10. The product became the real star attraction with the white space and minimalist store design features

9. The staffing model is like nothing anyone has ever seen. It has turned the entire industry on its head based on the number of staff on duty and the one to one customized service ethos it has perpetrated

8. A finely edited assortment can still drive huge volumes…But the products have to be spectacular

7. A relative newcomer to retail (May, 2001), it has embraced, leveraged and perfected mobile check-out technology

6. Apple elevated “Product Knowledge” to an art form with their “Genius Bars” and online appointment setting

5. Their windows are eye catching and attention grabbing utilizing simple cardboard props and posters with the product

4. They do not hold any sales or promotional events

3. There are very few markdowns

2. Daily replenishment can work

1. A “Harmonic Convergence” between physical and online stores is a competitive advantage

I ran my first business on a Mac. To think I was so enthralled by the brand and the coolness factor that I willingly stared at a 7″ Macintosh screen all day for years using Lotus Notes (a clearly inferior program to Microsoft Office). That was the impact Steve Jobs had on me. His articulation of an easier, better world, through design, marketing and “Blue Ocean” thinking that captivated an entire generation and society worldwide will be his everlasting legacy.

“Think Different” never resonated so true as in Apple’s and Steve Jobs’ approach to retail.

TheRetailTherapist:)

Most of the locations we walked into were enormous and quite impressive in terms of signage, lighting, stock levels and assortment. It really seemed they had everything (taking the notorious slogan “More Than Just Tires” to the extreme). It was a very interesting demographic as this is one of the few stores with a preponderance of the male gender roaming the aisles searching for the next great car accessory, garden tool, small appliance or lighting part.

As a customer, there was hardly a staff member to be found – not even at the supposedly staffed information kiosks. It would have been easy to staff those and create rules and processes in place for handling customer requests that couldn’t be answered standing in one spot. My guess is that 90 percent of the questions could be answered with the right technology and information at someone’s finger tips. 2 people would have sufficed and diffused many a situation we witnessed (including our own).

You would think in this day and age of advanced technology, management information systems, e-commerce and mobile networking, that a multi-billion dollar retailer would embrace some of these principles. Guess again.

Here is the process we went through for our beloved basketball net…

Like any shopping endeavour these days, it starts on the internet. I look up the choices and pricing online and the only store that has any selection of these is Canadian Tire. Of course, Canadian Tire decided in 2009 to shut down its online business, so the website acts as a glorified catalogue and displays the in stock levels at any store you choose.

Ok. I can live with that. So, I head down to the 1st store. The specific model is nowhere to be found. After several minutes of searching for a staff member, he takes us to a computer screen straight out of “The War Games” movie set (circa 1983) with its strange green type face and dirty, yellowed monitor. This is the inventory system and it provides all the information we require. Apparently, it does say they are supposed to have 1 of these nets in stock. He looks everywhere in store and in the back and cannot find it. He displays a list of stores in the area that greenly indicates current in-stock levels of the item in question. Mildly puzzled, I thank him and we travel to the next store.

By the 3rd store, we decided to hit a store that only greenly indicates more than 1 in stock since stores 2 and 3 cannot find the item either even though the inventory system (which I am assured updates itself every 24 hours – even though the last delivery of these specific models was April, 2010) says they should have 1.

The 4th store is supposed to have 3. We think we are golden this time. It has now been 3.5 hours and we are on a mission. Guess what? The store cannot find a single one anywhere. Do you think there is something wrong with the inventory system? I gathered that this is the same place from which the information for in-stock levels is pulled for the website. The store has a different but similar model on display and it touts “Home Delivery” on a sign affixed to the service kiosk labelled “Customer Services Offered”.

Unfortunately that sign is incorrect. There is no home delivery and we would have to get our own truck to take the already assembled sample home. We left after over 4 hours empty handed and frustrated.

How is this possible these days? Imagine the opportunity Canadian Tire has to improve profitability and customer relations just by becoming current in their information systems. It is time to get rid of the green screens and enter the brave new world of customer satisfaction in the age of technology. They better hurry as customers are starting to expect a lot more out of their merchants…

TheRetailTherapist:)

More than ever, it is the “omnichannel” retail experience that companies are starting to focus on to ensure a seamless or at least consistent brand message and high quality customer experience across their physical stores, in-store kiosks, catalogues, websites, mobile platforms and/or iPad/tablet applications. But technology and social media and the multitude of platforms that are being developed and nurtured only tell part of the story.

Companies and brands are starting to focus in on tailoring their assortments and their experiences to the local customer base. They are using technology, marketing disciplines, information technology and data gathered from social media platforms such as Facebook, Twitter and Groupon to further refine messaging and assortments. This helps provide the “Wow” customer experience itself.

This, of course, is nothing new. Retail has always been a very simple proposition: Provide customers what they want, when they want it, where they want it at a price they will pay. It has always been about that but corporations, bureaucracies and egos have prevented many companies from staying on task. Gap, Abercrombie & Fitch, American Eagle Outfitters, American Apparel to name a few more famous and high profile organizations at one time or another have lost their way by forgetting the af0rementioned basic principal.

Even Wal Mart strayed from what it did best and has now admitted mistakes and are in the midst of correcting them. Suffice to say, it isn’t easy to get out of your own way and continue to focus on delivering what customers want.

I will say this: The customer still needs to be inspired to purchase, especially if there is going to be any further impulse purchasing out there in the future (what with Smartphones in hand, customers are looking up pricing on the spot and comparing across all channels). I will keep pushing this forever. People continue to need inspiration, especially in the malls as the competition is not just next door or down the hall any longer – it is in the ether and global in scope.

Seth Fiegerman of TheStreet.com described what Apple has done at retail brilliantly (I am paraphrasing here) – it has created a destination shopping experience as opposed to more of an errand focused one. That is what has to happen regardless of the category. Some have done it well at times: Anthropologie; Hollister; Uniqlo; H & M. Even Disney has now decided to re-invent their store experience and is rolling out their latest re-designs globally.

This should not take deep pocketed resources to do this either. It really takes a willingness and an attitude first and foremost that the customer experience is tantamount to sustained profitability. Then it takes some creative thinking (and maybe even some objective third party help), a commitment from the organization to execute the new plans and some courage to stay the course. I believe there is no option but to constantly impress or “Wow” the customer today.

It is no longer good enough to have the best looking store in the mall. It has to appeal across channels and compete with everything and everyone nowadays. That is a scary proposition. But if a retailer can think beyond its own four walls and drive sales and influence as if there were no walls there to begin with, success is sure to follow.

TheRetailTherapist:)

The next generations (Generations X and Y) are even more savvy and addicted to their laptops and smartphones. Whether it’s playing games, late night Skype calls, or texting/BBM-ing, Tweeting and connecting on LinkedIn, the younger professional set is doing business a lot differently than we have done in the past.

Which takes me to the latest generation, our kids. They only know from computers, laptops, Facebook, Twitter, Groupon, playing Angry Birds all night, iPhone, Blackberry, Android…I often wonder what I did with the time they spend connected and wired to their communities both local and international.

There is little doubt that technological advances have changed our lives forever. I am not going to debate the relative merits of this change but with all the hype surrounding e-commerce (that has now settled in and is comping normally on an annual basis) and now m-commerce (whether it is actually purchasing from a mobile device or just price comparing) it is a wonder that anyone leaves their domiciles. Work can certainly be done remotely, meetings can be held via Skype or sites such as GoToMeeting.com, even schooling can be done over the internet.

So it had me thinking…Why, exactly would anyone invest in physical retail environments if, on the surface, the power of online and mobile commerce is so strong? Why would any consumer need to waste time with parking, line-ups, crowds, hot or cold temperatures, foreign smells, possible germs, food court food and, best of all, rude sales staff…?

When J. Walter Thompson, one of the world’s largest advertising and marketing companies comes out with the “Retail as the Third Space” notion as one of the top 10 trends for 2011, I applauded their insight. I believe, like them, that people will start craving human contact. As humans, we need the face to face interactions more so now than ever before. We have segregated ourselves even further with all this personal technology and I believe that at some point soon, we will see a boomerang effect that will send people to shopping malls with even more vigour because of the solitude nature of our current everyday use of technology. There is a built in mechanism (called instinct or innate behaviour) that will trigger this need for additional human interaction.

I am bullish on in-person customer experiences. Retailers cannot stick their heads in the sand and disregard the internet or mobile phenomena nor can they neglect adding technology and conveniences to their in-store experience. However, I believe we all still need the human touch. We need to get off our couches, desk chairs and beds and go physically shopping.

The “Third Space” concept was first claimed by Starbucks, which made sense at that time. People hung around the comfy chairs and socialized. These days, most of the people I see at Starbucks are on their laptops, iPads or Blackberrys and not talking to anyone. I am not sure what the point is to grant everyone free wireless connections when the goal is to promote human interaction. However, the physical retail environment, if done properly, can promote that human interaction while at the same time promote brand loyalty like never before…

Because we will start craving being with each other more than ever….That sounds pretty cool to me…

TheRetailTherapist

On the surface, it seems like a good deal for Hudson Bay Company, now that they have been able to unload the albatross around their neck. It seems ever since Wal Mart converted the Woolco franchise over 15 years ago, Zellers has never been the same or close to the dominant,  “The Lowest Price is the Law” player it used to be. The stores always looked and felt old fashioned and dark. The initial problem that Target encountered years ago was that the real estate portfolio contained so many iterations of size, shape and type of location that there was little ability to standardize presentation, assortments or operations. Now that Target has perfected a number of formats to deploy, it became easier for them to swallow most of the Zellers portfolio.

But I believe there are two bigger winners than HBC…

1) The landlords. Let’s even assume for a moment that the landlords are still saddled with dated, below market leases, it is still a huge victory for them. Not only do they get the most popular retailer that Canadians don’t already have as their new tenants, Target will spend over $1 billion in renovations that will upgrade each centre. The coup de grace is that the rising tide of traffic and business that will be generated by these new stores and new-to-Canada concept, will lift all boats in their centres. This is huge.

2) The consumer. Not only has the consumer been waiting for Target to enter the market (actually they haven’t waited patiently as they have repeatedly sought them out across the border whenever possible) but there is a void in this market for well merchandised and unique offerings in apparel (look at the success of Joe at Loblaw’s as an example of the void is now partially filled) and housewares (HomeSense to some degree has filled part of that void). Even though most of what Target sells can be termed as “basics” or “fashion basics” in one way or another the perception and imaging (which has been spectacularly brilliant for years) is that of a fashion forward, young, edgy and cool way of life without having to pay for it.

On a separate note, there is a lot of buzz of regarding the “foreignization” of Canadian retail. This is not new. This has been happening for decades and was inevitable. The pace has been accelerated for two reasons; firstly, Canadian retailers have failed to fill all the voids to prevent foreigners from staking their claim (or at least failed to entice them enough to buy them outright for the most part); and secondly, the U.S. and European recession was much more severe than the Canadian one and expansion into a stable and more steady economy than their own backyards makes a lot of sense to their shareholders for the next couple of years.

Do not be fooled though. Most of these entrants can only open between 18-25 stores across the country (except for Target and lower priced concepts). They will be run as a district or a region and be a satellite operation like any other in North America. It’s still good news for consumers and landlords.

Competition is always a good thing for Canadian home grown retailers too, although I am not sure I would call them winners in this exercise.

TheRetailTherapist

While she outlined several “Hard Strategies” such as cutting costs from the back end of the company, creating more accessible products in a wider array of price points and introducing new categories and locations for the brand globally, this veteran retail and fashion maven was convinced that most of the success can be attributed to what she called Burberry’s “Soft Strategies”.

This is a very interesting concept to think about separating the two types of approaches and emphasizing each of them (the point being both are necessary for long term and meaningful success). Ms. Ahrendts even admits that all companies have these types of strategies but to varying degrees of emphasis. I want to share some highlights from her presentation as they are very instructive:

1) Burberry set out to define themselves with a vision statement that was communicated to every employee in the company along with a plan to maximize their business

2) Their three “Soft Strategies” of “Style”, “Structure” and “Values” create alignment across the company and help empower innovation globally. According to Ms. Ahrendts, these soft strategies are “the glue that connects a young and old company and adds intuitive, visual and emotional depth to our toolkit”

3) The common threads that resonate for me when I hear Ms. Ahrendts speak is that communication and engagement are vital to maximizing a brand or organization’s potential. If there is no commitment to these two values, there is no alignment. When there is no alignment, there is less of a connection to the brand or the ‘centre’ as I would call it. According to Ms. Ahrendts “The more connected we are, the stronger the energy…The stronger the energy, the more we can achieve…” This only happens with constant and meaningful communication at all levels and a total commitment to employee engagement 12 months a year

In a previous post (Optimal Retail in Traffic Challenged Times – Part 2), we mentioned some keys we believe in especially in these trying economic times: communication, recognition and sustaining and emphasizing employee training and development. It is great to hear Ms. Ahrendts speak to each of these as underpinnings of her “Soft Strategies”.

Every organization should not underestimate the power of the “Soft Strategies” that can play a large part in achieving the goals of the organization and the dreams of the employees. After all, they are inexorably linked.

TheRetailTherapist

This brings us to the mobile era and its technological advances which seem to be changing the landscape of business in general and retail specifically on almost a daily basis. As mentioned in my latest post, in order to thrive in this new environment, brands need to be nurtured and continually developed to consistently show customers their uniqueness and their relevance in today’s market. In order to do that, brands may need to develop their own variation of “Merchantainment”.

No one can dispute that Ralph Lauren has been the ultimate apparel brand. Meticulously managed and curated, the theatre he has employed in merchandising his assortment and his brand whether in their own stores or on their web site (now 10 years in operation) has been cutting edge yet always appropriate for their customer who craves their take on luxurious classic American style. Now Ralph’s son, David, who has been responsible for their web site and leading edge ventures such as the design your own Rugby brand apparel concept, has conceived of Ralph Lauren in “4-D”. This fashion show projected on the outside of their new flagships in New York and London is simply spectacular – take a look … (http://4d.ralphlauren.com/?&ab=int_110910_HP_LIGHTSHOW_SEENOW).

What is fascinating about the concept of “Merchantainment’ to me is that there are an infinite number of variations on the theme that retailers can employ in order to stay true to their brand. Mobile applications, in-store technological advances, web-site embedded videos, customer engagement tactics and technological advances that are constantly changing how consumers interact with brands are all being developed daily. This is such an exciting time to be in retail.

The key ingredient is to ensure you stay close to your customer while at the same time being keenly aware of the latest technologies and ideas and then to be able to marry the two seamlessly. Depending on the demographic profile of a retailer’s customer base will dictate where those efforts and investments need to be made. Whether there should be a lot of energy expended into cool mobile applications, exciting “Groupon” offers and location based promotions and / or whether the store environment needs to entertain and educate customers on your brand and foster a deeper connection will depend on how and where your customers interact with your brand most often.

It looks like “Merchantainment” is now a trend, not a fad. How you define it depends on a number of factors. One thing is certain, you cannot ignore the fact that your customers are now demanding more inherent value than ever before and this marriage of merchandising and entertainment helps fulfill that demand.

TheRetailTherapist

I see a polarization happening in the marketplace between what I will call “Highly Branded” and “Highly Promotional” retailers. Highly Branded is relatively full price, unique assortments with or without a highly experiential customer experience. Highly Promotional is just as it sounds – a significant price/value relationship, discounted product to drive traffic and very fast turning assortments be it in fashion or other categories.

A view to the performance over the past few months would tell us that the higher end “luxury” category has returned. I would argue that most of the retailers fit into the Highly Branded side of the ledger. Brands such as Louis Vuitton, Hermes, Tiffany’s all offer unique merchandise and brands that have been carefully cultivated (albeit at the high end) for years if not decades. You also find concepts such as J. Crew, Victoria’s Secret, and the Urban Outfitters family of brands including Anthropologie that carry proprietary product, work very hard at maintaining brand integrity through unique assortments and price integrity. They are thriving at the moment as well. By the way, you also have a Zumiez, who impressed in October especially but do not necessarily carry 100% unique product. However, the way in which they assort, choose the national brands and put the looks and outfits together make for a branded Zumiez look as their overall assortment and merchandising is highly proprietary.

On the flip side, led by Dollarama and its ilk, we have the Highly Promotional, where it is now officially cool to shop. The consumer now brags about the deal she was able to procure at any of the so called discount or value oriented retailers either on-line or in-store. BJ’s Wholesale Club has done some incredible business in this tough economy, as has Forever 21 (may be considered Highly Branded although it is their price/fashion relationship that is leading to line-ups at the cash – the experience is nothing to write home about), H & M (to an extent as they have become more promotional lately in North America out of necessity and the competition Forever 21 is providing) and Aeropostale, which has eaten Abercrombie and Fitch’s and American Eagle Outfitter’s lunches lately selling the same look and lifestyle for 50 and 30% less respectively and is always on promotion.

If you are not squarely in either of these camps, you are going to have a hard time maximizing returns and ensuring long term viability in the market today.

Here are some keys to staying in either camp:

Highly Branded

1. Stay true to your knitting and do not try and become everything to everyone

2. Ensure you stay close to your target demographic and read the winds of change as they are coming faster and faster

3. Ensure your customer experience and not just your assortment is unique and adds value to the purchase

4. Keep the inventory tight but fresh and new. Update basics often and ensure your customer never gets bored. Ensure they are pleasantly surprised and delighted on a regular basis – yes, make them giggle sometimes (or at least smile)

5. Embrace social media and leverage it somehow, someway

Highly Promotional

1. Do not blur the lines. You are what you are and don’t try to “Brand it up”.

2. Keep digging at new sourcing techniques and options. You need your margins to stay healthy but your pricing to stay low

3. Keep stores full and highly productive. My fear for some of the players in this camp is that they are building bigger and bigger stores and that may cause undue financial issues down the road

4. You too have to keep things fresh and new regardless of how value oriented your pricing strategy at the same time, you must also keep inventories tight

5. Embrace social media and leverage it somehow, someway

There is my considered answer. Whatever happens, it will be interesting to witness the spending habits of the largest cohort, that of the over 45 crowd. My guess is they outspend their predecessors in that cohort by a wide margin and turn the entire industry on its head.

Happy Shopping!

TheRetailTherapist

In my days as a young and intrepid retail entrepreneur, I sought out those trade shows especially south of our border in order to get a leg up on my competitors and be able to carry unique, ‘never-seen-in-Canada-before’ merchandise whether it be gifts, apparel, accessories or even Hacky Sacs. I remember I was one of the first merchants (maybe even the first) to carry Swatch watches in our country in my 1200 square foot store (in an acrylic spinning display that sat on my cash counter).

Today, even with the overabundance of suppliers and the fact that Asia is now that much more sophisticated at manufacturing to exact specs, I believe it is more difficult to be unique and original. That is why the direct-to-retail licensing business has exploded the way it has so that large chain stores can claim unique “brands” and merchandise to entice consumers and retain credibility (not to mention healthier gross margin).

That is why I was overwhelmed when I attended the NY Gift Show last month. I was reminded of the rows upon rows of suppliers/distributors showing sometimes hundreds of SKU’s of product aisle after aisle after aisle. For independent retailers, this is a great way to “shop” for your store in a one stop situation without further travel expenses that can be an extremely efficient use of time. But it can be intimidating and overwhelming to those who are new to the business.

Along with the internet capabilities, buyers are swamped with product options regardless of category. But in the gift world, for example, in a typical 1500 square foot independent store, how do you assort your store without blowing your budget or rendering the store unshoppable due to being overrun with inventory? How do you choose from amongst the thousands of vendors that set up booths at the show plus all those you find online or roaming about town in other stores?

I believe it all comes down to a very clear and focused point of view on who your customer is and the kind of merchandise you want to carry. You need to put filters on your assortment planning so that you (or your staff in larger situations) have a road map as to what to look for and what to focus on. You cannot possibly go to every booth or every website and figure that out. There must be categories or customer groups that you need to prioritize in order to fend your way through the morass of product online and down the aisles.

The best merchants/buyers/retailers are master curators. They are able to whittle down the array of product they see and cherry pick the very best available for their own consumers in order to maximize the shopping experience and their sales. That’s what merchandising is really all about – editing an assortment and presenting that assortment in the most exciting and appealing way possible to your target group either in a store, online or on a mobile platform.

Should you be able to accomplish this, walking the trade show aisles will become easier, more effective and way more efficient.

I am sorry to report, however, that your feet will still hurt…

TheRetailTherapist

As I thought about colour and the role it plays in merchandising and retail in general, I believe it is as central as it is to Kandinsky’s paintings. I remember being at Gap when Mickey Drexler’s theory early on was to ensure there was an array of colours, even in the basic offerings. Not only will this grab people’s attention and make the store more pleasing to the eye, but it will help sell more blacks, whites and navy blues.

Retailers such as Uniqlo, Hollister, Forever 21 have all embraced this theory and have certainly created some excitement in their assortments and their visuals with the colours they are offering. I remember in the old days of Beaver Canoe, our colour influences came from Ralph Lauren, Merona and Alexander Julian (who was a brilliant colourist). If I were to design a line today, I would be influenced by the likes of Etro, Vilebrequin and Paul Smith who have all taken “colour” to new heights of emphasis and beauty.

In New York, DKNY has done a magnificent job with colour in their flagship store on Madison Avenue. The visual team has created colour “stories” for sections on their main floor and it is a stunning feat of visual brilliance. Each colour (be it bright pink or teal. sapphire or even black) is highlighted in its own section with a broad assortment of styles from which to choose. It certainly makes the collection stand out and be noticed.

Colour is so important to everyone around the world. Look no further than the World Cup of Football (soccer) that just took place in South Africa. The multitude of colourful uniforms, obviously taking cues from each of the country’s flag colours, made the pitch exciting and beautiful to watch (even if the quality of some of the matches were sometimes a bit sub-par). I was having lunch with some prospective Dutch business partners recently and I hesitated to bring up the World Cup Final since Holland lost 1-0 to Spain in that match. While they didn’t want to talk about the match as it was still too painful to comprehend, I remarked how amazing it was to see the hundreds of thousands Dutch supporters all dressed in Orange watching on a big screen at the Museumplein back in Amsterdam. Their immediate reaction was “We dressed in Orange and it is such a happy colour”. The Dutch team indeed are known as the “Oranje” and played the final in that bright colour from head to toe and it looked very cheerful and upbeat, until the final whistle.

Colour is such an integral part of our everyday psyche. On a grey day, we feel a bit dull, but on a sunny day we seem to have more energy and seem just a bit happier and more carefree. Such is the power of colour. I believe, especially in these more uncertain and challenging economic times, that people need more of it not less, and that merchants should always strive to ensure that their stores look appealing through the effective use of colour in their assortments and visuals.

I will leave the last words to Kandinsky, a true master of colour himself…”Colour is a means of exerting direct influence upon the soul”. Amen to that.

TheRetailTherapist