Outlook Guide 2010


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Outlook Guide 2010

  1. 1. 2010 OO K UTL O d e g u i Predictions From 10 of the Retail Industry’s Top Analysts Presented by
  2. 2. 2010 K LOO OUT e guid With the year coming a close, Retail TouchPoints called on some of the most prominent retail experts to compile an expanded resource for retailers that includes rich insight on the most telling retail trends for 2010. From inventory and pricing management to mobile marketing, the 2010 Retail TouchPoints Outlook Guide offers insight for every vertical, exposing some of the biggest challenges and more importantly, solutions to optimize cus- tomer interactions and advisement on where to increase marketing dollars in 2010. Our roster of analysts includes experts in cross-channel retail, in-store technology, inven- tory & pricing management, consumer spending trends, mobile & social retail strategy and store operations from: Page 3 Sucharita Mulpuru, Forrester Research 4 Jim Dion, Dionco, Inc. 5 Sahir Anand, Aberdeen Group 6 Nikki Baird, RSR Research 7 Laura Davis-Taylor, Retail Media Consulting 8 Richard Hastings, GHS Consumer Trends 9 Greb Buzek, IHL Consulting 10 Gary Schwartz, Impact Mobile 11 Leslie Hand, Global Retail Insights 12 Amanda Ferrante, Retail TouchPoints The Outlook Guide includes forecasts for what retailers can expect in 2010 in the areas of consumer spending, new technology adoption, the latest in mobile development for retail and how what areas retailers should increase investment and marketing dollars. The Out- look Guide includes key tactics for cross channel planning and alignment, as well as a list of technologies that retailers should consider to optimize in store engagement and the shop- per experience. 2 • Retail TouchPoints
  3. 3. 2010 K Optimizing Cross Channel Alignment in 2010 LOO OUT e guid In early November, Sucharita Mulpuru authored the Forrester Report, “U.S. Online Holiday Retail Forecast, 2009.” The report indicated that Forrester expects online retail sales to reach $44.7 billion during the months of Novem- Sucharita Mulpuru ber and December 2009, an 8% increase over 2008. “Despite the lingering VP & Principal Analyst effects of the global financial crisis, the online space remains the retail indus- Forrester Research try’s growth engine,” the report said. “While the majority of online retailers will Sucharita serves eBusiness & Chan- fare well this holiday season, success will vary based on retailer type, size and nel Strategy professionals. She is a product mix. As consumers will continue to be responsive to discounts, online leading expert on eCommerce, multi- retailers plan to implement pricing, marketing and merchandising strategies channel retail, consumer behavior, that will secure their bottom line.” and trends in the online shopping space. She is also a noted author- ity on technology developments Key Cross Channel Trends information that actually that affect the online commerce • Keeping the store locator function up to date increases transaction industry and vendors that facilitate volume.” online marketing and merchandis- • Utilize inventory visibility so shoppers online can see if prod- ucts are available in store ing. In her research, Sucharita covers “Facebook can be a such consumer-oriented topics • There’s a growing group of retailers looking at in store pickup traffic driver back to the as eCommerce forecasting and and store delivery site but no one has been trends, merchandising best prac- • Some retailers are looking at mobile applications, aimed at able to tie it back to tices, conversion optimization, and a rich experience. The new trends are focused on providing great sales, which I think Social Computing in the retail world. more product detail, images and information at the point of it’s the root of being able She has also authored “The State sale. (Sephora is using mobile reviews) to claim that Facebook Of Retailing Online,” a joint study is successful,” she says. conducted annually with Shop.org Mulpuru advises retailers to carefully organize and plan cross chan- and a leading industry benchmark nel efforts in order for optimal execution. “Any multi channel effort Moving Toward publication. is a pretty big one that requires a lot of different players to come Mobile together and it requires a lot of organizational and technology syner- Mulpuru advises retailers gies,” she says. “This isn’t about taking baby steps — it’s about to take things slow in mobile, as it’s very easy to overinvest in things committing to multi channel and aligning your incentives and your like iPhone applications, which may not prove successful or quickly organizational structure in such a way that you can set yourself up adopted among consumers. “Make your site simplified and compat- for success.” ible across different browsers so it’s convenient for mobile users to access on the go,” she says. It’s important to edit out all unneces- Where Retailers Should Increase Investment in 2010 sary information and keep it simple offering information on items “We’re hearing a lot about behavioral targeting as a way to drive with images and price, while making it easy for customers to pay for increased engagement with the brand,” Mulpuru says. Retail- products in a streamlined fashion (using a service like PayPal.) ers should develop a strategy to capitalize on shoppers that have already visited a retail site and provide relevant messaging to invite “You need to get your organization in place and make sure everyone them back to ultimately convert. in your company is aligned with the same strategy,” she says. “You need to have a budget for it and you need to create a roadmap.” Mulpuru says there’s a lot more sophistication around email segmentation and paid search. “Some challenges will be pose to Mulpuru advises retailers to consider what touchpoints are most some of the incumbent agencies that typically dominate paid search important to their brands. She offers some cross channel concepts management,” she warns. “I think some of the metrics will be more to consider and prioritize: challenged by some newer players in the space; this is where retail Web marketers will focus their efforts.” • Site to store concepts • Mobile commerce, mobile site design The Super Social Sphere • Cross channel inventory visibility Mulpuru says she has not seen any real success stories around driving incremental sales from social networks. “Where retailers “Whatever’s important to you, prioritize that and get a project road- seem to be getting more traction from the social component is map in place and execute against it,” she says. on their own retail sites,” she says. “If retailers enable people to create outfits or send customer reviews, those bits of information seem to be more pertinent for driving sales and providing relevant 3 • Retail TouchPoints
  4. 4. 2010 K LOO Holiday Spending in 2009 OUT e guid T ypically, the back to school shopping season is a telling sign of what to expect for the holiday shopping season. But 2009 has thrown a few curve balls challenging holiday to hit it out of the park. Jim Dion is a recog- Jim Dion nized expert on retail selling and the service-centric economy. Microsoft, Founder & President IBM, Williams-Sonoma, Harley-Davidson and Macy’s are some of the clients Dionco, Inc. that have benefited from Jim’s advanced selling methodology. James Dion (Jim), founder and presi- dent of Chicago-based Dionco Inc., is an internationally known Retail Dion says October sales have made it easier to be optimistic Where retailers Speaker & Trainer, Retail Consultant, about holiday spending. “I believe that we will see a +3% increase should increase in- and the Author of the best-sellers this Christmas over 2008,” he says. “There is also one more day vestment in 2010: Retail Selling Ain’t Brain Surgery, this year between Thanksgiving and Christmas. The real danger to Dion emphasizes: It’s Twice As Hard, Start and Run a my forecast is that retailers have always been good at snatching “Mobile, Mobile, Retail Business and The Complete defeat out of the jaws of victory and if they take their already thin Mobile. We have been Idiot’s Guide to Starting and Running inventories and panic by discounting early and deep, or even not predicting for quite a a Retail Store. Jim consults, trains too early but deep then all bets are off and we will have a terrible and speaks on consumer trends, few years that Mobile retail technology, selling and service, season as stores will run out of inventory that they sold at low is going to surpass the retail merchandising and operations, prices when they could have waited and made more money.” Web for commerce, it marketing and leadership. With over will not happen in 2010 30 years of progressive retail experi- “I think that there is more pent up demand out there than lots but it will be the tipping ence working at Sears, Levi Strauss of economists give the American Consumer credit for,” Dion says. point when we look and Gilmore Department Stores, Jim “Also, this year, despite a lot of gloom and doom (which the press back. More and more is one of the most sought after Retail is famous for stressing in the 24/7 news cycles) I think that there is “smart phones” are hit- Consultants and Retail Speakers in more belief that the worst is past. As well, we are not facing pro- ting consumers pockets the US and internationally. jections of rising heating costs and gas prices as we did last year. and smart companies All in all, a better holiday Season than many expect. Also think are learning how to about the fact that if you lower prices by 5% and sales are down leverage that device into an impulse buying machine. I would by 3%, you likely sold more units and business was better despite spend my dollars on making digital analog through an investment the “sales decrease.” It is called doing more for less.” in mobile apps that work in symbiosis with my store strategy and make it easy to shop and buy.” Dion expects mass merchants like Wal-Mart, Amazon and Costco to continue to reign supreme in their market positions. “The con- Competitive Differentiators in 2010 tinued pandering to price on commodity items will be successful Dion emphasizes: “People, People, People. Hire nice, smart, while at the same time strangely self defeating. Having said this, I talented ones (those three traits are NOT mutually exclusive!), treat do see some specialty chains who ‘keep the faith’ such as Crate & them exceptionally well, listen to them, celebrate them, educate Barrel, Gymboree, The Container Store, Apple, Zara, The Chil- them, teach them your values and vision and stand back and dren’s Place and a few others far outpacing their competitors.” watch them transform your business. Unless your model is a vending machine business, I still see the single biggest variable for What to expect in 2010: success to be your people.” Dion says 2010 will be all about making digital analog. “I think we have gotten pretty good at Web selling and now we need to take what we have learned on our Web sites back to our stores. Our customers have told us that they love to shop on line, they love the “I think we have gotten pretty good at speed, convenience, presentation, information, product and com- pany reviews and everything that is part of the Web experience Web selling and now we need to take and they now expect the same ease of use and information to be available to them in the physical store. Most brick and mortar has what we have learned on our Web sties become boring and the retailers who can figure out how to bring back to our stores.” the excitement of Web shopping to the store are going to win big.” 4 • Retail TouchPoints
  5. 5. 2010 K Key Performance Indicators, Action LOO Items and Competitive Differentiators OUT e guid The 2009 fiscal year so far has been a ‘reality check’ for the retail industry that is grappling to deal with critical pain points such as declining topline sales, business value chain impact, and shifts in the information technology roadmap Sahir Anand and priorities. Aberdeen Group conducted a recent survey of 200 retailers to Research Director, Retail ascertain the recessionary response and impact of strategic, systems, opera- Aberdeen Group tions, and bottom line decisions on retail business within the coming months. Sahir Anand focuses on technology and process management practices in retail, hospitality and the interplay Aberdeen data shows that 80% of retailers surveyed report that high Retail Winners between retail and consumer goods. cost of goods sold, the need to cut payroll costs, and decreased Anand says a number of His work is related to use and adop- discretionary dollars for areas such as marketing and advertising, retailers will end the year tion of technologies and processes are the top pressures faced by retailers during this recessionary well compared to Q1, that aid optimization and efficiencies year. Additionally, 54% of retailers clearly indicate that one of their Q2, and even Q3 of this in the multi-channel retail environ- top recession-beater strategies is to cut payroll, marketing, and year. “While it is difficult ment. Sahir specializes in the points operational expenses. Instead retailers should be concentrating to accurately predict, of customer interaction and points of integration (technology and busi- on micro-marketing, merchandise personalization, and consumer however based on esti- ness workflow) functions in retail. management strategy re-alignment with soft market conditions. Ab- mates through industry Research focus areas include store erdeen analysis shows that while in the supply chain, merchandis- associations, it is likely and headquarter-related functions ing, inventory related areas cost reduction is a necessity to manage that food retail will lead focusing on retail customer and gross margin return on inventory investment (GMROII), such knee- the way,” he says. “From employee-facing technology and jerk cost cutting measures within customer-facing channels and the other sub segments, process optimization areas. marketing have caused complexities in terms of employee morale, some named retailers offer management, messaging, service, sales and revenue. who are likely to come close or beat analyst expectations include Wal-Mart, Target, Best Where Retailers Should Increase Investment Buy, CVS, Walgreens, TJ Maxx, Kohl’s, Aeropostale, Amazon, JC Anand says retailers must invest in vast amounts of relevant and Penney, Apple, among others expected to do well. actionable consumer research and secondary data for making item-level changes and risk management. “From a customer-facing Factors of Market Share Loss standpoint, retailers should not stop investments but prioritize on Anand says there are three major macro-economic and monetary the essentials such as point of service, cross-channel, loyalty, factors which will cause segments to do well or not do well: the amongst others based on revenue driving improvements and mini- static interest rates, next wave of mortgage defaults/bankruptcies mizing customer attrition areas,” he says. and unemployment. “Merchandising, marketing, supply chain and customer service “I believe BtoC segments that are trying to more with less are likely teams should be incentivized to meet very specific performance to continue to be vulnerable with fluctuating results till Q2 of 2010,” management goals. Companies that started early in terms of con- Anand says. “The key is to continue consolidation, identify M&A tract negotiations with suppliers on order cycle time, returns, trade opportunities if you have excessive cash on hand, and invest in promotions, open to buy requirements, and total landed cost will research and development to tap into new market opportunities.” make substantial gains during this holiday season. The key to suc- cess will lie in how well are retailers connected with their suppliers to 2010 Trends adjust the product flow from BtoB integration, network visibility and Aberdeen data shows that Best-in-Class companies are showing internal/external collaboration standpoint.” leadership when it comes to the adoption of technologies that can potentially enable effective retail processes during an extended Aberdeen Research found that planned adoption of technologies period of less than desired growth. It is important to note that there among all respondents denotes that there is interest within the next is not a single technology platform which can provide a way out of 24 months towards KPI-driven operational and executive perfor- less than desirable growth in retail. The key is not being reactive and mance dashboards (46%), employee scheduling tools (40%), follow the roadmap for customer and operational improvements. store productivity and experience tools (43%), cross-channel appli- Currently, the foremost deployment criteria that retailers are using to cations for marketing, order, and fulfillment (42%), demand-driven measure new application deployment and improvements include: forecasting application (45%), consumer-driven replenishment (44%), and customer-loyalty applications (43%). Continued on next page >> 5 • Retail TouchPoints
  6. 6. 2010 K Optimizing Inventory Management LOO OUT e guid O ne of the overall assessments during the 2008 holiday season was that retailers ended up with a great deal of excess inventory. This was mostly pinned on the dark cloud that is, the economy, but ultimately, was a result of Nikki Baird improper planning on the inventory front. In 2009, it became top priority to as- Managing Partner sess inventory more precisely by aligning analytics with planning. Prior to join- Retail Systems Research ing Retail Systems Research, Nikki Baird was a principal analyst at Forrester Nikki Baird is Managing Partner at Research, where she covered extended retail industry topics like supply chain, Retail Systems Research, an analyst RFID, retail operations, POS and in-store management. Baird’s current focus firm that provides market intelli- points are retailer-consumer relationship, including store operations, workforce gence about retailers’ attitudes and management, cross-channel, loyalty, pricing and promotions, and supply chain adoption of enterprise technology. execution. Nikki’s areas of focus revolve around the retailer-consumer relationship, including store operations, workforce “2008 and 2009 have been rough years for retailers on the topics of being discerning – only management, cross-channel, loyalty, inventory and price management,” Baird says. “It’s been a real tale mailing those discounts pricing and promotions and supply of two cities: for most retailers, it’s been the big cliff – the huge cut to people who look like chain execution. in consumer spending, which has come back some, but still not to they might be defecting anything like previous spending levels earlier in the decade.” soon. But only a good CRM analysis will be able to tell you that.” Baird offers these key trends for 2010 inventory and pricing management: Competitive Differentiators in 2010: • More ties between assortment planning and space plan- “Cross-channel, and how retailers organize to serve consumers ning – if there were ever any doubts about the importance of no matter what the channel, will be the biggest differentiator going planning against the facings you have available to sell from, forward,” Baird says. “The retailers that build a good solid experi- 2009 and the “incredible shrinking pack size” put all of those ence that flexes depending on how consumers choose to engage to rest in grocery. with them will have a huge advantage over their competition. That means synchronizing inventory, prices, customer programs, mar- • Closer ties between merchandising and supply chain – keting, everything so that whatever a customer needs to make a merchants can’t keep buying against “infinite distribution buying decision can be brought to bear wherever they are and no capacity” because there’s no such thing. And the retailers matter what the channel.” that are paying attention to how mismatched metrics are driv- ing some of these non-productive behaviors are starting to set their sights on tackling this age-old problem in a substantial way. Continued from page 5: Sahir Anand • On the pricing side, the question for 2010 is how to get con- cost of deployment (42%), scalability for enterprise-wide adoption sumers weaned off of heavy promotions and discounts? The (37%), and customization of specific features and functions (36%). retailers that can figure out how to move their customers back Retailers must consider best-in-class standards based integration closer to full price retail will be in much better shape than the techniques and opportunities to improve demand predictability, per- rest of the pack. But that won’t be easy, especially if strug- formance management and customer experience management. gling retailers continue to discount heavily. Competitive Differentiators: Where retailers should increase investment in 2010: • Personalization, localization and responsiveness in the areas “Continued investment in customer programs, whether loyalty or of customer experience management, merchandising and more generic CRM-type programs, will be critical, because it’s marketing. probably the best way to get the insights you need in order to figure • Agility, Collaboration and Network integration in the retail sup- out HOW to wean customers off of heavy price discounts,” Baird ply chain. says. “And it may well be the vehicle for delivering whatever strategy • Within IT, the key differentiators in 2010 will be around risk retailers come up with. The most likely outcome is to start setting mitigation, integration, scalability, prioritization and intro- up bigger hurdles to get discounts – so instead of mass-mailing duction of lean techniques (e.g. opportunities to introduce everyone $10 to spend in your stores, you might start saying, thin-client, SaaS, outsourcing and cloud computing, where “spend $50 and we’ll give you $10 for next time” or you might start possible) 6 • Retail TouchPoints
  7. 7. 2010 K LOO Retail Technology OUT e guid T he customer experience is based not only on the retailer’s ability to de- liver a unique, streamlined encounter, but also on the ability to impress customers with add-ons and special features, ideally those that are unique to Laura Davis Taylor each. Laura Davis Taylor is a 15-year agency veteran with a diverse back- Founder & Principal ground in traditional advertising, brand planning,interactive marketing, digital Retail Media Consulting signage, merchandising and retail/environmental design. Laura is the Founder & Principal of Retail Media Consulting, a specialty During her time as a Vice President at Miller Zell, Taylor led accounts Taylor says retailers firm focused on helping brands with Circuit City, Wal-Mart and H&R Block, working intimately with have a big opportunity strategize, activate, measure and her clients to help them build strategies around all points of cus- to tap into “integrated evolve digital media strategies within tomer experience and communications. Her book “Lighting Up the infrastructures” at the the retail store. She joined Miller Zell Aisle” is aimed at helping retailers understand in-store digital media store level. “The easiest as a Vice President and led accounts from a simple perspective. way to think about this with Circuit City, Wal-Mart and H&R is to ponder how good Block, working intimately with her Taylor emphasizes these technologies for retail organizations moving online retail Web sites clients to help them build strategies into 2010: work—they integrate around all points of customer experi- • Technologies that can measure shopper dwell times, at- inventory, pricing, ence and communications. A pas- tention times and interactions loyalty information, sionate advocate of Digital Signage logistics and even rec- since 1999, Laura then immersed • Kiosks or touch screens that link to loyalty data and provide ommendation engines herself with multiple industry con- personal shopper communications, recommendations and create a very well stituents to understand the potential and incentives rounded, rewarding of in-store digital signage networks online shopping experi- for U.S. retailers. • Mobile applications that can help shoppers find “on the go” product information ence,” she says. “Retail- ers have the opportunity • Touch screens that provide in-depth product or category to create the same scenario in-store, but they will have to loop information and empower shoppers (can also be used for together many various data clouds and technology functionality. It associate training) will not be easy, but the potential is enormous!” • Digital signage software that can link into all of the above (as Where Retailers Should Increase Investment in 2010: well as POS systems) to monitor what’s happening in the “There is huge value to add if they increase their investment in store store and intelligently build content play lists targeted to experience, loyalty initiatives and building the proper bridges be- the shoppers and current activity (we call this Doppler Radar tween online and in-store services, Taylor says. “We often hear that for the store!) the top two shopper gripes today are rooted in the fact that they “The tough part for brick and mortar stores is that these digital still find the shopping experience overwhelming and unhelpful and shopping experiences have set the bar for them,” Taylor says. “Most that they can’t understand why they can access information and shoppers find it quite frustrating that the various support offered services online that aren’t available in the store. If you think about it, online is not bridged into the physical store. Most also realize that it’s really silly that this is often still the case!” it’s not the technology that’s holding this back, but the people that make the decisions at the top. They’re not stupid — and I truly think Competitive differentiators in 2010: that 2010 is the year for these brands to look hard at what the big “I truly believe it will be based on the retailer’s ability to understand shopper challenges are in-store and respond.” the needs and desires of their shoppers regarding product choices, store/brand experience, access to product information and their Prominent 2010 changes and trends in retail technology: personal relationship with the retail brand and respond,” Taylor “More retailers are embracing the opportunity for in-store technol- says. “There is no magic bullet for most retailers to ‘fix’ right now. In ogy to provide a better shopping experience, tap into a newfound most cases, they are falling down in a variety of areas and today’s source of funds (ad revenues) and keep messaging easily fresh and shopper simply wants them to take a hard look at what’s not work- updated. Due to social media’s wild rate of adoption, there also ing and do something about it! It sounds simple—and in theory it exists a reason to help shoppers easily tap into peer opinions and is—but this is a complex thing to affect with the internal teams. It’s recommendations.” going to take the chiefs at the top mandating positive change and holding the mid-level teams accountable for it to happen.” 7 • Retail TouchPoints
  8. 8. 2010 K Consumer Spending Trends LOO OUT e guid Much of retail sales’ demise has been attributed to the multi-faceted prob- lematic economy. Consumers are not spending because of the housing and employment market conditions. This can no longer be an “excuse” for retailers, Richard Hastings as it’s time to adapt and plan accordingly. Richard Hastings is Consumer Strat- Consumer Strategist egist at investment bank, Global Hunter Securities, LLC, which also provides Global Hunter Securities research on retailers and apparel companies. Richard Hastings brings more Richard Hastings is Consumer than 20 years experience in retailing industry coverage, credit analysis, apparel Strategist at investment bank, Global manufacturing, supply chain trends, and economic analysis. Hunter Securities, LLC, which also provides research on retailers and “Retailers and consumer companies need to stop waiting for • Changing be- apparel companies, energy and oil, the housing market to come back, as a source of jobs and as a haviors is the key restaurants, China-based companies, source of capital for spending,” Hastings says. “Industry leaders theme. We believe Web-based technologies, healthcare should look for deeper levels of loyalty within categories to drive it is necessary and biotech, and metals and mining cross-channel and cross-category success. It is necessary to have to look beyond companies. Richard brings more expertise and reputation in at least two or three categories in order the surface data than 20-years experience in retailing to drive the rest of the business. Consolidation is continuing, so occurring with the industry coverage, credit analysis, leaders need to be aware of two sources of sales: organic sales, consumer and apparel manufacturing, supply chain and then the sales that come from your business. You don’t want to begin to focus trends, and economic analysis. help anybody with the latter.” on underlying structural shifts Retail Winners in behaviors. The first theme that we believe is a point of Hastings points to Nordstrom for moving toward encouraging strength is home furnishing and modest home remodel proj- trends, which has managed to grab market share among higher ects, especially in the kitchen. income shoppers and use more extensive technology to understand • It is still very early, and traffic may not tell the entire holiday specific prices and markdowns. “Kohl’s continues to take market sales story. Traffic may remain stubbornly disappointing this share in the moderately priced market for in season softlines,” Hast- year, while more consumers stay online and wait for other ings says. “The Marmaxx division at TJX will continue to intrude catalysts for spending. The holiday season, in our model, deeper into department store demographics, taking shopper dollars ends with the last weekend of January 2010, so we have who were previously exclusive to department stores; a rebound in a long way to go before we will know for sure if the entire specialty apparel for younger shoppers thanks to colder weather in holiday season achieves or misses our Oct. 2009 forecast for late December and in January; and Walmart for mid-priced con- sales to increase by 2.5% year over year. sumer electronics.” Amazon’s critical mass remains unchallenged going into Holiday “Evidence from shopper surveys conducted by BIGresearch 2009. According to comScore, Inc.’s September 2009 top online indicates that Target is losing market share very slowly in various properties report, Amazon’s family of properties generated ap- categories, and has weak loyalty,” Hastings notes. “Macy’s is also proximately 68.7 million unique visitors, or 120% the visitor rate of vulnerable in women’s apparel, risking some market share to TJX’s Walmart.com for the same period (using comScore’s data). Accord- Marmaxx division. ing to recent blog entries by Compete.com, there was no evidence of customer loyalty shifts away from Amazon.com to Walmart.com Holiday Observations due to the recent buzz about book prices. Compete.com said, Recent GHS Consumer Strategies newsletters cite common retail “Additionally, Wal-mart bargain book shoppers are twice as likely to holiday trends for this season: shop for these titles at Amazon as Amazon shoppers are to shop at • Store traffic trend is disappointing, thus far. We reviewed Wal-mart. It seems that when offered comparable prices on books, store traffic data obtained from ShopperTrak for Saturday, consumers prefer Amazon.” November 21, 2009, looking at weekly, monthly, and yearly percentage change. The results from our reviews indicate that Competitive Differentiators store traffic improved significantly and sequentially through Hastings says, “Looking to 2010 and beyond, the drivers in the September and much of October, then seemed to diminish in industry will be store aesthetics and pleasing store environments; quality and intensity again during November. The most recent ease-of-payment systems online, similar to the Amazon and the observations are somewhat disappointing. iTunes Store models; and frequent shopper loyalty point sys- tems across every brand and channel.” 8 • Retail TouchPoints
  9. 9. 2010 K LOO Store Optimization: Creating Passionate Customers OUT e guid The retailers that understand the importance of investing in inventory manage- ment technologies will prevail in 2010. Greg Buzek is the Founder and Presi- dent of IHL Consulting Group and one of the Founders of the Retail Orphan Greg Buzek Initiative (www.retailROI.org), a charitable foundation that seeks to help the 400 Founder & President million orphaned and vulnerable children in the world. Noted by RIS News as IHL Consulting one of the 25 Most Influential People in Retail, Buzek has 20 years of experi- Greg Buzek is the Founder and ence in market analysis, business planning, product development and consult- President of IHL Consulting Group ing with Fortune 500 companies. and one of the Founders of the Retail Orphan Initiative, a charitable foundation that seeks to help the Analyzing by retail vertical retailers transform this 400 million orphaned and vulnerable “For hot electronics or toys, it will be a factor of retailers not being kind of excitement into children in the world. Noted by RIS able to get further inventory,” Buzek says. “For this reason I expect their stores? How do News as one of the 25 Most Influen- to see a banner year for gift cards for electronics and toys. For ap- you create passionate tial People in Retail, he has 20 years parel, it is those with near sourcing for manufacturing. Lean inven- fans of your organiza- of experience in market analysis, tories at store level, but nimble distribution and manufacturing.” tion…and how do you business planning, product develop- cultivate that in an ongo- ment and consulting with Fortune Buzek says Abercrombie & Fitch continues to lose market share in ing fashion? In sports, 500 companies. He is frequently the apparel segment, due to the retailer trying to protect the brand you tap into adrenaline. quoted in leading industry jour- by refusing to discount. “At this point, many of their customers have What is it for your cus- nals and has been used as a retail moved on to other retailers and I’m not sure they will be back for tomers? How do you technology analyst on NBC Nightly News, CBS News, and CNBC. In ad- the holidays,” Buzek says. “Apparel in general is going to struggle tap into a passion or an dition Greg has been a guest lecturer unless it is mass use every day apparel.” emotion?” for the Wharton School of Business’ Global Consulting Practicum and at “Most fixed goods retailers made their bets on inventory for the holi- Belmont University. Before starting days a long time ago,” Buzek notes. “Add to this the problems with IHL, Greg worked with NCR Corpo- CIT group and access to capital and many retailers are extremely ration and Sensormatic Electronics lean on inventory. Many are simply planning for a down holiday and as a marketing and development have no ability to take advantage of any upside. That is a dangerous executive on hardware, software and mix because it aggravates the out of stock problem and even electronic security products for the with the lean inventories they may have to deeply discount to get Retail Industry. the business. Those businesses could be in real trouble come the end of December. “Many retailers are extremely lean on Where Retailers Should Increase Investment inventory. Many are simply planning for Buzek says that retailers need to invest in business intelligence and analytics for technology, allocate marketing dollars towards get- a down holiday and have no ability to ting closer to the customer through social marketing and CRM that take advantage of any upside. That is a really delivers value to the customer. dangerous mix because it aggravates the Competitive Differentiators: Buzek emphasizes the importance of building a unique and sustain- out of stock problem and even with the able experience. “I can’t help but think through the excitement lean inventories they may have to deeply that permeates the atmosphere of a college or pro football game,” Buzek says. “The nature of the event around the event. How do discount to get the business.” (www.retailroi.org) 9 • Retail TouchPoints
  10. 10. 2010 K LOO Mobile Madness in 2010: A New Approach OUT e guid The 2010 consumer is way ahead of any national retailer’s marketing department. The consumer is leveraging their phone as a “mobile mouse” to click, search and explore in the mall, in the aisle. The retail CMO is looking for some new-fan- Gary Schwartz gled, high-tech way of engaging with this itinerate shopper. The sage truth is President & CEO that the marketing department is chasing shadows. Gary Schwartz founded Impact Mobile Impact Mobile in 2002 having worked in the IT and telecommunications Gary Schwartz founded Impact industry for over 20 years. Over the past eight years, Schwartz has played a Mobile in 2002 having worked in the leadership role in the mobile industry, running the first cross-carrier short code IT and telecommunications industry campaign in North America. for over 20 years. Over the past eight years, Gary has been a leader in the mobile industry, running the first Schwartz advises: “If retailers run mobile as a standalone campaign Additionally, remem- cross-carrier short code campaign or service in 2010, it is doomed to the graveyard of ‘yes-I-tried’ ber that successful in North America. He also founded mobile case studies.” solutions are solutions the CWTA Mobile Content Commit- that add incremental tee to establish policies and increase There are some amazing and jaw-dropping solutions that are value propositions to awareness to promote standards launched every day servicing the mobile shopper. Pick up any “business-as-usual”. Do and adoption. Gary is the Founder mobile periodical and read about geo-location services, mobile not try and change the & Co-Chair of the Mobile Marketing couponing innovation, paperless flyers and shopping lists. What is aisle or the consumer’s Committee for the US Interactive working? What is a game changer? shopping behavior. If Advertising Bureau (IAB) and is a you want to leverage Director on the board of the Mobile Where should retailers start with mobile? mobile couponing, do Entertainment Forum (MEF). The key to leveraging mobile successfully is to see it as an inte- not necessarily try and grated part of the retail story and not be treated as a standalone mirror paper coupon solution. Why? Because mobile is difficult for the consumer to scanning. Look at leveraging mini-kiosks for self-redemption thus discover: Apps (however cool) as lost on the phone and rarely used avoiding aisle slowdown. post-download. How to Engage and Build Relationships Based on Nielsen research, the consumer will only stay loyal to a Retailers need to engage and own the mobile CRM with the shop- limited number of applications. “The consumer will only actively use per. Importantly, the retailer needs to realize that the brands are five applications on their Smartphone at a given time,” said Eric speaking to their shoppers directly circumventing with Trojan-horse Puterbaugh, director of client services at Nielsen. programs in the store. “It is easy to come up with great ideas,” said James Crawford, Coca Cola’s PIN-on-Product mobile affinity program uses their Executive Director of the Global Retail Executive Council at the bottle caps as an affinity program allowing consumers to add points recent CTIA Wireless conference in San Diego. “But 90% of retailers via their phone as they leave the store. New Balance engages the cannot support them. Retailers have historically missed the trend by consumer off the shoe on the shelf, walking them through the NB decades. Retail is all about mainstream adoption.” experience and running post-store surveys. This is all SMS. “In many cases we can expect mobile to follow Gartner’s ‘Hype The key is to engage with the consumer’s shop number on an opt-in Cycle,’” he said. “People get excited about a new solution. There basis and drive cross-channel. Connect the retail media dots. is hype [and] then when the solution does not immediately deliver A recent Forrester consumer survey found that more than half of results, it crashes, disappears and then grows slowly, reemerging consumers buying in brick and mortar stores begin their research over a longer period of time.” process online. Cross-channel shopping is expected to top $1 tril- lion by 2012. It is the “dumb” simple solutions that the consumer is leveraging on their phone that the retailers need to focus on. The shopper is way Hot Topic: Mobile Commerce ahead of us simple retail marketing and POS operational folk. Finally, m-Commerce is an area to keep your eye on. Things to note: “Going Mobile” is not the challenge. The challenge is under- SMS is the most use and powerful function on the smartphone. It standing the mobile consumer’s behavior: again “experience” and trumps any other service including that legacy services like “voice.” “physicality.” The m-commerce shopping experience needs to be Retailers need to use these channels creatively to engage and reen- designed for the mobile consumer and their impulse economy. It gage with the retail store. cannot be solely designed for the mobile screen. Continued on next page >> 10 • Retail TouchPoints
  11. 11. 2010 K Customer Intelligence: Serving Omni-Channel Shoppers LOO OUT e guid The retail industry is undergoing a major shift to customer centric business models. Even in this economy, retail investments should support providing a higher degree of service across channels, building trusted relationships with Leslie Hand consumers. How can they continue to satisfy an increasingly savvy consumer? Research Director Leslie Hand is a Research Director at Global Retail Insights and oversees re- Global Retail Insights search and business development for the supply chain and demand planning Leslie Hand is a Research Director elements of the Global Retail Insights (GRI) product offerings. In her 20+ years at IDC Retail Insights and oversees in retail information technology she has guided strategy, development and research and business development implementation efforts in supply chain, demand planning, merchandising, point for the supply chain and demand of sale, integration and retail back office applications in a variety of business planning elements of the IDC Retail Insights (GRI) product offerings. Prior sectors. to joining IDC, Leslie was the Direc- tor of Global RFID Strategy and the In addition to focusing on core product assortment decisions, Hand customer experiences, Solutions Center for Ahold, one of says retailers must focus in three key areas: supported by supe- the world’s largest grocery retailers. • Differentiate on customer experience with services that are rior supply chain and built on an infrastructure underpinned by modern CRM, loy- marketing execution. alty management platforms and solid demand intelligence “The most successful retailers this holiday season will have the most agile supply chains, pricing and promotional capabilities, respond- • A consistent, integrated, enterprise-wide strategy to under- ing to shifting market needs, finding the perfect balanced inventory standing, anticipating and influencing customer behaviors levels across categories and channels. • Utilize advanced consumer intelligence, mobile and self- serve capabilities. The target customer is the “omni-channel” Continued from page 10: Gary Schwartz shopper, an evolution of the multi-channel consumer, who wants to use all channels -- store, catalog call center, Web If the goal is to take a legacy media and make it work on a smaller and mobile -- simultaneously, not each channel in parallel. An phone browser with limited functionality, then the industry is definite- example is the shopper with an Android-based phone who ly going mobile. However, taking the tethered online storefront and snaps a picture of the bar code of a product in the store and porting it to a mobile browser may not necessarily make it “mobile.” immediately does price comparisons on the Web as well as What has worked historically? Billions of dollars have been spent connecting to her social network for opinions. Perhaps one of globally by consumers off the mobile phone on premium rate service those friends bought the product and doesn’t use it and offers (ringtones, sweeps, etc.) one dollar at a time. Now with tethered to give it to the friend. Can the retailer recognize this activity credit card services, this impulse purchase behavior can be ex- and at least offer accessories? Are there services attached to tended to hard goods purchases. the product that can be offered? Successful “Deal of the day” or Deal of Week” SMS alert service Hand says this holiday season’s success hinges largely on consum- can be matched with tethered credit-card purchases. You see high er confidence, and more specifically, the financial security of those conversion rates when the retailer can target interested consumers consumers IDC Retail Insights refers to as the “700s”. with unique merchandising opportunities. “In our opinion, these consumers, with good credit scores (in the The native mobile storefront must place the consumer experience “700s”), have been saving more and spending less on discretionary first, with total regard to the consumer’s context and behavior while purchases, and are quite frankly, very anxious to loosen their purse also leveraging the unique capabilities of the mobile devices, offering strings,” Hand says. “A major risk to strong holiday performance is timely (time/location) and targeted (access/offers), with immediate that retailers, cautiously placing orders for goods, may in fact, be at methods of search and purchase (or re-purchase!) risk of under delivering on inventory, causing OOS’s and lower than necessary sales and customer satisfaction. Our hope is that retailers Beyond comparison shopping and including elements of social networking for sharing and reassurance, ultimately resulting in more and their suppliers are prepared to ramp up orders and maximize confident purchasing decisions. their sales opportunities.” “REPLY TO BUY”: now that is mobile. Competitive Differentiators in 2010: Hand says retailers should focus on providing superior consistent 11 • Retail TouchPoints
  12. 12. 2010 K Tapping into Social Media Strategies LOO OUT e guid The social sphere has clearly taken precedence over initial Internet activity, like email and chat. Last year nearly 90% of major online retailers increased their email volume during the holiday season, with retailers boasting their send frequency by 43% on average, compared to the pre-holiday period, accord- Amanda Ferrante ing to the Retail Email Guide to the Holiday Season (Smith-Harmon). With that Assistant Editor Retail TouchPoints said, retailers run the risk of getting lost in the clutter. As email falls behind on Amanda Ferrante is Assistant Editor the priority scale of online activities, retailers should tap social media platforms at G3 Communications, publisher to engage consumers. of Retail TouchPoints, a weekly e-newsletter focused on provid- ing retailers with insight to optimize Social media has emerged providing a platform for community tions can view the same the customer experience across all building, feedback, information sharing and, most importantly, a products and communi- channels. Amanda covers telling re- growing part of consumer’s lifestyle. Retailers must be present to cate via chat. Sesh and tail trends like in-store technologies, monetize feedback and foster loyalty and sharing at every possible Fluid are other similar mobile marketing, retail operation touchpoint. platforms designed to solutions and cross channel strate- provide a group Web gies. Focused on providing research Key Trends: browsing experience. and strategies to assist retail- A new Aberdeen Research report, “The ROI on Social Media Moni- ers’ social media efforts, Amanda engages in conversations on social toring: Why it Pays to Listen to Online Conversation,” offers four key FacebookConnect: media through Retail TouchPoints drivers for social media adoption: Although analysts are podcasts. Amanda is currently work- • Risk reduction: The online world unleashes new opportuni- skeptical about the ing on a social media whitepaper ties to attack a company’s brand reputation and social media success of Facebook- exploring how best in class retailers monitoring is providing much of the heavy artillery need to Connect for retail, this are leveraging social media and how identify and respond to these threats in a defensive (and even platform demonstrates emerging platforms will impact the potential to increase retail industry. preemptive) manner. Social media monitoring and analysis can serve as an early warning system, immediately alerting or- brand awareness and ganizations of issues that pose potential threats to their brand positive word-of-mouth. reputation. Facebook Connect launched in December 2008 and has proved successful for driving awareness around events, like Lollapalooza, • Customer advocacy: Using social media monitoring to iden- which reported a 99% increase since implementing Facebook tify and engage with “top influencers,” and to respond to the Connect. While retailers are not early adopters of this technology, key drivers of customer should naturally lead to an increased it’s a bold opportunity to reach the 350 million (and growing) loyal volume of positive word of mouth referrals. For most members of the Facebook community. companies, no marketing lever is more efficient than customer advocacy. The “network effect” can deliver ever-increasing Competitive Differentiators: value at little or no incremental cost. The retailers that figure out how to leverage Facebook Connect • Consumer insights generation: Companies can glean successfully will clearly outshine and add value to their brand and invaluable insights by observing a universe of consumers products. Any chance to create a positive buzz about your product freely discussing their brand experiences, as well as their offerings is golden, and this platform provides the opportunity to do future wants and need in social media. Ongoing analysis of just that. consumer-generated content can product a vast array of strategic options, including insight into what products should Although it’s a common practice for retailers to have a presence be developed. on social networks, very few have Facebook storefronts or of- • Customer service cost reduction: Because peer-to-peer fer the ability to pay for products without clicking through to the networks and online communities serve as public knowledge e-commerce site. 1800Flowers offers Facebook users the ability repositories comprised of thousand of question-and-answer to purchase without leaving the retailer’s Facebook page. The idea pairs, social media can alleviate demand for traditional cus- is to accentuate your offerings on social networks and tap into the tomer support services. loyal and growing customer, or “fan,” base. Where Retailers Should Increase Investment in 2010: “Retailers must be present to monetize Social/Collaborative shopping: Teen apparel retailer Charlotte Russe implemented ShopTogether, a feedback and foster loyalty and sharing at social shopping platform designed to enable simultaneous shopping sessions on the Charlotte Russe site. Shoppers from remote loca- every possible touchpoint” 12 • Retail TouchPoints