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![45 AMERICAN GIRL
Mattel’s American Girl line of dolls, accessories, books, and
(more recently) movies, has dominated the big and expen-
sive ($95) doll market for a quarter-century by building its
brand with unwavering focus on its core customers (girls,
their mothers and their grandmothers), an ability to identify
and fill gaps in the market for their customers and a com-
mitment to connecting with its customers beyond the ac-
tual sale. Since its first mail-order catalog debuted in 1986,
American Girl has sold more than 20 million dolls and 135
million books that tell the stories of its dolls representing dif-
ferent periods in American history.
46 CVS/CAREMARK
Reversing two years of decline, CVS/ new contract wins. Furthermore, chief up for grabs. With 43 percent of CVS
Caremark expects 2012 profits to grow rival Walgreen Co. has failed to replace stores located within one mile of a
11 percent to 15 percent based on its its contract with employee-benefits Walgreens (85 percent are within five
acquisition of Universal American manager Express Scripts. Valued at miles), CFO Dave Denton expects to
Corp.’s Medicare Part D business, a deal more than $5 billion in annual drug pick up as many as 23 million of those
with health insurer Aetna Inc., better sales, the lapsed contract will put ap- prescriptions, which would boost prof-
drug pricing, and billions of dollars in proximately 90 million prescriptions its by as much as 11 cents a share.
47 VICTORIA’S SECRET
Victoria’s Secret is all about differentia- increase of 12 percent, benefiting from Bra and the Gorgeous Bra. The com-
tion, according to Stuart Burgdoerfer, the wide array of its assortment, which pany also registered an 8 percent rev-
CFO of Victoria’s Secret parent Limit- includes major third-quarter launches enue increase in Victoria’s Secret direct
ed Brands Ltd. “We really have unique such as Showstopper Bra, PINK, the channel, driven primarily by PINK,
products, a leading position [and] with Heartbreaker Bra, the Unforgettable sleepwear, panties and knit clothing. In
respect to our brands, no obvious im- March, the company introduced three
mediate close competition.” The Co- versions of its “Incredible” bra, a super-
lumbus, Ohio-based specialty apparel soft push-up that is more comfortable
retailer posted a 12 percent gain in than earlier versions. An accompany-
comparable sales for the 11 months ing Incredible fragrance is a mixture
through December 2011. While Lim- of magnolia, pear and sandalwood and
ited registered revenue growth across described as “fruity, feminine and sur-
all of its major brands, Victoria’s Secret prisingly clean smelling.” The bra’s pre-
was the major growth driver for Q3, decessor, “Miraculous,” boosted busts
with U.S. stores registering a comp sales by as much as two cup sizes.
26](https://image.slidesharecdn.com/2012rcetop100-13534507509489-phpapp01-121120164302-phpapp01/85/Retail-experiences-26-320.jpg)
Retail experiences
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- 2. DRIVE CUSTOMER ENGAGEMENT AND BUILD LOYALTY Today consumersand businesses rely on smartphones, tablets and other Wi-Fi enabled devices for a wide array of personal and commercial applications. Now Motorola’s Proximity Awareness & Analytics Solution makes it possible to use these devices to improve consumer engagement and improve associate productivity in WLAN environments. Use your Wi-Fi infrastructure to capture shopper attention with personalized promotions and in-store coupons. Enable applications that help drive employee productivity and service delivery. Get the data you need to turn browsing into buying – and prospects into profits. Learn more at: motorolasolutions.com/shopperengagement MOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. © 2012 Motorola Solutions, Inc. All rights reserved.
- 3. WELCOME to the 2012 edition of Marcus, Nordstrom all in the Retail Customer Experience Top 100, sponsored the top 30? And multichan- by Motorola! nel and m-commerce initia- tives, which have been talked Once again, our team of retail experts sat down to about for years, are actually identify the hundreds of trends, technologies, brands, starting to happen in mean- strategies and people that are having an impact on re- ingful numbers. tail. They then assigned them numerical votes based on their influence and impact on customer experi- There has been a lot of fear ence, and the resulting rankings are collected in the and uncertainty in retail these past few years, and document you’re now reading. more than enough “sky is falling” blog posts about how everything is changed and nothing will ever be This year’s Top 100 highlights how very different retail the same, retail is dead, the kids these days only buy is today from just a few years ago. Look at the top two things online, yadda yadda yadda. Those kinds of arti- on the list — Amazon has turned bricks-and-mortar cles certainly get a lot of page views – which of course retail on its ear to the same extent that Apple gutted is the point – but they don’t really add anything mean- the retail music industry. Social media remains a huge ingful to the conversation. We present this Top 100 influence, even as it remains a moving target that re- in the hope that it starts any number of meaningful tailers are trying desperately to figure out. Last year’s conversations with your team. No. 1 — the economy — is still in the top five, and still casts a shadow over everyone and everything beneath it. James Bickers Senior Editor But there is a new air of optimism in retail, and we Retail Customer Experience can see hints of that in the list as well. Tiffany, Neiman Joseph Grove, executive editor Tom Harper, publisher josephg@networldmediagroup.com tomh@networldmediagroup.com James Bickers, senior editor Kathy Doyle, senior vice president sales jamesb@networldmediagroup.com and marketing kathyd@networldmediagroup.com David Henry, contributor Scott Slucher, account executive Jan Shrode, designer scotts@networldmediagroup.com Top 100 2012 ©2012 Networld Media Group. 13100 Eastpoint Park Blvd., Louisville, KY 40223. (502) 241-7545. All rights reserved. No part of this publication may be reproduced without the express written approval of the publisher. Viewpoints of the columnists and editors are their own and do not necessarily represent the viewpoints of the publisher. 3
- 4. 1 AMAZON For those who remember Amazon as a really cool online bookstore, the view from 2012 shows just how far the re- tailer — and the world — has come. What once seemed a promising fad is now an accepted way of life. Amazon’s revenues more than doubled in the past four years, from $14 million in 2007 to $34 million in 2010, and show little sign of slowing down. In the past year, Amazon introduced no fewer than four potentially game- changing products: Amazon Cloud, AmazonLocal, Kindle Fire and the Price Check smartphone app. Investment Research analysts Brian Amazon rolled out its new line of Kin- Amazon Web Services set the pace for Pitz and Brian Fitzgerald predict it dle readers, and the Kindle Fire tablet the year in March with an aggressive could capture as much as $2.5 billion in September. The latter was pointedly rollout of cloud products that included by 2014. positioned as a direct rebuke to the Elastic Beanstalk, CloudFormation, iPad 2 and its hefty price tag, as if to Amazon Cloud Player and Amazon In June, AmazonLocal launched, and the suggest that Steve Jobs’ parting gift was Cloud Drive. Users can store music daily deals service with region-specific essentially a $199 device dressed up in and other digital content in the cloud deals delivered by LivingSocial quickly a sleek design and seductive logo. The and play cloud-hosted music tracks became the sixth most-visited website 7-inch Fire received near-universal ac- via players for the Web and on An- in the U.S., according to comScore. It claim as a fun and versatile, easy-to- droid. Although AWS represents just a racked up 97.1 million unique U.S.- use tablet that links seamlessly with sliver of Amazon’s total business, UBS based visitors in July alone. Amazon’s impressive collection of digi- tal music, video, magazine, and book services. In December, Amazon once again got under the skin of brick-and-mortar merchants by offering discounts to us- ers who took its Price Check app into stores to comparison shop. The deal was that in-store shoppers could earn a 5-percent discount (up to $5) by scan- ning the barcode of an in-store product and then buying it from Amazon. The howls of protest were hardly confined to abused shopkeepers. Senator Olym- 4
- 5. pia Snowe calledthe incentive “an at- Amazon’s third-quarter profits for 2011 million to “technology and content,” tack on Main Street businesses that were down an alarming 73 percent — up 74 percent. Founder and chief ex- employ workers in our communities,” yet reported revenues went up 44 per- ecutive Jeff Bezos has increasingly used and called on Amazon to cancel the cent to $10.9 billion, powered in part Amazon’s cash to expand the business program. “Small businesses are fight- by the new generation of Kindle book into the digital domain and invest in ing every day to compete with giant re- readers and preorders for Kindle Fire. backend infrastructure to support all tailers, such as Amazon,” she said in a So where did the money go? Amazon the digital media he expects users to statement, “and incentivizing consum- invested it for the future and appar- consume on their new Kindle Fires. ers to spy on local shops is a bridge ently intends to keep doing so. For one Toward that end, Bezos struck deals too far.” Pundits, commentators, late- thing, Amazon invested nearly $1.6 with Twentieth Century Fox and PBS night comics and principled consumers billion — double what it spent the year to stream movies and TV shows from warned of a future in which the entire previous — toward “fixed assets, in- their vast libraries. (This is in addition physical world would serve as Amazon’s cluding internal use software and web- to deals previously inked with CBS, showroom. site development,” and another $769 Sony, Warner Bros. and others.) 2 APPLE Despite Amazon’s steady march of progress throughout 2011, Apple, true to form, managed to out-dazzle the world’s biggest online retailer every step of the way. The company continued to lure consumers and business users away from desktop computers to the more manageable environment of iOS devices such as the iPad, hastening the day when general-purpose computers are the province of software engineers and tech enthusiasts. The year began with an effort to broaden the iPhone market beyond a single carrier by terminating Apple’s exclusive partnership with AT&T and announcing that the iPhone 4 would be available through Verizon. January also saw the launch of the Mac App Store, Apple’s effort to remake its Mac OS ecosystem in the image of iOS, and thus collect a 30 percent cut of Mac app revenue in the process. In February Apple became the first computer maker to introduce Intel’s Light Peak data transfer technology under the name Thunderbolt. The iPad 2 came out in March even as competitors were struggling to deliver an answer to the original. In October Apple announced a breakthrough set of free cloud services that keep stored data up to date across all devices, including PCs. The company sold 72 million iPhones (nearly double the total for 2010), 32 million iPads, 17 million Macs and 42.6 million iPods, generating $108 billion in revenue in 2011 — up 66 percent from fiscal 2010. However, Apple’s many marketing, business, and technology achievements through the year were overshadowed by the death of Steve Jobs on Oct. 5, the day after Apple introduced the iPhone 4S. Under the guidance of corporate America’s most high-profile practicing Buddhist, Apple made function not merely inseparable from form, but indistinguishable from it. In Jobs’ hands, the two truly became one. 5
- 6. 3 DISCOUNTING Discounting dates back to the days of open-air bazaars, but the proliferation of e-commerce and smartphones now puts the neighborhood boutique in di- rect competition with the biggest dis- counts offered by any vendor anywhere in the world. And vice versa. The practice is bleeding profits from traditional retailers, with daily deals and online rivals inflicting most of the damage. Best Buy, to cite but one high- profile example, saw its shares plunge more than 15 percent after reporting a steeper-than-expected drop in 2011 according to Bob Welch, senior vice discounts — and nothing but discounts. third-quarter profits and margins — president of manufacturer practice Cynthia Jasper, a consumer science pro- the result, Wall Street analysts said, of client solutions at dunnhumbyUSA. fessor at the University of Wisconsin, fierce price competition from Amazon. Meanwhile, he says, “manufacturers warns that pursuing discounts can be- feel that retailers are driving promo- come an addiction. Or as James Dion Only 20 percent of new customers lured of the retail consultant Dionco puts it, tional strategies that do not make sense in by daily deals ever return to make many discount hunters “don’t bother to for the category and are eroding their a full-price purchase, according to a eat what they kill,” citing research find- brand’s equity.” study conducted by Rice University. ings that 30 percent of Groupon deals Despite this, the vicious cycle is per- While strategic discounting can be an are never redeemed. “That really leads petuated by retailers who feel the need effective quick-fix for moving volume me to believe that it’s the thrill of the to promote, “but know that increasing in a struggling economy, the fix leaves hunt. For some consumers, it is just discounts are eroding category value,” consumers craving ever bigger, deeper scoring the deal.” 4 THE ECONOMY/UNEMPLOYMENT The numbers say the Great Recession ended way back in June 2009. Somebody needs to tell the economy that. Growth isn’t accelerating as it normally would dur- ing a recovery. The U.S. economy in 2012 is expected to grow a scant 2 percent (unchanged from 2011). While 2 percent may keep us from dipping back into re- cession, it won’t make much of a dent in unemployment. It follows, of course, that with more people out of work, fewer people will be buying, and thus the retail sec- tor will decline. Consumer spending, which accounts for about 70 percent of GDP, has been posi- tive but shows no signs of driving a sustainable recovery. The economy will remain vulnerable to possible shocks, such as war, terrorism, oil price hikes, or natural disaster. Any one of these could tip the U.S. into recession. 6
- 7. Retail sales areexpected to grow about 10 percent in 2012, a slightly optimistic uptick from the 8 percent expected in 2011. One unpredictable factor that might lower 2012 sales is the sovereign debt crisis in Europe, which could keep markets volatile and consumers con- cerned about the future. Still, a reliable disconnect between consumer confi- dence and actual spending bodes well for retailers. Sales began to climb in October 2011, due in large part to a 3.7 percent jump in electronics sales (the largest monthly increase in two years) even as confidence fell to its lowest lev- 5 MULTICHANNEL INTEGRATION el since 2009. It no longer matters, really, whether the customer is always right. The customer is in charge. He decides when, where, and how he will interact with the retail landscape If the euro crisis spins out of control, through whatever channel, device, or touchpoint he wants. Such an environment fear of a new credit crunch may deter has made multichannel, by default, the new standard operating model for retail. spending by business owners. Another factor that could lower next year’s fore- While it can be argued that mobile devices and multichannel commerce have made cast is slower-than-expected growth it easier than ever for retailers to reach customers, they have also made it easier to of personal income, which hasn’t been lose them. Retailers will need to use a combination of channels to attract and con- keeping up with the rise in retail sales. vert consumers going forward, says e-commerce and multichannel consultant Kees If lower wages and high unemploy- De Vos, “rather than focusing on channel-centric approaches. Companies relying ment persist during the second half of on selling goods and services to their end-customers have to recast their operation- the year, expect retail sales growth to al and technical infrastructures to compete or even survive in the years to come.” slow even further. Best Buy CEO Brian Dunn, for example, is committed to making the chain’s physi- Retailers have the power to drive cal presence “more reflective of all the possibilities that are available to customers growth, though. Noting that new eco- today.” That means creating a web of experiences around the customer in all the dif- nomic realities have resulted in a new ferent channels in which he operates. “Customers don’t think, ‘I’m going to behave order of buyers who are more price- in a multichannel fashion today,’” he notes. “They say, ‘I’m gonna go online and conscious and careful about the pur- check it out, I’m gonna call and check it out, I’m gonna stop by and visit the store.’” chases they make, Deloitte LLP Vice Chairman Alison Paul believes that Early multichannel adopters are now thoroughly vindicated and firmly in the driv- delivering compelling in-store experi- er’s seat. Indeed, multichannel has been so roundly embraced that some, such as ences could drive profitable growth for blogger and principal analyst at Forrester Research Brian Walker, argue that mul- retailers in 2012. tichannel is already passé. “Customers no longer interact with companies from a channel perspective,” he says. Customers now interact through touchpoints that in- clude not only channels such as “stores, branches, call centers and websites, but also emerging interactions, including apps, social media, mobile sites, SMS messages and interactive advertising across smartphones, tablets, cars and even appliances.” “It is time for organizations to leave their channel-oriented ways behind,” he says, “and enter the era of agile commerce.” 7
- 8. rounds of thisfight. M-commerce 6 M-COMMERCE may prove to be the salvation of brick Technology companies and retailers and mortar after all. Cyriac Roeding, alike have hailed 2011 as the year of founder of the location-based mobile mobile shopping. Consumers are fast shopping app Shopkick, believes mo- approaching the tipping point in their bile commerce provides merchants embrace of smartphones and tablets to with unprecedented opportunities to access apps, discounts, price compari- bring personalization and one-on-one son information, and payment mecha- personal treatment back to the in-store nisms. According to Email Marketing purchase experience. Reports, mobile devices such as tablets Jani Strand, a spokeswoman for teen and smartphones became the highest- apparel chain American Eagle, said, selling consumer electronic device cat- “Our customers are rarely without their egory in 2011, amounting to 115 million smartphones, so any engagement that units in Q3 alone — beating out PC, used their phones to make a purchase connects with them through these de- laptop and netbook figures combined. at least once. In fact, more than one vices tends to be effective.” Indeed, to- in three purchasers have used their A much-cited report from comScore day’s shoppers are so umbilically tied smartphones to make a purchase while found that two-thirds of all smart- to their phones, according to Master- in a store, according to a less-noted phone owners have performed some Card executive Mario Shiliashki, they finding from the same report. sort of shopping activity on their are more likely to leave home without phones, including comparing prod- Thus far, e-commerce companies have their wallet or cigarettes. “And I men- ucts and prices, searching for coupons, had the upper hand in using mobile tion cigarettes,” he adds, “because the taking product pictures, or locating a technology to inflict blows on physi- phone has become more addictive than retail store, and that 38 percent have cal stores. But we are still in the early the most addictive substance out there.” 7 ASSORTMENT LOCALIZATION As consumers continue to trim spend- proactive retailers are utilizing sophis- rebel against the one-size-fits-all retail- ing and do more of their shopping on- ticated communication tools such as ing models. By utilizing the concept line, big-box retailers are moving to assortment planning, flow modeling, of store assortment localization, Seidl smaller stores to reduce under-utilized price optimization, promotion opti- notes that retailers have been able to space and stay profitable. At the same mization and size optimization to cre- boost sales by 40 percent to 50 percent time, consumers are treating retail ate custom assortments based on each and carve out a solid competitive ad- stores as showrooms where they can store’s local characteristics and demo- vantage for themselves. test-drive merchandise before making graphics. By capturing information Assortment localization can be an ef- a purchase. Whether or not they pur- about the specific buying patterns of fective way to build intimacy with chase in-store, shoppers will increas- their shoppers, they can efficiently ca- customers as the economy puts more ingly turn to their mobile devices to ter to each store’s particular needs. pressure on retailers to manage their check for better pricing or selection John Seidl, a partner at Kurt Salmon inventories closely. Scott Welty, vice before making that purchase. Associates, argues that, as U.S. consum- president of retail industry strategy for As a counter to both of these trends, ers become more diverse, they tend to JDA Software Group, notes that the 8
- 9. trend toward shoppersusing brick- and-mortar locations as showrooms requires retailers to stock the opti- mal localized assortment range and maintain appropriate quantities for each store. “Having the right item in the right store at the right time helps maintain and improve customer loy- alty,” says Welty. “Providing a superior customer experience by ensuring that ‘available to promise’ meets the de- mand and geographic location of the customer, no matter how or where they ultimately buy the merchandise.” 8 EXPERIENCE DESIGN In theory, experience design — or user UX design is a highly multi-disci- Emerging trends in UX design include experience (UX) design — operates plinary field, incorporating aspects of designs that can adapt and perform from the premise that consumers wish everything from psychology, anthro- within various media devices, gestural to engage in a meaningful interaction pology, sociology, computer science, and touch-based interactions, loca- when purchasing a product or service. graphic design and cognitive science. tion/proximity-based mobile experi- In practice, experience design involves Depending on the product, UX may ences, smart real-time user interface, the creation of culturally relevant also draw on content design disciplines and designs that can adapt and per- products, processes, services, events, as varied as communication, instruc- form within various media devices. and environments that focus primar- tion and gaming. The rise of social media has increased ily on the quality of the user experience the importance and impact of each rather than functionality. This emerg- customer experience. Because custom- ing trend in “user-centered” design er expectations and experiences are informs the latest in everything from rapidly shared and distributed between intelligent buildings to Facebook apps, peers, it is more important than ever iPhone games and digital equipment. that retailers engage in meaningful interactions with customers to make Mobile adoption in the retail and fi- them truly empowered participants. nancial sectors is fueling the drive to- ward smoother, more intuitive designs. UX designer and blogger Whitney Applying experience design principles Hess’s 10 guiding principles can be to mobile, for example, would strive to applied to both physical and virtual eliminate clutter while requiring fewer, world projects irrespective of goals, simpler steps to accomplish a task, thus constraints, or resources. Her first providing a more streamlined and tar- principle is: “Stay out of people’s way. geted experiences. Pave the road for an easy ride.” 9
- 10. that, over time,iTunes has morphed 9 iTUNES and bloated into an increasingly con- Apple has benefited mightily in the fusing and compartmentalized hodge- past decade from the shift from CDs podge of products jerry-rigged as one. to online music services — a shift it In terms of ease of use, iTunes is the helped set into motion with the unveil- least Apple-like piece of software the ing of the iPod in 2001. Two years later, company produces. While version 10.5 Apple launched the iTunes music store brought support for iOS 5 and iCloud, offering songs for 99 cents apiece. as well as some small changes to the Sony Corp.’s music unit and EMI Group user interface, most observers agree During the past year, iTunes has faced Ltd.) in assembling an offering of some the software must trim down and get some stepped-up competition from both Google and Swedish-based Spot- 13 million songs that users can share back into fighting condition in prepa- ify. Google introduced a music service on its Google+ social network. Spotify ration for the coming challenges to its that lets users buy songs through the is coming at iTunes from a different market dominance. Besides Google Android Market, and the European angle than most other sync platforms, and Spotify, iTunes is also facing on- music-streaming startup Spotify offered starting out with a strong inventory, slaughts from San Francisco startup an upgraded shopping system that al- more than a million subscribers and a DoubleTwist and a Seattle-based outfit lows users to purchase entire playlists war chest estimated at $100 million. known as Amazon.com. of MP3s with a single click and sync Thus far, Apple has fended off com- The victor in this struggle will claim them directly to their music players. petitors by issuing frequent upgrades the hearts and payment methods of Google has partnered with more than of the media-management software a user base that, in the last fiscal year, a thousand record labels (including to thwart third-party iPod synching. generated $6.3 billion. It will be inter- Vivendi SA’s Universal Music Group, One downside of that strategy has been esting to see how Apple does it. 10 MOBILE COUPONS According to a study by Group SJR and Liz Claiborne Inc. conducted among 8 0 1 smartphone and tablet owners between the ages of 18 to 64, half said they planned to scan barcodes more often to get additional information about a product, suggesting that barcode scanning is poised to go mainstream within the next few years. Citing an increase in mobile payment systems, better targeting technologies, and budget-friendly marketing techniques, Juniper Research analysts believe mobile coupons will be key to driving in-store purchasing with potential for exponential growth that could result in a market worth $46 billion by 2016. According to a survey commissioned by AT&T, 66 percent of respondents agree that mobile barcodes will drive new mobile marketing campaign concepts in the next year. The majority of executives surveyed believe mobile barcodes represent the greatest area of potential for innovation in 2012. SpyderLynk CEO Nicole Skogg believes mobile barcodes “offer unmatched opportunity to increase brand value by adding mea- surable interactive functionality and richer consumer engagement.” 10
- 11. Prosper Mobile Insightshas found venient and useful,” while 42 percent facing QR code acceptance has been that a majority of survey respondents had used their smartphone or tablet to that most mobile phones do not come had used their smartphones or tablets scan a barcodes or present a text mes- equipped with the requisite scanning for some type of shopping behavior. sage or promo code to a cashier. Forty capabilities, although marketers ex- Of the 348 smartphone and tablet us- percent had made a purchase directly pect that 2D barcode readers will be ers surveyed, 67 percent agree that on a mobile device, and 36 percent had standard issue for smartphones begin- location-based coupons are “very con- scanned a QR code. A major hurdle ning in 2012. 11 BEHAVIORAL TARGETING As yet another example of how the Amazon model continues to shape the evolution of the Web, the deluge of user-generated content — from product reviews and comments posted on news stories, to the glut of unguarded personal information offered up by users of Facebook, Twitter, YouTube, et al — amounts to a behavioral marketer’s dream come true. All that data, freely given, is rich in the sort of detail that behavioral marketers prize in selecting which advertising messages are displayed to that in- dividual. The algorithms Amazon developed to suggest items of interest based on a particular user’s browsing habits and purchasing history may soon permeate the entire Internet. The challenge is to find the appropriate opportu- nities without seeming too invasive or behaving like a virtual stalker. 12 ZAPPOS Seeking to drive home the point that Zappos offers “more than shoes,” the online retailer last summer launched a uniquely inter- active print ad campaign that invited consumers to dress naked models using QR codes. The ads depicted naked models (mostly women) doing outdoor activities, such as jogging or riding a scooter through Manhattan locations, with strategically placed censor bars emblazoned with the campaign’s tagline. The QR codes lead the user to a website where a video shows how the sce- nario depicted in the ad plays out. Consumers can then choose an outfit for the model and go to Zappos to buy it. While some Zap- pos brands declined to participate in the campaign, fearing the photos were too risqué, Nathalie Binda, marketing vice president for women’s active wear manufacturer of Lolë, did not hesitate to sign on, calling the campaign “gutsy” and “very Zapposesque.” “If there’s one brand out there that can do it,” she said, “it’s Zappos.” 11
- 12. REED HASTINGS On thenight of Sunday, Sept. 18, 2011, Netflix co- tumble that erased approximately $12 billion from the founder and CEO Reed Hastings sent an email to company’s market value. the company’s 24.6 million subscribers that began: “I messed up. I owe you an explanation.” Hastings ended 2001 by an- nouncing he would take a The blunder had come three months earlier when cus- 33-percent cut in pay, while tomers who opted for the company’s DVD-by-mail assuring investors that “we and streaming services learned that their subscription are done with pricing chang- rates would jump by as much as 60 percent if they re- es.” An SEC filing revealed that Hastings’ stock option tained both. allowance for 2012 will be $1.5 million, half of what he received for 2011, and his salary will remain $500,000. Hastings’ mea culpa also included the bubbly news In a January 2012 posting headlined “Reed Hastings: that the company’s DVD-by-mail service would 2012’s CEO of the Year?” Rick Aristotle Munarriz of henceforth be a separate entity called Qwikster, ac- The Motley Fool marveled that Netflix shareholders cessible via its own website for an additional fee — had seen a remarkable 25 percent surge in the first a move that drew comparisons to the launch of New week of the new year. Munarriz speculated that shares Coke from the instant Hastings clicked “send.” Hast- had bounced back following some well-deserved ings was roundly mocked in the business trades and tax-loss selling, and the company’s revelation that on Saturday Night Live for his arrogant, if not outright it logged some 2 billion hours of streaming content incompetent, disregard for his core customers. He during the last quarter. Netflix may have received an even neglected to acquire the @Qwikster handle on unexpected and counter-intuitive boost when Time Twitter, which was then being used by a man named Warner announced a 56-day waiting period (double Jason Castillo, whose profile pictured the Muppet the previous 28 days) before offering its DVDs to Elmo smoking a joint. No word on whether Castillo rental companies at bulk discount prices. While this managed to cash in on the urgent offers to buy his will hamper the DVD-by-mail side of the business, handle (“idk who to trust,” he tweeted) during his the same constrictions apply to its chief rivals Block- three-week window of opportunity before Hastings buster and Coinstar’s Redbox which continue to rely went back to the confessional to renounce Qwikster primarily on physical rentals. Netflix’s emphasis on as a non-starter. In the meantime, the company(s) had streaming may yet put Hastings on the shortlist for shed 800,000 angry subscribers, and saw a 76 percent Comeback CEO of the Year. 12
- 13. 13 RETAIL CRM The future of retail CRM — both its potential and pitfalls — is writ large on the walls of Facebook. Amassing more than a trillion page views per month, Facebook is an immense source of CRM data with unlimited potential, but it appears in an unwieldy mix of text, graph- ics, geospatial and other formats that, thus far, retailers have been un- able to wrap their arms around. In the past couple of years, the indus- try has been aswirl with rumors of impending CRM breakthroughs, with speculation ranging from artificial intelligence supercomputers such as IBM’s “Jeopardy!” champion Watson to applications devel- oped by CIA-friendly organizations for monitoring potential terrorist activities. However, with the release of its Gateway for Facebook CRM solution this past summer, retail business analytics leader MicroStrategy has positioned itself as first-mover in what some observers have already dubbed the “Facebook CRM era,” poten- tially the biggest development in retail technology and marketing since the invention of the Web. 14 FACEBOOK 15 MOBILE POS It’s no exaggeration to say that Facebook Point-of-sale systems have be- represents an unprecedented leap in come the true command centers the history of human interaction. As of in-store operations, providing of September 2011, Facebook has more a host of applications that lever- than 800 million active users, with age customer search histories, more than 50 percent of those logging generate cross-selling recom- on in any given day and amassing more mendations to prompt add-on than a trillion page views per month. purchases, streamline inventory Facebook traffic to retail sites increased functions, schedule employees and al- an incredible 92 percent year-over-year locate store resources. Yet “traditional” for August 2011, yet that traffic showed POS technologies — if it’s not too soon a conversion rate of only 1.2 percent, to use that term — are already facing suggesting that Facebook also repre- threats from mobile POS platforms 2011 released by RIS News sents the world’s richest source of un- such as smartphones and tablets. The Mobile, transaction systems provide tapped CRM data (see No. 13 above). migration to mobile is particularly a way for retailers to reduce checkout evident at independent restaurants lines without adding expensive check- and start-ups, where less-expensive out counters or staff. Automated sys- options are more readily embraced, tems that use mobile computers and says Greg Buzek, president of research printers add speed, security and pro- and services firm IHL Group. Adopt- fessionalism to transaction-processing ing mobile devices within a POS sys- operations. The results are greater cus- tem requires a lower initial investment tomer satisfaction and fewer carts and offers a “cool” factor for custom- abandoned by customers who leave the ers. According to Store Systems Study store discouraged by long checkout lines. 13
- 14. 16 IN-STORE WEB ACCESS In an effort to draw customers into stores as the primary means of merchandise distribution, some retailers are offering in-store Web access through self-service kiosks and workstations to engage customers, provide convenience and increase satisfaction. This past year, JCPenney refined its Findmore technology with 42-inch interactive plasma-screen kiosks linking shoppers and sales associates to its 250,000 online products. The media-rich kiosks provide editorial content and highlight key seasonal trends while incorporating social-media-like features, such as permitting shoppers to add items to an online “dressing room” and email their choices to them- selves or friends. Customers also can use Findmore to finalize the sale, either by purchasing items online and having them shipped to their home or to the store for later pickup, or by printing out a receipt and purchasing an online item at an in- store register. 17 DIGITAL PRODUCTS Representatives from major music labels EMI, Universal, and Sony have, at the time of this writing, all declined to comment on claims from various music industry insiders that they all have timetables in place for phasing out their production of physical CDs by the end of 2012. While no one is stepping up with such bold predictions on when the last movie theater will shutter its doors, a steadily growing number of viewers are con- tent to stream movies online, with Netflix alone reportedly accounting for 30 percent of all evening Internet traffic. Newer devices can handily stream movies on ever-larger and less expensive TV screens. The demand for deluxe edition CDs (and vinyl sets) loaded with extras is expected to remain for the foreseeable future, as are venues for projecting the occasional must-see, special-effects-laden blockbuster. The fate of any products capable of being delivered digitally seems clear. The handwriting has been on the wall ever since the first MP3 was posted to Napster back in mid-1999. 18 MILLENNIALS Finding themselves with more time than money and armed with total pricing transparency and unlimited selection, Millennial shoppers (those born between 1980 and 2000) are taking Depression-era frugality to a whole new level. In the process, Millen- nials are pushing retailers to learn new tricks. According to a study from Deloitte, Web-savvy Millennials treat each shopping trip as a mission. They research online and know exactly what they’re going to buy when they arrive at the store. TechCrunch sees in this trend the “Death of the Impulse Shopper,” while Bloomberg hails the “Rise of the Surgical Shopper.” Whether re- tailers see the glass as half-empty or half-full, the trend increases the importance of every customer who comes in their stores. Retailers can no longer rely on impulse buying to pay back the cost of loss-leader promotions, and rewards for store loyalty. Efforts, instead, must be dedicated to converting every shopper into a buyer. 14
- 15. 19 TRADER JOE’S Privately owned Trader Joe’s has been on an expansion binge over the past three years, continuing to build on its near-cult status by providing healthy, organic and locally produced food to shoppers on a budget. The company has expanded at a steady pace, opening some 40 new stores a year and moving well beyond its Southern California stronghold to the delight of awaiting customers in markets such as New York, Chicago, and Des Moines. The expansion comes as many retailers are eye- ing Trader Joe’s success and experimenting with smaller-format stores that can slide easily into urban areas with lower rents. In 2010, the company pulled in an estimated $8 billion in sales, roughly on par with chief rival Whole Foods Market. 20 LOYALTY PROGRAMS 21 MOBILE/CONTACTLESS PAYMENTS According to the Loyalty Marketer’s Associa- Although U.S. customers tion, customer loyalty, rather than acquisition, have been relatively slow is the key to sustainable growth. Business con- to adopt NFC-equipped sulting firm Protiviti ranks customer loyalty as smartphones or utilize the the top non-financial business challenge compa- contactless payment cards nies will face in 2012. Yet businesses report that they already carry in their retaining and engaging customers remain their wallets, blogger and prin- greatest challenges. While daily-deal sites such as cipal analyst at Forrester Groupon and LivingSocial continue to generate Research Brian Walker the greatest buzz, marketers suspect that price- predicts we will soon see based strategies are taking focus away from the customers waving NFC-en- real prize, customer loyalty. The emerging model abled smartphones across for success uses data gathered from loyalty pro- interactive display ads to grams to engage with customers across all touch- automatically add pictured points at all stages of the customer life cycle. items to their online carts, making immediate trans- actions on their phones, or walking into a store with the resulting offer. More than 7,000 Subway restaurants across the U.S. are installing new Tap & Go Payment Readers to accept contactless payments through the MasterCard PayPass platform. Subway diners will be able to pay for their meals simply by tapping a PayPass-enabled card or device at the register. As more and more consumers interact with these devices, Walker expects that their expectations and buying habits will quickly change. 15
- 16. 22 COSTCO 23 NEIMAN MARCUS Costco’s 596 stores provide a great indi- Like many other luxury players con- cator of where different products — from cerned about protecting their care- milk and eggs to diamond rings — are fully cultivated brand images, Neiman likely to see growth, according to Jeff Marcus was slow to embrace social Weidauer at retail industry marketing media. But in the run-up to the 2011 firm Vestcom International. Hofstra holiday season, the high-end retailer University business professor Barry got into the spirit in a big way by host- Berman recommends Costco’s strategy ing a flurry of digital campaigns aimed of opportunistic buying to any “smart at boosting its online presence. As of retailer.” mid-December, the retailer had nearly 500,000 fans on Facebook and 50,000 followers on Twitter. The campaigns included a Foursquare scavenger hunt called “Clutch me if you can,” in which By focusing on prices and maintaining Nancy Gonzalez clutch bags were hid- a 17-percent profit margin, Costco has den in 15 of its 41 stores and customers seen its profitability grow during the had to check in via Foursquare to receive clues about where to find them. In an ef- economic downturn as shoppers turned fort to create buzz for the launch of celebrity stylist Rachel Zoe’s collection, Neiman to the wholesale club operator for deals Marcus launched a Facebook design contest encouraging fans to assemble virtual on food and necessities. The Issaquah, outfits from items in the collection. The ensembles were judged by Rachel Zoe and Wash., company reported that its fiscal the chain’s fashion director Ken Downing, with the winner receiving a private meet- 2011 net income rose 12 percent to $1.46 ing with the two judges plus a $2,500 Neiman Marcus gift card. So what caused the billion, or $3.30 per share, while revenue sudden shift in attitude? Research showing that 77 percent of Neiman Marcus cus- climbed 14 percent to $88.92 billion. tomers own a Web-enabled mobile device and 60 percent are on Facebook. 24 UGC, PRODUCT REVIEWS Online marketers recognize how effective user-generated content (UGC) can be in strengthening search engine optimization strategies. According to comScore ARS, UGC product reviews are every bit as persuasive and effective (if not more so) than far costlier advertising media, including display and TV. User-generated product reviews have proven to be one of the most highly effective tools of social media marketing, allowing marketers to tweak and modify their messages — and help businesses increase their profits in the process. For retailers, UGC provides unbiased and unguarded feedback from actual customers. The next logical step for many marketers involves gleaning data from “micro UGC” — short, low-involvement forms of user-generated content such as Facebook status updates, “likes,” star ratings on Netflix or Amazon, location-based check-ins, “you may also like” recommenda- tions and pictures posted on Tumblr. The logic of UGC’s effectiveness is simple: Like-minded people trust the opinions of their peers above the hype of paid shills. 16
- 17. 25 TIFFANY 26 STARBUCKS According to data compiled by Bloom- Starbucks marked its 40th year in busi- berg, Tiffany nearly tripled its value ness with the rollout of a new logo and from the sale of engagement rings a mobile payment app that has become alone, helped along by price increases the early standard for m-commerce and sales in the Asia-Pacific region. success by demonstrating that custom- It boosted its market capitalization to ers will adopt mobile payments at the $8.6 billion in 2011, up from $3.1 bil- point of sale. Eschewing fancy tech for lion in June 2009, when the U.S. econo- relatively pedestrian barcodes, the Star- my emerged from the longest contrac- bucks app operates with a minimum of tion since the Great Depression. The fuss and a maximum of utility — two world’s second-largest jewelry retailer qualities that watchers agree are es- became a likely takeover target after sential to supplanting the use of cash Swatch Group AG terminated its 20- and cards. Introduced in January 2011, year watch partnership with the jeweler the app racked up an impressive three 16 years early. The company reported a million transactions in its first three 63 percent jump in fiscal third-quarter months. Additionally, by making its 2010 earnings as every geographic seg- mobile payments closed-loop and keep- ment saw double-digit sales growth, ing the transactions on its own systems, including a 17 percent increase in the Starbucks bypassed the complicating favorite in 2011, delivering a 35 percent Americas, which accounted for the step of partnering with a carrier or card year-to-date gain in December despite bulk of its 21 percent revenue growth. brand. Starbucks was also an investor spiraling coffee prices worldwide. 27 NORDSTROM Now in its 110th year, Seattle-based Nordstrom continues to live by its one-sentence doctrine: “Use good judgment in all sit- uations.” The fourth-generation, family-run department store is legendary in the retail industry for its emphasis on customer service above all else. In a 2011 consumer survey forecasting holiday spending, the upscale specialty retailer came out on top among department stores in online shopping, more than doubling its online share from December 2010. Rather than defining store space by brand, Nordstrom groups merchandise into so-called lifestyle sections, making it easier for shoppers to put together outfits, says retail analyst Jennifer Black. As a result, competitors have rushed to copy the Nordstrom model, and brands vie for invitations to win shelf space. Shoe entre- preneur Steve Madden recalls the first time he was asked to a Nordstrom buyers’ meeting. “It was like an invite to the White House,” he said. 17
- 18. RON JOHNSON The retailworld is watching CEO Ron Johnson close- Vuitton-owned Sephora and Martha Stewart Living, ly to see if he can replicate his success as the creative adding more brand names, streamlining supply-chain force behind the Apple Store in the relatively stodgy operations, and — as he did at Target — bringing in retail environment at JCPenney. The Apple Store con- exclusive lines from high-end cept was a success, he contends, because rather than designers like Michael Graves. tweaking the traditional model, Apple started from The retailer is also eliminating scratch and “re-imagined everything.” (Of course discount signs for in-season mer- it helps if the thing you’re selling happens to be the chandise and doing away with sleekest, most-coveted product since Cadillacs came cents on price tickets in certain with tailfins.) In a piece written for The Harvard Busi- cases. For instance, an item that ness Review “Online Forum” just weeks into his ten- costs $19.99 will now be $20. ure at Penney, Johnson conceded that Apple products Johnson has brought on a number of former col- do indeed pull people into stores, but added, “How do leagues from Apple and Target, which would indicate you explain the fact that people flock to the stores to that his plans include high-level structural changes. buy Apple products at full price when Walmart, Best He’s also planning a Penney’s version of the Apple Ge- Buy and Target carry most of them, often discounted nius Bar — a concept he created as the SVP of retail in various ways, and Amazon carries them all — and for Apple — staffed by trained employees who can doesn’t charge sales tax!” People come to the Apple offer advice and tips. The challenge, he says, is con- Store for the experience, he says, “and they’re willing ceptually similar to the ones Steve Jobs faced with the to pay a premium for that.” iPhone. “He didn’t ask, ‘How do we build a phone that can achieve a 2 percent market share?’ He asked, ‘How Since announcing his departure from Apple, John- do we reinvent the telephone?’ In the same way, re- son has been on a mission to revitalize the JCPenney tailers shouldn’t be asking, ‘How do we create a store brand and increase the retailer’s appeal to younger that’s going to do $15 million a year?’ They should be more affluent customers. Toward that end, Johnson asking, ‘How do we reinvent the store to enrich our is emphasizing store-within-store formats, partner- customers’ lives?’” ing with retailers such as the Moët Hennessy - Louis 18
- 19. 28 DISNEY 29 DIGITAL SIGNAGE Following record sales and profit, the Walt Disney Company, owner of the namesake theme parks and ESPN sports network, increased its annual dividend for 2011 by 50 percent, the most in at least 20 years. The Burbank, Cali.-based company, which also owns Marvel Entertainment and the ABC TV net- work, is returning cash to investors through stock repurchases as well, buying back $5 billion of shares in the year ended Oct. 1. The Steven P. Jobs Trust, Disney’s largest shareholder, will reap $82.8 million, an increase of $27.6 million based on the 138 million shares held by the estate of Apple’s late co-founder. Presented with so many attractive buying options, consumers often gravitate to- ward the lowest price, which they usually find online. Thus, retailers have been searching for new engagement strategies, such as interactive digital signage. By dis- playing targeted eye-catching content that can easily be customized according to the context and the audience, digital signage is helping brick-and-mortar retail- ers attract — and hold — the attention of the same customers that many feared were just stopping in to check prices before making an online purchase. Described by one retailer as being “like having a giant smartphone in your store,” interactive digital signage delivers some of the online world’s most appealing capabilities and functions in a real-world environment, replete with attentive sales associates. 30 H&M The world’s second-largest clothing re- Grecian buttons, and fluorescent mi- director Karl Lagerfeld in 2004, and tailer, Hennes & Mauritz AB, recently cro-minis. H&M creative adviser Mar- this most recent partnership between announced its “Versace for H&M” line gareta van den Bosch sees “design and the Swedish fashion giant and a luxury featuring apparel and accessories de- celebrity collections as crucial to estab- designer will give the Italian label glob- signed by Gianni Versace SpA, ranging lishing the fashion authority of H&M al visibility, according to Versace Chief from $17.95 zebra-print underwear to as a brand.” H&M has been marketing Executive Officer Gian Giacomo Fer- $299 studded leather jackets and floor- limited-edition designer collections raris, with targeted sales expected to length “goddess” gowns dotted with since partnering with Chanel creative reach $700 million by 2014. 19
- 20. 31 INTERACTIVE STOREFRONT WINDOWS Saks Fifth Ave. and Starbucks were content, tweets from around the Web all the iPads were able to talk “to each among those pushing the boundar- and user-submitted photos with the other to produce elegant fades and ies of interactive storefront displays to #StylelistatSaks hashtag. Running a na- control what device should display,” captivate passers-by in high-traffic lo- tive iPad application built specifically said Gin Lane’s Digital Creative Direc- cations. EBay introduced interactive for the installation on a local network, tor Dan Kenger. store windows in New York City and San Francisco encouraging holiday shoppers to make charitable donations to Toys for Tots by scanning a QR code. Displays fronting Starbucks stores in Toronto and Vancouver encouraged passers-by to assemble their favorite Tazo teas using gesture controls via a vinyl screen and projector, while Saks and Stylelist.com tapped downtown agency Gin Lane Media to create a three-window display featuring 64 iPad 2s and nine 27-inch flat-panel Cinema Displays for the high-end retailer’s flagship Fifth Avenue store. The display featured original imagery, streaming 32 SMALLER STORE FORMATS As consumers continue to do more shopping online, big-box re- tailers are attempting to stay profitable and reduce under-utilized space by moving to smaller store formats. Safeway and Walmart are among the latest to follow the trail blazed by Tesco’s Fresh & Easy Neighborhood Market. The advantages of smaller formats include greater flexibility, proximity to local markets, a quicker shopping experience, new store development options, solutions for recycling older units, and lower break-even points. According to Marketwise, 62 percent of Walmart’s newest stores are small-format Walmart Express, most of them in underserved rural and urban areas. The chain’s small-format Walmart Express stores typically carry between 11,000 to 13,000 items, compared with the more than 100,000 items found in a Supercenter. “Small stores are going to be a very good growth opportunity for us,” says William S. Simon, president and chief executive of Walmart’s domestic business, “because they allow us to get access in places we are not in today.” 20
- 21. 33 GROUPON/LIVINGSOCIAL/ETC. The exploding daily deal industry pioneered by Groupon has spawned, by some estimates, more than 700 copycats. And who can blame them? Barely three years after its founding, Groupon raised more than $700 million in an initial public offering, generating 30 percent more than the company originally sought, then saw its value balloon to more than $16 billion on its first day of trading on the Nasdaq. LivingSo- cial is Groupon’s most logical competitor. Backed with hundreds of millions of dollars in funding, primarily from Amazon (for which it provides the deals for AmazonLocal), the 2-year-old deal-maker says it expects to generate revenues of $1 billion in 2012. 34 GAMIFICATION OF RETAIL Boosted by the success of Facebook-supported games such as Farmville and Mafia Wars, gamification is the latest innovation retailers are banking on to improve customer en- gagement, build loyalty, strengthen their brand, and incentivize employees and business partners for better productivity. Gamification is defined as the process of integrating game thinking and game mechanics into marketing activities to solve problems and en- gage users. According to Gabe Zichermann, CEO of Gamification Company, the key to gamification’s success is drugs — “One important drug — dopamine,” he explains. “It’s what we secrete in response to challenge and achievement. It is part of the core group of behaviors that makes gamification and games powerful in changing influence and behavior.” Data released by M2 Research set the current worth of the gamification market at $100 million, with a projected value of nearly $2.8 billion by 2016. Gamifica- tion vendors predict 197 percent growth through 2012, representing an increase of 42 percent over 2011. 35 YELP San Francisco-based user review web- on companies that are generating wrinkle here is that Yelp relies on these site Yelp filed to raise as much as $100 losses,” says Tom Taulli, founder of rivals to send visitors to its site. Google million in a 2012 initial public offering, IPOByte.com and author of “Investing alone accounted for more than half of seeking to become the latest unprofit- in IPOs.” “No one knows how long this Yelp’s traffic in the first nine months of able Internet company to go public. window is going to last, so I think Yelp 2011. The search engine’s dual role as Co-founded by former PayPal Inc. ex- is going to get out as fast as possible.” both competitor and ally may put Yelp ecutive Jeremy Stoppelman in 2004, the in a difficult position in the future, ac- website features more than 22 million Yelp faces competition from Google, cording to Taulli. “Their main source reviews created by its 61.1 million Facebook and Yahoo!, all of which sell of customers is coming from their users. “Investors are open to taking bets online ads to local businesses. The competitor.” 21
- 22. 36 BERGDORF GOODMAN Online merchants are forcing even the highest-end stores to offer up bar- gains to their well-heeled clientel who are relatively insulated from the job and housing markets. “At the luxury end, discounting has become very mainstream because of the Gilts of the world,” said Andrew Sacks of luxury research firm AgencySacks, referring to Gilt Groupe, the online discounter for designer fashions. At the height of the 2011 holiday season, Bergdorf Goodman’s website listed more than 70 pages of discounts on designer fashions, some marked down as much as 40 percent. Bergdorf Goodman has also turned to digital and social-media programs in recent months, launching campaigns aimed at building the brand’s presence online, in- cluding a contest inviting its Facebook fans to design a Fendi handbag. While Bergdorf isn’t the first luxury retailer to try a user-generated design campaign, it may be the first to board the crowdsourcing bandwagon. 37 AT&T WIRELESS 38 REI The collapse of AT&T’s $39 billion bid for REI has teamed up with U.S. Bank to make credit card approval easier and faster T-Mobile USA leaves the second-largest for consumers shopping in-store via an iPhone application. By promoting a down- U.S. mobile carrier with few options to load of the REI Visa app at point of purchase, the retailer can enable customers to challenge market leader Verizon Wireless. instantly be approved for the REI Visa card and begin using their reward points T-Mobile’s spectrum assets would have al- immediately. “The app also moves the customer application process out of the ser- lowed AT&T to expand its LTE footprint vice lane to more of an in-store experience that connects with the brand,” says to cover 97 percent of Americans. How Dominic Venturo, chief innovation officer of the bank payment service division at AT&T will make up that difference isn’t U.S. Bank. REI was deemed the best fit to try out the mobile credit card application yet known, but AT&T needs to act quick- process because of the company’s mission. “Eliminating paper was important to ly, as Verizon has already blanketed some REI because it is an environmentally conscious group,” Venturo said. 190 markets and 200 million Americans “REI also has a very strong customer following with their existent iPhone app with LTE. While AT&T was focused on and wanted to try something new.” winning regulatory approval for the take- over, rivals were negotiating their own air- wave deals. As a result, several spectrum assets that would have still been available to AT&T are now off the table. Its remain- ing options are time-consuming, expen- sive and risky, says Cowen & Co. analyst Colby Synesael. AT&T can either seek to buy spectrum from another company, wait for the government to auction more frequencies or try to squeeze more capac- ity out of its current airwaves. 22
- 23. 39 POP-UP SHOPS Although pop-ups have moved up in the world, for some the term still has downmarket connotations. The first generation of pop- ups often consisted of little more than shelving and a cash register in empty mall space. In recent years, retailing stalwarts breathed new life into the format. Procter & Gamble, for example, operated a 4,000-square-foot pop-up on 57th Street in Manhattan that drew 14,000 visitors in the 10 days it was open. The store had no cash registers because everything was free — including a full CoverGirl makeover or a Head & Shoulders wash and blow dry. The P&G pop-up — the company’s marketing executive Nataraj Iyer prefers the term “interactive experience” — represents a new iteration in the evolution of the pop-up. The goal was not to move merchan- dise but to build brand loyalty. 40 DEAL-OF-THE-DAY (WOOT, ETC.) The “daily deal” concept is as old as phenomenal success — the company retailing itself. Strictly speaking, deal- was acquired by Amazon.com in 2010 of-the-day sites are similar to job lot — combined with extremely low bar- discounters. They take unused capacity riers to entry inspired a slew of similar and sell it at a discount. The difference deal-of-the-day sites with quirky prod- is that businesses use social media to uct descriptions and real-time inven- spending on deal-of-the-day offers pre-sell this excess inventory in hopes tory updates. It wasn’t until such sites could grow from $873 million in 2010 of luring new customers. Pioneered by began offering deals for local shops and to $3.9 billion in 2015. The same fore- Woot in 2004, deal-of-the-day websites restaurants that the industry truly took cast also estimates there are 178 U.S. started out selling mostly electronics off. BIA/Kelsey released a forecast in cities with deal-of-the-day sites reach- and tech gear at deep discounts. Woot’s March 2011 indicating that consumer ing 102 million people. 41 IKEA Ikea is developing its website to have product and then figuring out how to stores in North America by 2013. Ikea a broader geographic reach and offer make it, will cut prices by 1.5 percent expects to triple its pace of store open- more services, such as allowing cus- this year as its increased scale allows ings in China to capture faster growth tomers to select items they want in it to produce items at less cost. Ikea, in the second-largest economy, says the store and have them delivered to which updates its collection of about CEO Mikael Ohlsson. The expansion their home without having to gather 10,000 products with more than 2,000 in China will also allow the company them from the outlet’s warehouses. new items a year, will continue invest- to reduce its reliance on Europe, which The world’s largest furniture retailer, ing in products and enlarging stores is suffering from a slump in consumer known for setting a price point for a in the coming year, adding 50 more confidence. 23
- 24. BRIAN DUNN Recent headlinestell a dismal story: “Best Buy’s zon.com with Best Buy Marketplace, a new service Dunn Should Be Next CEO Fired” wrote Douglas meant to challenge the world’s largest e-commerce A. McIntyre on 24/7WallStreet.com. Then, just a few company. The effort addresses challenges shared by weeks later, “Why Best Buy is Going out of Business all retailers committed to main- … Gradually” topped a 3,000-word screed by Forbes taining large bricks-and-mortar contributor Larry Downes, that garnered some 15,700 operations while simultaneously Facebook shares, 17,500 tweets, and a blunt response trying to flank Amazon online. from Dunn himself titled “My Thoughts on Best Buy’s Although Best Buy Marketplace Recent Media Coverage,” albeit without mentioning substantially increases the selec- either McIntyre or Downes by name. Best Buy has tion of products and brands available at BestBuy.com, posted a string of poor quarterly results since Dunn Wall Street appears to be losing patience with Best assumed the CEO mantle in June 2009. Throughout Buy’s plans to overhaul itself. Despite Dunn’s upbeat his reign, Downes charges, Dunn has pursued a strat- assurances to the contrary, Amazon.com has badly egy of protecting market share over profit. In the quar- damaged Best Buy’s earnings and its future projects. ter ending November 30, 2011, store sales increased 1 As evidence of investor reaction to the CEO’s tenure, percent — marking the retailer’s first increase in two Best Buy’s shares are off 43 percent over the past two years. Margins, however, sank, with net income drop- years, while Amazon’s are up 39 percent, and the S&P ping by 29 percent. For the quarter ending May 28, 500 is higher by 12 percent over the same period. The 2011, the firm posted a sales increase of only 1 per- market’s stunned response to Best Buy’s third quarter cent to $10.9 billion. EPS fell by 3 percent to 35 cents. 2011 results and forecasts resulted in shares plummet- Online revenue rose only 10 percent in the U.S., not ing more than 15 percent. A decisive blow to Dunn’s nearly enough to keep up with Amazon, which con- tenure may have come just days before Christmas tinues to grow more than 50 percent per quarter. when the world’s largest consumer electronics retailer announced that it would be unable to fill an undis- Dunn maintains that his company is well positioned closed number of holiday orders placed online. to poach significant online market share from Ama- 24
- 25. 42 TARGET After spending two years preparing to accounted for more than half of the take control of its website from Ama- major outages on the top 100 sites in zon.com, a prominent link (“learn all the U.S. by revenue, according to Web about what’s new”) on Target’s home monitor AlertBot. Still, e-commerce page failed to work when the site went analyst Colin Sebastian at Robert W. live in August. That was just the begin- Baird & Co contends that Target made ning. Three weeks later, the release of the right move. “The complexity of a collection from Italian fashion house building a large-scale e-commerce site Missoni brought a rush of visitors that is really difficult,” he said. “But, at the crashed the site for most of the day. A sentence statement that Target.com end of the day, Target made the right month later, the site went down again president Steve Eastman had left the decision. Amazon is a competitor, and during peak shopping hours. Later company to “pursue other opportu- you don’t want them controlling your that day, Target announced in a one- nities.” All told, Target.com crashes e-commerce business.” 43 LULULEMON 44 TABLET COMPUTERS IN-STORE Vancouver-based athletic apparel com- An estimated 25 percent of all tablet learning curves for new hires, more pany Lululemon Athletica has caught computers purchased in 2011 were engaging and knowledgeable sales as- fire with yoga enthusiasts to a degree bought by enterprises, and 25 percent sociates, sales associates’ ability to help that sent its competitors stumbling of those enterprises were retailers. Re- customers in more store departments over themselves in pursuit of custom- tailers are putting tablets to work as and a more pleasant and efficient buy- ers willing to spend $98 on stretchy digital catalogs, signage and in-store ing experience for customers. yoga pants. Mimicking Lululemon’s information kiosks. Tablet computing winning strategy, Nike’s Salvation solutions connect retail sales associates chain of athletic-wear stores intro- with a wealth of knowledge, including duced $64 training capris featuring a product information, learning tools, yoga-studio format and similar logo. real-time product inventory, customer Gap’s Athleta stores began selling $60 reviews and ratings, updated price and women’s yoga tops and offering free promotional information, as well as the yoga classes — another Lululemon in- ability to print or email any of these. novation. Unlike other business solutions that require a great deal of infrastructure Nordstrom’s Zella line, dedicated to and integration efforts, tablet comput- yoga attire, went so far as to hire a ing solutions require minimal impact Lululemon alum to launch the effort. on existing systems and are often more Since opening its first store in the reliable than other solutions. In-store United States in 2003, Lululemon’s ag- tablet computing systems provide re- gressive strategy has paid off with rev- tailers with consistent sales processes enues growing from $40.7 million in that can be promoted across all stores, 2004 to $711.7 million in 2010. increased sales, significantly reduced 25
- 26. 45 AMERICAN GIRL Mattel’s American Girl line of dolls, accessories, books, and (more recently) movies, has dominated the big and expen- sive ($95) doll market for a quarter-century by building its brand with unwavering focus on its core customers (girls, their mothers and their grandmothers), an ability to identify and fill gaps in the market for their customers and a com- mitment to connecting with its customers beyond the ac- tual sale. Since its first mail-order catalog debuted in 1986, American Girl has sold more than 20 million dolls and 135 million books that tell the stories of its dolls representing dif- ferent periods in American history. 46 CVS/CAREMARK Reversing two years of decline, CVS/ new contract wins. Furthermore, chief up for grabs. With 43 percent of CVS Caremark expects 2012 profits to grow rival Walgreen Co. has failed to replace stores located within one mile of a 11 percent to 15 percent based on its its contract with employee-benefits Walgreens (85 percent are within five acquisition of Universal American manager Express Scripts. Valued at miles), CFO Dave Denton expects to Corp.’s Medicare Part D business, a deal more than $5 billion in annual drug pick up as many as 23 million of those with health insurer Aetna Inc., better sales, the lapsed contract will put ap- prescriptions, which would boost prof- drug pricing, and billions of dollars in proximately 90 million prescriptions its by as much as 11 cents a share. 47 VICTORIA’S SECRET Victoria’s Secret is all about differentia- increase of 12 percent, benefiting from Bra and the Gorgeous Bra. The com- tion, according to Stuart Burgdoerfer, the wide array of its assortment, which pany also registered an 8 percent rev- CFO of Victoria’s Secret parent Limit- includes major third-quarter launches enue increase in Victoria’s Secret direct ed Brands Ltd. “We really have unique such as Showstopper Bra, PINK, the channel, driven primarily by PINK, products, a leading position [and] with Heartbreaker Bra, the Unforgettable sleepwear, panties and knit clothing. In respect to our brands, no obvious im- March, the company introduced three mediate close competition.” The Co- versions of its “Incredible” bra, a super- lumbus, Ohio-based specialty apparel soft push-up that is more comfortable retailer posted a 12 percent gain in than earlier versions. An accompany- comparable sales for the 11 months ing Incredible fragrance is a mixture through December 2011. While Lim- of magnolia, pear and sandalwood and ited registered revenue growth across described as “fruity, feminine and sur- all of its major brands, Victoria’s Secret prisingly clean smelling.” The bra’s pre- was the major growth driver for Q3, decessor, “Miraculous,” boosted busts with U.S. stores registering a comp sales by as much as two cup sizes. 26
- 27. 48 PUBLIX 49 DICK’S SPORTING GOODS Publix Super Markets has offered ex- Dick’s Sporting Goods dates back to 1948 when Richard Stack (father of current ceptional customer service for more CEO Edward Stack) opened a bait-and-tackle store in Binghamton, N.Y. When Ed- than 80 years, operating 1,000 loca- ward took over as CEO in 1984, only two stores were in existence. Today Pittsburgh- tions through one of the worst eco- based Dick’s is the largest sporting goods retailer in the country, with 474 namesake nomic downturns in history without stores in 42 states and 81 Golf Galaxy stores in 30 states. Dick’s still has abundant laying off a single employee. Publix is top-line growth opportunity with plans for 400 more stores over the next several the country’s largest employee-owned years to build out its presence on the West Coast. Dick’s has succeeded where other supermarket and the fourth-largest big-box sporting goods efforts have failed by catering to serious enthusiasts who operator of traditional supermarkets want a big selection and an engaging in-store experience. Each Dick’s location fea- overall, behind Kroger, Supervalu, tures stores within the store, such as the Golf Shop, the Lodge and Perfect Season, and Safeway. George Jenkins — or Mr. which highlight whatever sport is then in season. George, as he is still known within the company — launched his service- oriented supermarket in 1930 and im- mediately embarked on an expansion effort that has yet to abate. Publix con- tinues to grow at a time when many other businesses are stagnating. The retailer’s latest growth efforts include a hybrid store that melds its GreenWise organic format with its more conven- tional stores. Publix’s second-quarter 2011 net income rose 9.7 percent, to $382.4 million. Total sales increased 5.8 percent, to $6.6 billion, with same- store sales up 4.2 percent. 50 BUILD-A-BEAR WORKSHOP The interactive entertainment retailer Build-A-Bear Workshop invites guests to create their own customized stuffed animals. Digital Signage Today named Build-A-Bear’s new Digital HearMe Sound Stations one of the top 10 coolest digital signage deployments of 2011. The self-ser- vice kiosk is highly visible, located near the entrance and “ChooseMe” area where guests first select their “new friends.” The stations bring a new experience to the customers while reducing time to market for new sounds — automatically linking the sound purchase to a POS system and improving personalization through a record-your-own sound module. Digial Signage Today rates the experience as “fun for kids and easy to understand for grandma.” 27
- 28. 51 LEGO The 76-year-old, family-owned Dan- ish toy maker topped $1 billion in U.S. sales for the first time in 2010 and was on track to repeat that performance in 2011. The snap-together plastic brick empire has grown and evolved dramati- cally to include robotics, films, video games, theme parks — even a business consultancy to foster creative think- ing — but all focused on boys. On New Year’s Day 2012, Lego introduced Lego Friends, a full line of 23 different prod- ucts aimed at girls aged 5 and up. “This is the most significant strategic launch we’ve done in a decade,” said Lego Group CEO Jørgen Vig Knudstorp. 52 HIGH-TECH DRESSING ROOMS “We want to reach the other 50 percent Shoppers at San Francisco’s Industrie Denim no longer need to venture outside the of the world’s children.” The company’s fitting room to ask friends (or strangers) if the jeans they’re trying on make their commitment is evidenced by a $40 butts look big. Nor do they have to take anyone else’s word for it. They can see for million global marketing push behind themselves using the closed-circuit “Booty Cams” installed in the retailer’s dress- the launch. ing rooms. (Store manager Rob Jolin is quick to assure shoppers that the process is completely private.) Some of luxury retailer Prada’s dressing rooms employ plasma mirrors similar to the Booty Cams, as well as doors that go from opaque to trans- parent. A growing number of clothing retailers are using such gee-whiz technology to entice customers into trying on clothes and get them excited about shopping. Consumer psychologist, Kit Yarrow, said the high-tech dressing-room tools are as much about customer assistance as they are marketing. “What it tells consumers,” she says, “is that a store is trying and they’re thinking.” 53 QUICKRESPONSE (QR) CODES At first glance, QR codes seemed a sure bet to be the next big thing. So why aren’t they? They’re everywhere: on billboards, magazine ads, business cards, T-shirts, shop windows, every variety of signage — even on trees and playground equipment in public parks. Yet, according to a recent survey conducted by Archrival research group, nearly 80 percent of college students across the U.S. had no clue how to scan a sample QR code when presented with one. No clue and little interest. Nearly 75 percent said they were unlikely to scan a QR code in the future. Go off campus and QR’s prospects are a little brighter. A recent survey by Prosper Mobile Insights found that nearly one-third of general-population smartphone and tablet users have scanned QR codes to access in-store coupons. But unless someone comes up with an application that will catch fire with the cool kids, the only place you may see those now-ubiquitous do-hickeys — often described as barcodes on steroids or a checkerboard on LSD — will be in the next millennium edition of Trivial Pursuit. 28
- 29. 54 BEST BUY 55 EBAY Best Buy is taking its best shot at In a direct rebuke to Amazon.com, poaching some online market share eBay is offering consumers an incen- from Amazon.com with a new service tive to shop in stores by offering those meant to challenge the world’s larg- who spend $100 online a $10 discount est e-commerce company. Best Buy on purchases from designated retail- Marketplace substantially increases ers. To qualify, shoppers must buy on the selection of products and brands the Web from Toys R Us, Dick’s Sport- available at BestBuy.com. The effort ing Goods, or Aeropostale using eBay’s addresses challenges shared by Barnes PayPal payments servicer. The world’s & Noble and all retailers committed to posted a sales increase of only 1 percent largest online marketplace announced maintaining large bricks-and-mortar to $10.9 billion. EPS fell by 3 percent to the incentive after Amazon drew operations while simultaneously trying 35 cents. Online revenue rose only 10 heavy fire in December for offering a to flank Amazon online. Wall Street percent in the U.S., not nearly enough 5 percent discount to those who used appears to have lost patience with Best to keep up with Amazon, which con- its new mobile app to compare prices Buy’s plans to overhaul itself. For the tinues to grow by more than 50 percent with those in physical stores. While quarter ending May 28, 2011, the firm per quarter. eBay also offers an app for price check- ing, it doesn’t actively compete with re- tailers on its site. EBay is “trying to be the anti-Amazon in a sense,” said Co- 56 LL BEAN lin Sebastian, an analyst at Robert W. Baird & Co. The company is “position- Never regarded as a retail trendsetter, L.L. Bean has responded to customer demand ing itself as a partner with traditional and now allows consumers to shop its entire inventory of outdoor gear and apparel retailers, whereas Amazon is trying to using a new commerce-enabled mobile site powered by Usablenet. “It’s really to accelerate that shift away from stores.” meet our customers where they want to shop,” said senior public relations represen- tative Laurie Brooks. “We’re a multichannel merchant. We were responding to what our customers were asking us — to have a shoppable mobile site.” The company built a loyal following over the past 98 years with its liberal return policy and folksy sales staff. The $1.5 billion Freeport, Maine, retailer saw Internet sales top catalog orders for the first time in 2010. The shift from catalog to Web sales led to a decline in phone-in order volume, requiring the retailer to close one of its four call cen- ters. The company respond- ed by allowing affected em- ployees to work from home, winning the No. 1 spot in that year’s Bloomberg Busi- nessWeek customer service ranking. 29
- 30. CHIP WILSON Upmarket yogaand sportswear retailer Chip Wilson Wilson began 2012 on a decidedly different note by had a topsy-turvy 2011. In March, the lululemon ath- unexpectedly announcing he would resign his execu- letica founder, chairman of the board, and chief in- tive position as chief innovation and branding officer novation and branding officer made Forbes’ World effective Jan. 29, although he will Billionaires list for the first time while climbing from continue to serve as chairman of 49th to 15th place on Canadian Business magazine’s the board of directors. Wilson list of wealthiest Canadians, increasing his worth by founded the pricey yoga gear re- 128 percent to $2.85 billion. His company suffered tailer in 2000 when he opened some grisly publicity that same month when an em- the first lululemon in Kitsilano, a ployee brutally murdered a co-worker after hours in beachside part of Vancouver, and the chain’s Bethesda, Md. store. The incident was rou- took the firm public in 2007. Lu- tinely referred to as the “Lululemon murder” in the lulemon now boasts revenues of more than $800 mil- intense media coverage that followed. Wilson drew lion from 140 stores and catalog sales. Wilson gave no personal fire in November when the chain printed reason for his abrupt exit, merely stating that in any “I Am John Galt” on its shopping bags, in reference organization there comes a time when there is a need to Ayn Rand’s 1957 objectivist novel Atlas Shrugged. for change, that he felt comfortable leaving his re- Pundits warned that the sentiment would likely alien- placement Christine Day “at the helm of a world class ate his lotus-sitting customers. Indeed, the embodi- management team whom I fully believe will continue ment of Rand’s free-market philosophy, which dis- to elevate our world.” For now, Wilson plans to devote misses altruism and in favor of individuals living for himself fulltime to his remaining role as board chair- their self-interests seems an unlikely model for Wil- man guiding the company’s future growth. son, who sprinkled his own “manifesto” with slogans such as “The pursuit of happiness is the source of all unhappiness,” and “What we do to the earth we do to ourselves.” 30
- 31. 57 RETAIL CROWDSOURCING Crowdsourcing will soon become as way to build sustainable relationships participate in the online shopping pro- commonplace as outsourcing. Retail with consumers and thereby develop cess.” Australia-based Shoes of Prey is marketers need more crowdsourcing to a deeper connection and better brand apparently meeting a tremendous de- open up their talent pool for research loyalty.” According to Alisa Gould- mand by giving women the power to and development. The strategy “greatly Simon, director of marketing and design their own shoes. According to reduces costs to the retailers because communications at Pose.com, a free founder Jodie Fox, women have collec- they’re only paying for the idea, not mobile shopping application, “Brands tively spent more than 15 million min- the process,” says C.J. Kettler of Genius are looking at ways to not only listen utes designing shoes on their site since Crowds. “Crowdsourcing provides a to their customers but allow them to the company’s launch in October 2009. 58 WHOLE FOODS The upheaval in the commercial prop- and cleaned up its balance sheet. Now, erty market has created opportunities it’s debt-free, gaining market share and for companies looking to expand, and generating good cash flow. In June, Whole Foods has identified locations Robb announced that Whole Foods where it “can put some bets down and plans to use some of its cash to speed take advantage of that,” says co-CEO up store openings, with the eventual Walter Robb. After stumbling dur- goal of operating 1,000 stores in the ing the recession, the country’s largest U.S., up from around 300 currently. As seller of natural and organic foods is part of its health-and-wellness initia- now outperforming other grocery sell- tives, Whole Foods also plans to open ers. Whole Foods has lowered prices wellness clubs in five U.S. cities. 59 WILLIAMS-SONOMA Williams-Sonoma is seeing benefits from the high-end sales recov- ery, helped along by the shift to online and strong merchandising in its stores, according to David Strasser of Janney Capital Markets. Ear- lier this year, Williams-Sonoma announced it would invest $75 mil- lion in e-commerce and the information technology and supply chain solutions to support it in fiscal 2011, with $25 million earmarked spe- cifically for long-term international e-commerce growth. Due in large part to its rapid online growth, Williams-Sonoma’s direct-to-consum- er channel already contributes an impressive 41 percent to the com- pany’s overall revenues, with that figure expected to reach 43 percent. “E-commerce is not only our fastest growing but also our most profitable channel,” said CEO Laura Alber, “and, therefore, its growth as a percent- age of total company revenues increases overall corporate profitability.” 31
- 32. 60 BLOOMINGDALE’S Widely regarded as an en- with NBC. One cross- dangered species a decade promotional effort had ago, high-end department Bloomingdale’s 39 stores stores, exemplified by the taking part in a virtual re- venerable Bloomingdales, are stag- stores, according to the International ality experience. Shoppers could stand ing an impressive comeback by lur- Council of Shopping Centers, continu- in a certain spot in the store and snap ing shoppers with exclusive, trendy ing a trend that has prevailed for three photos of themselves using an iPhone items that appeal to Gen Y. Financial quarters. Wall Street Strategies analyst app. Through augmented reality, they results at department stores are out- Brian Sozzi has declared that the once- appeared to be standing on a red carpet pacing specialty retailers such as Gap stodgy department stores are again a with NBC stars such as Hank Azaria of and American Eagle Outfitters. In “credible destination for fashion.” To “Free Agents” and Christina Applegate February, sales at department stores further dispel any lingering stodginess of “Up All Night.” The hope was that open at least a year rose 5.7 percent, in the air, this past fall, Bloomingdale’s shoppers would then share their pho- versus a 3.2 percent gain for apparel entered into a marketing partnership tos on social networking sites. 61 HOLLISTER 62 NIKE If the apparel industry was dominated on the site. Hollister and Abercrombie in 2011 by the emergence of e-com- & Fitch are the two most popular teen merce and m-commerce, 2012 looks apparel brands on Facebook, followed to be the year of f-commerce — f for by American Eagle and Aeropostale. Facebook, what else? Teen apparel As Facebook emerges as a serious mar- companies Abercrombie & Fitch and keting platform, this ranking is a sig- its American lifestyle brand Hollis- nificant indicator of teen shoppers’ en- ter are actively engaging and building thusiasm for the retailers’ promotions brand loyalty with their target market and product offerings. Despite higher prices, Nike published quarterly results that beat Wall Street estimates, as it attracted shoppers, especially in emerging markets. In China, orders scheduled for delivery from December 2011 through April 2012 rose 31 percent, with a 12 percent rise in other emerging markets. Mob scenes surrounding a new release of Nike’s retro Air Jordans two days be- fore Christmas conjured up memories of the frenzied scenes from the mid to late 1980s when the release date for Air Jordans had to be moved to weekends to keep kids from skipping school. 32
- 33. 63 IN-STORE AUDIO While advertising is most often employed to lure customers into a store, advocates of in-store audio argue that it can be even more effective once they are there. One current strategy gaining favor among retailers is to build on traditional marketing and advertising efforts by promoting heavily inside the store. The theory is that shoppers come in with one or a few items in mind; the goal is to entice them to buy more with well-planned advertising and marketing within the store. An in-store audio brand- ing channel contributes to a great customer experience, encourages impulse buys, motivates sales associates, and makes their jobs easier. 64 ANTHROPOLOGIE 65 DOLLAR TREE Female apparel store Anthropologie, known for Changes in spending patterns, especially among low-end consumers, its $300 bohemian dresses, quirky accessories, and necessitated by a weak economy, has led to Dollar Tree’s induction into unique home goods is expanding its sumptuous Standard & Poor’s S&P 500 Index. The discount retailer’s inclusion came print catalog to digital platforms with an iPad ap- after Dollar Tree added equity of more than 48 percent over a 52-week plication designed to increase brand awareness. period. More signifcantly Dollar Tree reported same-store sales growth The app lets consumers browse the current collec- of 7.1 percent, 4.7 percent, and 4.8 percent during the first three quarters tion and features recent news and social media. of 2011, respectively. The last quarter increase of 4.8 percent was aided by Anthropologie is also looking to increase its social a 1.4 percent higher ticket price and a 3.4 percent increase in customers. media efforts by embedding the brand’s Facebook and Tumblr pages into the app. The mid-upscale retailer also rolled out a commerce-enabled mobile website that lets shoppers browse and purchase clothing items. The app has been criticized, how- ever, for its lack of a store locator feature, which is crucial to any shopping app. As part of an effort to revitalize flagging sales following a three-quar- ter long revenue drop, Urban Outfitters named former Under Armour president David W. Mc- Creight as CEO of its Anthropologie chain and eliminated the positions of the co-presidents who previously ran the brand. 66 AHOLD USA (STOP & SHOP, GIANT, MARINI’S PEAPOD) Ahold USA, the U.S. division of Am- cent of the parent company’s total sales. 11 states and the District of Columbia. sterdam-based Ahold, encompasses Additionally, Peapod.com, based in Founded in 1989 by brothers Andrew and 376 units of Stop & Shop, 180 Giant Skokie, Ill., provides Internet-based Thomas Parkinson as a wholly owned Foods of Landover, Md., and 148 Gi- home shopping and grocery delivery as subsidiary of international food provider ant Foods of Carlisle, Penn. Ahold USA an integrated element of Stop & Shop Royal Ahold, Peapod has grown to be one accounts for approximately 57 per- and Giant Foods, serving markets in of America’s leading Internet grocers. 33
- 34. 67 STAPLES With its new 2.0 version iPhone app, office supply and service chain Staples has turned its signature Easy Button into a full- featured mobile shopping accelerator. The app allows for syn- chronizing shopping list construction across desktop and app so a customer can start a shopping list on the PC and have that in-process list show up in-store in the app. The code scan feature can be used to create a list of items that are running low and need refreshing. Following its mobile site redesign in the autumn of 2011, Staples saw a rapid acceleration in customers’ adoption of its mobile site, which now accounts for about 14 percent of all online. To adapt to this growth, Staples made several feature improvements to the app, stemming from the needs of small business: a feature spe- cifically for timely printer cartridge replacement, synchronization of shopping lists across both desktop and app, and barcode scanning to maintain inventory of supplies that are running low. Also of note is the addition of an in-store mode that activates when the user checks in at a Staples store. The setting prioritizes different features, including a coupon wallet to use in-store. 68 LOWE’S 69 CABELA’S As the world’s second-largest hardware back on its expansion plans of open- Cabela’s takes the concept of in-store chain, Lowe’s is ranked among the Top ing up any new stores. As a part of this experience to new vistas. After passing 50 corporations in America. Along with restructuring effort, it will also be lay- by statues of two huge bears wrestling chief competitor Home Depot, Lowe’s ing off around 2,000 people for better at the store’s entrance, outdoor ad- was able to thrive on homeowners’ new resource utilization and to maximize venturers are in their element, scout- focus on remodeling. Despite signs of profits. Lowe’s is also working to re- ing out guns, camo rainwear, scent an improving economy and consumer duce promotions and moving toward eliminators, arrow rests, trolling gear, spending, the retail giant recently an- an “everyday low price” philosophy in blinds, tactical knives, camping stoves, nounced that 20 underperforming response to consumers’ reluctance to swimbaits, and outdoor-themed furni- stores across the country will be shut undertake pricey home improvement ture and artwork. A museum presents down. Moreover, Lowe’s is also holding projects. dioramas featuring trophy animals, a walk-through aquarium, and a conser- vation mountain complete with a run- ning stream that ends in a small pond stocked with live trout. While oppor- tunities to experience Cabela’s in per- son are limited to 35 stores in the U.S. and Canada, the adventurous retailer is now shipping its popular print catalogs with QR codes so customers can scan special offers or select products using Cabela’s iPhone or Android app. 34
- 35. 70 T MOBILE 71 TWITTER T-Mobile’s 33.6 million customers may When Twitter was introduced in 2006, be relieved that the federal government the result of a daylong brainstorming blocked AT&T’s bid to buy the No. 4 session among board members of the wireless carrier so they can keep their podcasting company Odeo, it was wireless service plans. But in the long deemed but a trifle, a novelty — a step run, T-Mobile is in an unsustainable backwards, even. Who, in the age of cell firmed what everyone already knew: position. Analysts say the company’s phones and unlimited email, would Millions of tweets had played a central past decisions have painted it into a cor- choose a platform that constrained role in galvanizing and organizing the ner where it is being squeezed by com- messages to the length of a haiku? But, disparate rebel groups that would top- petitors on both sides. On the high end, lo, five and a half years later, a study ple dictatorships in Tunisia and Egypt. it can’t compete with Verizon Wireless from the University of Washington con- Think about that for a minute. and AT&T. At the low end, T-Mobile is struggling against competitors Sprint Nextel Corp., which sells government- subsidized “lifeline” service, and Me- troPCS Holdings Corp., which targets 72 GREEN RETAILING urban, working class consumers with As consumers increasingly focus on tives aimed at reusing materials, elimi- cheap “unlimited” plans. “We’re stuck eco-friendly shopping and greener nating waste, and preserving resources. in the middle from a brand point of lifestyles, “greentailing” has been up- Supermarket chain Tesco has famously view,” says T-Mobile CEO Philipp graded from warm and fuzzy niche declared its intention of being “a leader Humm. Essentially, T-Mobile is seen as marketing tactic to value proposition. in helping to create a low-carbon econ- a cheap brand by those who can afford As demands from both customers and omy.” One green step the company has better, and an expensive buy for those regulators have tightened, some of the taken thus far is bringing emission- who must pinch every penny. That industry’s biggest players, includ- free delivery vans to London and leaves the most valuable customers, the ing Home Depot, Starbucks, and other locations. The battery- ones who buy smartphones and sign Walmart are leading the charge powered vehicles save 21 tons up for two-year contracts with lucra- to more environmentally of CO2 per year, the equiva- tive data plans. They’re the ones racing aware practices with envi- lent of driving 51,000 miles for the exit. ronmentally friendly initia- in a conventional car. 73 LAYAWAY Although the concept still conjures up images of the Great Depression when merchants gave cash-strapped customers the opportunity to set items aside until they were paid for in installments, layaway made a sur- prising comeback during the recent Great Recession, and big news this past holiday season when so-called layway “angels” began showing up at retail outlets such as Kmart and Walmart to anonymously pay off the bal- ances on strangers’ layaway accounts, releasing troves of set-aside gifts — especially children’s toys and clothing — in time for family celebrations. 35
- 36. JEFF BEZOS It’s instructiveto remember that Jeff Bezos founded miniscule operating profit margin — just 2.47 percent Amazon in the mid-1990s, at a time when most re- for its most recent quarter. (Compare that to Google’s tailers and corporations treated the Web as little more 33 percent Apple’s 31 percent, and Microsoft’s 39 than a space for billboard messages. More than any percent.) Bezos has consistently other company or institution, Amazon made the Web rebuffed institutional investors’ a venue for commerce. Amazon’s pioneering security pleas to maximize quarterly re- innovations are responsible for chipping away at cus- turns for the sake of shares value, choosing to focus tomers’ initial reluctance to enter their credit-card instead on long-term profitability and stability, sacri- numbers and other sensitive information online. Da- ficing high margins for market share. “Amazon’s slim vid Hornik of VentureBlog notes that, “while many margins are a key component of Mr Bezos’ business firms use Web platforms successfully, very few make strategy in keeping competition away,” says Forem- real money from Web commerce alone. … Amazon ski. “Amazon forces a competitor to fight in the gutter stands out for demonstrating what can be done, and over margins that are rounding errors for others.” No — just as important — for showing how difficult and longer content with being a mere retail outlet, Bezos rare real Web-commerce success is. Amazon is so is turning Amazon into an entertainment hub, taking big, so embedded in our daily habits, that it’s folly to bigger risks on ventures such as the Kindle, inking big think it could serve as a useful model for any emerg- Hollywood content deals, providing in-the-cloud ac- ing firm.” cess to music and video, and hosting Web service data for other firms and institutions. His newly rekindled Amazon now accounts for more than 40 percent of spirit of adventure, along with the untimely passing of online commerce transacted in the US, yet Tom Fo- Steve Jobs, may yet give Bezos his long-awaited turn remski of Silicon Valley Watcher reckons that Bezos’ as the wizened savant, showing the world the way to most impressive feat may be summed up in Amazon’s the future. 36
- 37. 74 ETHNIC RETAIL The café inside Walmart’s Hispanic-themed Más Club in Houston offers fresh-made tortillas. Macy’s Salt Lake City store carries larger-size cookware to accommodate the area’s Mormon families, which tend to be bigger. Whole Foods’ special halal promotion during Ramadan boosted sales by 300 percent. The iPhone World Cup app published by His- panic network Univision was 2010’s 13th most popular free application in the U.S. A survey published in Ad Age found that 42 percent of Hispanics said they are more loyal towards companies that show appreciation for their culture by adver- tising in Spanish. But before they change their logos to red and green, marketers and retailers are cautioned to consider that those who identify themselves as Hispanic hail from as many as 20 different cultures. A campaign targeting the U.S. Mexican population would fall flat (or worse) if aimed at South Americans or Spaniards. Cultural sensitivity and a working knowledge of cultural taboos are crucial. 75 URBAN OUTFITTERS Urban Outfitters shares slid 27 per- Pamela Quintiliano blames “bizarre” western Native American motifs. The cent in 2011, the year’s biggest drop and “lackluster” fashion selections for trouble started when Urban Outfitters among U.S. specialty apparel retailers the retailer’s woes. It didn’t help mat- described the items as Navajo. Under except for Aeropostale, costing the re- ters when the Philadelphia-based the terms of the Federal Indian Arts tailer its spot on the Nasdaq 100 Index. Urban was served with a cease-and- and Crafts Act of 1990 and the Federal Net income also dropped for the past desist order from the Navajo Nation Trade Commission Act, it is prohibited four quarters, prompting the chain to in June 2011 in response to a line of to falsely claim, or even imply, that a boost discounts to clear slow-moving products emblazoned with bold geo- product is Native American-made if it inventory. Oppenheimer & Co. analyst metric designs reminiscent of South- is not. 76 ANN TAYLOR Your mother’s favorite retailer is look- the country wearing the label’s latest are equipped with flattering, back-lit ing to become a fashion destination for collections. The brand’s new concept mirrors and touch screens that display women in their twenties. Ann Taylor’s stores, designed by New York-based product information. The retailer saw new online lookbook “The Style For architecture firm S. Russell Groves, fea- its net sales in the third quarter ended Students” takes its lead from street style ture a runway of mannequins, crystal Oct. 29 increase 12 percent to $564 blogs such as Scott Schumann’s Sar- chandeliers, tufted couches, and “shops million and net income rise 33 percent torialist and Jak and Jill, and features within the shop” that lend a more to $32.3 million, compared with the young women from universities across boutique-y feel. The dressing rooms same quarter last year. 37
- 38. 77 MACY’S Macy’s relentless endeavors to keep it- both its namesake and Bloomingdales self on a growth trajectory have paid chains. From January to November off. The second-largest U.S. department 2011, Macy’s consistently registered store chain, reported earnings that beat comparable-store sales growth post- analysts’ estimates and boosted its full- ing a low of 0.9 percent in March and year profit forecast as sales increased a high of 10.8 percent in April, for an faster than the retailer expected. The average growth of approximately 5.1 company, which sells exclusive goods percent. This is far better than its com- by Madonna, Martha Stewart and petitor JCPenney, which witnessed an Karl Lagerfeld, exceeded projections average comps growth of a meager 0.8 as store and online revenue gained at percent over the same period. 78 TJ MAXX 79 DOLLAR GENERAL Third-quarter earnings for Goodlettsville, Tenn.-based Dollar General jumped 34 percent as same-store sales continued to rise on improved traffic. In addition, Dollar General approved a new share repurchase program of up to $500 million in stock. The deep discount leader has seen its profit rise in recent quarters as it opened new stores and added better-known brands of merchandise. At the end of the third quarter, Dollar General operated 9,813 stores, up 5.8 percent from a year earlier, and plans to open about 625 new stores in fiscal 2012, matching its new store openings for 2011. As with other discount retailers, the company has had to contend with more conservative spending from its customers. Off-price apparel and home fashions retailer TJ Maxx boasts an unmatched track record of leveraging modest sales growth into double-digit profit gains — a feat it has achieved consistently over the past decade, with average three- year earnings growth figures at nearly 26 percent annually. The retailer’s fo- cus on selling clothing and accessories from major-label brands at discount prices is a proven winner in any eco- nomic climate, as was made clear when the company sailed through the credit crisis without so much as a hiccup. 38
- 39. 80 FAMILY DOLLAR While other retailers have closed stores and struggled with sales, dollar stores have been in growth mode as consumers attempt to stretch smaller incomes or trade down in spending. Unlike Walmart Supercenters, dollar stores serve neighborhoods in a small footprint, sell smaller items, and are convenient to lower-income shoppers who walk or take the bus. According to Nielsen data, 55 percent of Family Dol- lar customers have an annual gross in- come of less than $40,000 and 24 per- cent make less than $20,000. Although lower incomes make up a majority of 81 HOME DEPOT the customer base, a greater number of With the housing market in a seemingly endless slump, big-box store Home Depot’s those who can afford to shop elsewhere stock finished strong in 2011, and now trades at levels higher than it did before the are finding the convenience factor recession. As shoppers spent more per trip, the world’s largest home-improvement makes dollar stores an attractive alter- retailer reported a third-quarter profit gain that topped analysts’ estimates. Net in- native. Family Dollar added about 300 come rose 12 percent to $934 million, or 60 cents a share, in the quarter that ended stores in 2011 after same-store sales Oct. 30, up from $834 million, or 51 cents, a year earlier. CEO Frank Blake has grew 5 percent. The second-largest U.S. lured cash-strapped do-it-yourselfers by shifting back-office employees to the floor dollar store chain plans to add as many and improving distribution from warehouses to stores. The Atlanta-based chain’s as 500 stores in 2012 to accelerate sales number of transactions increased by 1.2 percent to 325.3 million while shoppers’ growth. average spending rose 3 percent to $53.03 per ticket. 82 BED BATH & BEYOND Bed Bath & Beyond turned in an unexpectedly stellar performance reporting fiscal 2011 second quarter earn- ings of 93 cents per share, an increase of 33 percent over the year earnings-per-share figure of 70 cents. Gross profit of $951 million during the quarter represents a 41 percent margin on sales of $2.3 billion. That compares with gross profit of $875 million (the same 41 percent of sales) in the year-ago quarter. The home-and-kitchen furnishings retailer’s solid management team executed especially well in an economic environment that threat- ened a double-dip recession. Same-store sales growth in- dicates that consumers are continuing to buy. 39
- 40. 83 OAKLEY This past holiday season, Oakley, maker of eyewear for world-class ath- letes released special edition 3D glasses to commemorate Paramount Pic- tures’ “The Adventures of Tintin” a 3D film extravaganza directed by Ste- ven Spielberg and produced by Peter Jackson. The Oakley 3D Gascan Tintin Limited Edition uses the company’s patented optical innovations to offer the ultimate 3D entertainment experience. The Foothill Ranch, Calif.-based brand, owned by Luxottica SpA, currently holds more than 600 patents for eyewear, performance gear, and materials for its high-performance sunglasses, sports visors, ski goggles, watches, backpacks, shoes and other accessories. 84 SEPHORA 85 BATH & BODY WORKS The Sephora chain of cosmetics stores founded in France in 1970 and acquired by Paris-based conglomerate LVHM (Moët Hen- nessy • Louis Vuitton) in 1997 includes more than 750 stores in 17 countries and carries more than 250 brands, including its own private label. The trendy cosmetics giant now provides its beauty- and trend-conscious customers a personal experience through its iPad 2 app. The tablet’s front-facing camera is used to create a vir- tual mirror so that customers can view how-to videos on one side of the screen while watching themselves create their own runway- worthy looks. Sephora has also partnered with nail polish brand Opi to develop an iPhone app that allows customers to match their skin tone to an on-screen hand and then “try on” a range of virtual nail colors, which they can then buy through the app. Bath & Body Works’ parent company, Limited Brands, specialty retailer of women’s intimate and other ap- parel, beauty and personal care products, reported ad- justed earnings per share for the third quarter, 2011 up 39 percent to $0.25 compared to earnings per share of 18 cents for the same quarter 2010. Third-quarter op- erating income was $186.1 million compared to oper- ating income of $149.1 million the previous year, and adjusted net income was $77.6 million compared to 2010 net income of $61.3 million. In 2011, Bath & Body Works Canada launched a promotional sale in which all new items in its Signature Collection were priced at $1. The promotion, intended to entice more customers to sample the new products, netted the retailer valu- able marketing information regarding the popularity of each product. 40
- 41. 86 LACOSTE French apparel retailer Lacoste, found- Spring/Summer 2011 with an interac- ed in 1933, most famous for selling tive campaign shot by renowned party tennis shirts emblazoned with its icon- photographer Cobrasnake. The result- ic green alligator logo, is transitioning ing film documents a 24-hour party into a mainstream brand that deals with models in Paris offering a first with and produces high-end apparel. person perspective of the fun and the The retailer’s new Lacoste L!ve” creates with a plan to engage a guest artist opportunity to shop the collection live its collections in association with musi- or designer for each season. Lacoste with interactive features and personal- cians and artists from across the world, launched its new brand range for ized messages popping up throughout. 87 RETAIL AT AIRPORTS With malls sales stagnating during the recession, many mass-market retailers began searching for more fertile locations. Places where people might have time on their hands — and nowhere else to go. “Airports are becoming, really, a service facility, like a shopping mall,” said Jose Gomez, senior vice president for business development for fashion re- tailer Mango which recently opened two stores at San Francisco International and one in the Orlando airport. Whether it’s because they are on vacation or charging to expense accounts, “the experience of traveling tends to put people in a mode that they’re prepared to spend money,” says Paul McGinn, president of MarketPlace Development, which manages and leases retail space at Philadelphia International Airport and LaGuardia. “It is also a venue where — and this is always a funny thing to talk about — but there’s an awful lot of people that are motivated by guilt. That certainly inspires a lot of sales.” 88 CAFÉS AND OTHER AMENITIES Black Friday marketers and gamifica- shopper would for the same item. So screens that encourage shoppers to lin- tion advocates please take note: There is how do retailers help their customers ger. Department stores and boutiques strong evidence that shoppers will ac- relax? Some are offering soothing ame- are adding in-store cafés, or breaking tually buy more — and even pay more nities and pampering services such as up a large store into small rooms, says — when they are relaxed. A new study trays of complimentary cocktails and Jim Bieri, principal at retail real estate- in the Journal of Marketing Research finger food, private events before and consulting firm Stokas Bieri Real Estate finds that a calm shopper might spend after regular store hours, and cushy in Detroit. “They engineer it so that up to 15 percent more than a stressed lounge areas with free Wi-Fi and flat some are almost empty, on purpose.” 41
- 42. THE SPIRITUAL SUCCESSORTO STEVE JOBS Although Tim Cook assumed the mantle when Ap- Devin Leary-Hanebrink, blogging at Ludwig von ple’s iconic CEO stepped down due to illness, Walter Mises Institute, posits that Jobs’ successor “would Isaacson’s biography of Steve Jobs included the aston- more fittingly be an entrepreneur rather an innova- ishing disclosure that Apple’s senior vice president tor.” Jobs, he says, “enjoyed a gift for industrial design, Jonathan “Jony” Ive, has nearly few possess: the ability to trans- complete freedom to do as he sees fit. Ive, whom Jobs form a fledgling idea into a mas- called his “spiritual partner,” had “more operation terpiece. He rarely created from power” at Apple than anyone besides Jobs himself. scratch, but he could recognize Jobs further told Isaacson that no one at the company what we ‘needed’ long before we could tell Ive what to do. That, Jobs said, is “the way I even wanted it.” Not to be outdone, Kanye West pro- set it up.” When the reclusive and soft-spoken Ive took claimed himself to be Steve Jobs’ successor. In a se- the podium at a November event on Apple’s campus ries of tweets on Jan. 5, 2012, the rapper announced to commemorate Jobs, he looked to be, in the words of that he is creating a company called Donda — named Michael A. Robinson, “as many have pointed out, the for his late mother — that “will pick up where Steve spiritual successor to Steve.” While Ive’s design work Jobs left off,” with a mission, to “marry our wants and ultimately must mesh with the hardware requirements needs to make products and experiences that people coming out of Apple’s engineering groups under Bob want and can afford.” Apparently, he wasn’t joking. As Mansfield, Eric Slivka wrote on MacRumors.com, “it’s subsequent tweets explained, “We need scientists and clear from Jobs’ comments that Ive is free to pursue top world designers to directly affect governments.” his own design solutions for Apple products.” That And, “I am assembling a team of architects, graphic Jobs-like level of freedom “ultimately helps to guard designers, directors, musicians, producers, A&Rs, against a watering-down effect that could occur if his writers, publicists, social media experts …”. There, his designs were subject to the approval of and revision by thought trailed off. Although his global plan remains others in the company.” short on specifics, we include West here to represent the countless others like him inspired by Jobs to think “Perhaps no one spent more time with Jobs in the last different. fifteen years, and Jony looks poised, charismatic, and unbelievably inspired,” Slivka wrote. “In short, he’s not Steve, but he’s another kind of creative genius.” 42
- 43. 89 RFID IN RETAIL If the predictions of RFID advocates have their way, grocery store checkout lines will soon be a thing of the past. RFID technology uses ink laced with carbon nanotubes to print electronics directly onto items such as cereal boxes and potato chip bags, and then transmits information about an entire cart- load of groceries when the shopper wheels past a detector that instantly tabu- lates the total. RFID also gives retailers an unprecedented ability to fully track and trace inventory throughout the supply chain from source to shelf to final sale with near-perfect accuracy. Research conducted by Dr. Bill Hardgrave of the University of Arkansas RFID Research Center shows that RFID is capable of accuracy rates topping 99 percent. 90 ELECTRONIC SHELF LABELS Given the headaches and hours of labor it takes to keep prices accu- rate and up to date for a superstore’s worth of product, electronic shelf labels would seem to be a no-brainer. Yet ESLs, while widely used in Europe and parts of the West Coast, have seen only limited, ex- perimental use in other locales. ESLs connect to a storewide network, communicate with the retailer’s POS system and download prices to labels at the store, or from a corporate location for numerous store lo- cations simultaneously. ESLs can also display additional information via a touchscreen interface such as nutritional information, price- per-measure, or even recipes. Even though the cost of implementing ESLs has decreased over the years thanks to improvements in battery technology and economies of scale, there are still significant startup costs. The tipping point for ESLs will come if and when there are suf- ficient gains in flexible and responsive pricing to justify the cost dif- ference over cheaper labels. 91 TESCO CEO Phillip Clarke is confident about gether,” Clarke says, for Fresh & Easy million, while sales rose 47 percent to the future of Tesco’s Fresh & Easy to achieve profitability in 2012 or 2013, $392.7 million and same-store sales Neighborhood Market because of the by which time Tesco expects to be op- rose approximately 10 percent. The enthusiasm and loyalty of its customer erating close to 400 U.S. stores. For the chain experienced additional losses, base, despite the company’s decision six-month period that ended Aug. 31, due to costs related to its acquisition of to shutter 13 underperforming units. 2011, Tesco’s U.S. division, which then two suppliers, and increased rent from “The key components are coming to- encompassed 159 stores, lost $151 unopened stores. 43
- 44. 92 KROGER Although Kroger’s fiscal third-quarter net income slipped 2 percent, the performance beat analysts’ expec- tations and raised its full-year earnings forecast. Like many grocers, Kroger has been dealing with rising costs. The Cincinnati-based company has been passing along higher prices to consumers to offset rising costs and increased supplier prices for meat, produce, and other goods. The nation’s largest grocery chain was recently named America’s Most Generous Company in a Chron- icle of Philanthropy listing in Forbes magazine. Kroger contributed 10.9 percent of its $589 million pre-tax prof- its ($64 million) to charity in 2009, the year Chronicle of Philanthropy used to make its evaluations. 93 ABERCROMBIE & FITCH Mall-based teen retailer Abercrombie & Fitch has announced plans to open new stores in Paris, Madrid, Dusseldorf, Brussels, and Singapore, even as its U.S operations continue to struggle. Abercrombie & Fitch said its better-than-expected second-quarter showing was the result of both strong international sales and comps. The controversial clothing retailer faced hostility from parents of tweens in response to its padded push-up bikini tops for “girls 56 to 58 inches tall” according to the Ab- ercrombie Kids size chart. In an example of reverse product placement, the company offered to pay Mike “The Situation” Sorrentino of MTV’s reality hit Jersey Shore to desist from wearing its products on the show. 94 OVERSTOCK.COM In a short-lived rebranding experiment out the transition. “What we learned begun in June, the company tried call- was that we haven’t yet adequately ing itself by the single-letter domain transferred the decade of brand equity cut to reach its site. Also in Novem- name “O.co.” But by November, Over- we have in Overstock.com. So, we’re ber, the Salt Lake City-based discount stock.com was once again Overstock. down-shifting the rebranding effort merchant launched a free O.co iPad com. President Jonathan Johnson notes in order to leverage and transfer that application, which features the same that customers continued to call the brand equity,” Johnson says. However, product selection available on the company “Overstock.com” through- shoppers can still use O.co as a short Overstock.com website. 44
- 45. 95 GYMBOREE Toddler-targeted Gymboree irked parents and made news last fall when the company offered onesies for baby boys emblazoned with the words “Smart Like Daddy,” while the corresponding girls’ onesie said, “Pretty Like Mommy.” The children’s cloth- ier announced last February that it would use its $1.8 billion leveraged buyout by Bain Capital LLC to refinance debt. The company replaced an $820 million loan with one that has no financial mainte- nance covenants. The San Francisco-based retailer’s net sales for the 39 weeks ended Oct. 29, 2011, in- creased to $815.7 million from $745.0 million in the same period the previous year, an increase of $70.7 million, or 9.5 percent. 96 AUTOZONE Auto parts chain AutoZone has the right business model at the right time. As consumers tighten their budgets, they’ve been extending the use of their cars and delaying plans to buy new ones. As a result, the median age of vehicles on the road has extended to more than seven years (as compared AutoZone has benefited from an in- ment hard parts, maintenance items, to about five in 2003). With new ve- creased demand for parts and acces- and accessories has also benefited from hicle sales trending at a 13.6-million- sories for used cars. AutoZone, which declines in gas prices that have encour- per-year pace, as of November 2011, stocks a wide assortment of replace- aged an increase in driving. 97 LANDS’ END Faced with an increasingly saturated fort to better understand and target its implementing enterprise marketing marketplace and a slowing economy, customers, the global direct merchant automation software. By implementing Lands’ End is moving more toward of classically inspired clothing has un- enterprise marketing automation soft- hybrid or multichannel marketing dertaken an extensive CRM strategy, ware, Lands’ End hopes to improve its campaigns and shifting management leveraging its existing enterprise data current operational processes as well focus from product-centric to custom- warehouse to create a customer data develop more targeted, personalized er-centric strategies. As part of its ef- mart for campaign management, and marketing strategies. 45
- 46. and nudge itssocial media marketing 98 GUESS conversion rate above the typical tenth Despite weak holiday sales, Guess has of a percent mark. The Microstrategy made a “conscious decision” to cut gateway opens the possibility of us- down on markdowns and promotions. ing Facebook as a CRM database, says “We cannot and we would not continue Guess CIO Michael Relich. Incorpo- to go in that direction,” says CEO Paul rating Facebook data into customer Marciano. The company, which gener- profiles will relieve Guess from prob- ates more than 40 percent of its sales ing too deeply into customer prefer- from Europe, expects a challenging ences when they sign up for the loyalty year ahead as the sovereign debt crisis the weakness in Europe. The trend- program, something many shoppers moves closer to the heart of the euro- defining apparel retailer is among the dislike. By pulling shopper data from zone. Guess is now banking on store ex- first in line to try using Microstrategy’s Facebook, Guess expects to enrich its pansion in North America and growth Gateway for Facebook analytics to tap customer profiles and keep them auto- in Asia to help drive profits and offset into Guess’s one million Facebook fans matically up to date. 99 PAYLESS SHOESOURCE 100 GODIVA CHOCOLATIER Faced with a U.S. unemployment rate averaging 9 per- This year, marketers at Godiva were saddled with the daunting task cent and competition from shoe departments at dis- of persuading women to eat more chocolate. Their answer? Put the count retailers such as Target Corp. and Walmart, Col- high-end chocolatier’s wares within arm’s reach where consumers lective Brands, is closing 475 underperforming Payless can just munch them mindlessly. At the risk of diminishing its up- and Stride Rite stores — about 10 percent of its total scale brand, the 80-year-old boutique chocolatier began placing its locations—over the next three years, more than 300 of indulgent confections on grocery store shelves in the form of jumbo which were to be shut by January 2012. Luring price- candy bars, cupcakes and conscious urban-area customers in the wake of the lon- brownies. Godiva even gest recession since the Great Depression has been the uses its exquisite, pre- company’s biggest challenge, as Payless saw same-store mium-priced chocolate sales drop for four straight years. to coat pretzels, espresso beans and — gasp! — Oreos. “We want to get more Godiva into peo- ple’s mouths more often,” explains chief marketing officer and senior vice president of global brand development Lauri Kien Kotcher. “It’s all about chocolate snacks, little chocolate treats. … When those things come, you just keep eating.” 46
- 48. DRIVE CUSTOMER ENGAGEMENT AND BUILD LOYALTY Today consumersand businesses rely on smartphones, tablets and other Wi-Fi enabled devices for a wide array of personal and commercial applications. Now Motorola’s Proximity Awareness & Analytics Solution makes it possible to use these devices to improve consumer engagement and improve associate productivity in WLAN environments. Use your Wi-Fi infrastructure to capture shopper attention with personalized promotions and in-store coupons. Enable applications that help drive employee productivity and service delivery. Get the data you need to turn browsing into buying – and prospects into profits. Learn more at: motorolasolutions.com/shopperengagement MOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. © 2012 Motorola Solutions, Inc. All rights reserved.