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www.ngretailus.com • Q4 2010   Riding the recession   How the best retailers have   profited from the downturn   Survival o...
PHILIPS DPS.indd 1   01/10/2010 16:11
PHILIPS DPS.indd 2   01/10/2010 16:11
INTEL DPS AD.indd 1   01/10/2010 16:09
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FROM THE EDITOR 5           Changing the retail           landscape – again           Why the mobile revolution has fundam...
MOTION COMPUTING AD.indd 1   05/10/2010 14:09
CONTENTS 7                                                     28                                                     Surv...
8   CONTENTS             Regulars                                 12 The brief                                 A look at t...
CONTENTS 9           70 Token efforts           Bob Griffin outlines the landscape of           retailers’ tokenization opt...
The NG Retail US Summit       17-19th May 2011                                                                            ...
ENQII AD.indd 1   01/10/2010 16:03
12    THE BRIEF            ’Tis the season to be spending?            By Nick Pryke            W                          ...
THE BRIEF 13                In addition to the modest two percent increase in        News in pictures           spending f...
14    UPFRONT            Retailers look to the environment            Consumers across the globe want companies to        ...
UPFRONT 15                                        What Do Countries Think About Green Brands?                             ...
16    GLOBAL NEWS                Not everyone shops the same                So what’s happening globally in the wonderful ...
UPFRONT 17                                                                                   Powerful slate tablet PCs off...
18    UPFRONT                        B                                    etween the increasing popularity      Amazon    ...
SAP_AD.indd 1   1/6/10 11:18:50
20    UPFRONT            I                    t has been a hot topic among retail                    industry professional...
Lithuim AD.indd 1   08/07/2010 13:15
22    UPFRONT            Reality bytes            I                  magine a world in which small, cartoon-              ...
CEO PERSPECTIVE 23           Looking ahead           It’s a marketer’s dream – and a philanderer’s nightmare: glasses that...
24    UPFRONT            Big box solutions            IKEA’s journey from Sweden’s best-kept secret to global retail sensa...
UPFRONT 25               ??????FRONT SECTION.indd 25          08/10/2010 15:30
26    UPFRONT            Holiday plans            B                                                         Vending Viking...
UPFRONT 27           Logo wars           R                            etail stalwart Gap recently                         ...
28     THE BIG INTERVIEW              SurvivalofBig Interview Steve Odland.indd 28   08/10/2010 15:48
THE BIG INTERVIEW 29                                     At one point, the economic crisis                                ...
Next Generation Retail [Q4 2010]
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Next Generation Retail [Q4 2010]

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Next Generation Retail explores the topic of Net Returns: How the web through e-commerce, social networks, smartphones — has changed the retail landscape forever.

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  1. 1. www.ngretailus.com • Q4 2010 Riding the recession How the best retailers have profited from the downturn Survival of the fittest Office Depot’s Steve Odland on tackling tough times Energy effectiveness Philips Teletrol’s Andy McMillan on improving the shopper experience Net returns How the web – through e-commerce, social networks and smartphones – has changed the retail landscape forever SUSTAINABLE RETAIL • DIGITAL SIGNAGE • WORKFORCE M ANAGEMENT • STORE DESIGN • PAYMENT SOLUTIONSCover NGRUS1.indd 1 08/10/2010 16:15
  2. 2. PHILIPS DPS.indd 1 01/10/2010 16:11
  3. 3. PHILIPS DPS.indd 2 01/10/2010 16:11
  4. 4. INTEL DPS AD.indd 1 01/10/2010 16:09
  5. 5. INTEL DPS AD.indd 2 01/10/2010 16:09
  6. 6. HARRIS AD.indd 1 01/10/2010 16:03
  7. 7. FROM THE EDITOR 5 Changing the retail landscape – again Why the mobile revolution has fundamentally altered the way we live and shop. W ith apologies to Ferris Bueller, technology that one in five consumers planned to use their mobile “While mobile moves pretty fast – if you don’t stop and phones to shop during the 2009 holiday season. look around once in a while, you could retail is real now, Indeed, the variety of applications for mobile tech- miss it. Mobile is just the latest disruptor it’s very quickly nology are huge. “We believe the true potential for to revolutionize the way we interact with information. m-commerce is to provide consumers with a valuable Picture the following scene: a group of friends going to morph tool for research, comparison shopping and retailer are sat in a pub, arguing over an obscure fact. In years into something interaction,” says Malcolm Pinkerton, Senior Analyst gone by, the argument would have raged for hours, different from at Verdict Research, in our cover story. Google, mean- with neither side willing to give an inch; these days, while, believes that mobile will also bring advantages however, such debates are solved easily at the touch of the types of location-based marketing and social media market- a button via a simple Google query. Elsewhere, a com- of mobile ing to the mix and these, while not necessarily driving muter on the way to an important meeting is stuck in functionality we direct sales from handsets, will provide the cornerstone traffic; a real-time travel update means he is able to of the future shopping experience. reroute his journey to get there on time. Meanwhile see today” The marketing whizz kids at Apple put it best: “This a tourist is looking for somewhere to eat in a strange changes everything. Again.” In many ways, Apple’s city; no problem, the location-aware software on her ad might represent excessive marketing industry mobile phone instantly provides her with a range of hyperbole, but it does hold an essential truism: the choices. mobile revolution has fundamentally altered the way Mobile phones must be one of the best on-the- we live. More importantly, it also highlights another spot information retrieval resources of all time – which truth – that while mobile retail is real now, it’s very is why they are increasingly becoming the weapon quickly going to morph into something different from of choice for a new army of consumers constantly in the types of mobile functionality we see today. We’ve search of lower prices, better deals and greater infor- barely scratched the surface of what’s possible. mation on everything from product comparisons to It’s hard to plan for a constantly evolving technology. user satisfaction. With consumers relying on hand- However, retail execs cannot afford to take a backseat held devices for everything from phone calls to web and wait for others to shape the mobile landscape. Ferris surfing, retailers are looking to mobile as the next had it right: snooze and you’ll almost certainly lose. frontier of the shopping experience. Approximately 1.15 billion mobile handsets shipped in 2009 around the globe, with smartphones accounting for 81 percent of the estimate. eBay’s iPhone app, launched earlier this year, has already been downloaded in excess of 11 million times, and the online auction giant is gunning for a whopping $1.5 billion in mobile sales this year; Amazon’s mobile site traffic is second only to eBay among vendors of real- world stuff, according to figures from Nielsen; while Ben Thompson an annual survey from Deloitte last year that found Senior EditorED NOTE.indd 5 08/10/2010 16:15
  8. 8. MOTION COMPUTING AD.indd 1 05/10/2010 14:09
  9. 9. CONTENTS 7 28 Survival of the fittest Office Depot CEO Steve Odland on how the company weathered the downturn and is now looking ahead to a brighter future 60 76 Heart and sole The art of celling With mobile commerce set to How Zappos has leapfrogged traditional stores revolutionize the to become one of America’s favorite shopping retail environment, destinations Ben Thompson asks whether the country’s businesses are ready for the next wave of change 38 Riding the recession As America recovers from one of the most crippling financial climates in the country’s business history, Lucy Douglas asks what a retailer needs to succeed in 82 a recession? Kindling customer engagement How CTO Werner Vogels transformed Amazon.com into the world’s most customer-centric organizationCONTENTS.indd 7 11/10/2010 11:58
  10. 10. 8 CONTENTS Regulars 12 The brief A look at the forecast for holiday spending 16 Global news A round-up of the latest industry events and trends from around the world 48 Roundtable A panel of experts give their 12 insight into the changing face of retail marketing solutions 101 Lifestyle Have we seen the final curtain call for America’s favorite movie rental store? 104 Travel How to spend 36 hours in… Las Vegas 34 Branding for the online avenue Next Generation Retail speaks to Saks Fifth 16 Avenue’s AJ Sutera about taking an exclusive brand on to an accessible online platform 44 Blueprint for success Why making the most of your costly retail space can pay dividends in terms of better branding and more active customer engagement 54 Signs of the times The Retail Advertising and Marketing Association’s Mike Gatti reveals how digital signage is going to revolutionize the retail world 68 Taking on the online challenge 101 104 Walgreens’ CTO Abhi Dhar explains how the nation’s favorite bricks-and-mortar drugstore successfully made the transition to online powerhouseCONTENTS.indd 8 08/10/2010 15:29
  11. 11. CONTENTS 9 70 Token efforts Bob Griffin outlines the landscape of retailers’ tokenization options 72 Engaging the social consumer Steve Madden’s Andrew Kovan speaks about utilizing the growing social media platforms to interact with customers 90 74 Return of the king According to recent research from IBM, it is consumers rather than stores that are driving the rapidly evolving retail environment 86 A rewarding experience Customer loyalty is consistently touted by retailers across the country as a major area of focus. So why do so few have a rewards program that works for both them and their clients? 88 Asset maximization: selling your brand starts with your talent Jamie Minier, President of The Right Thing, explains why a strong employment brand is 54 68 vital to attract top talent 90 Inside the hit factory What keeps Starbucks’ HR department awake at night? Clue: it’s not just the coffee 94 Energy effectiveness: getting beyond energy efficiency By Andy McMillan 96 Retail goes green Why a growing number of retailers are putting sustainability at the heart of their business models 106 Less is more Liz Claiborne’s Peter Warner speaks to Next 72 00 Generation Retail about keeping up with the industry and how stripping a business back to the bare essentials can provide the much needed facelift to succeed in tough timesCONTENTS.indd 9 08/10/2010 15:29
  12. 12. The NG Retail US Summit 17-19th May 2011 Legal Information Scottsdale, Arizona The advertising and articles appearing within this publication reflect the opinions and attitudes of their The NG Retail Summit is a three-day critical information gathering of the respective authors and not necessarily most influential and important executives from the retail industry. those of the publisher or editors. We are not to be held accountable for unsolicited manuscripts, transparencies or photographs. All The NG Retail Summit is an opportunity to debate, benchmark and learn material within this magazine is from other industry leaders. ©2010 NGR. A Controlled, Professional and Focused Environment Chairman/Publisher Spencer Green Worldwide Sales Director Oliver Smart A Proven Format Finance Director Jamie Cantillon This inspired and professional format has been used by over 100 executives as a rewarding platform for discussion and learning. Editor Ben Thompson Associate Editor Lucy Douglas Contributors Ian Clover, Rebecca Find Out More, Contact NG Retail Goozee, Nicholas Pryke, Julian Rogers, Stacey Sheppard, Marie Shields +212 796 2000 ext. 456 Creative Director Andrew Hobson Design Director Sarah Wilmott Associate Designers Tiffany Farrant, Michael Hall, Crystal Mather, Cliff Newman, Catherine Wilson Online Director James West Online Editor Jana Grune Project Director Robert Fishkin Assistant Project Director Matt Rivoir Sales Executives Chris Burke, Mark Segreto, Gabrielle Hess, JP Wolf, Joe DeForca, Ruth Pender Production Director Lauren Heal Production Coordinators Renata Okrajni, Aimee Whitehead VP North America Jason Green Operations Director Ben Kelly IT Director Karen Boparoy Marketing Director John Funnell Subscription Enquiries: +44 117 9214000, www.ngretailus.com General Enquiries: info@gdsinternational.com (Please put the magazine name in the subject line) Letters to the Editor: letters@gdspublishing.com GDS International GDS Publishing, Queen Square House 18-21 QueenSquare, Bristol, BS1 4NH Tel: +44 117 9214000 E-mail: info@gdsinternational.com www.ngrsummit.comCREDITS.indd 10 08/10/2010 15:29
  13. 13. ENQII AD.indd 1 01/10/2010 16:03
  14. 14. 12 THE BRIEF ’Tis the season to be spending? By Nick Pryke W ith the obligatory Christmas run-up Beemer, Founder and CEO of ARG. “Never, in the 31 “Pessimism hitting our screens, shops and internet, years I’ve been conducting research, have I seen such you could be excused for thinking that among a pessimism. President Obama has pierced the side of we’re already in December. Fortunately Americans about Lady Liberty, reducing the spirit of hope among con- that’s not the case, but with the side effects of the the upcoming sumers as they wonder when the recession will ever global recession hitting last year’s Christmas period end. Americans see massive government debt, more with some force, researchers, analysts and retail play- Christmas home foreclosures in their neighbourhoods and little ers are keen to do all they can to predict what the 2010 season is off the or no improvement in their local economy – even after festive period holds in store – and early signs indicate charts” $1 trillion spent in government stimulus.” that it could be another tough season for retailers. However, in somewhat of a contrast to Beemer’s A survey recently conducted by America’s Research Britt Beemer, Founder statement, Deloitte has released its 2010 holiday and CEO of ARG Group (ARG) has confirmed that more than 42 percent spending forecast, in which it notes the most modest of consumers plan to spend significantly less during of increases in consumer spending in comparison to the festive season this year, compared with a mere 11.7 2009. Regardless, “sustained weakness in the hous- percent who said they planned to spend more than ing and employment markets continue to restrict they did the year previous. The near four-to-one ratio consumer cash flow,” says Carl Steidmann, Deloitte’s saying they would spend less is above the two-to-one Chief Economist. seen in 2009 – and even higher than the three-to-one “Consumers’ discretionary funds have dwindled seen in the financial downturn that 2008 delivered. as households remain focused on reducing debt and In addition, while 55 percent of people said that they increasing their savings. Should consumers receive were in a better debt position this year than last, it good tidings later this season in the way of falling certainly doesn’t mean that the purse strings have energy prices or additional stock market gains, they been loosened, as credit-card companies have contin- may be able to lend retailers a bit more holiday cheer. ued to tighten credit limits and increase interest rates. However, given the unsteady pace of economic re- “Pessimism among Americans about the upcom- covery, retailers should expect only a small uptick in ing Christmas season is off the charts,” says Britt holiday sales this year.”FRONT SECTION.indd 12 08/10/2010 15:56
  15. 15. THE BRIEF 13 In addition to the modest two percent increase in News in pictures spending for 2010, Deloitte’s retail group also expects total holiday sales to reach $852 billion, representing a slight improvement over last year’s one percent gain. But with a change in environment and ever-accelerat- ing advances in technology, non-store selling and e- commerce is set to top the retail charts, with Deloitte highlighting a 15 percent increase in non-store sales, with nearly two-thirds coming from online channels and the remainder from catalogs and interactive TV. “The convenience and functionality that have fu- elled e-commerce gains in previous seasons will con- tinue to draw consumers online to do their shopping this year,” confirms Alison Paul, Vice Chairman and Deloitte’s retail sector leader in the US. “Online activ- ity may also influence in-store shopping this holiday season, as social networks and mobile applications are playing a more prominent role in the shopping Gap is among the brands that have joined the President’s “Skills for America’s process. As such, retailers should seek to deliver tightly Future” partnership, which links large companies with community colleges in integrated and consistent merchandise, inventory and order to boost the job skills of American workers. promotional messages to customers moving between web-based and physical storefronts.” Paul adds that retailers should be out in front of consumers to get their attention and strike a connec- tion with their brand early and often. Furthermore, according to Paul, by reaching out to their consumers via mobile applications, digital marketing and social networks, retailers should be able to enhance brand awareness and build traffic and sales in time for the Christmas period. And with US retailers posting their largest sales gain in five months in August, with strong receipts at gasoline stations and clothing outlets, the presumption would be that spending is on the up. Unfortunately it’s not as clear-cut as that, with retailers and consumers both explicitly aware of the continuing fragility of their A coffee buyer checks a sample of coffee beans at the coffee growers’ collective in San Gil, Colombia, on September 24. Colombian coffee growers may fall short of financial situations. Challenger, Gray & Christmas, re- a 2010 production forecast after output last year fell to a 33 year low, helping to leasing its annual holiday hiring forecast, confirmed sustain a 41 percent rally in New York-traded coffee prices this year. that retailers were more inclined to wait until the last minute before deciding to take on seasonal help in November and December. In addition, the company’s CEO, John Challenger, says that the best opportuni- ties for seasonal job seekers will be at discount stores, which he believes will attract a large majority of cost- conscious consumers during the period. “There’s still a lot of doubt about the sustainability of this economy,” asserts Challenger. “Retailers do not want to be caught with too many workers. There are still nearly 15 million Americans out of work and many have lost their homes or are struggling to hang on to them. This does not bode well for heavy holiday spending.” But it’s not all doom and gloom for the industry, as Toys R Us Inc. has brought some festive cheer to the table by announcing plans to hire 10,000 work- ers to staff its new 600 Toys R Us Express temporary The price of gold reached an all time high, with prices over $1300 an ounce as of stores around the US this coming Christmas. For the the end of September. Pawn shops and cash converters such as this one are proving remainder of the industry, it’s another case of ‘watch popular with consumers looking to make some extra cash. this space’.FRONT SECTION.indd 13 08/10/2010 15:30
  16. 16. 14 UPFRONT Retailers look to the environment Consumers across the globe want companies to be greener, a recent survey shows. M ore than 60 percent of consumers want to buy from environmentally responsible companies, but the cost of green products continues to be a hurdle in developed countries, according to a recent international survey. The fifth annual ImagePower Green Brands Survey, conducted by WPP agencies Cohn & Wolfe, Landor Associates and Penn Schoen Berland (PSB), as well as independent strategy consulting firm Esty Environmental Partners, gathered information on the environmental attitudes of 9000 consumers in eight countries. TOP 10 GREEN BRANDS Selection and labelling emerged as the biggest challenges in developing economies. The data also indicate that 70 percent of consumers in China, India and Brazil plan to spend the same or more money on green products in the coming year. 1. BURT’S BEES Reducing toxic and dangerous substances emerged as the most critical activity a company can do to be green – cited by more than two-thirds of 2. WHOLE FOODS respondents in each country – followed by water conservation or recycling. Consumers also said environmental consciousness is 3. TOM’S OF MAINE an important corporate priority, ranking it fourth in importance behind good value, trustworthiness and being caring about customers. 4. TRADER JOE’S Good shop, bad shop 5. GOOGLE T hink buying green makes you a better person? Think again. A research study by Nina Mazar and Chen-Bo Zhong of the 6. AVEENO University of Toronto suggests that those who make green purchases are subsequently more likely to behave in a selfish manner. Half of the study participants were asked to 7. SC JOHNSON shop online from a store stocked with mostly green products, while the other half were given a store containing conventional products. Participants were then asked to carry 8. PUBLIX out one of two tasks. One group was told to allocate $6 between themselves and another participant. The green shoppers kept more for themselves than the others did. 9. MICROSOFT The other group were given a task with a clear incentive to lie about the results to earn more money. The green shoppers earned on average 36¢ more than they should have, showing that they had lied to boost their income. 10. IKEAFRONT SECTION.indd 14 08/10/2010 15:30
  17. 17. UPFRONT 15 What Do Countries Think About Green Brands? It would be legitimate to think that with the US coming out of a recession, shoppers would be more pre-occupied with the economic downturn than saving the planet, and according to the fifth annual ImagePower Green Brands Survey that appears to be the case, although there is a growing concern for green practices. Consumers are more concerned about the economy than the environment * 68% UK 58% 25% 67% Germany 35% China 57% 32% 79% France 35% USA More concerned 17% with the economy 59% More concerned India with the environment 72% 37% 51% Brazil 25% 41% Australia Very important 60% of consumers say it is of some importance to buy brands from green companies * Somewhat important Not important 16% 16% 9% 15% 30% 50% 49% 40% 54% 59% 62% 64% 58% 57% 47% 44% 34% 22% 19% 11% 18% 2% 3% 7% USA UK France Germany Australia China India Brazil Source: All figures from 2010 ImagePower - Green Brands Survey * Not showing ‘Don’t know’ Graphic created for NG Retail US | www.ngretailus.com | GDS DigitalFRONT SECTION.indd 15 08/10/2010 15:30
  18. 18. 16 GLOBAL NEWS Not everyone shops the same So what’s happening globally in the wonderful world of retail? Orchard Road shopping district, Singapore Venus Fort, Japan NEW HORIZONS GIVE-AND-TAKE Asian markets in a strong position coming out of the Why swapping is the new shopping in Holland downturn The large number of flea markets and second- Some 2.6 million square feet of retail space hand shops dotted around Amsterdam’s city opened to shoppers in Singapore last year. center have long marked the city out as open to Between the bustling Orchard Road shopping the idea of thrift retail. But now the concept is district and several integrated resorts at vari- being taken a step further with the rise in swap-shopping currently ous popular and luxurious destinations such as Sentosa Island, being imported from the US. Instead of getting rid of their clothes, the new developments will provide an extra boost to the city- locals are encouraged to exchange them in private and public nation’s economy. In addition, the integrated resort helped bring events hosted by enterprising third parties. a rise in tourist numbers in Singapore with over 946,000 visitors “Want a whole new wardrobe for a fraction of the price? Ex- welcomed into the country in May, signifying a 30 percent rise change your perfectly good items that you never wear for fabu- year on year. lous fashion finds,” exhorts Amsterdam’s leading swap-shop host Further north, Malaysia is seeing an estimated 4.4 million Swap and the City. Colleen Geske and Tamara Raab, creators of the square feet of retail space coming on to the market this year. event, believe that while the idea of a clothing swap is nothing new, the economic climate means it’s a perfect time to re-examine INTO AFRICA fashion-shopping habits. “I wanted to create a fun afternoon out WalMart to enter into the South African market for women in the Amsterdam area, around the theme of fashion, Retail giant WalMart has put in a bid of $4.2 bil- beauty and charity,” says Geske. lion for South African wholesaler Massmart. As And as the event spawns a host of copycat meetings, expect Africa’s biggest economy, South Africa represents the trend to continue throughout 2010. a crucial market for WalMart’s success on the continent. In addition, Massmart operates 288 stores over 14 LOCATION, LOCATION, LOCATION nations across sub-Saharan Africa, as well as managing some of Themed Hong Kong streets offer bargains the country’s largest retail chains, and the successful acquisition If you want the best deal, shop where the locals of the firm would represent the largest takeover in more than 10 shop. That’s the lesson from Hong Kong, where years for the world’s largest retailer. WalMart failed to be the first consumers in Asia’s retail hotbed have swapped mover into either the South American or the Asian markets, in retail directories and the internet in favor of lo- both instances being beaten by French rival Carrefour group. It cally clustered retail ‘theme’ streets to help them find the largest is now hoping to be the first Western super-retailer to establish selection of goods in town. Kimberley Road is home to dozens of a presence on the African market and is prepared to take on the wedding gown shops; sport shoe shops line Fa Yuen Street; while risks that such a move brings with it. florists (unsurprisingly) pack the units along Flower Market Road.FRONT SECTION.indd 16 08/10/2010 15:30
  19. 19. UPFRONT 17 Powerful slate tablet PCs offer enhanced power, performance and integrated features M otion Computing, a global leader in integrated mobile Flower Market Road, Hong Kong computing solutions, has enhanced its entire line of rugged slate tablet PCs with enhanced integrated Hong Kong has many such theme-driven clusters of small busi- features and powerful performance. Now with the Intel Core i7 nesses that defy the conventional retail wisdom of avoiding direct vPro processors, Motion offers new levels of performance, security competition. Economists refer to the phenomenon as the ‘cluster- and manageability. The J3500 and F5v Tablet PCs from Motion are ing effect’, explaining how it acts as a magnet for like-minded significantly impacting point-of-sale computing by providing real- shoppers. In addition, Lam Pun-lee of the department of business time access to customer information, inventory details and more – in studies at Polytechnic University believes grouping similar shops the store, in the field or anywhere else it’s needed. together actually lowers the cost of marketing and creates more By offering the latest in processor technology, Motion is providing choice for consumers. “Hong Kong is a small city,” he says. “The retailers with the ability to equip mobile and in-store workers with presence of a few shops of similar products can grow into a cluster. That in turn attracts spending crowds.” all of the performance they need to improve productivity at the point-of-service, in a highly mobile device designed for users who CHIC ON THE CHEAP stand and compute. Enhanced remote management capabilities, Outlet malls gain in popularity as Japan cuts costs increased security and improved multitasking offer the ability to run As the saying (almost) goes, when in Tokyo, do multiple applications, with the confidence to know that the data, and what the Tokyans do. There is a new wind blow- the device, are protected. ing through Japan’s rising retail market: the Motion’s latest Tablet PC, the J3500, now features capacitive arrival of city-centre outlet malls is upon us. As dual touch technology, enabling users to take advantage of the the uncertain economic climate forces people to become more accuracy of stylus input or the convenience of touch for navigating budget-conscious, outlet malls have become increasingly popular in the land of the rising sun. But with such shops traditionally lo- applications. Both the F5v and J3500 offer a host of features that cated in hard-to-reach, remote suburbs, growth in the sector has, support the mobile worker with a rugged, lightweight design for to date, been limited. all-day computing. Extra-durable Corning Gorilla glass offers display However, one shopping center in Tokyo has brought outlet breakage protection, and combined with the available 128GB solid shopping to the heart of the city. Although it opened in 1999 with state drive, these tablets are built to withstand highly mobile work around 160 boutiques and restaurants, Venus Fort, a shopping environments. complex built to resemble medieval Europe, recently renovated Finally, from the available integrated digital camera to the its entire third floor to accommodate close to 50 outlet shops – a optional Gobi2000 mobile broadband with GPS, available web first for Tokyo. As with other outlet malls, items are heavily dis- camera, hot-swappable battery solutions and barcode scanner, counted, sometimes between 50-70 percent off the retail price. And it is not just the affordability that attracts shoppers, but Motion’s tablet PCs significantly improve how data is used at the choice as well. point of service. For more information, please visit www.motioncomputing.com.FRONT SECTION.indd 17 08/10/2010 15:30
  20. 20. 18 UPFRONT B etween the increasing popularity Amazon of devices such as smartphones The Amazon app essentially provides users and tablets among the US con- with the same service as the website, just sumer market, and retailers optimized for the screen size. Customers continuing to look for ways to can browse and purchase products from the expand their operations in order to keep rev- emporium that is the Amazon store, as well enues up in a downturn, a spurge in retail cell as manage an existing cart of products and phone applications seemed only logical. But monitor orders. how many retailers have fully taken advan- Customer rating ½ tage of the new platforms to maximize the experience of the mobile user? Macy’s The iShop from Macy’s was undoubtedly well eBay received by avid fans of the brand, but the The app from the online auction site not departments store’s app is basic compared to only allows users to buy items from their those offered by other retailers. Still it does cellphone, but also lets consumers track the allow users to shop from the Macy’s online status of their bids, sending automatic up- store wherever they are. dates should a higher bid come in. Customer ratings Apple store customer rating Target WalMart This app does what you would hope, given its The superstore’s app, currently available name, boasting the ability to provide its users across platforms of various sizes, boasts a with “the tools to simplify and streamline variety of features, from facilitating such your shopping experience.” Beyond the basic simple tasks as searching for products or functions, this app allows users to set their nearby store locations, to more specific func- store preference in order to see results spe- tions such as determining the correct TV size cific to their local outlet, has a barcode scan- for your room. ning function and helps users search for gifts Customer rating by age, gender or even personality. Customer rating ½FRONT SECTION.indd 18 11/10/2010 11:58
  21. 21. SAP_AD.indd 1 1/6/10 11:18:50
  22. 22. 20 UPFRONT I t has been a hot topic among retail industry professionals for a while now. And indeed, the escalating use of social media among cash rich consumers has been so extreme over the last five years that retailers would be foolish not to jump on board. But the latest social media trend has had retailers at the forefront of the movement. Location- based social media has proved increasingly popular in recent months, with networks such as Gowalla or Loopt and the recent addition of Facebook’s Places application, but most notably with the conception of Foursquare. Some cite it more as a game than a form of virtual socializing, only incorporating a limited amount of a user’s information into the network. However for retailers, it is proving one of the most successful platforms for social media marketing to have emerged out of the recent boom in social technology. Location-based networks provide an experience more closely aligned with reality; while sounding like a cheesy marketing line On location this statement does highlight the primary appeal for retailers in that it deliberately targets consumers when they are out and provides the potential to draw customers physically into a store. With Foursquare now reporting more than three million users round the world, and an estimated Location-based social media is the latest craze for the web- 600,000 more singing up each month, this enabled generation. But how can it benefit today’s retailer? is the fastest growing social medium; and the increasing developments in smartphone technology look set to boost those numbers CardStart win a pair of tickets to the Marc Jacobs show further. Taking their cue from the Starbucks at Fashion Week. So which retailers have been riding initiative, the digital customer loyalty the wave of the location-based social program teamed up with Foursquare Ann Taylor media movement? And more importantly, to improve customer/retailer relations. The women’s fashion retailer launched a how have they used Foursquare to boost CardStart is a digital facility that manages discount incentive for Foursquare users at revenues? a consumer’s club or loyalty cards, with an the end of the summer, offering visitors to iPhone application so users can scan while any of its eight new stores across New York Starbucks at a checkout. Now users can check in on City 15 percent off a purchase on their fifth The global coffee shop chain has often been Foursquare automatically while using their ‘check-in’. ‘Mayors’ can expect to receive 25 cited as a highly engaging brand thanks CardStart for iPhone application. While not percent off their purchases. to its social media presence, and has been offering consumer rewards just yet, this involved in the Foursquare movement a move is another indicator of the integration Tasti D-Lite while, after developing the ‘Barista badge’ of location-based social media and loyalty This program encourages Tasti customers back in March. Then back in May, Starbucks schemes. to sync their loyalty cards with their introduced its temporary Mayor Offer, Foursquare accounts. After registering rewarding frequent visitors of a particular Marc Jacobs the Tasti D-Lite TreatCard online, users store with discount vouchers. The offer was The designer teamed up with Foursquare can enable his or her Foursquare account, only available for a limited time, however during New York Fashion Week back in allowing for automatic ‘check-in’ when Starbucks was confident that this was only February to draw consumers into Marc Jacobs the card is used at the counter as well as the beginning for location-based loyalty stores. Consumers could ‘check-in’ at any receiving loyalty points that can later be schemes. store around the country for the chance to redeemed as goods.FRONT SECTION.indd 20 08/10/2010 15:30
  23. 23. Lithuim AD.indd 1 08/07/2010 13:15
  24. 24. 22 UPFRONT Reality bytes I magine a world in which small, cartoon- style tags pop up within your field of vision, overlaying real-world objects and buildings to describe what you’re looking at, like Arnie in Terminator 2. It might sound like something straight out of Hollywood, but that is essentially what Japan’s two larg- est cellphone operators are about to offer their millions of customers, using the cam- eras and screens of smartphones – along with vast online databases – to supplement your worldview with everything from product re- views to directions to price comparison data. It’s called ‘augmented reality’, and it’s the next hot feature to hit smartphones in 2010. Japan’s NTT DoCoMo launched ‘chokkan nabi’ (or intuitive navigation) in September to help people find their way around megacities such as Tokyo and Osaka and other places in Japan. “You just need to focus on a street, a building or a particular spot with your camera-equipped cellphone to see if there is visual landmarks and then displays live and called Point & Find, which involves pointing a bank, a restaurant, a supermarket or other past tweets from others as ‘air tags’ in the your camera phone at real-world objects to location,” a DoCoMo official told AFP. “Labels same location. access information and functions. The service or signs indicate, for example, the distance to Internationally, several operators are har- also allows users to scan barcodes to compare a chosen restaurant, schedules, menus, etc. nessing similar technology. Finnish cellphone prices, read reviews or save a product to a With a simple gesture, you can switch back to giant Nokia is offering a free application wish list. a conventional map in two dimensions.” The service has so far registered some 600,000 points of interest throughout Japan, including restaurants, shops and train sta- AR SHOPPING APPS tions, which can be searched through user- defined criteria. The technology, developed An array of programs that will remake everything from roaming the mall with mapmaker Zenrin, uses GPS and sophis- to impulse buying. ticated software to place virtual tags on real- world objects and provide directions to places outside the user’s direct view. It also links with micro-blogging site Twitter, which has been wildly successful in Japan, so that its users can spot each other in real time and real space, and tweet comments about where they are. Meanwhile, Japan’s number two mobile operator KDDI has developed a platform that allows users to scan, for example, a CD advertising poster with their camera phone to gain additional material, such as an extract Finders, keepers Virtual dressing room The most obvious application of augmented Meanwhile for the home shopper, Zugara’s from a song. The service will then offer the reality is location-based services that can tell Webcam Social Shopper uses motion- user the option to buy a download of the if a shop you need is close by. Zagat was first capture technology to create a virtual song with just two clicks, or can guide them to market with NRU, but competitors such dressing room. Your movements allow you to to the nearest real-world CD shop. The appli- as Yelp have released their own AR apps as navigate among selections, and the software cation, which also features virtual characters, well. In addition to ratings and wayfinding, calculates your orientation so that you can is an advanced version of an already popular apps could also include shopping guides. adjust the garment to your body. Japanese application for Apple’s iPhone called Sekai Camera. That program identifiesFRONT SECTION.indd 22 08/10/2010 15:30
  25. 25. CEO PERSPECTIVE 23 Looking ahead It’s a marketer’s dream – and a philanderer’s nightmare: glasses that track your eyes’ every movement. T he ability to see exactly what the customer sees, what an advertisement. Comfortable and lightweight, the glasses have no displays, ads or items catch their eye and what they skip over distracting cameras or mirrors in the field of view nor do they require without a second glance has long been the Holy Grail for the user to carry bulky equipment. As a result, the user behaves more marketing departments everywhere. And now the vision is naturally giving the data a much higher level of validity. set to become reality thanks to pioneering technology from Tobii, the You might not win any prizes for style – unless you’re attending global market leader in eye tracking and eye control. an 80s revival – but the potential applications for retail are huge. According to the firm, Tobii Glasses will help researchers in “Never before has it been possible to cost-effectively conduct commercial, scientific and government organizations gain greater quantitative studies in real world environments and automatically levels of insight into the preferences, reactions and personal see the visual attention a product or display received,” says Gill experiences of people in a natural environment. Sounds a bit sci-fi, Aitchison, Global President of Ipsos Shopper and Retail Research, who right? had access to the glasses at a recent demonstration. Now researchers “We believe the product opens up entirely new possibilities can measure actual consumer responses during real shopping trips for our customers to conduct research in a way that previously has – and this can be achieved at the point of purchase where decisions not been possible,” agrees Tom Englund, Executive Vice President are made, instead of in unnatural laboratory environments, online of Analysis Solutions at Tobii Technology AB. “The application of questionnaires or over the phone. this product to provide insight into human behavior can include And the best thing about the technology? It’s available now. anything from understanding buyer preferences, learning about Expect marketers, retailers and jealous spouses everywhere to be gaze in operating mobile devices, playing sports, driving or operating queuing round the block. machinery. In fact, the number of ways you can apply this technology to conduct research is virtually endless.” The new Tobii Glasses look and feel like a regular pair of glasses and allow wearers to walk around freely, making it easy for “The product opens researchers to create a real-world environment in which to capture up entirely new user behavior. This can be while they are browsing in shopping possibilities environments, using a computer, trying out new products or reading for customers to conduct research in a way that previously has not been possible” Seeing is believing Augmented reality isn’t just limited to smartphones. The coolest in-store information kiosk out there comes from Lego: the toy company is test launching a digital box that, when held up to an in-store camera, will superimpose a rendering of the completed Lego model on top of the product box onscreen.FRONT SECTION.indd 23 08/10/2010 15:30
  26. 26. 24 UPFRONT Big box solutions IKEA’s journey from Sweden’s best-kept secret to global retail sensation has been founded on slavish devotion to a carefully formulated business plan. Here, CIO Paolo Cinelli explains why he is looking Y to apply similar discipline to the firm’s technology function. By Ben Thompson ou can spot the stores from a mile away: huge, hulking ware- give us everyday, and we see this as a missed opportunity. We’re not houses painted in distinctive blue and yellow, dominating good enough at understanding and capturing feedback in a structured the skyline as their parent company does the home furnish- way so that we can listen to it, interpret it and react more appropriately. ings retail landscape. In a little over half-a-century, IKEA has Take the IKEA family card, as an example. This card is owned by over 30 expanded beyond the boundaries of its native Sweden to become one million people now, and is a potential goldmine of information. But we of the most successful multinational retailers of the modern age, with don’t take advantage of it because of missing links between systems.” global sales of $30 billion last year. It’s a disconnect Cinelli is keen to bridge. After all, IKEA plans its The numbers alone are staggering. Its stores welcomed a total of stores meticulously to ensure customers are best able to help them- 590 million shoppers in 2009, its website attracted 561 million visitors, selves. Each one carries products from a centrally developed range and while its cult catalogue was printed in 27 languages and 56 editions to is carefully designed to have the same look and feel so that the custom- produce a whopping 198 million copies. The IKEA range consists of 9500 er experience is as consistent as possible – whether you’re in Malmo, home furnishing products; the company employs 123,000 co-workers in Minneapolis or Moscow. But surprisingly for a firm that has put consis- 39 countries; suppliers number 1220 in 55 countries. And as of August tency and standardization at the heart of its business model, the same last year, the firm operated 267 stores with a further 34 owned and run rigor has not always been applied to the evolution of its IT architecture. by franchisees outside the IKEA Group. “That consistency in store layout is the result of orderly planning; of But just as impressive as the financial course we have several blueprints we work figures has been the way the company has “The unwritten deal from, but there are a limited number of ver- stamped itself indelibly into the public con- sions and everybody sticks to them,” explains sciousness. IKEA has become a byword for with our customers is Cinelli. “But in contrast, the IT landscape is affordable style and, more importantly, a largely unplanned. It just evolved over the lifestyle choice for an ever-expanding army that ‘you do your part, years to become what it is today. What would of fans who love its clean lines and simple el- we do ours’. That’s happen if our stores suffered from the lack egance. It has also become a common popular of planning that the IT systems suffer from? culture touchstone, referenced in everything in the DNA of the Imagine what they would look like? Badly from The Simpsons to Hollywood movies such as Fight Club. And while some see it as relationship” planned, disorganized, inconsistent – if, as a customer, you were ever able to get out of representing the very height of mass-market that store in the first place, you would never populism and the enemy of individual style, they are far outnumbered come back again.” by those who just want their home to look good and not pay too much In response, Cinelli and his leadership team have drawn up a blue- for the privilege. One way or another, people are passionate about IKEA. print for IT transformation they are calling IT4Business that he hopes will And for its own part, the company is just as passionate about its provide a reference architecture that can drive decisions going forward. customers. “We have a huge attachment to our customers,” says Group “Part of IT4Business is to change our architecture in the direction of CIO Paolo Cinelli. “We really value them and it’s a really deep principle fewer, more integrated systems,” he says. “It’s not a technology priority of the company overall. For us, it’s about fulfilling a contract: the un- per se, it is more of an organizational change in terms of IT governance. written deal with our customers is that ‘you do your part, we do ours’. It’s about bringing the same level of standardization and consistency to That’s in the DNA of the relationship.” Indeed, while the firm’s legendary the IT architectures that we bring to the rest of the organization. It won’t hands-off policy to in-store service may seem like an abdication of con- happen overnight, but what’s important is recognition of the fact that sumer responsibility, scratch beneath the surface and it actually reveals customers now expect there will be no difference between channels of a remarkably grown-up approach to its customers – a “we’re here if you information.” need us but won’t constantly pressure you into buying” style of retail. Of course, IKEA is not alone in facing the challenge of how to deal Customers find it empowering, and it frees IKEA staff up to concentrate with the sprawl of legacy applications while effectively planning for the on the store visitors that genuinely require help. future; it’s a common problem given the pace at which the technology And IT is key to providing that help. “Whatever you want to do, landscape has evolved over the past few decades. The difference is that whether it’s generating new business or opening a new channel or even IKEA is committed to changing the status quo to better reflect the needs driving quality improvements, you need IT investment,” says Cinelli. “So of the 21st century and enable it to serve its customers more efficiently if we increase the probability of success of projects with an IT compo- and effectively. In an environment where the customer is increasingly nent, we actually increase the probability of success of projects in gener- king – and one where the right strategic uses of technology will become al. For instance, customer relationship management is a really big focus a key competitive advantage – that could mean the difference between area for us; we don’t currently make the most of the feedback customers success and failure.FRONT SECTION.indd 24 08/10/2010 15:30
  27. 27. UPFRONT 25 ??????FRONT SECTION.indd 25 08/10/2010 15:30
  28. 28. 26 UPFRONT Holiday plans B Vending Vikings est Buy Co. Inc., the Richfield-based con- sumer electronics retailer, will hire 29,000 seasonal employees for the holiday shopping season this year. CEO Brian Dunn made the The Minnesota Vikings and Indianapolis-based merchandise company MainGate announcement in a webcast preview of the Christmas Inc have launched the first NFL-branded vending machine in Mall of America. buying season. “With vending machines becoming more and more commonplace, we According to Dunn, smartphones, touchscreen thought we would test the concept with our fans via a location at Mall of tablet computers, new video gaming platforms (includ- America,” said Vikings Vice President of Sales and Marketing/Chief Marketing ing 3D games) and e-readers will drive sales this year. Officer Steve LaCroix. If the machine proves successful, the companies will con- He said the company is currently in talks with smart sider installing more in the Twin Cities area. phone maker Research in Motion to carry its touch- “Consumers are getting very comfortable with self service from a retail screen tablet computer. perspective,” said David Moroknek, President and CEO of MainGate Inc. “We be- He also said Best Buy would open between 44 and lieve that this is a viable method of selling licensed products, and an economical 50 new Mobile Stores before Thanksgiving, and expand way to increase the number of outlets we have to service the core fans. Growing the company’s used game business to 1000 stores from merchandise sales and building the Vikings brand are our goals and we feel this its current presence in 600 stores. program allows us to do both.” Juice row A tlanta-based soft-drink giant Coca-Cola Co. has launched a lawsuit against Aldi Inc., the German discount grocery store chain. The suit alleges that the packaging of Aldi’s ‘Nature’s Nectar’ line of juices infringes on Coke’s patents for its ‘Simply’ family of juices. Coca-Cola filed the suit on September 24 in the US District Court in Atlanta, seeking punitive damages, prof- its Aldi gained from the alleged infringement, attorney’s fees and other damages. Coke is pushing for a jury trial. NJ-based food maker Johanna Foods Inc. is also named in the suit. The company sells ‘Nature’s Nectar’ to Aldi along with a product line called ‘Tree Ripe’ that uses similar packaging. Aldi has more than 1100 US stores located in 31 states, and has plans to open 100 new stores across the country in 2010.FRONT SECTION.indd 26 08/10/2010 15:30
  29. 29. UPFRONT 27 Logo wars R etail stalwart Gap recently revealed its new logo – to a bar- rage of criticism and negative response from fans. The new logo, which uses the typeface more often associated with American Apparel, and a basic small square of color, has encouraged a tremendous back- Bigger is better T lash on Twitter and other social mediums. Designers and fans of the brand alike have claimed that the logo is cheap and unsophisticated, and sug- he Bon-Ton Stores, Inc. has an- gest that the move is symp- nounced the signing of an agree- tomatic of a “serious branding ment with Casual Male Retail crisis” for the company. Group, Inc. to provide men’s In response a number of big and tall apparel to Bon-Ton designers have created their customers through Bon-Ton’s own version of the logo, which in turn has e-commerce website and, beginning in the sparked cynical rumours that Gap’s logo was spring of 2011, certain Bon-Ton stores. The only ever a move by the company to crowd product offerings will include sportswear, source a new design, cutting the costs and activewear, clothing and accessories. headaches involved with re-branding. Casual Male Retail Group, based in Canton, Mass., is the largest specialty retailer of big and tall men’s Company Index Q4 2010 “Casual Male Retail Group, apparel, with op- erations throughout the United States, Inc. to provide Companies in this issue are indexed to the first page of the men’s big and tall Canada and Europe. article in which each is mentioned. apparel to Bon- Bud Bergren, Ton customers President and Chief Amazon 34, 60 Macy’s 74 through Bon-Ton’s Executive Officer of eCommerce Bon-Ton, said the America’s Research Group 12 Microsoft 76 website” Anthropologie 60 Motion Computing 6, 17 company is “very Apple Stores 44 National Retail Federation 12, 54, 60 excited about our Best Buy 60 Neiman-Marcus 44 strategic alliance with Casual Male”, and is Best Buy 74 Netflix 101 planning to take advantage of the company’s BIGresearch 12 Nielsen 60 dominant position in big and tall clothing to Blockbuster 60, 101 Office Depot 28 allow Bon-Ton to offer its customers hard-to- Challenger, Gray & Christmas 12 Ovum 60 find sizes in a wide variety of basic casual wear Deloitte 12, 60 Philips Teletrol IFC, 92, 94 and sportswear. Discovery-Based Retail 44 Redbox 101 eBay 34, 60 RSA 70 EnQii 48, 51 Saks Fifth Avenue 34 Environmental Protection 96 SMG 44 Agency Starbucks 90 Facebook 72 Steve Madden 72 Footlocker 60 Tesco 96 Forrester Research 60 The Right Thing 88, 89, IBC Free People 60 Twitter 76 Godiva 86 Urban Outfitters 60 Harris Corp 4, 48, 53 Verdict Research 60 IBM 74, 96 Virgin 76 Intel 2,46, 48 Walgreens 68 Kohl’s Department Stores 96 Walmart 96 Liz Claiborne 106 Zappos 34, 76FRONT SECTION.indd 27 08/10/2010 15:30
  30. 30. 28 THE BIG INTERVIEW SurvivalofBig Interview Steve Odland.indd 28 08/10/2010 15:48
  31. 31. THE BIG INTERVIEW 29 At one point, the economic crisis of the last two years pushed Office Depot stock down to penny-stock levels and while 2010 has seen the company rally, a full recovery is far from assured. CEO Steve Odland explains how the company weathered the downturn, and looks ahead to a brighter future. ffice Depot’s Steve Odland has endured a tough two years. The financial crisis and subsequent global recession has not been kind to the firm or its CEO: key markets such as Florida and California got ham- mered in the downturn, it lost customers to rival Staples and it was further embarrassed by a series of accounting scandals. Since trading at $38 in early 2007, shares have fallen 89 percent to penny-stock levels. But under Odland’s leadership, the office supplier is staging something of a recovery, continuing a multi-year turnaround strategy that began before the economic mael- strom hit. In 2009 it cut $680 million of operating expenses, mostly by closing 120 stores. It reduced distribution centers from 33 to 12. And now it’s meeting with vendors to review every product it sells. Indeed, just last month Office Depot posted a better-than-expected quarterly loss (driven by cost cuts and profits in its North American stores), while analysts believe remodeled stores and a solid balance sheet put the office supplies retailer in a good position to benefit from an eventual economic recovery when it arrves. So how do you instill confidence in your staff when times are tough? How do you motivate them and keep them believing in the brand? In short, how do you survive a global recession? “Leadership requires followership, and so it requires that you invest time in the people around you and that you make sure that you’re listening and working as a team,” says Odland. Next Generation Retail’s Jonathan Spragg caught up with him to find out more.Big Interview Steve Odland.indd 29 08/10/2010 15:48

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