RETAIL – BÁN LẺ                                                                                                           ...
Are You Really Getting A Bargain Black Friday Deal?...............................................................27Why Re...
Why You Should Be Hiring Millennials [Infographic] ..................................................................74Wha...
Whats In Store: Retails StealthTrend“Few purchases are made – either online or offline– without some type of digital resea...
http: //www. forbes. com/sites/lydiadishman/2012/12/21/whats-in-store-retails-stealth-trend/5 | Page                      ...
Three Important Retail Trends for2013Even as the cash registers and virtual shopping carts continue to rack up holiday sal...
already noticed, consumers today are both online and offline, and sometimes both–online whileshopping offline. Online they...
Whats In Store: How PolyvoresStylish  Social     Commerce IsCracking Retail 3. 0It’s a dilemma that’s dogged retailers sin...
without interfering with the user experience. User experience is our number one priority, ” saysGullov-Singh.Another facto...
Walmart Vs. Amazon: Its AboutTo Get Interesting(Image credit: AFP/Getty Images via @daylife)In the case of Walmart Vs. Ama...
Retail Wisdom: Lessons LearnedFrom Holiday 2012The post-holiday haze has lifted, leaving much head scratching and gnashing...
smartly and creatively leveraged their bricks and clicks, omni-channel, approach were moresuccessful than those that did n...
Holiday Shopping: The Retail RaceIs On(Photo credit: Wikipedia)By the time we get to December 25 we will have learned much...
New "Service" Vernacular: Do YouSpeak It?Photo credit: WikipediaIn a world where there are so many shopping choices — and ...
where did you get those fabulous shoes?” Nothing was a trouble. Later, when the conciergespotted me about to exit the stor...
Channel Blurring On SteroidsPhoto credit: WikipediaThe wall between prestige and mass retailers continues to crumble. Luxu...
London Retail Dazzles: Betweenthe Jubilee & OlympicsLondon has always known how to throw a party. But with this summer’s c...
2012: The Year of "Moving On"Looking back on 2011, images come to mind that instantly capture the state of retail around t...
a few. The trend continues in 2012, when department stores such as London’s Selfridges andNew York’s Macy’s will both unde...
Nordstrom Moves To The Land ofRetail Opportunity(Photo credit: Wikipedia)The American retail industry is buzzing – about C...
Power    Couple:  Walgreens   &Alliance Boots Build Cross-PondEmpireSAN FRANCISCO, CA - People walk by a Walgreens store i...
Boots The Chemist at Gunwharf Quays, Portsmouth. (Photo credit: Wikipedia)So how to grow? Well, smart strategy says you ne...
Will    JC   Penney  ShoppersAccompany The Retailer To TheFinish Line?Another year, another Black Friday and Cyber Monday....
Alas, JC Penney simply is in a race against the clock. So far it has transformed a small handfulof its stores, and the res...
Are Retailers Cannibalizing BlackFriday?Black Friday isn’t what it used to be. The days of working off that turkey and stu...
How will the specificity of the items, and the window of time in which they are available, affectsales? The Black Friday s...
Are You Really Getting A BargainBlack Friday Deal?Black Friday shoppers at Walmart (Photo credit: Wikipedia)If you plan to...
The bottom line: Before you head out for the stores on Black Friday, ask yourself the threesimple questions of intelligent...
Why Retailers Have to Open onThanksgiving This YearImage via CrunchBaseI get the angst the retail employees are feeling ab...
So as retailers step up their POS investments and mollify employees working on Thanksgivingas best they can, they also hav...
With Thanks giving - NightOpenings,   Do   Retailers RiskBusting More Than Doors?Retailers are opening earlier this holida...
“And on Friday, less than two-thirds of our team members are scheduled to work, ” she said.“We’ve heard from many stores t...
Retailers, Can You Hear Us Now?Last month I ended my post with the call to action for retailers and manufacturers to liste...
Retailers: Who Do You Trust?Forever 21 Store (Photo credit: Rajiv Patel (Rajivs View))Trust is a funny thing. It is someth...
How do you know what someone expects of you? One way is to visit as many of yourcustomers as you can and ask them. Open, h...
Retails Big Question: Is The PriceRight?With the holiday season upon us, retail CEOs know that this month will make or bre...
Now layer on e-commerce, with mobile technology enabling real-time price comparisons, andthe exercise of pricing becomes e...
Pricing Part 2 -- Focus OnSpecialty & Vertically IntegratedRetailersPhoto credit: WikipediaAs I indicated in my last post,...
Added Jenny Ming, “To be a great retailer you must have an incredible sense ofcuriosity…curiosity to understand, learn and...
Pricing Part 3: How Does A BrandKnow When The Price Is Right?(Image credit: AFP/Getty Images via @daylife)Ever wonder how ...
for the product category to determine where the new product will be positioned. Somemanufacturers lay out a grid with pric...
This gives us insight into higher price point–and margin–opportunities, well before the productintroduction. ”As we have b...
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  1. 1. RETAIL – BÁN LẺ hoangnd@msn. com duchoang@cmc. com. vn +849-0484-5459 Mar 2013 – V1. 0 Updated: 30/03/2013Table of ContentsWhats In Store: Retails Stealth Trend ....................................................................................... 4Three Important Retail Trends for 2013 ..................................................................................... 6 Mobile..................................................................................................................................... 6 Integration .............................................................................................................................. 6 More and More Social ............................................................................................................ 7Whats In Store: How Polyvores Stylish Social Commerce Is Cracking Retail 3. 0 ..................... 8Walmart Vs. Amazon: Its About To Get Interesting...................................................................10Retail Wisdom: Lessons Learned From Holiday 2012 ...............................................................11 Forget the calendar – it’s not a crystal ball .............................................................................11 Thanksgiving hours don’t guarantee more sales ....................................................................11 Focus on the merchandise ....................................................................................................11 Leverage the Internet for all it’s worth ....................................................................................11Holiday Shopping: The Retail Race Is On .................................................................................13New "Service" Vernacular: Do You Speak It?............................................................................14 HIGH-TECH SERVICE ..........................................................................................................14 ACCESSIBLE SELF-SERVICE .............................................................................................14 CONCIERGE SERVICE ........................................................................................................14 CUSTOMIZED, HELPFUL SERVICE ....................................................................................15 THOUGHTFUL SERVICE .....................................................................................................15 SERVICE ANYWAY THEY WANT IT ....................................................................................15Channel Blurring On Steroids....................................................................................................16London Retail Dazzles: Between the Jubilee & Olympics ..........................................................172012: The Year of "Moving On" .................................................................................................18 BIG, BOLD, AUDACIOUS SPACES ......................................................................................18 VIRTUAL STORES POPPING UP.........................................................................................18 EXTREME COUPONING ......................................................................................................18 DEPARTMENT STORES TANTALIZE AFFLUENT SHOPPERS ..........................................18Nordstrom Moves To The Land of Retail Opportunity................................................................20Power Couple: Walgreens & Alliance Boots Build Cross-Pond Empire .....................................21Will JC Penney Shoppers Accompany The Retailer To The Finish Line? ..................................23Are Retailers Cannibalizing Black Friday?.................................................................................251 | Page hoangnd@msn. com Mar 2013
  2. 2. Are You Really Getting A Bargain Black Friday Deal?...............................................................27Why Retailers Have to Open on Thanksgiving This Year ..........................................................29With Thanks giving - Night Openings, Do Retailers Risk Busting More Than Doors? ................31Retailers, Can You Hear Us Now? ............................................................................................33Retailers: Who Do You Trust?...................................................................................................34Retails Big Question: Is The Price Right? .................................................................................36Pricing Part 2 -- Focus On Specialty & Vertically Integrated Retailers .......................................38 Getting the Price Right from the Start ....................................................................................39Pricing Part 3: How Does A Brand Know When The Price Is Right? .........................................40 So how does a brand set the entry price for a new product? .................................................40Department Store Pricing -- No Easy Task (Part 4 Of 4) ...........................................................43 High Fashion Specialty Stores ...............................................................................................43 Mid-Level Department Stores ................................................................................................44 Stores for Price-Sensitive Consumers ...................................................................................45 Conclusion ............................................................................................................................46How Fashion Brands Set Prices ................................................................................................47 1. Market Product Opportunity Analysis: ................................................................................48 2. Define Strategic Brand Position: ........................................................................................49 3. Wholesale Price:................................................................................................................51 4. Product Development: .......................................................................................................52Why do dresses cost more on a designers website? ................................................................54 2. 1. Conflicting Priorities Destroy Feedback Loop:................................................................54 2. 2. High Subjectivity and Large Biases Adversely Impacting the Comparative Pricing Analysis: ................................................................................................................................56 2. 3 Supporting Legacy Revenue Channels with Conflicting Agendas ...................................57 2. 4. Emotional Engagement Drives Pricing Power: ...............................................................60The Future Of Fashion Retailing: Part 1 - Uniqlo .......................................................................62 Uniqlo: Choosing Long-Term Appeal over Trends .................................................................62The Future Of Fashion Retailing: The Zara Approach (Part 2 of 3) ...........................................64 Zara: Responding to Consumer Trends .................................................................................64 How is Zara able to do this? By being fast and flexible. .........................................................64The Future Of Fashion Retailing -- The H&M Approach (Part 3 of 3) ........................................66 H&M: Building a Bridge between Timeless and Trendy .........................................................66 Three Different Approaches, Important Common Ground ......................................................67Uniqlo: How Japanese Billionaire Tadashi Yanai Plans To Clothe America ..............................68Are Retailers Reaching Consumers Of The New Millennium? ...................................................70What Is The Kryptonite Of The Millennial Generation? ..............................................................72 History Repeats .....................................................................................................................72 History vs. Trivia ....................................................................................................................73 A Well-Read Mind .................................................................................................................732 | Page hoangnd@msn. com Mar 2013
  3. 3. Why You Should Be Hiring Millennials [Infographic] ..................................................................74What Millennials Want Most: A Career That Actually Matters ....................................................78Postscript On Retail Pricing: Avoiding The "Race To The Bottom" ............................................80 Who Owns Pricing? ...............................................................................................................80 Is Anyone Selling at Full Price? .............................................................................................81 What is a Product Really Worth? ...........................................................................................81 Offering a distinct, differentiated product. ..............................................................................82 Staying true to who they are as a brand. ...............................................................................82Pricing Wars Make A Punch And Judy Show Of Retailing: Running For Higher Ground ..........83 Did The JC Penney ‘Fair and Square’ Promise Offer Salvation? ...........................................83 Dynamic Pricing ....................................................................................................................84 Personalized Pricing ..............................................................................................................84 What Can Be Done?..............................................................................................................84JCPenney Returns To High-Low Pricing, Cue The Critics .........................................................86J.C. Penney Tweaks (Again) Its Radical Pricing Strategy, Which Continues to Sink Sales..........87The Winners (Target) And Losers (Best Buy) This Holiday Season............................................91Retailers Fight Back Against Amazon With Private Brands .......................................................96Wal-Mart Nimble? Pricing and Shipping Moves Suggest New Competitive Zeal; Stock Rising 1003 | Page hoangnd@msn. com Mar 2013
  4. 4. Whats In Store: Retails StealthTrend“Few purchases are made – either online or offline– without some type of digital research. Retailersare telling us that over 90% of their purchases arenow digitally assisted. ” That’s the observation ofLelah Manz, chief e-commerce strategist atAkamai. You may not have heard of the cloudplatform but you definitely know its customers.Akamai works with the likes of global retailersincluding Dolce & Gabbana, Best Buy, VictoriaSecret and leading flash sale site Hautelook andtracking retail traffic based on its Retail Net UsageIndex.As analysts, brand managers and store owners (not to mention yours truly) try to tease out thetrends that will convert browsers to buyers in 2013, Manz took a moment to talk to FORBESabout an often overlooked, but critically important, part of the shopping experience: search.Think about it. You want a TV. Or a pair of shoes. Or a toy for your toddler. Do you get in yourcar and drive to the nearest strip mall? Chances are you’re sitting at your computer, or on yoursmartphone, and you just type in the name of the product and let the research and reviews pourin. Or you’re actually in a store, staring at an array of similar products and whip out yoursmartphone and voila. Comparison pricing, often tagged to your location, pops up in seconds.Hello, showrooming!Manz says search engines, with Google in particular, are still the number one choice foraccessing product information. “One study suggests that as much as 80% of referrals – areferral is a site that shoppers link off of to get to an e-commerce site – is coming from Googlesearch, ” she tells FORBES.The growth in mobile also delivers a plethor of new shopping tools that bypass Google entirely,Manz notes, such as Apple iOS’s voice search Siri. “Red Laser is just one example of a pricecomparison scanning tools that allow shoppers to scan a UPC label, or a QR code, with theirsmartphone’s camera, returning a list of different online price points for that product. The searchengine Milo offers price comparisons and inventory information for products to be found locallyin stores, ” she adds.Don’t forget Amazon. The online merchant’s massive database of product information andconsumer reviews provides a natural starting point for many a search, says Manz, noting that arecent Forrester survey suggested Amazon may be taking traffic away from search engineswhen it comes to starting the purchasing process. The findings indicate that 30% of U. S. adultsnow start their purchasing journey on Amazon, while those starting on a search engine likeGoogle declined to 13% in 2012, down from 24% in 2011.Manz says the difference may be in consumer perception. “If you type into the address bar ofyour browser “Macys” instead of www. macys. com, behind the scenes that browser is using asearch engine – most often Google as the default – to take you to a set of search results thatincludes as the top listing www. macys. com, ” she explains. “As a shopper you are likely notreally thinking about that activity as a Google search, and arguably there was very littleinfluence that Google search had in influencing your purchasing decisions in that case. Butretailers do see and count this as a Google referral. ”Manz believes the influence of Google-as-a-Navigation-Tool has on referral statistics isdebatable, but it’s clear that this type of activity has a very different level of influence on theconsumer’s decision. “The power of influence in Amazon’s reviews and pricing information,however, is indisputable, ” she asserts.4 | Page hoangnd@msn. com Mar 2013
  5. 5. http: //www. forbes. com/sites/lydiadishman/2012/12/21/whats-in-store-retails-stealth-trend/5 | Page hoangnd@msn. com Mar 2013
  6. 6. Three Important Retail Trends for2013Even as the cash registers and virtual shopping carts continue to rack up holiday sales forretailers, savvy merchants are casting a critical eye into their crystal balls to determine how theircustomers will shop in 2013. This is important, as theNational Retail Federation (NRF) pointsout that with retailers operating more than 3. 6 million U. S. establishments that contribute $2. 5trillion to the annual GDP, what happens in stores and online is “a daily barometer for thenation’s economy. ” Good thing Kiplinger predicts that next year will herald better times,especially in the second half of 2013.FORBES gathered some forecasts, surveys and expert comments to see what may be in storefor retailers after January 1.MobileSusan Reda, executive editor of STORES Media, writes, “The year just concluding will beremembered as the one in which mobile became embedded into the lives of consumers — andthus into the hearts of retail businesses large and small. ”Mobile developers agree. According to a survey by Appcelerator and IDC , 93 percent of mobiledevelopers anticipate that it is “likely to very likely” that most retail companies will have enabledmobile commerce in 2013 as consumers increasingly reach for their phones and tablets evenwhile shopping in a physical store. Consumer behavior continues to underscore thistransformation. Appcelerator found that nearly two-thirds of developers also believe thatconsumers will make more purchases via their mobile phone than their credit card in 2013.IntegrationFounder of the direct-to-consumer shoe merchant Sole Society Brett Markinson tellsFORBES the “emerging” direct-to-consumer E-commerce model recently being discussed asthe “Next Big Thing” is only the beginning of the evolution pushing haute couture into the digitalage. “Building and distributing a successful brand in the Internet era is about addressing thenew behaviors of an evolving customer base by leveraging the changing landscape and its newdynamics, ” he says.Markinson believes the discussion has to shift from e-commerce vs. offline commerce tointegrated commerce. “The consumer does not distinguish. They want to buy cute, on-trendproducts at great values wherever they happen to be. They want to engage with cool brandsthat understand their interests and proclivities. The DNA of the web must be an intimate part ofthe fashion brands of the future.Those retailers who find a way to integrate will have a “killer brand. ” Says Markinson, “Oneneeds to be where the customer is, with both your messaging and your product. If you haven’t6 | Page hoangnd@msn. com Mar 2013
  7. 7. already noticed, consumers today are both online and offline, and sometimes both–online whileshopping offline. Online they are sharing, friend validating, researching, learning and developinga point of view. Offline there is touching, brand comparing and brand associating. All of thisdrives the brand of the future. Finding the formula to leverage that online/offline dynamic iscritical. ”More and More SocialRichRelevance, a company that powers personalized e-commerce experiences released someinteresting findings about social media’s role in retail. Namely, traffic from Pinterest has doubledin the last year while Facebook saw its share decline to just 90% (from 95% in 2011).Rich Relevance’s chief marketing officer Diane Kegley tells FORBES, “We believe that social isgoing to have an increasing impact in 2013. We feel that the role of social media is to generateawareness, not direct sales. While traffic referred from social networks is low – less than . 5%according to our data – it has grown 30% year-over-year. ”Kegley notes that retailers are getting smarter about how to use the social channels to generatecustomer “delight. ” She points out how Target recently awarded gift cards to a number ofcustomers who were tweeting about them over the Thanksgiving holiday weekend. “Socialmedia is one element in [retailers’] arsenal of developing brand awareness across multiplechannels. All of these elements, including social media, shape or form the way that a consumerhears about a brand or offering. This contributes not only to awareness, but actual productdecisions. ”http: //www. forbes. com/sites/lydiadishman/2012/12/17/three-important-retail-trends-for-2013/7 | Page hoangnd@msn. com Mar 2013
  8. 8. Whats In Store: How PolyvoresStylish Social Commerce IsCracking Retail 3. 0It’s a dilemma that’s dogged retailers since the days of the general store: how to help customersdiscover new items and keep them coming back for more. In an era where e-commerce andsocial media is continuing to blur the transaction line, the solution is as easy to pinpoint as amoving target. But Polyvore is handily cracking the code of commerce 3. 0.Though it’s not a retailer, as the largest fashion community on the web, five-year old Polyvore iseasily straddling the intersection of style and social commerce. 20 million uniquevisitors discover the site each month and create over 2. 4 million “sets” or collages of productsthat range from branded apparel and accessories to nail polish and home furnishings.Polyvore’s co-founder Pasha Sadri says those sets generate “millions of data points on styleand taste. Polyvore then uses the data to drive its algorithms for search ranking and productrecommendations, Sadri noted in a statement.But Polyvore’s massive army of style devotees isn’t just playing virtual dress up. They areturning those 7. 5 billion product views into real spending. New data released by the companyyesterday indicates that the average order size from Polyvore visitors is $220. On Black Friday,the average Polyvore shopping cart was 50% higher than the average for an apparel retailer. It’salso a leader in the luxury market, boasting seven of its top 10 retailers who are major players inthe space such as Neiman Marcus and Net-a-Porter. (Think: the biggest order ever was for $67,315). All this has translated into a 2. 3x revenue increase for the profitable Polyvore.Speaking of revenue generation, Polyvore’s successful model is due in part to affiliate marketinglinks, in which the platform receives compensation each time a user clicks through from aproduct to a retail or brand page. Users tend to click on items they are really interested inlearning more about and/or actually buying so it’s extremely important for the platform to ensurea smooth transition. On Polyvore, clicking a pair of pumps in a set on party style for example,takes you to a product page and one more click leads to a purchase page.The company’s recently hired chief revenue officer, Arnie Gullov-Singh, former CEO of Adly, amarketing platform on Twitter, understands the importance of providing a seamless experience.He tells FORBES that in order to keep those links at their clickable best, part of Polyvore’sengineering team is dedicated to data quality. “They are constantly working to ensure thatproducts on the site link back to the correct e-commerce site and that those links are affiliatized8 | Page hoangnd@msn. com Mar 2013
  9. 9. without interfering with the user experience. User experience is our number one priority, ” saysGullov-Singh.Another factor is ease of sharing. Of the one billion monthly set impressions, 43% are on socialnetworks, according to company findings. Pinterest leads the Polyvore pack, Gullov-Singh says,because the visual nature of photo-sharing platform makes it a natural for shares and click-throughs. “It’s design allows people to scan lots of images very quickly. That’s great for image-heavy sites like Polyvore and e-commerce retailers, ” he says. “We’ve found that Polyvore setsshared to Pinterest get 18x as many views and 2x as many clicks as sets shared to Facebook.Tumblr is also very visual but the user interface is less optimized for fast consumption, ” addsGullov-Singh.Though he’s staying mum on Polyvore’s projected growth for the coming year, Gullov Singhsays he’s excited for 2013. “What’s exciting aboutPolyvore is that it’s a fast growing socialplatform that actually drives sales of products for brands and retailers. That’s rare to find intoday’s social media landscape and its what attracted me to join the company. ”http: //www. forbes. com/sites/lydiadishman/2012/12/21/whats-in-store-how-polyvores-stylish-social-commerce-is-cracking-retail-3-0/9 | Page hoangnd@msn. com Mar 2013
  10. 10. Walmart Vs. Amazon: Its AboutTo Get Interesting(Image credit: AFP/Getty Images via @daylife)In the case of Walmart Vs. Amazon, it’s about to get interesting.Let’s put aside the much discussednews leak that Walmart is considering using its ownshoppers as delivery people, providing some kind of incentive to drop off online orders on theirway home from the store.It’s not likely to happen, there are far too many unattractive variables. But it shows the retailer isthinking outside of the box when it comes to competing with its online competition, Amazon.Walmart already offers in-store pick up and just expanded its test of a locker system whereshoppers can order online and pick-up in the store without waiting in line. It’s similarto Amazon’s recent deal with Staples and 7-Eleven to do the same.The big box behemoth may not be a start-up, but it does try to think like one with its WalmartLabs division. That group is developing Pangaea, a global technology platform, scan and goapps that let shoppers buy in store via a smartphone, and online operations in growing marketsoutside the U. S. such as Brazil and China.Wal-Mart is still testing same-day delivery in four cities. The program uses stores as fulfillmentcenters and if expanded, could turn 4, 000 stores into bases for same day delivery.According to Internet Retailer, Walmart is the fourth largest e-commerce retailer and expects togenerate $9 billion in global e-commerce revenue in its current fiscal year, ending Jan. 31,2014.Compared to Amazon, that $9 billion is pocket money. Amazon’s sales for the fourth quarteralone were $21. 27 billion.But take a look at the profits and some other key indicators. Income is slowing, expenditures areup and there’s an Marketplace Fairness Act on its way to force the collection of state sales tax.Sooner or later, people will start to notice the lack of earnings.Amazon is building out a physical infrastructure to provide same day delivery, it doesn’t haveWalmart’s existing store base to work from.It’s too early to call a winner in the retail race. Maybe there’s room for both, although they don’tthink so. In the case of Walmart Vs. Amazon, it’s about to get interesting.http: //www. forbes. com/sites/lauraheller/2013/03/29/walmart-vs-amazon-its-about-to-get-interesting/10 | Page hoangnd@msn. com Mar 2013
  11. 11. Retail Wisdom: Lessons LearnedFrom Holiday 2012The post-holiday haze has lifted, leaving much head scratching and gnashing of teeth aboutwhat happened and why. Most agree it was an imperfect retail season. Sales results werereported up 3 percent versus 2011, reflecting a season that was “peak-ed” to say the least. Andwhile final profit margins have yet to be released, they likely won’t bring better news.So rather than succumb to a post-season, mid-winter funk, we may as well make the best of the2012 holiday season. Lessons abound, after all.Forget the calendar – it’s not a crystal ballIt’s time for retailers to stop using the calendar as a predictor. More shopping days betweenThanksgiving and Christmas no longer mean more sales. Shoppers were very stressed by theend of 2012, and between the economy, fighting in Congress, Hurricane Sandy and life ingeneral, they had good reason to be. Extra shopping days proved exhausting for many.Thanksgiving hours don’t guarantee more salesOpening stores on Thanksgiving Day didn’t necessarily translate to more sales either. It mayhave provided more people with jobs (good news), and got others off the couch before they atetheir third portion of turkey (a good health trend!), but that’s it. And Black Friday isn’t what itused to be – it has become more media event and family entertainment activity than a majorindicator or driver of the season’s sales.Photo credit: WikipediaFocus on the merchandiseRetailers that offered innovative, relevant and good-value gifts made the sales (Urban Outfittersis a prime example). If there was nothing exciting to buy shoppers didn’t feel compelled to, orbought gift cards instead (one of the success stories of the season). Today’s shoppers didn’tfeel pressured to buy just anything because it was the holidays. And, as 80% of US shoppersstill believe “their” recession will last 3+ years (How America Shops® 2012 Megatrends), theirfocus on value is not over by any means.Leverage the Internet for all it’s worthThe Internet became the great disrupter of the season, more so than in previous years. Itenabled people to start shopping earlier, be better prepared by checking out pricing and dealsonline whether they planned to shop in stores or digitally). It also made the easily overwhelmingseason less stressful to manage. The outcome was that the many traditional retailers who11 | Page hoangnd@msn. com Mar 2013
  12. 12. smartly and creatively leveraged their bricks and clicks, omni-channel, approach were moresuccessful than those that did not (Macy’s and Nordstrom were good examples).So, don’t blame a disappointing holiday season on the Fiscal Cliff, Hurricane Sandy or thecalendar. Like everything else in retail today, the world of shoppers and shopping has changed,and this was never more evident than in 2012.http: //www. forbes. com/sites/wendyliebmann/2013/01/29/retail-wisdom-lessons-learned-from-holiday-2012/12 | Page hoangnd@msn. com Mar 2013
  13. 13. Holiday Shopping: The Retail RaceIs On(Photo credit: Wikipedia)By the time we get to December 25 we will have learned much about the economics of this2012 season. There has been much discussion about the merits of opening stores earlier thisholiday shopping season. When Walmart, Target, Best Buy, Toys R Us and othersannounced their earlier Thanksgiving hours, questions arose as to the appropriateness:Shouldn’t Thanksgiving be sacrosanct? Is it fair to ask employees to work when they should behome? Is it right to encourage people to shop instead of spending time with family, eating andwatching football?The only way to answer these questions is to abide by our everyday mantra and “follow theshoppers” — let them lead us. And they did.Here’s what we found: Holidays are about family and fun — and shopping. We saw shopperslined up in hundreds – especially outside big box stores and outlet malls – waiting for them toopen. There were families and friends. They were happy, excited, eager to be first for doorbuster deals, especially those for flat screen TVs, computers, or the “toy” of the moment,tablets. Sure, some had a gift list; others just wanted something for themselves; and still otherspre-planned, checking prices before lining up. But most came for the pure sport of it, to feel likea winner, and for the anticipation of Santa in the air.How will the rest of the season measure up now that the thrill of the Thanksgiving/Black Fridayhunt has passed? Our research finds that nearly half of Americans (46%) will do their shoppingbetween November 26 and December 17, while nearly a quarter of shoppers (23%) will waituntil the week before Christmas to get their gifting done. For retailers, this means that holidaysales opportunities are far from over. So where will the shopper lead us next? Stay tuned…http: //www. forbes. com/sites/wendyliebmann/2012/12/11/holiday-shopping-the-retail-race-is-on/13 | Page hoangnd@msn. com Mar 2013
  14. 14. New "Service" Vernacular: Do YouSpeak It?Photo credit: WikipediaIn a world where there are so many shopping choices — and always a cheaper, moreconvenient or more intriguing option — “service” delivered in 21st century fashion is what canbuild or destroy your relationship with your shoppers. Everyday, but especially during thisholiday season.How do shoppers value ‘service’ today? It’s more than just making it easy for them to find whatthey want, when they want it. Today, great service is also about anticipating what they don’teven know they want and understanding in which categories and shopping moments they wanta “high touch” experience, or when they just want to get in and get out.It all came into focus on a recent trip to Seattle, WA.HIGH-TECH SERVICEI began my trip by activating my new MapQuest app to plot the journey. [New-age service. ] Ittook a minute to figure out how to use the app. (In case you haven’t heard, you can no longeruse GoogleMaps on the new Apple iPhone5. Bad Apple service… But that’s another story. )MapQuest efficiently talked me to Seattle’s new City Target store. [Friendly high-tech service. ]ACCESSIBLE SELF-SERVICETarget’s new three-story urban format doesn’t have lots of live bodies in the store, however, itdoes offer good (self) service. The store is easy to navigate for urban shoppers on-the-go, haspersonal service where it’s required (pharmacy, electronics) and lots of good signing andinformation when “people” service is unnecessary.There are two entrances for easy access. The entrance on the main floor has a big friendly “HiSeattle” on the wall to greet shoppers as they enter and walk through women’s apparel, baby,health and beauty, and pharmacy departments. The second entrance is conveniently locatedbelow street level at the supermarket (which allows for quick in-and-out grocery shopping).CONCIERGE SERVICEAt Nordstrom’s flagship store, old fashioned service is expertly delivered by the concierge, whomakes shoppers feel welcome and well-cared for. She answered every question: “Where’s theMen’s department?” “Where can I get a snack?” “Where’s the ladies’ room?” “And by the way,14 | Page hoangnd@msn. com Mar 2013
  15. 15. where did you get those fabulous shoes?” Nothing was a trouble. Later, when the conciergespotted me about to exit the store with hands full of shopping bags she asked, “Do you needany help?“ She then walked me out of the store and directed her back to the hotel. Her last wordof advice “Don’t forget to try our Nordstrom app. It will make your shopping easy, let you seewhat events we have coming up. And you can download it for free. ” [Old world service meetsnew world service]CUSTOMIZED, HELPFUL SERVICELast stop, Starbucks’ new Evolution Fresh store that sells healthy, fresh-squeezed juices andfood. You can order a range of fresh-squeezed exotic juices like “Coconut Zen” juice (coconutwater, pineapple and cucumber, 50 calories, in an 8 oz. glass for $4. 99) or “Sweet Burn” (withcoconut water, pineapple, apple, beet, cayenne and ginger, 80 calories). You can order juices“your way” from Juices on Tap presented like beers on tap.The service is pleasant, knowledgeable without being too pushy or too preachy. The signing isbold, clear, with dramatically changing wall images that tell the healthy story using wonderfulpictures of colorful fruits and vegetables. It’s easy to select what you want once you get used tothe process. You can have your drinks your way or theirs. You can stay and drink or take ithome. [Good execution of customized service. ]THOUGHTFUL SERVICEAfter a refreshing juice to bolster my spirits, I headed back to the hotel for a quick workout —but realized I’d forgotten my sneakers. Saved! The Westin chain now offers Workout Gear, aprogram in conjunction with New Balance fitness wear. If you like to travel light (or forget tobring your exercise gear) Westin and New Balance have a solution. They offer guests fitnesswear (sweats, socks and sneakers) to use for the length of their stay for only $5. 00. For mostbusiness travelers that’s a great deal. Even more rewarding is the fact that the hotel recognizedthe need and satisfied it. [Thoughtful service. ]SERVICE ANYWAY THEY WANT ITYou get the picture. Sometimes good service is delivered by a person, in person — but notalways. Today, it’s all about “servicing” customers, making it easy for them to find whatthey want, when they want it, on their terms. While a well-trained professional certainlymakes for special add-on value that’s not what every shopper wants, every time she or heshops.The beauty of today’s shopping world is that we now have the tools to understand who ourshoppers are, what they need and want, when and how, so we can customize serviceaccordingly. In the end, it’s all service. Anyone can offer it, regardless of category, price point orretail format. The fact is, everyone must.http: //www. forbes. com/sites/wendyliebmann/2012/11/15/new-service-vernacular-do-you-speak-it/15 | Page hoangnd@msn. com Mar 2013
  16. 16. Channel Blurring On SteroidsPhoto credit: WikipediaThe wall between prestige and mass retailers continues to crumble. Luxury retailer NeimanMarcus and trendy big box Target announced a partnership to launch The Target + NeimanMarcus Holiday Collection this December. The limited-time collection will include products from24 well-known fashion designers, including Marc Jacobs, Oscar de la Renta, Diane VonFurstenberg, Derek Lam, Rodarte and Tory Burch. The collection will feature some 50 productsin women’s, men’s, children’s apparel and accessories, home, pets, electronics accessories andsporting goods. It will be featured in all Target and Neiman Marcus stores, and on both retailers’websites. The collection will be merchandised together in a single shop-within-a shop format inboth retailers.The big question for shoppers: how quickly will the merchandise sell through? If last year’sTarget program with Italian designer Missoni is any indication, we should all hold our place inline (or online) right now.Three days after the NM – Target announcement, Seattle-based department store retailerNordstrom and UK fast fashion retailer Topshop announced that Topshop and Topman wouldbe sold (initially) in 14 Nordstrom stores beginning this September.Topshop is recognized for bringing runway trends to its retail stores in a fashion-minute. Unlikeother fast fashion retailers, such as H&M and Zara, Topshop has a wider range of: price points,quality merchandise and categories (including collectable vintage fashion and beauty).This isn’t the first time Topshop has developed a relationship with a department store retailer. Inthe UK, in addition to its own stores, it’s sold in Selfridges and in Canada in The Bay.The relationship with Nordstrom will help Topshop, currently with only three stores in the U. S. ,grow its U. S. business faster. For Nordstrom, there’s the benefit of bringing new fashion intostores every week and, in so doing, attract younger and more fashion-forward shoppers.Beyond the “official” reasons for the Nordstrom-Topshop and Neiman Marcus-Targetcollaborations, the real reason is that this is the way shoppers buy today. Shoppers around theworld are no longer willing to deal with the barriers of price point or the delay from runway tostore. They shop with a “high-low, ” “want it now” approach, and expect retailers to deliver.Retailers are finally beginning to recognize that – so, expect the blurring to continue.http: //www. forbes. com/sites/wendyliebmann/2012/10/09/channel-blurring-on-steroids/16 | Page hoangnd@msn. com Mar 2013
  17. 17. London Retail Dazzles: Betweenthe Jubilee & OlympicsLondon has always known how to throw a party. But with this summer’s convergence ofcelebrations for both Queen Elizabeth II’s Jubilee and the Olympics, London retailers are trulymaking the most of their moment – and giving the rest of the world an “Olympic”-sized dose ofretail inspiration.UK retailers are creating all manner of enticements for locals and foreign visitors alike.Department stores Selfridges, Harrods, Harvey Nichols, andLiberty of London areemblazoned with enticing brands and unique promotions. Anticipating the crush of shoppersfor Gucci products, Harrods had set up a “shopping line” on the pavement, “Gucci Queue StartsHere” (a la the velvet rope at a night club). And on a kitsch note, home retailer OKA hasillustrated pictures of corgi dogs (the Queen’s dogs) on its windows.To add to the excitement, new stores are opening in a timely fashion, including Victoria’sSecret on New Bond Street. And right near the Olympic Stadium, in once undeveloped EastLondon, there’s Westfield Stratford City, handy for visitors who want a break from the events.Once the Olympics are over, the 300-store mall will draw shoppers with its high-low fashion(from Hugo Boss to H&M, Prada to Primark), electronics (Apple of course), more beautystores than a beauty junkie could dream of (from the obvious, MAC, Kiehl’s, L’Occitane, to theesotericArabian Oud, the largest Arabian fragrance retailer in the world), and everyday retail:supermarket (Waitrose), pharmacy (Boots), and banks. There are 80+ places you can eat orbuy food, with movie theaters, a bowling alley and casino. And more. With or without a Queen’sJubilee or the Olympics, London is clearly offering a shopper’s delight!17 | Page hoangnd@msn. com Mar 2013
  18. 18. 2012: The Year of "Moving On"Looking back on 2011, images come to mind that instantly capture the state of retail around theworld, and anticipate the year to come. The images reflect the yin and yang of the world: theglobal economy as it limped along (at best), and the now unrelenting pervasiveness of digitaltechnology. Together these converged to transform everything at retail in 2011, everywherefrom the U. S. to South America, to the Pacific Rim and on.After four years of economic upheaval, American shoppers have taken control of what they canand are moving on in new and different ways. Retailers too are moving on in their own way, asis evident by the degree of retail innovation and renovation in 2011.BIG, BOLD, AUDACIOUS SPACESThe opening of Duane Reade’s hugely audacious flagship drug store at 40 Wall Street, NYC,set the tone for BOLD in 2011. The store’s “Upmarket” sushi bar, juice bar, fresh produce andexpanded grocery offering reflect the growing importance of food as a category in U. S. drugstores.And speaking of bold, who could forget the opening of the presumptuous new Apple store atNew York City’s iconic Grand Central Station? The store goes way beyond a destination fortravelers idling between trains; it has driven shoppers to other innovative retail stores nowestablished at the station, including Australian beauty retailer Aesop, with its store made out ofrecycledNew York Times newspapers.VIRTUAL STORES POPPING UPAnother image that defined the year was the opening of the Home plus virtual store in thesubways of Seoul, South Korea. This innovative concept features images of products as if in aregular store, and enables shoppers to use their smartphones to scan the image’s QR codesand instantly order, pay and arrange for delivery. Home plus and its partner UK’s Tescoleveraged the virtual pop-up into a retail game changer, rolling it out into permanent virtualstores, Then before you could say “click here” a Chilean grocery retailer Jumbo, and London-based John Lewis Department Stores both followed suit with their own virtual stores.The speed at which these virtual stores went from concept to execution and moved from Asia toSouth America to England says much about the future of retail.EXTREME COUPONINGIf you haven’t seen this highly rated reality TV show, you can imagine what it’s about, and whyit’s all the rage. When it airs, coupon websites gain significantly higher traffic. Everyone wants tobe a smart shopper. While most shoppers don’t care to devote as much time as the TV showcontestants do to get their groceries, and more, for almost nothing, they do admire those whodo. Regular shoppers want to find their own “extreme couponing” in stores. What will retailersdo in 2012?DEPARTMENT STORES TANTALIZE AFFLUENT SHOPPERSDepartment store retailers around the world have come to recognize they must dazzle theirhigher income shoppers, if they want them to shop and buy regularly.As a result, we’ve seen renovations to revamp the shopping experience at many majordepartment stores around the world: From the age-old Printemps flagship in Paris, nowbrilliantly new behind its traditional 19th century façade; to La Rinascente in Milan; and thecompletion of a multi-year remodel of Bloomingdale’s NYC 59th Street flagship, just to mention18 | Page hoangnd@msn. com Mar 2013
  19. 19. a few. The trend continues in 2012, when department stores such as London’s Selfridges andNew York’s Macy’s will both undergo renovations.The changes we’ve seen in 2011 have clearly paved the way for continued innovation andtransformation in the year ahead. As retailers look to create compelling ways to entice shoppersto buy more than what’s on sale, there will be much for us to report on as the year unfolds. Staytuned.http: //www. forbes. com/sites/wendyliebmann/2012/01/19/2012-the-year-of-moving-on/19 | Page hoangnd@msn. com Mar 2013
  20. 20. Nordstrom Moves To The Land ofRetail Opportunity(Photo credit: Wikipedia)The American retail industry is buzzing – about Canada. This week, Nordstrom announced itsplans to enter the Canadian retail market — joining other U. S. retailers such as Walmart andCostco who have already successfully made the move.Anticipating this trend, last month WSL/Strategic Retail launched our first study of Canadianshoppers in How Canada Shops®, an in-depth analysis of how Canadian women and men shopacross all channels, and how they compare to U. S. shoppers, with specific comparisons of U.S. and Canadian Walmart shoppers and Costco shoppers.Why did we go to Canada at this time? U. S. retailers are now looking at Canada as a growthopportunity. Target’s announcement that it would open in Canada in 2013 added impetus for us.So too did the fact that department store retailer Lord & Taylor is now owned by the samecompany that owns Canada’s The Bay. The Limited has opened Victoria’s Secret and Bath &Body Works stores. As U. S. retail continues to struggle, more companies are looking north foropportunity. So did we.Here are some interesting tidbits from the study. While Canadian shoppers are similar toAmerican shoppers in some ways there are some not-so-subtle differences: they’ve made fewerchanges to how they shop because of the recession (they didn’t get themselves buried in debtto the degree we did south of the board), they’re less driven to use coupons and sales (but theyare still very focused on value), and while they do their homework online they buy less online (atleast for now). In all, they are very compelling shoppers to target. These are only a few of thedifferences U. S. companies should understand – and strategize against – to ensure asuccessful market entry. For more info about the study go to our website, www.wslstrategicretail. com.http: //www. forbes. com/sites/wendyliebmann/2012/09/14/nordstrom-moves-to-the-land-of-retail-opportunity/20 | Page hoangnd@msn. com Mar 2013
  21. 21. Power Couple: Walgreens &Alliance Boots Build Cross-PondEmpireSAN FRANCISCO, CA - People walk by a Walgreens store in San Francisco, California. U. S.based drug store chain Walgreens has announced a deal to purchase a 45 percent stake inEuropean pharmacy retailer Alliance Boots for $6. 7 billion. The acquisition will make Walgreensone of the worlds largest drug store and pharmacy retailers with 11, 000 stores in 12 countries.(Image credit: Getty Images via @daylife)If you still doubt retail is in the process of tremendous change, don’t. In a move that’s at onceboth brilliant and daunting, Walgreens, the largest US drug chain, purchased 45% share ofAlliance Boots, including the UK’s iconic Boots The Chemist, a global pharmaceuticalwholesaling business, and access to European and Asian markets.Brilliant: Who would have thought of it? A global drug chain with 11, 000 stores in 12 countries(8, 000 of them in the US). That’s only part of it. There’s the highly regarded portfolio of Boots’private label beauty and health brands, the likes of Boots No 7, Botanics, Sanctuary, Clearasil,and Soltan, to name a few. There is the retail division’s expertise managing prestige and massbeauty brands under one retail roof. There’s the company’s experience running retail stores ofvarious sizes – from its flagship, multi-story, 15, 000 square feet store on Oxford Street, Londonto its ubiquitous urban and suburban stores on British High Streets and small formatconvenience-focused stores at British railway stations and airports. There are its years ofexperience with its loyalty card, Boots Advantage Card. And, last but not least, the power (oftenunrecognized in the US) of its global pharmaceutical wholesaling business.Daunting: For one, the obvious challenge of combining two culturally different businessesacross 3, 000 miles of ocean. Both companies clearly understand retail pharmacy. However,there are many differences in how drug store retailing operates in the UK and US, differencesbetween UK, European and US health care systems, and differences in how people in thesecountries shop, in general and specifically for health and beauty.So why? Why now? Only Walgreens’ and Alliance Boots’ management can say for a fact. But,from our point of view, there is so much happening in retail around the world that establishes therationale for such a merger.In the US alone, so much is changing the retail landscape: most notably the realization (finally)that we have too many stores — for the most part a result of the impact the Internet and mobiletechnology are having on the way people shop. As a result, retailers can no longer grow byopening more and more of the same stores. Retailers of every variety (including Walgreens)now ask themselves, “How many physical stores do we now need?”21 | Page hoangnd@msn. com Mar 2013
  22. 22. Boots The Chemist at Gunwharf Quays, Portsmouth. (Photo credit: Wikipedia)So how to grow? Well, smart strategy says you need different size stores, stores customized tolocal communities, more virtual stores, possibly global expansion… for a start. Everyone fromWalmart to Target to Best Buy, Starbucks, Macy’s are responding. And of course, alsoWalgreens — with its Duane Reade acquisition, flagship strategy, focus on urban formats,addition of food, and purchase of drugstore. com and beauty. com.For Alliance Boots, the US has been a tantalizing market for a long time. Its successful test androllout of Boots beauty brands in Target stores gave it a taste for the market. But where to gonext? And where to grow its wholesaling proposition? Now, we know where.In the end, we say, “Brilliant trumps Daunting. ”http: //www. forbes. com/sites/wendyliebmann/2012/08/23/power-couple-walgreens-alliance-boots-build-cross-pond-empire/22 | Page hoangnd@msn. com Mar 2013
  23. 23. Will JC Penney ShoppersAccompany The Retailer To TheFinish Line?Another year, another Black Friday and Cyber Monday. And while retailers from Kohl’s toMacy’s, Target to Wal-Mart have been busy trying to thwart “show-rooming”—the consumerpractice of examining products in-store and then searching for the best deal online—thevenerable JC Penney is literally in a race for its life. But as the company dramatically overhaulsits stores into mini malls featuring certain brands or types of merchandise, will shoppers hang inthere to the finish line?JC Penney shoppers have been whipsawed on pricing policies ever since the arrival of CEORon Johnson a year ago this month. First the chain eliminated the more than 500 sales it usedto stage all year long, in their place offering lower pricing across the board in its approximately1, 100 locations. No testing of this new pricing approach was done, Johnson told TheAssociated Press, because time didn’t allow it. The result: shoppers went elsewhere. Late thissummer, Penney got rid of its month-long sales offering—part of a three-tier strategy along withlower across-the-board pricing and periodic clearances—but sales continued southward.Financial results followed suit, with the company’s sales plummeting just over 26% in the thirdquarter of 2012.The grand scheme now under way at Penney is to transform most of its stores into a sort of minimall—stores within stores featuring wares from the likes of its own Liz Claiborne brand, Izod,Levi’s and Sephora. To protect margins, some of this merchandise won’t be available online.But shopping habits seldom change quickly. Instances of major retailers successfully completelyrevamping their operations and pricing policies are few and far between. CEO Johnson certainlyhas the chops for the job. He led Target to “cheap chic” success and then joined Apple todesign its highly successful retail outlets. A look at consumer research strongly suggests that forhis current challenge he did too good a job at Target, which stands above both JC Penney andMacy’s in key respects, per the GfK MRI Focus: Retail study. Nearly 26% of people whoshopped at Target in the last three months agreed with the statement, “For the products Iusually purchase at this store, this is my ‘go to’ store. ” The figure for JC Penney was 14. 7%and for Macy’s 10. 6%. The percentage of shoppers who believe they “can always count ongreat service” was 28. 9 for Target, 18. 9% for JC Penney and 12. 8 for Macy’s. Slightly moreconsumers (23. 8%) say they frequent JC Penney based on price versus 17. 7% of Macy’sshoppers. Since JC Penney and Macy’s share a fair amount of mall locations, these figures aregood news for JC Penney.23 | Page hoangnd@msn. com Mar 2013
  24. 24. Alas, JC Penney simply is in a race against the clock. So far it has transformed a small handfulof its stores, and the results have yielded $269 in sales per square foot compared with $134 inolder stores, according to The New York Times. Problem is, it needs to spend mightily torevamp almost 90% of its locations, something that could take years. Meanwhile, its loyal coreof middle-income consumers has begun voting with its feet. While it’s possible that JC Penneycan win over new shoppers in the long run, any major disruption to the economy along the way(think fiscal cliff-induced recession) will infinitely complicate matters.http: //www. forbes. com/sites/annemariekelly/2012/11/28/will-jc-penney-shoppers-accompany-the-retailer-to-the-finish-line/24 | Page hoangnd@msn. com Mar 2013
  25. 25. Are Retailers Cannibalizing BlackFriday?Black Friday isn’t what it used to be. The days of working off that turkey and stuffing by runningaround the mall and scooping up holidayBlack Friday shoppers at Walmart (Photo credit: Wikipedia)deals the day after are waning, because now you don’t even have to wait until you’ve digestedthat drumstick. Stores are opening on Thanksgiving Day itself, and there are plenty of sales inthe days leading up to Thanksgiving, not to mention Cyber Monday along with the many pre-Christmas bargains that stores are offering.So what’s a consumer to do? Not only is there confusion about whento shop, it’s gotten to thepoint where there are so many great sales this time of year that the meaning of Black Friday hasbeen cannibalized. That rush of excitement waiting for the doors to open, and the excuse to beout of the house and away from your relatives, is no longer a given.It’s always a little sad when traditions change. Time marches on in this digital age, especially inthe world of retail. But at least there are many ways for consumers to save at a more leisurelypace. Let’s look at what retailers are doing this week.Amazon is offering Black Friday Deals Week, an actual countdown to Black Friday, includinglightning deals each day on apparel, electronics, toys, games and more. On Thanksgiving Dayitself, many stores are advertising exactly what items will be on sale, and at what hours, so thatshoppers can be more targeted and focused with their purchases and waste less time pushingthrough the crowds.Walmart, for example, is selling its hottest electronic items, including the Apple iPad2 16GBwith wi-fi, between 10 and 11 pm on Thanksgiving Day, so the shopping can start the momentthe dishes are done.Shoppers don’t even have to wait until evening. For those who prefer retail therapy to watchingfootball, Sears, Target and Toys R Us are all open Thanksgiving Day, offering deals oneverything from stocking-stuffer toys to Xboxes and Playstations. The list and range of retailersdoing business on that day is long and growing, with at least 20 major chains planning to beopen.Just as for Thanksgiving Day, stores are advertising online exactly what items will be on sale,for how much, and when for Black Friday. At Staples, for example, customers arriving beforenoon can save over $200 on certain HP PCs with Windows 8. PetSmart, meanwhile, is givingdog and cat lovers a steep 75% off select items online.25 | Page hoangnd@msn. com Mar 2013
  26. 26. How will the specificity of the items, and the window of time in which they are available, affectsales? The Black Friday strategy has always been to get people in the stores with doorbustersand then sell them other items once they are there. If an item is very popular (e. g. the iPad),advertising a deal on the specific item will naturally draw in shoppers.I believe the difference in 2012 versus even just five years ago is the level of intelligence manyretailers now have about their customers. With loyalty cards and deep analytics, many retailersknow precisely the types of customers who will be drawn in by certain offers, and what otherproducts those consumers are likely to buy once they are in the stores. They can know the pricepoints at which consumers will buy an item, and they can also know the times of day consumersof certain demographics shop.This intelligence allows retailers to be very targeted in the types of offers they make. Also, bystarting early – on Thanksgiving Day or earlier in the week – retailers can find ways to lure ashopper back into the store on Black Friday or online on Cyber Monday with a targeted emailoffer.So these new holiday “traditions” aren’t necessarily hurting retail. If anything, the spread of saledays is helping to bolster overall revenues and maintain consumer interest before, during andafter Black Friday itself, which remains the most important day of the shopping year. With theNRF forecasting a 4. 1 increase in holiday sales for 2012 over last year, given the impact ofHurricane Sandy, Black Friday will undoubtedly play a key role in determining whether or notthis happens. Last year, that one day accounted for $11. 4 billion in sales, an increase in 6. 6%from the previous year. Cyber Monday will also be an important day – it rang up $1. 25 billion insales in 2011, up 22% from 2010.Next week, we’ll get the results. Until then, enjoy your Thanksgiving and don’t forget to do yourpart to support the retail industry this week!26 | Page hoangnd@msn. com Mar 2013
  27. 27. Are You Really Getting A BargainBlack Friday Deal?Black Friday shoppers at Walmart (Photo credit: Wikipedia)If you plan to line up outside Wal-Mart Stores (NYSE: WMT), Best-Buy (NYSE: BBY),Macy’s (NYSE: M), Apple store or any other major retailer this Thanksgiving evening to buymerchandise at deep discount, you better think twice: you may end up buying things you don’tneed, wasting your time and money. Especially if you are an emotional shopper.Humans are both intelligent and emotional beings. As intelligent beings, we make decisions byreason. We carefully examine the environment we live in, setting goals and priorities. Then wecraft alternative strategies and tactics to reach them.Emotional beings decide by impulse, fueled by anxiety, anger, fear, greed, and other emotions.Both the intelligent and the emotional sides of humans come out in shopping. Intelligentconsumers begin with the “Big Picture, ” things that are important in their lives, setting needsahead of desires. Before they grab a piece of a merchandise and head for the cash register,they always ask three simple questions: Do I need the product? Is the price right? Is this merchandise the best use of my money?Emotional consumers, by contrast, act by impulse, passion and hype. They race out to buyproducts — filling the dreams and aspirations of ruthless marketers, rather than their own.They see the “Big Picture” too, but upside down, often placing desires ahead of needs. Theyrush to buy merchandise just because it happened to be on sale, without asking whether theyreally have a need for it in the first place; whether the price is right; and whether it is the bestchoice for their money. They end up subscribing to magazines they never read; joining healthclubs they rarely visit; buying clothing they never wear; purchasing tools and accessories theynever use; and bringing home toys their children hardly touch.Obviously, intelligent consumers allocate their resources efficiently and effectively, whileemotional shoppers waste their resources.But why do so many consumers do that? Why do they shop with emotions rather thanintelligence?Because emotional shoppers allow themselves to be manipulated by marketers who hype theiremotions by sales events like Black Friday. They are too concerned with the prospect of missingout on a sale opportunity — buying merchandise indiscriminately, irrespective of the need for it.27 | Page hoangnd@msn. com Mar 2013
  28. 28. The bottom line: Before you head out for the stores on Black Friday, ask yourself the threesimple questions of intelligent shopping, so you make sure you are really getting a bargain.http: //www. forbes. com/sites/panosmourdoukoutas/2012/11/18/are-you-really-getting-a-bargain-black-friday-deal/28 | Page hoangnd@msn. com Mar 2013
  29. 29. Why Retailers Have to Open onThanksgiving This YearImage via CrunchBaseI get the angst the retail employees are feeling about having to work on Thanksgiving, I reallydo. Retailers like Wal-Mart, Target, Toys R Us and Kmart are among those stores that will beopening in the evening on the big day and its employees will have to be there like it or not. Andfor most of these workers, it is definitely not.Corporate greed is blamed for the decision, and technically that is true if one defines corporategreed as staying solvent. Brick-and-mortar retailers are on the brink of getting parity in the e-commerce-versus-real world shopping wars, but they still cannot afford to lose ground over theholiday season.Consider this: Last year IBM‘s Holiday Benchmark survey reported thatThanksgiving onlineshopping grew by 39. 3% year over year. On Black Friday, online sales grew by 24. 3%compared to the same period last year.If these people are logging on to shop, the thinking goes, they should also be interested inwalking through a retailer’s doors as well.And when they do they will be counted and tracked by ever increasingly sophisticated retailmanagement systems.“Retailers have been struggling with fact that so many sales have been going to ecommerce, ”Rob Wilson, senior director of Retail Analytic Packages atSAP, says. Indeed they might haveseen themselves on the losing side of technology in previous years (that darned Internet!) butnot so this year. “The past 12 to 18 months we have seen some amazing advancements in in-memory technology, POS data management and associated analytics. ” In-memory allows forthe rapid granular analysis of activity at the transactional and SKU level, he says. “It letsretailers make decisions almost in real time about what is moving and at what times in the store.” They can comfortably predict what sales would be like if they opened an hour earlier or lateror, oh let’s say, on Thanksgiving Day.Not that ecommerce is doomed now that stores are adopting bigger and meaner tech tools. Thisholiday season 20% of all online sales will come from mobile devices. So predicts the IBM priorto releasing its Holiday benchmark.Not surprising, Apple‘s iPad and iPhone are driving much of this traffic, with 8% of online trafficoriginating from the iPad and 7. 2% from the iPhone.The iPad Mini will probably skew online sales traffic even more, says Michele Turner, CMO ofmBlox. “The iPad Mini will be transformative in terms of online shopping. It is small enough totoss in your purse or keep in your pocket, but still has robust browsing capability. It can be partof creating a great branded experience for a retailer. ”29 | Page hoangnd@msn. com Mar 2013
  30. 30. So as retailers step up their POS investments and mollify employees working on Thanksgivingas best they can, they also have to consider their mobile–not just online—presence.For the record, mobile shoppers, it has been determined in numerous studies, don’t bother towait more than a second or two for sites to open on their devices. They also can be exceedinglyimpatient with clunky payment processes.It is well worth it for sites to overcome these challenges.Last year, consumers spent more than $20. 7 billion shopping using mobile devices, accordingto The EGC Group’s report “How to Prepare for the First Nonline Retail Season”. Also, one infour used more than one device to shop during the 2011 Holiday Season, a percentage likely toincrease as people add to their stable of tablets.http: //www. forbes. com/sites/erikamorphy/2012/11/17/why-retailers-have-to-open-on-thanksgiving-this-year/30 | Page hoangnd@msn. com Mar 2013
  31. 31. With Thanks giving - NightOpenings, Do Retailers RiskBusting More Than Doors?Retailers are opening earlier this holiday season, sandwiching Thanksgiving turkey between thework week and yuletide shopping as never before.Target, Black Friday (Photo credit: Wikipedia)Target is opening at 9 p. m. on Thanksgiving, while Sears and Walmart will open at 8 p. m.Talk of putting the customer at the center of all marketing moves is on the lips of every CMOthese days. But equally important, both for brand health and consumer engagement, as we’veseen time and again, is keeping employees committed, happy and motivated.The risk in alienating employees is alienating shoppers, of course, and that could have anegative impact on brand. “To the extent that consumers relate more with employees pressed to work in stores onThanksgiving than they do as customers who want to shop on Thanksgiving, it could have anegative impact on the brand, ” said Brooks Holtom, Associate Professorof Management at Georgetown University’s McDonough School of Business, in an email.“Because I think that consumers will be quite mixed in their opinions about shopping onThanksgiving, the potential backlash against the retailers will be muted. While they may expressoutrage or moral indignation, whether they go shopping or not is the truest test of how they feel.”The reality, of course, is that U. S. employees can choose not to work for retailers that chooseto open their doors early. “Because they are NOT indentured servants, they can choose to workor not work, ” Holtom said. “However, there are consequences of those choices. Employers facea favorable labor market right now. Unemployment is relatively high, and many of the jobs thatare being created are low-wage jobs. Competition for jobs is strong. So, even though workersprefer to be home for Thanksgiving, economic necessity compels them to work wheneverrequested. ”To keep employees happy, Target, for example, “should do its best to staff the store with thoseemployees who volunteer to do so, ” he said. “Offering incentive or holiday pay allows themarket to work. If they don’t get enough volunteers, they may need to up the pay. Whileemployees will have different preference functions, the employer will over time find a marketclearing wage. ”In fact, “across the company, one-third of Target’s store team members are scheduled to workon Thanksgiving, ” Target communications manager Molly Snyder said in an email.31 | Page hoangnd@msn. com Mar 2013
  32. 32. “And on Friday, less than two-thirds of our team members are scheduled to work, ” she said.“We’ve heard from many stores that they had more team members volunteer to work than theyhad available shifts. In those cases stores were asked to make back-up lists to allow for themost flexibility if team members needed to make scheduling changes. ”Target’s decision to open on Thanksgiving night wasn’t made without employee buy-in, shesaid. It “was carefully evaluated with our guests, team and the business in mind, ” Snyder said.“Across the country, team member preferences were considered in creating our store staffingschedules. ”Georgetown’s Holtom believes that retailers like Target should make sure consumers knowwhat they’re doing when it comes to employee relations. “If I were consulting to Target, I wouldencourage them to publicize all efforts to staff using volunteers. They should clearly articulatetheir incentive pay and project the economic benefit that will follow. They can also apologize forany perceived encroachment on the holiday, ” he said.In the meantime, Target sales-floor employees won’t be the only ones pulled from mashedpotatoes and gravy this Thanksgiving. “At Target we all believe that it’s important for our team— and particularly our leaders — to be actively involved, ” Snyder said. “Our senior leadership,including Jeff Jones, will spend Black Friday in stores across the country, meeting our guests,and celebrating and working together with our store teams. ”In the end, consumers will vote with their wallets this holiday shopping season. “If no one goesshopping on Thanksgiving, then retailers will not open on Thanksgiving in the future, ” Holtomsaid.http: //www. forbes. com/sites/jenniferrooney/2012/11/14/with-thanksgiving-night-openings-do-retailers-risk-busting-more-than-doors/32 | Page hoangnd@msn. com Mar 2013
  33. 33. Retailers, Can You Hear Us Now?Last month I ended my post with the call to action for retailers and manufacturers to listen, notto me but to consumers. I stated a well-known fact: the customer is in charge of the dialogue,and the only way to know whether you are right is to look at your sales data. If your comp storesales are up over last year, you were right; if not, you were wrong. It’s that simple.Another well-known and documented fact is that the retail market in North America is a zerosum game. The National Retail Federation (NRF) projects that U. S. retail sales will grow 3. 4%in 2012. The retail market is not growing substantially due to population explosion or technologyor productivity enhancements on a broad level. One retailer or manufacturer’s gain is another’sloss. So, how do you win?You win by expanding into new markets or categories, or by growing comparable store sales inexisting categories, or both. In all cases, in order to provide long-standing shareholder value,you must have the products that consumers want. So what does this have to do with listening?The answer seems obvious. Why wouldn’t we listen to consumers to find out what products theywant? One reason not to listen to them is the belief that they don’t know.A perfect case in point about retailers’ attitudes is NBC’s new show, Fashion Star. It’s a greatconcept – new fashion designers show their styles to retail experts from Saks, Macy’s and H&M,each of whom provides their opinions and votes with their orders. The winning styles are thenmade available in stores the next day.The show seems like an interesting idea and is generating some marketing buzz for theretailers. In a recent Apparel article, Martine Reardon, CMO of Macy’s said: “Fashion Star ismore about marketing than commerce. It helps us keep our brand out there. ”Saks CEO Steve Sadove said the show is essentially a “one-hour commercial about who Saksis. ” Sadove added that website traffic doubles when the show airs, and the company has seenan increase in show-related purchases and new visitors to the Saks site.But, overall, show viewership for Fashion Star is relatively low at 4. 5 to 5 million viewers. Why?Well, let’s compare it to Fox’s American Idol, which averages 15-20 million viewers. People areperforming, experts are reviewing, but wait… there is one additional piece. On “Idol, ” Americanviewers get to vote, and it matters – even if the experts disagree. What a concept! Listening tothe people and giving them what they want. Reminds me of an old quote from Marshall Fields,“Give the lady what she wants. ” But the question is, how?I have not met a single executive who did not want to listen to his or her customers. Most havelamented the issue that, even though they listen to their customers, what the customer have toldthem and what the customer actually did were two entirely different things.Did this ever happen to you? If this is the case, one or more of three issues may be the cause:One, you are not listening to the right people. Two, you are not asking them the right questions.Or three, you are not making it enjoyable for the consumer to engage with you and you end upgetting bad information.If you want the right people to give you the right information, you had better make it enjoyable.This will be the topic of my next post.http: //www. forbes. com/sites/gregpetro/2012/04/12/retailers-can-you-hear-us-now/33 | Page hoangnd@msn. com Mar 2013
  34. 34. Retailers: Who Do You Trust?Forever 21 Store (Photo credit: Rajiv Patel (Rajivs View))Trust is a funny thing. It is something that is highly valued, but cannot be bought. It must beearned, but cannot be sold. Its lifespan is as long as you care to maintain it.During my 25+ years in the retail industry, I have worked very hard to build and maintain thetrust of my customers. How? By doing what I say I will do, by maintaining confidentiality with theinformation shared with me, and by acting in my customers’ best interests. Why? Because itmakes good business sense, of course. But ultimately, because a trustworthy reputation is oneof a few things that is and will be remembered.What does this have to do with retailers, brands and products? Well, you work extremely hard toestablish a reputation with a group of people – your customers — who come to the places youhave built – your stores — to get the products you have become known for providing. A simpleword comes to mind in maintaining a trusted relationship: fairness. The trust your customershave developed with you comes from the idea that they expect a carefully edited set of productsat a fair price. They will give you their hard earned dollars for a fairlyvalued product.Brands also develop trust with their customers. The “brand promise” is ultimately the trustconsumers have placed in a brand they like. Consumers who are loyal to a brand will trust thatthe next product introduced under that brand will fulfill the brand promise.The more frequently you fulfill your promise, the more trusted you become. Given how easy it isfor a customer to walk across the mall to your competitor, or price shop your products online,your competitive advantage is largely derived from how well you develop a relationship basedon trust.It begs the question:How can you improve in earning the trust and consequent purchase dollars of your customers?One direct way is by meeting expectations consistently. Setting and fulfilling expectations is theeasiest way to build trust both in a relationship and through a product. Here are a few examples:Retailers Forever 21, H&M and now Uniqlo have developed fashion-forward, value-orientedproducts that their customers recognize and desire. It is not just simply that their products areless expensive. These retailers consistently deliver on a promise of quality, and this approachhas delivered strong returns for their businesses.Costco delivers a great product set at a highly communicated 13% margin (tremendous valuedelivery), along with a consistent experience.McDonald’s, Coke and Marriott all set and consistently meet expectations. Regardless of whereyou visit a McDonald’s or a Marriott, you will (almost always) experience a similar level ofservice and a similar product.Sometimes retailers and brands delight their customers with exceptional experiences. Examplesinclude Polo’s Mansion, Louis Vuitton’s newest handbag, and Wal-Mart’s superior fulfillmentability which ensures they will always have the product you are looking for, in-stock.34 | Page hoangnd@msn. com Mar 2013
  35. 35. How do you know what someone expects of you? One way is to visit as many of yourcustomers as you can and ask them. Open, honest dialogue is invigorating and informative. Youlearn so much, even if you are already meeting their expectations.Walk the floors, visit stores, survey or simply get out and explore. One of my favorite moviesis Brubaker. It is an 80’s film in which Robert Redford plays a newly hired warden who goes inas a prisoner to understand what is wrong with the system. A current showon CBS is Undercover Boss, in which a CEO goes in undercover to learn the true story of whatis happening within his or her own company. In almost every case, it is a true discovery session.I suspect that is the case for all of us, but the discovery comes at the cost of time.Undercover Boss (U. S. TV series) (Photo credit: Wikipedia)Often we hire consultants to understand… and they are helpful … but to fix a situationpermanently, you need a systemic way of continuously getting customer feedback.Technology can help bridge the gap. Looking at Point-of-Sale (POS) data gives a rear-viewmirror view of what consumers want and have bought. I think we all know what happens whenyou look in the rear-view mirror too long. But today’s tools for leveraging social media and the“wisdom of crowds” can give a forward looking view into what’s coming and how people feel.Trust can now be measured, in terms of how your customers will view your new products versesyour competitor’s products, and how well your new product offerings will deliver on the valueyou are proposing.In addition to learning what consumers expect, the process of seeking consumer input itselfbuilds trust with them. In our work with retailers and brands, we have found that consumersengage with online games at rates two to five times higher than typical promotional emailcampaigns. In fact, the email subject line that tends to generate the highest open rates is “tell uswhat you think. ” The lesson? Your customers want to engage with you!So reach out and find a way to engage the customer. You will learn what they expect, and willearn their trust in the process.http: //www. forbes. com/sites/gregpetro/2012/07/12/retailers-who-do-you-trust/35 | Page hoangnd@msn. com Mar 2013
  36. 36. Retails Big Question: Is The PriceRight?With the holiday season upon us, retail CEOs know that this month will make or break theiryear. As many retailers and brands launch new products, two factors will determine success orfailure: is it the right product, and is it priced right? These days, pricing is the hottest topic inretail, and it is also the most complex.Over my next few posts, I will share insights and comments from discussions with several CEOswith diverse opinions on pricing in the retail industry.Markdowns, discounts and promotional strategies abound, creating a dangerous patterndeemed a “race to the bottom. ” Retail blogger Robin Lewis put it best when he said, “Itbehooves brands and retailers to beware what they ask for by diminishing the value propositionto…buy me, I’m cheap. ” When the “value” of a product shifts from brand recognition,differentiated features and in-store experience to merely “price, ” you have entered that race tothe bottom.Regarding price, consider that while Americans bought 19. 4 billion garments last year, a 5. 3percent decrease from 2010, the total apparel sales dollars rose almost 5 percent to $283. 7billion, according to the trade group American Apparel & Footwear Association. This meansprice increases, along with some shift in product mix to higher-priced garments, accounted forall of the growth in the apparel industry in 2011. This should set off alarm bells in the heads ofmost apparel retailers and brands.Why? First, with stagnant or declining unit sales, if retailers are not pricing products to capturefull consumer value, comp sales will almost certainly decline. Unfortunately, this is alreadyhappening for many retailers. Second, for those who have managed to increased comps bypushing price increases, how do they know they have captured all of the consumer value? Howmuch is being left on the table?So how do retailers and brands approach pricing today? There are several different models,including “take it or leave it” pricing (e. g. Apple, Under Armour), the “manufacturer’s suggestedretail pricing” that no one actually pays (e. g. automobiles) and value- or volume-based pricing(e. g. Costco).In the fashion industry, pricing models are just as mixed: “Fixed Price” on unique products with long lifecycles (e. g. Uniqlo) Percentage off “retail price” plus additional discounts, promotions and markdowns (e. g. Kohl’s). “Everyday Low Price” (e. g. JC Penney) Set entry price with quick markdowns when inventory doesn’t move. This model is often used by fast fashion retailers with short product lifecycles (e. g. Wet Seal) “High/Low” pricing, where products are in a near constant state of change… up, down, up, down.36 | Page hoangnd@msn. com Mar 2013
  37. 37. Now layer on e-commerce, with mobile technology enabling real-time price comparisons, andthe exercise of pricing becomes even more complicated.It is no wonder the consumer is confused on what is and what is not a good value anymore. JCPenney, for example, is clearly struggling as it attempts to change the customer’s mindset. Onecustomer recently stated on the retailer’s Facebook page: “This is not a change at all, there hasnever been a day in all of my shopping at JC Penney where ANYTHING has been full price. ”Another customer stated, “I really, really miss my coupons. ”In this three-part series, I will explore how pricing is managed in three different retail entities –first Specialty & Vertically Integrated Retailers, then Department Stores, and finally individualBrands (the manufacturers). I will look at what’s working and what’s not, and I’ll discuss theresults of some of my conversations with CEOs in each category.http: //www. forbes. com/sites/gregpetro/2012/12/11/retails-big-question-is-the-price-right/37 | Page hoangnd@msn. com Mar 2013
  38. 38. Pricing Part 2 -- Focus OnSpecialty & Vertically IntegratedRetailersPhoto credit: WikipediaAs I indicated in my last post, in this series I will explore how pricing is managed in three typesof retail entities – first Specialty & Vertically Integrated Retailers, then Department Stores, andfinally individual Brands (the manufacturers). I will look at what’s working and what’s not, and I’lldiscuss the results of some of my conversations with CEOs in each category.Let’s start with Specialty/Vertically Integrated Retailers. Just a few of the many companies thatfit this category include Aeropostale, American Eagle, Charlotte Russe, Hot Topic, Gap, Men’sWearhouse, and PacSun.These companies control the entire product lifecycle – from design to manufacture todistribution. Let’s look at a couple of these retailers, starting with Charlotte Russe.Charlotte Russe is a fast fashion specialty retailer with over 500 stores with a spotlight onwomen in their teens and early twenties. In a recent conversation with Jenny Ming, CharlotteRusse’s CEO, she told me that “Charlotte Russe is about the right fashion at the right price, ”adding, “if she (the customer) doesn’t want it, lowering the price will not make it more attractiveto her. ” As a result, Charlotte Russe avoids heavy discount promotions but sometimes offersbuy-one-get-one-free offers (BOGOs) to provide the customer with more of the type of productshe wants. The initial entry price is clearly critical at Charlotte Russe.I also spoke recently to Gary Schoenfeld, CEO of teen retailer PacSun. Their approach topricing is based in part on the type of product – basic vs. unique. Schoenfeld stated, “With basicproducts, understanding the competitive landscape is very important. For unique products, wehave more flexibility based on how our customers value our unique designs. ”Mindy Meads, former co-CEO of Aeropostale, current Wet Seal board member, and previousFederal Reserve Bank board member, recently told me, “In a highly promotional environment,the key to the value equation is having the right combination of all three factors – fashion,quality and price. ”Compared to Department Stores and Brands, Specialty (and Vertically Integrated) Retailershave the most control when it comes to pricing. Vertically Integrated Retailers control the entireprocess. The best ones design product from the beginning to target specific price and marginpoints. They also control the in-store experience, which can’t be ignored when understandingthe value of the brand and how it affects pricing.Success in this space requires you to “Distinguish yourself and stay true to who you are. Ownyour vision and have it be consistent, ” explained Ms. Meads.38 | Page hoangnd@msn. com Mar 2013
  39. 39. Added Jenny Ming, “To be a great retailer you must have an incredible sense ofcuriosity…curiosity to understand, learn and explore. ”As Gary Schoenfeld, CEO of PacSun, succinctly summarized: “We have a knowledgeablecustomer who understands the value and pricing of our products. If the fashion and price istrend right, we have a win-win scenario. ”Getting the Price Right from the StartWith price as a primary engine for growth over the next few years, pricing will clearly be anintegral part of the value equation for consumers in deciding what is the “Right Product. ” In astudy of 70 retailers in April 2012, retail analyst firm RSR found that 67% of respondentsreported consumer price sensitivity as a top-three business challenge, up from 46% in 2010.Interestingly, they found that 55% of “laggards” (underperformers in year-over-year comparablestore/channel sales) are using promotions as their pricing strategy, versus approximately 35%of all other respondents.“Retailers must return to a value-based proposition for consumers, ” Nikki Baird, ManagingPartner of RSR, recently told me. “This means there is a lot more importance on the initial price,because any retailer making a value argument about its prices is going to lose a lot of credibilitywith consumers if it then has to run promotions or markdown items because it didn’t hitconsumers’ initial expectations. ”So vertically integrated retailers know they must get the price right from the start. It is alsobecoming clear that these retailers want to price based on customer value, and that pricingbased on assumed psychological barriers, or based on standard cost mark-ups, is no longer a“best practice. ” The best retailers are using data to drive decisions on price-setting… nothistorical data, but forward-looking data based on precise knowledge of what consumers willactually pay.Next up: Pricing from the perspective of Department Stores.http: //www. forbes. com/sites/gregpetro/2012/12/20/retails-big-question-is-the-price-right-part-2-focus-on-specialty-vertically-integrated-retailers/39 | Page hoangnd@msn. com Mar 2013
  40. 40. Pricing Part 3: How Does A BrandKnow When The Price Is Right?(Image credit: AFP/Getty Images via @daylife)Ever wonder how a manufacturer or brand comes up with the number on the price tag? Arrivingat that figure is a complex process, and getting the formula right is key to the health of theirprofit margins.This four-part series covers the hottest topic in retail: pricing. I’m sharing the results ofconversations with several retail CEOs who are commenting on the challenges as well as bestpractices in the industry. At the NRF conference in New York City on January 14, I will also bemoderating a panel discussion on this topic including several of the industry experts interviewedin these posts.In my last post, I wrote about the pricing models and challenges facing specialty and verticallyintegrated retailers. This time, I will focus on the brands or manufacturers that sell throughmultiple retail channels.How can brands price so they capture full customer value, grow sales and preserve margins?How do they avoid the so-called “race to the bottom”?Brands typically rely on department stores or other channels to distribute their products. Thedepartment stores achieve differentiation through a combination of the product assortment, thecustomer experience, and the price/value equation. But, for the manufacturer, the differentiationresides with the brand itself.Many brands have relatively narrow product lines, which tends to reduce their leverage withretailers. But Nike, for instance, has a broad product line which includes everything fromshoes to apparel to sporting goods, which in turn allows them stronger negotiating power withretailers. Apple has a relatively narrow product line, but the brand is so strong that they havebeen successful selling both through retail partners (wholesale) as well as through their ownretail channels.So how does a brand set the entry price for a new product?Forbes. com contributor Matthew Carroll wrote a comprehensive piece in February 2012 on thistopic (“How Fashion Brands Set Prices”), describing how most manufacturers start bydetermining the targeted retail price to the consumer, otherwise known as the manufacturer’ssuggested retail price (MSRP). If the new product is an extension of an existing product line,or a replacement for a previous style, the brand will typically expect a similar price as theproduct’s predecessor, unless there have been significant changes in market dynamics.But if the product is new to the manufacturer’s line or is in an entirely new category, establishingthe MSRP is more difficult. Many brands will analyze the market and the competitive landscape40 | Page hoangnd@msn. com Mar 2013
  41. 41. for the product category to determine where the new product will be positioned. Somemanufacturers lay out a grid with price versus features, placing competitive products on the gridalong with the proposed new product.In addition to the retail price (MSRP), the manufacturer also attempts to estimate the averageunit retail price (AUR). AUR is important because it is the average price the product will bearover its lifetime, taking into account all promotions and markdowns. MSRP is something thebrand controls and sets; AUR is something that occurs based on consumer demand.With a target retail price in mind for the product, the brand then works backwards to determinethe wholesale price to the retailer. For years, retailers applied a standard 2x “Keystone Markup”,which meant that the retailer would double the manufacturer’s wholesale price. Today, bothretailers and brands have access to robust analytics which give them better information withwhich to negotiate wholesale prices. Also, for manufacturers with broad product lines, themarkup may differ based on the line or even the individual product. Other components canaffect the markup, such as volume discounts, rebates, and marketing/advertising dollarsprovided by the brand to the retailer. Because of these factors, the standard 2x markuprarely applies these days.Once the wholesale price is determined, the brand assesses its cost to manufacture theproduct. If the brand cannot make its targeted margin at the wholesale price, it may decide notto proceed with the product, or it may make modifications to the product in order to reduce thecost. Most brands are looking for margins of at least 50%.This all sounds relatively straightforward… so why is it such a challenge? Because most brandsmust make the decision on whether or not to move forward with a new product 12-15 monthsprior to its introduction. They can’t wait for the negotiation with the retailers on wholesale prices.As a result, many brands don’t work backwards from the estimated retail price; instead they setthe wholesale price based on a standard mark-up over manufacturing cost (say 2x or even 3xtheir cost).The problem here is that when the product is ready to launch, the MSRP may end up being thewrong price because it was developed based on cost instead of what the end consumer willpay. But the problem really started 12-15 months earlier, when the product may have beenover-designed (or under-designed) for the targeted price point.“Data drives so much of our insights today, yet one of the most important and overlookedfactors in trend-related consumer products is the initial price, ” said Matthew E. Rubel, SeniorAdvisor at private equity firm TPG Capital and TPG Growth, and former CEO of CollectiveBrands (previous parent company of Payless, Stride Rite and other brands), in a recentconversation. “Years ago, the advent of GMROI changed the way we looked at gross marginand the investment it took to get it…today we need to test and validate initial pricing in order tooptimize our return. The opportunity for the savvy retailers and brands is to understand this andmove ahead of the curve. ”Today, many brands are using technology to learn the price the market will bear for a newproduct, at the point of initial product development. Manufacturers are gaining consumer insighton candidate new products – even in entirely new categories – 12-15 months beforeintroduction. These manufacturers are able to analyze a price elasticity curve, yielding aforecast of the average unit retail price before product development dollars are spent. They usethis information to set the MSRP based on market demand rather than based on cost mark-ups.They also use this data to eliminate potentially unprofitable products early on, or missed salesthrough stock-outs later on.“With digital and immediate access to consumers, the process is no longer cumbersome, ”continued Rubel. “It is like a third party working with the buyer and the planner. ”Mike Ray, CEO of Vera Bradley, a leading manufacturer of fashion handbags, luggage andaccessories, told me: “As a brand selling through multiple channels, setting the suggested retailprice is critical for us. We establish retail prices months before a product is launched, so weneed a forward view of what the market will bear. We’re using real time consumer insightsgathered through online engagements which give us actionable data on how to set MSRPs.41 | Page hoangnd@msn. com Mar 2013
  42. 42. This gives us insight into higher price point–and margin–opportunities, well before the productintroduction. ”As we have been sharing over the last few posts, price is an essential element in determining anew product’s success or failure. Using historical norms to predict the price performance of anew product is analogous to using a stock or mutual fund’s history to predict how that securitywill perform in the future. As we see in nearly all investment literature: “past performance is noguarantee of future results. ”Next up: Department Store Pricing – No Easy Taskhttp: //www. forbes. com/sites/gregpetro/2013/01/03/pricing-part-3-how-does-a-brand-know-when-the-price-is-right/42 | Page hoangnd@msn. com Mar 2013

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