • 15. 19 TRADER JOE’S Privately owned Trader Joe’s has been on an expansion binge over the past three years, continuing to build on its near-cult status by providing healthy, organic and locally produced food to shoppers on a budget. The company has expanded at a steady pace, opening some 40 new stores a year and moving well beyond its Southern California stronghold to the delight of awaiting customers in markets such as New York, Chicago, and Des Moines. The expansion comes as many retailers are eye- ing Trader Joe’s success and experimenting with smaller-format stores that can slide easily into urban areas with lower rents. In 2010, the company pulled in an estimated $8 billion in sales, roughly on par with chief rival Whole Foods Market.20 LOYALTY PROGRAMS 21 MOBILE/CONTACTLESS PAYMENTSAccording to the Loyalty Marketer’s Associa- Although U.S. customerstion, customer loyalty, rather than acquisition, have been relatively slowis the key to sustainable growth. Business con- to adopt NFC-equippedsulting firm Protiviti ranks customer loyalty as smartphones or utilize thethe top non-financial business challenge compa- contactless payment cardsnies will face in 2012. Yet businesses report that they already carry in theirretaining and engaging customers remain their wallets, blogger and prin-greatest challenges. While daily-deal sites such as cipal analyst at ForresterGroupon and LivingSocial continue to generate Research Brian Walkerthe greatest buzz, marketers suspect that price- predicts we will soon seebased strategies are taking focus away from the customers waving NFC-en-real prize, customer loyalty. The emerging model abled smartphones acrossfor success uses data gathered from loyalty pro- interactive display ads tograms to engage with customers across all touch- automatically add picturedpoints at all stages of the customer life cycle. items to their online carts, making immediate trans- actions on their phones, or walking into a store with the resulting offer. More than 7,000 Subway restaurants across the U.S. are installing new Tap & Go Payment Readers to accept contactless payments through the MasterCard PayPass platform. Subway diners will be able to pay for their meals simply by tapping a PayPass-enabled card or device at the register. As more and more consumers interact with these devices, Walker expects that their expectations and buying habits will quickly change. 15
  • 16. 22 COSTCO 23 NEIMAN MARCUSCostco’s 596 stores provide a great indi- Like many other luxury players con-cator of where different products — from cerned about protecting their care-milk and eggs to diamond rings — are fully cultivated brand images, Neimanlikely to see growth, according to Jeff Marcus was slow to embrace socialWeidauer at retail industry marketing media. But in the run-up to the 2011firm Vestcom International. Hofstra holiday season, the high-end retailerUniversity business professor Barry got into the spirit in a big way by host-Berman recommends Costco’s strategy ing a flurry of digital campaigns aimedof opportunistic buying to any “smart at boosting its online presence. As ofretailer.” mid-December, the retailer had nearly 500,000 fans on Facebook and 50,000 followers on Twitter. The campaigns included a Foursquare scavenger hunt called “Clutch me if you can,” in whichBy focusing on prices and maintaining Nancy Gonzalez clutch bags were hid-a 17-percent profit margin, Costco has den in 15 of its 41 stores and customersseen its profitability grow during the had to check in via Foursquare to receive clues about where to find them. In an ef-economic downturn as shoppers turned fort to create buzz for the launch of celebrity stylist Rachel Zoe’s collection, Neimanto the wholesale club operator for deals Marcus launched a Facebook design contest encouraging fans to assemble virtualon food and necessities. The Issaquah, outfits from items in the collection. The ensembles were judged by Rachel Zoe andWash., company reported that its fiscal the chain’s fashion director Ken Downing, with the winner receiving a private meet-2011 net income rose 12 percent to $1.46 ing with the two judges plus a $2,500 Neiman Marcus gift card. So what caused thebillion, or $3.30 per share, while revenue sudden shift in attitude? Research showing that 77 percent of Neiman Marcus cus-climbed 14 percent to $88.92 billion. tomers own a Web-enabled mobile device and 60 percent are on Facebook. 24 UGC, PRODUCT REVIEWSOnline marketers recognize how effective user-generated content (UGC) can be instrengthening search engine optimization strategies. According to comScore ARS,UGC product reviews are every bit as persuasive and effective (if not more so) thanfar costlier advertising media, including display and TV. User-generated productreviews have proven to be one of the most highly effective tools of social mediamarketing, allowing marketers to tweak and modify their messages — and helpbusinesses increase their profits in the process. For retailers, UGC provides unbiasedand unguarded feedback from actual customers. The next logical step for manymarketers involves gleaning data from “micro UGC” — short, low-involvement formsof user-generated content such as Facebook status updates, “likes,” star ratings onNetflix or Amazon, location-based check-ins, “you may also like” recommenda-tions and pictures posted on Tumblr. The logic of UGC’s effectiveness is simple:Like-minded people trust the opinions of their peers above the hype of paid shills. 16
  • 17. 25 TIFFANY 26 STARBUCKSAccording to data compiled by Bloom- Starbucks marked its 40th year in busi-berg, Tiffany nearly tripled its value ness with the rollout of a new logo andfrom the sale of engagement rings a mobile payment app that has becomealone, helped along by price increases the early standard for m-commerceand sales in the Asia-Pacific region. success by demonstrating that custom-It boosted its market capitalization to ers will adopt mobile payments at the$8.6 billion in 2011, up from $3.1 bil- point of sale. Eschewing fancy tech forlion in June 2009, when the U.S. econo- relatively pedestrian barcodes, the Star-my emerged from the longest contrac- bucks app operates with a minimum oftion since the Great Depression. The fuss and a maximum of utility — twoworld’s second-largest jewelry retailer qualities that watchers agree are es-became a likely takeover target after sential to supplanting the use of cashSwatch Group AG terminated its 20- and cards. Introduced in January 2011,year watch partnership with the jeweler the app racked up an impressive three16 years early. The company reported a million transactions in its first three63 percent jump in fiscal third-quarter months. Additionally, by making its2010 earnings as every geographic seg- mobile payments closed-loop and keep-ment saw double-digit sales growth, ing the transactions on its own systems,including a 17 percent increase in the Starbucks bypassed the complicating favorite in 2011, delivering a 35 percentAmericas, which accounted for the step of partnering with a carrier or card year-to-date gain in December despitebulk of its 21 percent revenue growth. brand. Starbucks was also an investor spiraling coffee prices worldwide.27 NORDSTROMNow in its 110th year, Seattle-based Nordstrom continues tolive by its one-sentence doctrine: “Use good judgment in all sit-uations.” The fourth-generation, family-run department storeis legendary in the retail industry for its emphasis on customerservice above all else. In a 2011 consumer survey forecastingholiday spending, the upscale specialty retailer came out ontop among department stores in online shopping, more thandoubling its online share from December 2010. Rather thandefining store space by brand, Nordstrom groups merchandiseinto so-called lifestyle sections, making it easier for shoppersto put together outfits, says retail analyst Jennifer Black. As aresult, competitors have rushed to copy the Nordstrom model,and brands vie for invitations to win shelf space. Shoe entre-preneur Steve Madden recalls the first time he was asked to aNordstrom buyers’ meeting. “It was like an invite to the WhiteHouse,” he said. 17
  • 18. RON JOHNSONThe retail world is watching CEO Ron Johnson close- Vuitton-owned Sephora and Martha Stewart Living,ly to see if he can replicate his success as the creative adding more brand names, streamlining supply-chainforce behind the Apple Store in the relatively stodgy operations, and — as he did at Target — bringing inretail environment at JCPenney. The Apple Store con- exclusive lines from high-endcept was a success, he contends, because rather than designers like Michael Graves.tweaking the traditional model, Apple started from The retailer is also eliminatingscratch and “re-imagined everything.” (Of course discount signs for in-season mer-it helps if the thing you’re selling happens to be the chandise and doing away withsleekest, most-coveted product since Cadillacs came cents on price tickets in certainwith tailfins.) In a piece written for The Harvard Busi- cases. For instance, an item thatness Review “Online Forum” just weeks into his ten- costs $19.99 will now be $20.ure at Penney, Johnson conceded that Apple products Johnson has brought on a number of former col-do indeed pull people into stores, but added, “How do leagues from Apple and Target, which would indicateyou explain the fact that people flock to the stores to that his plans include high-level structural changes.buy Apple products at full price when Walmart, Best He’s also planning a Penney’s version of the Apple Ge-Buy and Target carry most of them, often discounted nius Bar — a concept he created as the SVP of retailin various ways, and Amazon carries them all — and for Apple — staffed by trained employees who candoesn’t charge sales tax!” People come to the Apple offer advice and tips. The challenge, he says, is con-Store for the experience, he says, “and they’re willing ceptually similar to the ones Steve Jobs faced with theto pay a premium for that.” iPhone. “He didn’t ask, ‘How do we build a phone that can achieve a 2 percent market share?’ He asked, ‘HowSince announcing his departure from Apple, John- do we reinvent the telephone?’ In the same way, re-son has been on a mission to revitalize the JCPenney tailers shouldn’t be asking, ‘How do we create a storebrand and increase the retailer’s appeal to younger that’s going to do $15 million a year?’ They should bemore affluent customers. Toward that end, Johnson asking, ‘How do we reinvent the store to enrich ouris emphasizing store-within-store formats, partner- customers’ lives?’”ing with retailers such as the Moët Hennessy - Louis 18
  • 19. 28 DISNEY 29 DIGITAL SIGNAGEFollowing record sales and profit, theWalt Disney Company, owner of thenamesake theme parks and ESPN sportsnetwork, increased its annual dividendfor 2011 by 50 percent, the most in atleast 20 years. The Burbank, Cali.-basedcompany, which also owns MarvelEntertainment and the ABC TV net-work, is returning cash to investorsthrough stock repurchases as well,buying back $5 billion of shares in theyear ended Oct. 1. The Steven P. JobsTrust, Disney’s largest shareholder,will reap $82.8 million, an increase of$27.6 million based on the 138 millionshares held by the estate of Apple’s lateco-founder. Presented with so many attractive buying options, consumers often gravitate to- ward the lowest price, which they usually find online. Thus, retailers have been searching for new engagement strategies, such as interactive digital signage. By dis- playing targeted eye-catching content that can easily be customized according to the context and the audience, digital signage is helping brick-and-mortar retail- ers attract — and hold — the attention of the same customers that many feared were just stopping in to check prices before making an online purchase. Described by one retailer as being “like having a giant smartphone in your store,” interactive digital signage delivers some of the online world’s most appealing capabilities and functions in a real-world environment, replete with attentive sales associates.30 H&MThe world’s second-largest clothing re- Grecian buttons, and fluorescent mi- director Karl Lagerfeld in 2004, andtailer, Hennes & Mauritz AB, recently cro-minis. H&M creative adviser Mar- this most recent partnership betweenannounced its “Versace for H&M” line gareta van den Bosch sees “design and the Swedish fashion giant and a luxuryfeaturing apparel and accessories de- celebrity collections as crucial to estab- designer will give the Italian label glob-signed by Gianni Versace SpA, ranging lishing the fashion authority of H&M al visibility, according to Versace Chieffrom $17.95 zebra-print underwear to as a brand.” H&M has been marketing Executive Officer Gian Giacomo Fer-$299 studded leather jackets and floor- limited-edition designer collections raris, with targeted sales expected tolength “goddess” gowns dotted with since partnering with Chanel creative reach $700 million by 2014. 19
  • 20. 31 INTERACTIVE STOREFRONT WINDOWSSaks Fifth Ave. and Starbucks were content, tweets from around the Web all the iPads were able to talk “to eachamong those pushing the boundar- and user-submitted photos with the other to produce elegant fades andies of interactive storefront displays to #StylelistatSaks hashtag. Running a na- control what device should display,”captivate passers-by in high-traffic lo- tive iPad application built specifically said Gin Lane’s Digital Creative Direc-cations. EBay introduced interactive for the installation on a local network, tor Dan Kenger.store windows in New York City andSan Francisco encouraging holidayshoppers to make charitable donationsto Toys for Tots by scanning a QR code.Displays fronting Starbucks stores inToronto and Vancouver encouragedpassers-by to assemble their favoriteTazo teas using gesture controls via avinyl screen and projector, while Saksand Stylelist.com tapped downtownagency Gin Lane Media to create athree-window display featuring 64 iPad2s and nine 27-inch flat-panel CinemaDisplays for the high-end retailer’sflagship Fifth Avenue store. The displayfeatured original imagery, streaming 32 SMALLER STORE FORMATS As consumers continue to do more shopping online, big-box re- tailers are attempting to stay profitable and reduce under-utilized space by moving to smaller store formats. Safeway and Walmart are among the latest to follow the trail blazed by Tesco’s Fresh & Easy Neighborhood Market. The advantages of smaller formats include greater flexibility, proximity to local markets, a quicker shopping experience, new store development options, solutions for recycling older units, and lower break-even points. According to Marketwise, 62 percent of Walmart’s newest stores are small-format Walmart Express, most of them in underserved rural and urban areas. The chain’s small-format Walmart Express stores typically carry between 11,000 to 13,000 items, compared with the more than 100,000 items found in a Supercenter. “Small stores are going to be a very good growth opportunity for us,” says William S. Simon, president and chief executive of Walmart’s domestic business, “because they allow us to get access in places we are not in today.” 20
  • 21. 33 GROUPON/LIVINGSOCIAL/ETC.The exploding daily deal industry pioneered by Groupon has spawned,by some estimates, more than 700 copycats. And who can blame them?Barely three years after its founding, Groupon raised more than $700million in an initial public offering, generating 30 percent more thanthe company originally sought, then saw its value balloon to morethan $16 billion on its first day of trading on the Nasdaq. LivingSo-cial is Groupon’s most logical competitor. Backed with hundreds ofmillions of dollars in funding, primarily from Amazon (for which itprovides the deals for AmazonLocal), the 2-year-old deal-maker saysit expects to generate revenues of $1 billion in 2012. 34 GAMIFICATION OF RETAIL Boosted by the success of Facebook-supported games such as Farmville and Mafia Wars, gamification is the latest innovation retailers are banking on to improve customer en- gagement, build loyalty, strengthen their brand, and incentivize employees and business partners for better productivity. Gamification is defined as the process of integrating game thinking and game mechanics into marketing activities to solve problems and en- gage users. According to Gabe Zichermann, CEO of Gamification Company, the key to gamification’s success is drugs — “One important drug — dopamine,” he explains. “It’s what we secrete in response to challenge and achievement. It is part of the core group of behaviors that makes gamification and games powerful in changing influence and behavior.” Data released by M2 Research set the current worth of the gamification market at $100 million, with a projected value of nearly $2.8 billion by 2016. Gamifica- tion vendors predict 197 percent growth through 2012, representing an increase of 42 percent over 2011. 35 YELPSan Francisco-based user review web- on companies that are generating wrinkle here is that Yelp relies on thesesite Yelp filed to raise as much as $100 losses,” says Tom Taulli, founder of rivals to send visitors to its site. Googlemillion in a 2012 initial public offering, IPOByte.com and author of “Investing alone accounted for more than half ofseeking to become the latest unprofit- in IPOs.” “No one knows how long this Yelp’s traffic in the first nine months ofable Internet company to go public. window is going to last, so I think Yelp 2011. The search engine’s dual role asCo-founded by former PayPal Inc. ex- is going to get out as fast as possible.” both competitor and ally may put Yelpecutive Jeremy Stoppelman in 2004, the in a difficult position in the future, ac-website features more than 22 million Yelp faces competition from Google, cording to Taulli. “Their main sourcereviews created by its 61.1 million Facebook and Yahoo!, all of which sell of customers is coming from theirusers. “Investors are open to taking bets online ads to local businesses. The competitor.” 21
  • 22. 36 BERGDORF GOODMANOnline merchants are forcing even the highest-end stores to offer up bar-gains to their well-heeled clientel who are relatively insulated from the joband housing markets. “At the luxury end, discounting has become verymainstream because of the Gilts of the world,” said Andrew Sacks of luxuryresearch firm AgencySacks, referring to Gilt Groupe, the online discounterfor designer fashions. At the height of the 2011 holiday season, BergdorfGoodman’s website listed more than 70 pages of discounts on designerfashions, some marked down as much as 40 percent. Bergdorf Goodmanhas also turned to digital and social-media programs in recent months,launching campaigns aimed at building the brand’s presence online, in-cluding a contest inviting its Facebook fans to design a Fendi handbag.While Bergdorf isn’t the first luxury retailer to try a user-generated designcampaign, it may be the first to board the crowdsourcing bandwagon. 37 AT&T WIRELESS 38 REIThe collapse of AT&T’s $39 billion bid for REI has teamed up with U.S. Bank to make credit card approval easier and fasterT-Mobile USA leaves the second-largest for consumers shopping in-store via an iPhone application. By promoting a down-U.S. mobile carrier with few options to load of the REI Visa app at point of purchase, the retailer can enable customers tochallenge market leader Verizon Wireless. instantly be approved for the REI Visa card and begin using their reward pointsT-Mobile’s spectrum assets would have al- immediately. “The app also moves the customer application process out of the ser-lowed AT&T to expand its LTE footprint vice lane to more of an in-store experience that connects with the brand,” saysto cover 97 percent of Americans. How Dominic Venturo, chief innovation officer of the bank payment service division atAT&T will make up that difference isn’t U.S. Bank. REI was deemed the best fit to try out the mobile credit card applicationyet known, but AT&T needs to act quick- process because of the company’s mission. “Eliminating paper was important toly, as Verizon has already blanketed some REI because it is an environmentally conscious group,” Venturo said.190 markets and 200 million Americans “REI also has a very strong customer following with their existent iPhone appwith LTE. While AT&T was focused on and wanted to try something new.”winning regulatory approval for the take-over, rivals were negotiating their own air-wave deals. As a result, several spectrumassets that would have still been availableto AT&T are now off the table. Its remain-ing options are time-consuming, expen-sive and risky, says Cowen & Co. analystColby Synesael. AT&T can either seekto buy spectrum from another company,wait for the government to auction morefrequencies or try to squeeze more capac-ity out of its current airwaves. 22
  • 23. 39 POP-UP SHOPSAlthough pop-ups have moved up in the world, for some the termstill has downmarket connotations. The first generation of pop-ups often consisted of little more than shelving and a cash registerin empty mall space. In recent years, retailing stalwarts breathednew life into the format. Procter & Gamble, for example, operateda 4,000-square-foot pop-up on 57th Street in Manhattan that drew14,000 visitors in the 10 days it was open. The store had no cashregisters because everything was free — including a full CoverGirlmakeover or a Head & Shoulders wash and blow dry. The P&Gpop-up — the company’s marketing executive Nataraj Iyer prefersthe term “interactive experience” — represents a new iteration inthe evolution of the pop-up. The goal was not to move merchan-dise but to build brand loyalty.40 DEAL-OF-THE-DAY (WOOT, ETC.)The “daily deal” concept is as old as phenomenal success — the companyretailing itself. Strictly speaking, deal- was acquired by Amazon.com in 2010of-the-day sites are similar to job lot — combined with extremely low bar-discounters. They take unused capacity riers to entry inspired a slew of similarand sell it at a discount. The difference deal-of-the-day sites with quirky prod-is that businesses use social media to uct descriptions and real-time inven- spending on deal-of-the-day offerspre-sell this excess inventory in hopes tory updates. It wasn’t until such sites could grow from $873 million in 2010of luring new customers. Pioneered by began offering deals for local shops and to $3.9 billion in 2015. The same fore-Woot in 2004, deal-of-the-day websites restaurants that the industry truly took cast also estimates there are 178 U.S.started out selling mostly electronics off. BIA/Kelsey released a forecast in cities with deal-of-the-day sites reach-and tech gear at deep discounts. Woot’s March 2011 indicating that consumer ing 102 million people. 41 IKEAIkea is developing its website to have product and then figuring out how to stores in North America by 2013. Ikeaa broader geographic reach and offer make it, will cut prices by 1.5 percent expects to triple its pace of store open-more services, such as allowing cus- this year as its increased scale allows ings in China to capture faster growthtomers to select items they want in it to produce items at less cost. Ikea, in the second-largest economy, saysthe store and have them delivered to which updates its collection of about CEO Mikael Ohlsson. The expansiontheir home without having to gather 10,000 products with more than 2,000 in China will also allow the companythem from the outlet’s warehouses. new items a year, will continue invest- to reduce its reliance on Europe, whichThe world’s largest furniture retailer, ing in products and enlarging stores is suffering from a slump in consumerknown for setting a price point for a in the coming year, adding 50 more confidence. 23
  • 24. BRIAN DUNNRecent headlines tell a dismal story: “Best Buy’s zon.com with Best Buy Marketplace, a new serviceDunn Should Be Next CEO Fired” wrote Douglas meant to challenge the world’s largest e-commerceA. McIntyre on 24/7WallStreet.com. Then, just a few company. The effort addresses challenges shared byweeks later, “Why Best Buy is Going out of Business all retailers committed to main-… Gradually” topped a 3,000-word screed by Forbes taining large bricks-and-mortarcontributor Larry Downes, that garnered some 15,700 operations while simultaneouslyFacebook shares, 17,500 tweets, and a blunt response trying to flank Amazon online.from Dunn himself titled “My Thoughts on Best Buy’s Although Best Buy MarketplaceRecent Media Coverage,” albeit without mentioning substantially increases the selec-either McIntyre or Downes by name. Best Buy has tion of products and brands available at BestBuy.com,posted a string of poor quarterly results since Dunn Wall Street appears to be losing patience with Bestassumed the CEO mantle in June 2009. Throughout Buy’s plans to overhaul itself. Despite Dunn’s upbeathis reign, Downes charges, Dunn has pursued a strat- assurances to the contrary, Amazon.com has badlyegy of protecting market share over profit. In the quar- damaged Best Buy’s earnings and its future projects.ter ending November 30, 2011, store sales increased 1 As evidence of investor reaction to the CEO’s tenure,percent — marking the retailer’s first increase in two Best Buy’s shares are off 43 percent over the past twoyears. Margins, however, sank, with net income drop- years, while Amazon’s are up 39 percent, and the S&Pping by 29 percent. For the quarter ending May 28, 500 is higher by 12 percent over the same period. The2011, the firm posted a sales increase of only 1 per- market’s stunned response to Best Buy’s third quartercent to $10.9 billion. EPS fell by 3 percent to 35 cents. 2011 results and forecasts resulted in shares plummet-Online revenue rose only 10 percent in the U.S., not ing more than 15 percent. A decisive blow to Dunn’snearly enough to keep up with Amazon, which con- tenure may have come just days before Christmastinues to grow more than 50 percent per quarter. when the world’s largest consumer electronics retailer announced that it would be unable to fill an undis-Dunn maintains that his company is well positioned closed number of holiday orders placed online.to poach significant online market share from Ama- 24
  • 25. 42 TARGETAfter spending two years preparing to accounted for more than half of thetake control of its website from Ama- major outages on the top 100 sites inzon.com, a prominent link (“learn all the U.S. by revenue, according to Webabout what’s new”) on Target’s home monitor AlertBot. Still, e-commercepage failed to work when the site went analyst Colin Sebastian at Robert W.live in August. That was just the begin- Baird & Co contends that Target madening. Three weeks later, the release of the right move. “The complexity ofa collection from Italian fashion house building a large-scale e-commerce siteMissoni brought a rush of visitors that is really difficult,” he said. “But, at thecrashed the site for most of the day. A sentence statement that Target.com end of the day, Target made the rightmonth later, the site went down again president Steve Eastman had left the decision. Amazon is a competitor, andduring peak shopping hours. Later company to “pursue other opportu- you don’t want them controlling yourthat day, Target announced in a one- nities.” All told, Target.com crashes e-commerce business.”43 LULULEMON 44 TABLET COMPUTERS IN-STOREVancouver-based athletic apparel com- An estimated 25 percent of all tablet learning curves for new hires, morepany Lululemon Athletica has caught computers purchased in 2011 were engaging and knowledgeable sales as-fire with yoga enthusiasts to a degree bought by enterprises, and 25 percent sociates, sales associates’ ability to helpthat sent its competitors stumbling of those enterprises were retailers. Re- customers in more store departmentsover themselves in pursuit of custom- tailers are putting tablets to work as and a more pleasant and efficient buy-ers willing to spend $98 on stretchy digital catalogs, signage and in-store ing experience for customers.yoga pants. Mimicking Lululemon’s information kiosks. Tablet computingwinning strategy, Nike’s Salvation solutions connect retail sales associateschain of athletic-wear stores intro- with a wealth of knowledge, includingduced $64 training capris featuring a product information, learning tools,yoga-studio format and similar logo. real-time product inventory, customerGap’s Athleta stores began selling $60 reviews and ratings, updated price andwomen’s yoga tops and offering free promotional information, as well as theyoga classes — another Lululemon in- ability to print or email any of these.novation. Unlike other business solutions that require a great deal of infrastructureNordstrom’s Zella line, dedicated to and integration efforts, tablet comput-yoga attire, went so far as to hire a ing solutions require minimal impactLululemon alum to launch the effort. on existing systems and are often moreSince opening its first store in the reliable than other solutions. In-storeUnited States in 2003, Lululemon’s ag- tablet computing systems provide re-gressive strategy has paid off with rev- tailers with consistent sales processesenues growing from $40.7 million in that can be promoted across all stores,2004 to $711.7 million in 2010. increased sales, significantly reduced 25
  • 26. 45 AMERICAN GIRL Mattel’s American Girl line of dolls, accessories, books, and (more recently) movies, has dominated the big and expen- sive ($95) doll market for a quarter-century by building its brand with unwavering focus on its core customers (girls, their mothers and their grandmothers), an ability to identify and fill gaps in the market for their customers and a com- mitment to connecting with its customers beyond the ac- tual sale. Since its first mail-order catalog debuted in 1986, American Girl has sold more than 20 million dolls and 135 million books that tell the stories of its dolls representing dif- ferent periods in American history.46 CVS/CAREMARKReversing two years of decline, CVS/ new contract wins. Furthermore, chief up for grabs. With 43 percent of CVSCaremark expects 2012 profits to grow rival Walgreen Co. has failed to replace stores located within one mile of a11 percent to 15 percent based on its its contract with employee-benefits Walgreens (85 percent are within fiveacquisition of Universal American manager Express Scripts. Valued at miles), CFO Dave Denton expects toCorp.’s Medicare Part D business, a deal more than $5 billion in annual drug pick up as many as 23 million of thosewith health insurer Aetna Inc., better sales, the lapsed contract will put ap- prescriptions, which would boost prof-drug pricing, and billions of dollars in proximately 90 million prescriptions its by as much as 11 cents a share. 47 VICTORIA’S SECRETVictoria’s Secret is all about differentia- increase of 12 percent, benefiting from Bra and the Gorgeous Bra. The com-tion, according to Stuart Burgdoerfer, the wide array of its assortment, which pany also registered an 8 percent rev-CFO of Victoria’s Secret parent Limit- includes major third-quarter launches enue increase in Victoria’s Secret directed Brands Ltd. “We really have unique such as Showstopper Bra, PINK, the channel, driven primarily by PINK,products, a leading position [and] with Heartbreaker Bra, the Unforgettable sleepwear, panties and knit clothing. Inrespect to our brands, no obvious im- March, the company introduced threemediate close competition.” The Co- versions of its “Incredible” bra, a super-lumbus, Ohio-based specialty apparel soft push-up that is more comfortableretailer posted a 12 percent gain in than earlier versions. An accompany-comparable sales for the 11 months ing Incredible fragrance is a mixturethrough December 2011. While Lim- of magnolia, pear and sandalwood andited registered revenue growth across described as “fruity, feminine and sur-all of its major brands, Victoria’s Secret prisingly clean smelling.” The bra’s pre-was the major growth driver for Q3, decessor, “Miraculous,” boosted bustswith U.S. stores registering a comp sales by as much as two cup sizes. 26
  • 27. 48 PUBLIX 49 DICK’S SPORTING GOODSPublix Super Markets has offered ex- Dick’s Sporting Goods dates back to 1948 when Richard Stack (father of currentceptional customer service for more CEO Edward Stack) opened a bait-and-tackle store in Binghamton, N.Y. When Ed-than 80 years, operating 1,000 loca- ward took over as CEO in 1984, only two stores were in existence. Today Pittsburgh-tions through one of the worst eco- based Dick’s is the largest sporting goods retailer in the country, with 474 namesakenomic downturns in history without stores in 42 states and 81 Golf Galaxy stores in 30 states. Dick’s still has abundantlaying off a single employee. Publix is top-line growth opportunity with plans for 400 more stores over the next severalthe country’s largest employee-owned years to build out its presence on the West Coast. Dick’s has succeeded where othersupermarket and the fourth-largest big-box sporting goods efforts have failed by catering to serious enthusiasts whooperator of traditional supermarkets want a big selection and an engaging in-store experience. Each Dick’s location fea-overall, behind Kroger, Supervalu, tures stores within the store, such as the Golf Shop, the Lodge and Perfect Season,and Safeway. George Jenkins — or Mr. which highlight whatever sport is then in season.George, as he is still known withinthe company — launched his service-oriented supermarket in 1930 and im-mediately embarked on an expansioneffort that has yet to abate. Publix con-tinues to grow at a time when manyother businesses are stagnating. Theretailer’s latest growth efforts include ahybrid store that melds its GreenWiseorganic format with its more conven-tional stores. Publix’s second-quarter2011 net income rose 9.7 percent, to$382.4 million. Total sales increased5.8 percent, to $6.6 billion, with same-store sales up 4.2 percent. 50 BUILD-A-BEAR WORKSHOP The interactive entertainment retailer Build-A-Bear Workshop invites guests to create their own customized stuffed animals. Digital Signage Today named Build-A-Bear’s new Digital HearMe Sound Stations one of the top 10 coolest digital signage deployments of 2011. The self-ser- vice kiosk is highly visible, located near the entrance and “ChooseMe” area where guests first select their “new friends.” The stations bring a new experience to the customers while reducing time to market for new sounds — automatically linking the sound purchase to a POS system and improving personalization through a record-your-own sound module. Digial Signage Today rates the experience as “fun for kids and easy to understand for grandma.” 27
  • 28. 51 LEGOThe 76-year-old, family-owned Dan-ish toy maker topped $1 billion in U.S.sales for the first time in 2010 and wason track to repeat that performance in2011. The snap-together plastic brickempire has grown and evolved dramati-cally to include robotics, films, videogames, theme parks — even a businessconsultancy to foster creative think-ing — but all focused on boys. On NewYear’s Day 2012, Lego introduced LegoFriends, a full line of 23 different prod-ucts aimed at girls aged 5 and up. “Thisis the most significant strategic launchwe’ve done in a decade,” said LegoGroup CEO Jørgen Vig Knudstorp. 52 HIGH-TECH DRESSING ROOMS“We want to reach the other 50 percent Shoppers at San Francisco’s Industrie Denim no longer need to venture outside theof the world’s children.” The company’s fitting room to ask friends (or strangers) if the jeans they’re trying on make theircommitment is evidenced by a $40 butts look big. Nor do they have to take anyone else’s word for it. They can see formillion global marketing push behind themselves using the closed-circuit “Booty Cams” installed in the retailer’s dress-the launch. ing rooms. (Store manager Rob Jolin is quick to assure shoppers that the process is completely private.) Some of luxury retailer Prada’s dressing rooms employ plasma mirrors similar to the Booty Cams, as well as doors that go from opaque to trans- parent. A growing number of clothing retailers are using such gee-whiz technology to entice customers into trying on clothes and get them excited about shopping. Consumer psychologist, Kit Yarrow, said the high-tech dressing-room tools are as much about customer assistance as they are marketing. “What it tells consumers,” she says, “is that a store is trying and they’re thinking.” 53 QUICKRESPONSE (QR) CODESAt first glance, QR codes seemed a sure bet to be the next big thing. So why aren’t they? They’re everywhere: on billboards,magazine ads, business cards, T-shirts, shop windows, every variety of signage — even on trees and playground equipment inpublic parks. Yet, according to a recent survey conducted by Archrival research group, nearly 80 percent of college studentsacross the U.S. had no clue how to scan a sample QR code when presented with one. No clue and little interest. Nearly 75 percentsaid they were unlikely to scan a QR code in the future. Go off campus and QR’s prospects are a little brighter. A recent surveyby Prosper Mobile Insights found that nearly one-third of general-population smartphone and tablet users have scanned QRcodes to access in-store coupons. But unless someone comes up with an application that will catch fire with the cool kids, theonly place you may see those now-ubiquitous do-hickeys — often described as barcodes on steroids or a checkerboard on LSD— will be in the next millennium edition of Trivial Pursuit. 28
  • 29. 54 BEST BUY 55 EBAYBest Buy is taking its best shot at In a direct rebuke to Amazon.com,poaching some online market share eBay is offering consumers an incen-from Amazon.com with a new service tive to shop in stores by offering thosemeant to challenge the world’s larg- who spend $100 online a $10 discountest e-commerce company. Best Buy on purchases from designated retail-Marketplace substantially increases ers. To qualify, shoppers must buy onthe selection of products and brands the Web from Toys R Us, Dick’s Sport-available at BestBuy.com. The effort ing Goods, or Aeropostale using eBay’saddresses challenges shared by Barnes PayPal payments servicer. The world’s& Noble and all retailers committed to posted a sales increase of only 1 percent largest online marketplace announcedmaintaining large bricks-and-mortar to $10.9 billion. EPS fell by 3 percent to the incentive after Amazon drewoperations while simultaneously trying 35 cents. Online revenue rose only 10 heavy fire in December for offering ato flank Amazon online. Wall Street percent in the U.S., not nearly enough 5 percent discount to those who usedappears to have lost patience with Best to keep up with Amazon, which con- its new mobile app to compare pricesBuy’s plans to overhaul itself. For the tinues to grow by more than 50 percent with those in physical stores. Whilequarter ending May 28, 2011, the firm per quarter. eBay also offers an app for price check- ing, it doesn’t actively compete with re- tailers on its site. EBay is “trying to be the anti-Amazon in a sense,” said Co- 56 LL BEAN lin Sebastian, an analyst at Robert W. Baird & Co. The company is “position-Never regarded as a retail trendsetter, L.L. Bean has responded to customer demand ing itself as a partner with traditionaland now allows consumers to shop its entire inventory of outdoor gear and apparel retailers, whereas Amazon is trying tousing a new commerce-enabled mobile site powered by Usablenet. “It’s really to accelerate that shift away from stores.”meet our customers where they want to shop,” said senior public relations represen-tative Laurie Brooks. “We’re a multichannel merchant. We were responding to whatour customers were asking us — to have a shoppable mobile site.” The companybuilt a loyal following over the past 98 years with its liberal return policy and folksysales staff. The $1.5 billion Freeport, Maine, retailer saw Internet sales top catalog orders for the first time in 2010. The shift from catalog to Web sales led to a decline in phone-in order volume, requiring the retailer to close one of its four call cen- ters. The company respond- ed by allowing affected em- ployees to work from home, winning the No. 1 spot in that year’s Bloomberg Busi- nessWeek customer service ranking. 29
  • 30. CHIP WILSONUpmarket yoga and sportswear retailer Chip Wilson Wilson began 2012 on a decidedly different note byhad a topsy-turvy 2011. In March, the lululemon ath- unexpectedly announcing he would resign his execu-letica founder, chairman of the board, and chief in- tive position as chief innovation and branding officernovation and branding officer made Forbes’ World effective Jan. 29, although he willBillionaires list for the first time while climbing from continue to serve as chairman of49th to 15th place on Canadian Business magazine’s the board of directors. Wilsonlist of wealthiest Canadians, increasing his worth by founded the pricey yoga gear re-128 percent to $2.85 billion. His company suffered tailer in 2000 when he openedsome grisly publicity that same month when an em- the first lululemon in Kitsilano, aployee brutally murdered a co-worker after hours in beachside part of Vancouver, andthe chain’s Bethesda, Md. store. The incident was rou- took the firm public in 2007. Lu-tinely referred to as the “Lululemon murder” in the lulemon now boasts revenues of more than $800 mil-intense media coverage that followed. Wilson drew lion from 140 stores and catalog sales. Wilson gave nopersonal fire in November when the chain printed reason for his abrupt exit, merely stating that in any“I Am John Galt” on its shopping bags, in reference organization there comes a time when there is a needto Ayn Rand’s 1957 objectivist novel Atlas Shrugged. for change, that he felt comfortable leaving his re-Pundits warned that the sentiment would likely alien- placement Christine Day “at the helm of a world classate his lotus-sitting customers. Indeed, the embodi- management team whom I fully believe will continuement of Rand’s free-market philosophy, which dis- to elevate our world.” For now, Wilson plans to devotemisses altruism and in favor of individuals living for himself fulltime to his remaining role as board chair-their self-interests seems an unlikely model for Wil- man guiding the company’s future growth.son, who sprinkled his own “manifesto” with sloganssuch as “The pursuit of happiness is the source of allunhappiness,” and “What we do to the earth we do toourselves.” 30
  • 31. 57 RETAIL CROWDSOURCINGCrowdsourcing will soon become as way to build sustainable relationships participate in the online shopping pro-commonplace as outsourcing. Retail with consumers and thereby develop cess.” Australia-based Shoes of Prey ismarketers need more crowdsourcing to a deeper connection and better brand apparently meeting a tremendous de-open up their talent pool for research loyalty.” According to Alisa Gould- mand by giving women the power toand development. The strategy “greatly Simon, director of marketing and design their own shoes. According toreduces costs to the retailers because communications at Pose.com, a free founder Jodie Fox, women have collec-they’re only paying for the idea, not mobile shopping application, “Brands tively spent more than 15 million min-the process,” says C.J. Kettler of Genius are looking at ways to not only listen utes designing shoes on their site sinceCrowds. “Crowdsourcing provides a to their customers but allow them to the company’s launch in October 2009. 58 WHOLE FOODS The upheaval in the commercial prop- and cleaned up its balance sheet. Now, erty market has created opportunities it’s debt-free, gaining market share and for companies looking to expand, and generating good cash flow. In June, Whole Foods has identified locations Robb announced that Whole Foods where it “can put some bets down and plans to use some of its cash to speed take advantage of that,” says co-CEO up store openings, with the eventual Walter Robb. After stumbling dur- goal of operating 1,000 stores in the ing the recession, the country’s largest U.S., up from around 300 currently. As seller of natural and organic foods is part of its health-and-wellness initia- now outperforming other grocery sell- tives, Whole Foods also plans to open ers. Whole Foods has lowered prices wellness clubs in five U.S. cities. 59 WILLIAMS-SONOMAWilliams-Sonoma is seeing benefits from the high-end sales recov-ery, helped along by the shift to online and strong merchandising inits stores, according to David Strasser of Janney Capital Markets. Ear-lier this year, Williams-Sonoma announced it would invest $75 mil-lion in e-commerce and the information technology and supply chainsolutions to support it in fiscal 2011, with $25 million earmarked spe-cifically for long-term international e-commerce growth. Due in largepart to its rapid online growth, Williams-Sonoma’s direct-to-consum-er channel already contributes an impressive 41 percent to the com-pany’s overall revenues, with that figure expected to reach 43 percent.“E-commerce is not only our fastest growing but also our most profitablechannel,” said CEO Laura Alber, “and, therefore, its growth as a percent-age of total company revenues increases overall corporate profitability.” 31
  • 32. 60 BLOOMINGDALE’SWidely regarded as an en- with NBC. One cross-dangered species a decade promotional effort hadago, high-end department Bloomingdale’s 39 storesstores, exemplified by the taking part in a virtual re-venerable Bloomingdales, are stag- stores, according to the International ality experience. Shoppers could standing an impressive comeback by lur- Council of Shopping Centers, continu- in a certain spot in the store and snaping shoppers with exclusive, trendy ing a trend that has prevailed for three photos of themselves using an iPhoneitems that appeal to Gen Y. Financial quarters. Wall Street Strategies analyst app. Through augmented reality, theyresults at department stores are out- Brian Sozzi has declared that the once- appeared to be standing on a red carpetpacing specialty retailers such as Gap stodgy department stores are again a with NBC stars such as Hank Azaria ofand American Eagle Outfitters. In “credible destination for fashion.” To “Free Agents” and Christina ApplegateFebruary, sales at department stores further dispel any lingering stodginess of “Up All Night.” The hope was thatopen at least a year rose 5.7 percent, in the air, this past fall, Bloomingdale’s shoppers would then share their pho-versus a 3.2 percent gain for apparel entered into a marketing partnership tos on social networking sites. 61 HOLLISTER 62 NIKEIf the apparel industry was dominated on the site. Hollister and Abercrombiein 2011 by the emergence of e-com- & Fitch are the two most popular teenmerce and m-commerce, 2012 looks apparel brands on Facebook, followedto be the year of f-commerce — f for by American Eagle and Aeropostale.Facebook, what else? Teen apparel As Facebook emerges as a serious mar-companies Abercrombie & Fitch and keting platform, this ranking is a sig-its American lifestyle brand Hollis- nificant indicator of teen shoppers’ en-ter are actively engaging and building thusiasm for the retailers’ promotionsbrand loyalty with their target market and product offerings. Despite higher prices, Nike published quarterly results that beat Wall Street estimates, as it attracted shoppers, especially in emerging markets. In China, orders scheduled for delivery from December 2011 through April 2012 rose 31 percent, with a 12 percent rise in other emerging markets. Mob scenes surrounding a new release of Nike’s retro Air Jordans two days be- fore Christmas conjured up memories of the frenzied scenes from the mid to late 1980s when the release date for Air Jordans had to be moved to weekends to keep kids from skipping school. 32
  • 33. 63 IN-STORE AUDIOWhile advertising is most often employed to lure customers into a store, advocates of in-store audio argue that it can be evenmore effective once they are there. One current strategy gaining favor among retailers is to build on traditional marketing andadvertising efforts by promoting heavily inside the store. The theory is that shoppers come in with one or a few items in mind;the goal is to entice them to buy more with well-planned advertising and marketing within the store. An in-store audio brand-ing channel contributes to a great customer experience, encourages impulse buys, motivates sales associates, and makes theirjobs easier.64 ANTHROPOLOGIE 65 DOLLAR TREEFemale apparel store Anthropologie, known for Changes in spending patterns, especially among low-end consumers,its $300 bohemian dresses, quirky accessories, and necessitated by a weak economy, has led to Dollar Tree’s induction intounique home goods is expanding its sumptuous Standard & Poor’s S&P 500 Index. The discount retailer’s inclusion cameprint catalog to digital platforms with an iPad ap- after Dollar Tree added equity of more than 48 percent over a 52-weekplication designed to increase brand awareness. period. More signifcantly Dollar Tree reported same-store sales growthThe app lets consumers browse the current collec- of 7.1 percent, 4.7 percent, and 4.8 percent during the first three quarterstion and features recent news and social media. of 2011, respectively. The last quarter increase of 4.8 percent was aided byAnthropologie is also looking to increase its social a 1.4 percent higher ticket price and a 3.4 percent increase in customers.media efforts by embedding the brand’s Facebookand Tumblr pages into the app. The mid-upscaleretailer also rolled out a commerce-enabled mobilewebsite that lets shoppers browse and purchaseclothing items. The app has been criticized, how-ever, for its lack of a store locator feature, which iscrucial to any shopping app. As part of an effortto revitalize flagging sales following a three-quar-ter long revenue drop, Urban Outfitters namedformer Under Armour president David W. Mc-Creight as CEO of its Anthropologie chain andeliminated the positions of the co-presidents whopreviously ran the brand.66 AHOLD USA (STOP & SHOP, GIANT, MARINI’S PEAPOD)Ahold USA, the U.S. division of Am- cent of the parent company’s total sales. 11 states and the District of Columbia.sterdam-based Ahold, encompasses Additionally, Peapod.com, based in Founded in 1989 by brothers Andrew and376 units of Stop & Shop, 180 Giant Skokie, Ill., provides Internet-based Thomas Parkinson as a wholly ownedFoods of Landover, Md., and 148 Gi- home shopping and grocery delivery as subsidiary of international food providerant Foods of Carlisle, Penn. Ahold USA an integrated element of Stop & Shop Royal Ahold, Peapod has grown to be oneaccounts for approximately 57 per- and Giant Foods, serving markets in of America’s leading Internet grocers. 33
  • 34. 67 STAPLESWith its new 2.0 version iPhone app, office supply and servicechain Staples has turned its signature Easy Button into a full-featured mobile shopping accelerator. The app allows for syn-chronizing shopping list construction across desktop and appso a customer can start a shopping list on the PC and have thatin-process list show up in-store in the app. The code scan featurecan be used to create a list of items that are running low and needrefreshing.Following its mobile site redesign in the autumn of 2011, Staplessaw a rapid acceleration in customers’ adoption of its mobile site,which now accounts for about 14 percent of all online. To adaptto this growth, Staples made several feature improvements to the app, stemming from the needs of small business: a feature spe-cifically for timely printer cartridge replacement, synchronization of shopping lists across both desktop and app, and barcodescanning to maintain inventory of supplies that are running low. Also of note is the addition of an in-store mode that activateswhen the user checks in at a Staples store. The setting prioritizes different features, including a coupon wallet to use in-store.68 LOWE’S 69 CABELA’SAs the world’s second-largest hardware back on its expansion plans of open- Cabela’s takes the concept of in-storechain, Lowe’s is ranked among the Top ing up any new stores. As a part of this experience to new vistas. After passing50 corporations in America. Along with restructuring effort, it will also be lay- by statues of two huge bears wrestlingchief competitor Home Depot, Lowe’s ing off around 2,000 people for better at the store’s entrance, outdoor ad-was able to thrive on homeowners’ new resource utilization and to maximize venturers are in their element, scout-focus on remodeling. Despite signs of profits. Lowe’s is also working to re- ing out guns, camo rainwear, scentan improving economy and consumer duce promotions and moving toward eliminators, arrow rests, trolling gear,spending, the retail giant recently an- an “everyday low price” philosophy in blinds, tactical knives, camping stoves,nounced that 20 underperforming response to consumers’ reluctance to swimbaits, and outdoor-themed furni-stores across the country will be shut undertake pricey home improvement ture and artwork. A museum presentsdown. Moreover, Lowe’s is also holding projects. dioramas featuring trophy animals, a walk-through aquarium, and a conser- vation mountain complete with a run- ning stream that ends in a small pond stocked with live trout. While oppor- tunities to experience Cabela’s in per- son are limited to 35 stores in the U.S. and Canada, the adventurous retailer is now shipping its popular print catalogs with QR codes so customers can scan special offers or select products using Cabela’s iPhone or Android app. 34
  • 35. 70 T MOBILE 71 TWITTERT-Mobile’s 33.6 million customers may When Twitter was introduced in 2006,be relieved that the federal government the result of a daylong brainstormingblocked AT&T’s bid to buy the No. 4 session among board members of thewireless carrier so they can keep their podcasting company Odeo, it waswireless service plans. But in the long deemed but a trifle, a novelty — a steprun, T-Mobile is in an unsustainable backwards, even. Who, in the age of cell firmed what everyone already knew:position. Analysts say the company’s phones and unlimited email, would Millions of tweets had played a centralpast decisions have painted it into a cor- choose a platform that constrained role in galvanizing and organizing thener where it is being squeezed by com- messages to the length of a haiku? But, disparate rebel groups that would top-petitors on both sides. On the high end, lo, five and a half years later, a study ple dictatorships in Tunisia and Egypt.it can’t compete with Verizon Wireless from the University of Washington con- Think about that for a minute.and AT&T. At the low end, T-Mobileis struggling against competitors SprintNextel Corp., which sells government-subsidized “lifeline” service, and Me-troPCS Holdings Corp., which targets 72 GREEN RETAILINGurban, working class consumers with As consumers increasingly focus on tives aimed at reusing materials, elimi-cheap “unlimited” plans. “We’re stuck eco-friendly shopping and greener nating waste, and preserving resources.in the middle from a brand point of lifestyles, “greentailing” has been up- Supermarket chain Tesco has famouslyview,” says T-Mobile CEO Philipp graded from warm and fuzzy niche declared its intention of being “a leaderHumm. Essentially, T-Mobile is seen as marketing tactic to value proposition. in helping to create a low-carbon econ-a cheap brand by those who can afford As demands from both customers and omy.” One green step the company hasbetter, and an expensive buy for those regulators have tightened, some of the taken thus far is bringing emission-who must pinch every penny. That industry’s biggest players, includ- free delivery vans to London andleaves the most valuable customers, the ing Home Depot, Starbucks, and other locations. The battery-ones who buy smartphones and sign Walmart are leading the charge powered vehicles save 21 tonsup for two-year contracts with lucra- to more environmentally of CO2 per year, the equiva-tive data plans. They’re the ones racing aware practices with envi- lent of driving 51,000 milesfor the exit. ronmentally friendly initia- in a conventional car. 73 LAYAWAY Although the concept still conjures up images of the Great Depression when merchants gave cash-strapped customers the opportunity to set items aside until they were paid for in installments, layaway made a sur- prising comeback during the recent Great Recession, and big news this past holiday season when so-called layway “angels” began showing up at retail outlets such as Kmart and Walmart to anonymously pay off the bal- ances on strangers’ layaway accounts, releasing troves of set-aside gifts — especially children’s toys and clothing — in time for family celebrations. 35
  • 36. JEFF BEZOSIt’s instructive to remember that Jeff Bezos founded miniscule operating profit margin — just 2.47 percentAmazon in the mid-1990s, at a time when most re- for its most recent quarter. (Compare that to Google’stailers and corporations treated the Web as little more 33 percent Apple’s 31 percent, and Microsoft’s 39than a space for billboard messages. More than any percent.) Bezos has consistentlyother company or institution, Amazon made the Web rebuffed institutional investors’a venue for commerce. Amazon’s pioneering security pleas to maximize quarterly re-innovations are responsible for chipping away at cus- turns for the sake of shares value, choosing to focustomers’ initial reluctance to enter their credit-card instead on long-term profitability and stability, sacri-numbers and other sensitive information online. Da- ficing high margins for market share. “Amazon’s slimvid Hornik of VentureBlog notes that, “while many margins are a key component of Mr Bezos’ businessfirms use Web platforms successfully, very few make strategy in keeping competition away,” says Forem-real money from Web commerce alone. … Amazon ski. “Amazon forces a competitor to fight in the gutterstands out for demonstrating what can be done, and over margins that are rounding errors for others.” No— just as important — for showing how difficult and longer content with being a mere retail outlet, Bezosrare real Web-commerce success is. Amazon is so is turning Amazon into an entertainment hub, takingbig, so embedded in our daily habits, that it’s folly to bigger risks on ventures such as the Kindle, inking bigthink it could serve as a useful model for any emerg- Hollywood content deals, providing in-the-cloud ac-ing firm.” cess to music and video, and hosting Web service data for other firms and institutions. His newly rekindledAmazon now accounts for more than 40 percent of spirit of adventure, along with the untimely passing ofonline commerce transacted in the US, yet Tom Fo- Steve Jobs, may yet give Bezos his long-awaited turnremski of Silicon Valley Watcher reckons that Bezos’ as the wizened savant, showing the world the way tomost impressive feat may be summed up in Amazon’s the future. 36
  • 37. 74 ETHNIC RETAILThe café inside Walmart’s Hispanic-themed Más Club inHouston offers fresh-made tortillas. Macy’s Salt Lake Citystore carries larger-size cookware to accommodate the area’sMormon families, which tend to be bigger. Whole Foods’special halal promotion during Ramadan boosted sales by300 percent. The iPhone World Cup app published by His-panic network Univision was 2010’s 13th most popular freeapplication in the U.S. A survey published in Ad Age foundthat 42 percent of Hispanics said they are more loyal towardscompanies that show appreciation for their culture by adver-tising in Spanish. But before they change their logos to redand green, marketers and retailers are cautioned to considerthat those who identify themselves as Hispanic hail from asmany as 20 different cultures. A campaign targeting the U.S. Mexican population would fall flat (or worse) if aimed at SouthAmericans or Spaniards. Cultural sensitivity and a working knowledge of cultural taboos are crucial. 75 URBAN OUTFITTERSUrban Outfitters shares slid 27 per- Pamela Quintiliano blames “bizarre” western Native American motifs. Thecent in 2011, the year’s biggest drop and “lackluster” fashion selections for trouble started when Urban Outfittersamong U.S. specialty apparel retailers the retailer’s woes. It didn’t help mat- described the items as Navajo. Underexcept for Aeropostale, costing the re- ters when the Philadelphia-based the terms of the Federal Indian Artstailer its spot on the Nasdaq 100 Index. Urban was served with a cease-and- and Crafts Act of 1990 and the FederalNet income also dropped for the past desist order from the Navajo Nation Trade Commission Act, it is prohibitedfour quarters, prompting the chain to in June 2011 in response to a line of to falsely claim, or even imply, that aboost discounts to clear slow-moving products emblazoned with bold geo- product is Native American-made if itinventory. Oppenheimer & Co. analyst metric designs reminiscent of South- is not. 76 ANN TAYLORYour mother’s favorite retailer is look- the country wearing the label’s latest are equipped with flattering, back-liting to become a fashion destination for collections. The brand’s new concept mirrors and touch screens that displaywomen in their twenties. Ann Taylor’s stores, designed by New York-based product information. The retailer sawnew online lookbook “The Style For architecture firm S. Russell Groves, fea- its net sales in the third quarter endedStudents” takes its lead from street style ture a runway of mannequins, crystal Oct. 29 increase 12 percent to $564blogs such as Scott Schumann’s Sar- chandeliers, tufted couches, and “shops million and net income rise 33 percenttorialist and Jak and Jill, and features within the shop” that lend a more to $32.3 million, compared with theyoung women from universities across boutique-y feel. The dressing rooms same quarter last year. 37
  • 38. 77 MACY’SMacy’s relentless endeavors to keep it- both its namesake and Bloomingdalesself on a growth trajectory have paid chains. From January to Novemberoff. The second-largest U.S. department 2011, Macy’s consistently registeredstore chain, reported earnings that beat comparable-store sales growth post-analysts’ estimates and boosted its full- ing a low of 0.9 percent in March andyear profit forecast as sales increased a high of 10.8 percent in April, for anfaster than the retailer expected. The average growth of approximately 5.1company, which sells exclusive goods percent. This is far better than its com-by Madonna, Martha Stewart and petitor JCPenney, which witnessed anKarl Lagerfeld, exceeded projections average comps growth of a meager 0.8as store and online revenue gained at percent over the same period. 78 TJ MAXX 79 DOLLAR GENERAL Third-quarter earnings for Goodlettsville, Tenn.-based Dollar General jumped 34 percent as same-store sales continued to rise on improved traffic. In addition, Dollar General approved a new share repurchase program of up to $500 million in stock. The deep discount leader has seen its profit rise in recent quarters as it opened new stores and added better-known brands of merchandise. At the end of the third quarter, Dollar General operated 9,813 stores, up 5.8 percent from a year earlier, and plans to open about 625 new stores in fiscal 2012, matching its new store openings for 2011. As with other discount retailers, the company has had to contend with more conservative spending from its customers.Off-price apparel and home fashionsretailer TJ Maxx boasts an unmatchedtrack record of leveraging modest salesgrowth into double-digit profit gains —a feat it has achieved consistently overthe past decade, with average three-year earnings growth figures at nearly26 percent annually. The retailer’s fo-cus on selling clothing and accessoriesfrom major-label brands at discountprices is a proven winner in any eco-nomic climate, as was made clear whenthe company sailed through the creditcrisis without so much as a hiccup. 38
  • 39. 80 FAMILY DOLLARWhile other retailers have closedstores and struggled with sales, dollarstores have been in growth mode asconsumers attempt to stretch smallerincomes or trade down in spending.Unlike Walmart Supercenters, dollarstores serve neighborhoods in a smallfootprint, sell smaller items, and areconvenient to lower-income shopperswho walk or take the bus. According toNielsen data, 55 percent of Family Dol-lar customers have an annual gross in-come of less than $40,000 and 24 per-cent make less than $20,000. Althoughlower incomes make up a majority of 81 HOME DEPOTthe customer base, a greater number of With the housing market in a seemingly endless slump, big-box store Home Depot’sthose who can afford to shop elsewhere stock finished strong in 2011, and now trades at levels higher than it did before theare finding the convenience factor recession. As shoppers spent more per trip, the world’s largest home-improvementmakes dollar stores an attractive alter- retailer reported a third-quarter profit gain that topped analysts’ estimates. Net in-native. Family Dollar added about 300 come rose 12 percent to $934 million, or 60 cents a share, in the quarter that endedstores in 2011 after same-store sales Oct. 30, up from $834 million, or 51 cents, a year earlier. CEO Frank Blake hasgrew 5 percent. The second-largest U.S. lured cash-strapped do-it-yourselfers by shifting back-office employees to the floordollar store chain plans to add as many and improving distribution from warehouses to stores. The Atlanta-based chain’sas 500 stores in 2012 to accelerate sales number of transactions increased by 1.2 percent to 325.3 million while shoppers’growth. average spending rose 3 percent to $53.03 per ticket. 82 BED BATH & BEYOND Bed Bath & Beyond turned in an unexpectedly stellar performance reporting fiscal 2011 second quarter earn- ings of 93 cents per share, an increase of 33 percent over the year earnings-per-share figure of 70 cents. Gross profit of $951 million during the quarter represents a 41 percent margin on sales of $2.3 billion. That compares with gross profit of $875 million (the same 41 percent of sales) in the year-ago quarter. The home-and-kitchen furnishings retailer’s solid management team executed especially well in an economic environment that threat- ened a double-dip recession. Same-store sales growth in- dicates that consumers are continuing to buy. 39
  • 40. 83 OAKLEYThis past holiday season, Oakley, maker of eyewear for world-class ath-letes released special edition 3D glasses to commemorate Paramount Pic-tures’ “The Adventures of Tintin” a 3D film extravaganza directed by Ste-ven Spielberg and produced by Peter Jackson. The Oakley 3D Gascan TintinLimited Edition uses the company’s patented optical innovations to offer theultimate 3D entertainment experience. The Foothill Ranch, Calif.-based brand, owned by Luxottica SpA, currently holds morethan 600 patents for eyewear, performance gear, and materials for its high-performance sunglasses, sports visors, ski goggles,watches, backpacks, shoes and other accessories.84 SEPHORA 85 BATH & BODY WORKSThe Sephora chain of cosmetics stores founded in France in 1970and acquired by Paris-based conglomerate LVHM (Moët Hen-nessy • Louis Vuitton) in 1997 includes more than 750 stores in17 countries and carries more than 250 brands, including its ownprivate label. The trendy cosmetics giant now provides its beauty-and trend-conscious customers a personal experience through itsiPad 2 app. The tablet’s front-facing camera is used to create a vir-tual mirror so that customers can view how-to videos on one sideof the screen while watching themselves create their own runway-worthy looks. Sephora has also partnered with nail polish brandOpi to develop an iPhone app that allows customers to match theirskin tone to an on-screen hand and then “try on” a range of virtualnail colors, which they can then buy through the app. Bath & Body Works’ parent company, Limited Brands, specialty retailer of women’s intimate and other ap- parel, beauty and personal care products, reported ad- justed earnings per share for the third quarter, 2011 up 39 percent to $0.25 compared to earnings per share of 18 cents for the same quarter 2010. Third-quarter op- erating income was $186.1 million compared to oper- ating income of $149.1 million the previous year, and adjusted net income was $77.6 million compared to 2010 net income of $61.3 million. In 2011, Bath & Body Works Canada launched a promotional sale in which all new items in its Signature Collection were priced at $1. The promotion, intended to entice more customers to sample the new products, netted the retailer valu- able marketing information regarding the popularity of each product. 40
  • 41. 86 LACOSTEFrench apparel retailer Lacoste, found- Spring/Summer 2011 with an interac-ed in 1933, most famous for selling tive campaign shot by renowned partytennis shirts emblazoned with its icon- photographer Cobrasnake. The result-ic green alligator logo, is transitioning ing film documents a 24-hour partyinto a mainstream brand that deals with models in Paris offering a firstwith and produces high-end apparel. person perspective of the fun and theThe retailer’s new Lacoste L!ve” creates with a plan to engage a guest artist opportunity to shop the collection liveits collections in association with musi- or designer for each season. Lacoste with interactive features and personal-cians and artists from across the world, launched its new brand range for ized messages popping up throughout. 87 RETAIL AT AIRPORTSWith malls sales stagnating during the recession,many mass-market retailers began searching formore fertile locations. Places where people mighthave time on their hands — and nowhere else togo. “Airports are becoming, really, a service facility,like a shopping mall,” said Jose Gomez, senior vicepresident for business development for fashion re-tailer Mango which recently opened two stores atSan Francisco International and one in the Orlandoairport. Whether it’s because they are on vacationor charging to expense accounts, “the experience oftraveling tends to put people in a mode that they’reprepared to spend money,” says Paul McGinn, president of MarketPlace Development, which manages and leases retail space atPhiladelphia International Airport and LaGuardia. “It is also a venue where — and this is always a funny thing to talk about —but there’s an awful lot of people that are motivated by guilt. That certainly inspires a lot of sales.” 88 CAFÉS AND OTHER AMENITIESBlack Friday marketers and gamifica- shopper would for the same item. So screens that encourage shoppers to lin-tion advocates please take note: There is how do retailers help their customers ger. Department stores and boutiquesstrong evidence that shoppers will ac- relax? Some are offering soothing ame- are adding in-store cafés, or breakingtually buy more — and even pay more nities and pampering services such as up a large store into small rooms, says— when they are relaxed. A new study trays of complimentary cocktails and Jim Bieri, principal at retail real estate-in the Journal of Marketing Research finger food, private events before and consulting firm Stokas Bieri Real Estatefinds that a calm shopper might spend after regular store hours, and cushy in Detroit. “They engineer it so thatup to 15 percent more than a stressed lounge areas with free Wi-Fi and flat some are almost empty, on purpose.” 41
  • 42. THE SPIRITUAL SUCCESSOR TO STEVE JOBSAlthough Tim Cook assumed the mantle when Ap- Devin Leary-Hanebrink, blogging at Ludwig vonple’s iconic CEO stepped down due to illness, Walter Mises Institute, posits that Jobs’ successor “wouldIsaacson’s biography of Steve Jobs included the aston- more fittingly be an entrepreneur rather an innova-ishing disclosure that Apple’s senior vice president tor.” Jobs, he says, “enjoyed a giftfor industrial design, Jonathan “Jony” Ive, has nearly few possess: the ability to trans-complete freedom to do as he sees fit. Ive, whom Jobs form a fledgling idea into a mas-called his “spiritual partner,” had “more operation terpiece. He rarely created frompower” at Apple than anyone besides Jobs himself. scratch, but he could recognizeJobs further told Isaacson that no one at the company what we ‘needed’ long before wecould tell Ive what to do. That, Jobs said, is “the way I even wanted it.” Not to be outdone, Kanye West pro-set it up.” When the reclusive and soft-spoken Ive took claimed himself to be Steve Jobs’ successor. In a se-the podium at a November event on Apple’s campus ries of tweets on Jan. 5, 2012, the rapper announcedto commemorate Jobs, he looked to be, in the words of that he is creating a company called Donda — namedMichael A. Robinson, “as many have pointed out, the for his late mother — that “will pick up where Stevespiritual successor to Steve.” While Ive’s design work Jobs left off,” with a mission, to “marry our wants andultimately must mesh with the hardware requirements needs to make products and experiences that peoplecoming out of Apple’s engineering groups under Bob want and can afford.” Apparently, he wasn’t joking. AsMansfield, Eric Slivka wrote on MacRumors.com, “it’s subsequent tweets explained, “We need scientists andclear from Jobs’ comments that Ive is free to pursue top world designers to directly affect governments.”his own design solutions for Apple products.” That And, “I am assembling a team of architects, graphicJobs-like level of freedom “ultimately helps to guard designers, directors, musicians, producers, A&Rs,against a watering-down effect that could occur if his writers, publicists, social media experts …”. There, hisdesigns were subject to the approval of and revision by thought trailed off. Although his global plan remainsothers in the company.” short on specifics, we include West here to represent the countless others like him inspired by Jobs to think“Perhaps no one spent more time with Jobs in the last different.fifteen years, and Jony looks poised, charismatic, andunbelievably inspired,” Slivka wrote. “In short, he’s notSteve, but he’s another kind of creative genius.” 42
  • 43. 89 RFID IN RETAIL If the predictions of RFID advocates have their way, grocery store checkout lines will soon be a thing of the past. RFID technology uses ink laced with carbon nanotubes to print electronics directly onto items such as cereal boxes and potato chip bags, and then transmits information about an entire cart- load of groceries when the shopper wheels past a detector that instantly tabu- lates the total. RFID also gives retailers an unprecedented ability to fully track and trace inventory throughout the supply chain from source to shelf to final sale with near-perfect accuracy. Research conducted by Dr. Bill Hardgrave of the University of Arkansas RFID Research Center shows that RFID is capable of accuracy rates topping 99 percent.90 ELECTRONIC SHELF LABELSGiven the headaches and hours of labor it takes to keep prices accu-rate and up to date for a superstore’s worth of product, electronic shelflabels would seem to be a no-brainer. Yet ESLs, while widely usedin Europe and parts of the West Coast, have seen only limited, ex-perimental use in other locales. ESLs connect to a storewide network,communicate with the retailer’s POS system and download prices tolabels at the store, or from a corporate location for numerous store lo-cations simultaneously. ESLs can also display additional informationvia a touchscreen interface such as nutritional information, price-per-measure, or even recipes. Even though the cost of implementingESLs has decreased over the years thanks to improvements in batterytechnology and economies of scale, there are still significant startupcosts. The tipping point for ESLs will come if and when there are suf-ficient gains in flexible and responsive pricing to justify the cost dif-ference over cheaper labels. 91 TESCOCEO Phillip Clarke is confident about gether,” Clarke says, for Fresh & Easy million, while sales rose 47 percent tothe future of Tesco’s Fresh & Easy to achieve profitability in 2012 or 2013, $392.7 million and same-store salesNeighborhood Market because of the by which time Tesco expects to be op- rose approximately 10 percent. Theenthusiasm and loyalty of its customer erating close to 400 U.S. stores. For the chain experienced additional losses,base, despite the company’s decision six-month period that ended Aug. 31, due to costs related to its acquisition ofto shutter 13 underperforming units. 2011, Tesco’s U.S. division, which then two suppliers, and increased rent from“The key components are coming to- encompassed 159 stores, lost $151 unopened stores. 43
  • 44. 92 KROGERAlthough Kroger’s fiscal third-quarter net incomeslipped 2 percent, the performance beat analysts’ expec-tations and raised its full-year earnings forecast. Likemany grocers, Kroger has been dealing with rising costs.The Cincinnati-based company has been passing alonghigher prices to consumers to offset rising costs andincreased supplier prices for meat, produce, and othergoods. The nation’s largest grocery chain was recentlynamed America’s Most Generous Company in a Chron-icle of Philanthropy listing in Forbes magazine. Krogercontributed 10.9 percent of its $589 million pre-tax prof-its ($64 million) to charity in 2009, the year Chronicle ofPhilanthropy used to make its evaluations. 93 ABERCROMBIE & FITCH Mall-based teen retailer Abercrombie & Fitch has announced plans to open new stores in Paris, Madrid, Dusseldorf, Brussels, and Singapore, even as its U.S operations continue to struggle. Abercrombie & Fitch said its better-than-expected second-quarter showing was the result of both strong international sales and comps. The controversial clothing retailer faced hostility from parents of tweens in response to its padded push-up bikini tops for “girls 56 to 58 inches tall” according to the Ab- ercrombie Kids size chart. In an example of reverse product placement, the company offered to pay Mike “The Situation” Sorrentino of MTV’s reality hit Jersey Shore to desist from wearing its products on the show.94 OVERSTOCK.COMIn a short-lived rebranding experiment out the transition. “What we learnedbegun in June, the company tried call- was that we haven’t yet adequatelying itself by the single-letter domain transferred the decade of brand equity cut to reach its site. Also in Novem-name “O.co.” But by November, Over- we have in Overstock.com. So, we’re ber, the Salt Lake City-based discountstock.com was once again Overstock. down-shifting the rebranding effort merchant launched a free O.co iPadcom. President Jonathan Johnson notes in order to leverage and transfer that application, which features the samethat customers continued to call the brand equity,” Johnson says. However, product selection available on thecompany “Overstock.com” through- shoppers can still use O.co as a short Overstock.com website. 44
  • 45. 95 GYMBOREE Toddler-targeted Gymboree irked parents and made news last fall when the company offered onesies for baby boys emblazoned with the words “Smart Like Daddy,” while the corresponding girls’ onesie said, “Pretty Like Mommy.” The children’s cloth- ier announced last February that it would use its $1.8 billion leveraged buyout by Bain Capital LLC to refinance debt. The company replaced an $820 million loan with one that has no financial mainte- nance covenants. The San Francisco-based retailer’s net sales for the 39 weeks ended Oct. 29, 2011, in- creased to $815.7 million from $745.0 million in the same period the previous year, an increase of $70.7 million, or 9.5 percent.96 AUTOZONEAuto parts chain AutoZone has theright business model at the right time.As consumers tighten their budgets,they’ve been extending the use of theircars and delaying plans to buy newones. As a result, the median age ofvehicles on the road has extended tomore than seven years (as compared AutoZone has benefited from an in- ment hard parts, maintenance items,to about five in 2003). With new ve- creased demand for parts and acces- and accessories has also benefited fromhicle sales trending at a 13.6-million- sories for used cars. AutoZone, which declines in gas prices that have encour-per-year pace, as of November 2011, stocks a wide assortment of replace- aged an increase in driving.97 LANDS’ ENDFaced with an increasingly saturated fort to better understand and target its implementing enterprise marketingmarketplace and a slowing economy, customers, the global direct merchant automation software. By implementingLands’ End is moving more toward of classically inspired clothing has un- enterprise marketing automation soft-hybrid or multichannel marketing dertaken an extensive CRM strategy, ware, Lands’ End hopes to improve itscampaigns and shifting management leveraging its existing enterprise data current operational processes as wellfocus from product-centric to custom- warehouse to create a customer data develop more targeted, personalizeder-centric strategies. As part of its ef- mart for campaign management, and marketing strategies. 45
  • 46. and nudge its social media marketing98 GUESS conversion rate above the typical tenthDespite weak holiday sales, Guess has of a percent mark. The Microstrategymade a “conscious decision” to cut gateway opens the possibility of us-down on markdowns and promotions. ing Facebook as a CRM database, says“We cannot and we would not continue Guess CIO Michael Relich. Incorpo-to go in that direction,” says CEO Paul rating Facebook data into customerMarciano. The company, which gener- profiles will relieve Guess from prob-ates more than 40 percent of its sales ing too deeply into customer prefer-from Europe, expects a challenging ences when they sign up for the loyaltyyear ahead as the sovereign debt crisis the weakness in Europe. The trend- program, something many shoppersmoves closer to the heart of the euro- defining apparel retailer is among the dislike. By pulling shopper data fromzone. Guess is now banking on store ex- first in line to try using Microstrategy’s Facebook, Guess expects to enrich itspansion in North America and growth Gateway for Facebook analytics to tap customer profiles and keep them auto-in Asia to help drive profits and offset into Guess’s one million Facebook fans matically up to date.99 PAYLESS SHOESOURCE 100 GODIVA CHOCOLATIERFaced with a U.S. unemployment rate averaging 9 per- This year, marketers at Godiva were saddled with the daunting taskcent and competition from shoe departments at dis- of persuading women to eat more chocolate. Their answer? Put thecount retailers such as Target Corp. and Walmart, Col- high-end chocolatier’s wares within arm’s reach where consumerslective Brands, is closing 475 underperforming Payless can just munch them mindlessly. At the risk of diminishing its up-and Stride Rite stores — about 10 percent of its total scale brand, the 80-year-old boutique chocolatier began placing itslocations—over the next three years, more than 300 of indulgent confections on grocery store shelves in the form of jumbowhich were to be shut by January 2012. Luring price- candy bars, cupcakes andconscious urban-area customers in the wake of the lon- brownies. Godiva evengest recession since the Great Depression has been the uses its exquisite, pre-company’s biggest challenge, as Payless saw same-store mium-priced chocolatesales drop for four straight years. to coat pretzels, espresso beans and — gasp! — Oreos. “We want to get more Godiva into peo- ple’s mouths more often,” explains chief marketing officer and senior vice president of global brand development Lauri Kien Kotcher. “It’s all about chocolate snacks, little chocolate treats. … When those things come, you just keep eating.” 46
  • 47. DRIVECUSTOMERENGAGEMENTAND BUILDLOYALTYToday consumers and businesses rely on smartphones, tabletsand other Wi-Fi enabled devices for a wide array of personal andcommercial applications. Now Motorola’s Proximity Awareness& Analytics Solution makes it possible to use these devices toimprove consumer engagement and improve associate productivityin WLAN environments. Use your Wi-Fi infrastructure to captureshopper attention with personalized promotions and in-storecoupons. Enable applications that help drive employee productivityand service delivery. Get the data you need to turn browsing intobuying – and prospects into profits.Learn more at:motorolasolutions.com/shopperengagementMOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLCand are used under license. All other trademarks are the property of their respective owners. © 2012 Motorola Solutions, Inc. All rights reserved.