Global Retail Executive Council

The Retail Experience: EUROPE - "Under the Ash Cloud"

It began as a quiet and quick mention on the morning news Thursday, April 14th as I wrangled my kids at breakfast: A volcano in Iceland that had a name that I neither I or the anchorman could pronounce had erupted, and the outcome was that there might be 'some' airline delays at Heathrow. I really didn't pay it a lot of attention and got back to the business of packing lunches and shipping the kids off to school. I was leaving the next day for Berlin via Frankfurt for the World Retail Congress, but this event surely wouldn't effect me. Right?

Fast forward to the next morning when with bags packed I became just one of tens of thousands of travelers that had their plans turned upside down. It wasn't until reaching Chicago that I learned my Lufthansa flight was cancelled. Stay a night was the gate agents recommendation... Perhaps they would get me out on Saturday. Some small bit of hope remained despite increasing information I received that the last large airport hub in the EU, Madrid, Spain, had just joined the ranks of closures.

This is where I now digress from the play-by-play of negotiating my return ticket home, the hours lost on hold with Lufthansa and Expedia, and my personal disappointment of having to abandon all hope of reaching Berlin. We were going to provide news coverage of the World Retail Congress (WRC), and despite our absence  - and the uncertainty of whether or not the conference will happen at all - we will perform that task, albeit remotely, and begin to explore the implications of this "modest delay" on the world of retail. There are two stories: first the immediate perspective on how global retail is being affected by the eruption, and second, the long term implications for retailers if air travel to/from Europe is permanently disrupted. 

Disruption is an understatement. Certainly most goods travel via ships and containers, but the fresh food industry segment relies on air transport. Flowers, cheese, meat, seafood, fruits, and other specialty foods all require expedited transport. Already CNN was reporting that Holland tulips and daffodils were not going to be available to Chicago shoppers. No one at the moment seemed all too upset by this report, but shoppers all over the world will soon discover that staples in their homes are quickly unavailable and have disappeared from the shelves of the grocery story. We represent a global community with global tastes. I expect that I can easily get my Delice de Bougoine cheese from France while in Germany a shopper has similar expectations getting their Mexican mango. These "staples" simply won't be there if airplanes disappear from the supply chain, even in the short term.

Now what? Demand exists, distribution is broken, and the manufacturer/producer is left holding product... which means they'll unload it even at lower prices through the remaining channels they have. Even in the short term, this will wreak havoc for retailers already struggling to balance profit and a value proposition for demanding shoppers. If you are a retailer that is heavily dependent upon perishable goods, even a temporary disruption is potentially the preverbial "straw that breaks the camels back." British grocer Waitrose has already warned that "a handful" of products are already in short supply, including pineapple from Ghana and baby sweetcorn from Thailand, and Tesco and Sainsbury's are also monitoring for supply shortfalls. Retailers all of the world that rely on fresh goods coming into or out of Europe will need to rapidly adjust their value proposition in the face of the hopefully temporary but near total shutdown of European airspace.

But that's just one scenario and the long term implications of a belching Icelandic volcano are much more frightening than just a German citizen not having mango for breakfast or me not getting my French cheese. Global expansion plans may have to be shelved: if Whole Foods, for example, desires to continue its expansion into the UK, how would permanent restrictions on and an increase in price of air freight change their strategy or make them consider abandoning the idea all together? If this natural disaster continues for an indeterminate amount of time, what will the new face of retail look like? We certainly don't know and geologists aren't speculating on when the volcano will return to "normal," but consider just some of these possible retail implications.

About 7000 tons of goods flow via air each day from Asia to Europe, and a further 4000 tons from Europe to Asia, according to a Morningstar analyst, and while many of these represent items where air shipping is a convenience, not a necessity (electronics, for example) the impact of the shutdown on retail is broad:

Grocery/specialty foods

The aisles of the grocery store are an international tour of taste. Shoppers no longer think of Irish butter, fresh cheese from France, or star fruit from Mexico as something remarkable. It's just there. Seasons? Certainly not. If you want asparagus despite it being January in the UK, you can get it... at only a modest premium to have it flown in from somewhere warmer where it's grown. Consider for a moment that just a little over fifty years ago at the grocery store items that were once impossible to obtain out of season are now regularly stocked and expected by shoppers. Our palettes and our menus have been changed dramatically based on air freight and this sudden turn of events might force us back to being more seasonal and local. The UK is a perfect case in point: though air freight makes up only 0.5% of imports by weight, they account for about 25% of the value of imports, and almost 70% of this is carried in the baggage holds of commercial passenger flights, so the air transport ban is already hitting hard and fast. Though "fresh and local" is all the buzz for "localvore" foodies, few will easily give up their desires for the remaining nine months of the year. 

The air freight freeze is already hurting specialty food producers. Buffalo mozzarella, produced in one small area in Italy and highly-prized around the world, has such a short time from the time the cow is milked to the sale in the store that the producers association is already considering options: "In the next couple of days we have to decide," said Vito Amendolara, head of the farmers lobby Coldiretti's office in Campania, the region around Naples famed for the cheese. "We cannot sell buffalo milk as it is, because it is too fatty and is meant solely for production of mozzarella. We will either have to throw away the milk or find alternative markets" by heavily promoting it locally.

Interestingly, the reduction in air freight will have a trickle effect on producing countries' labor markets as well. Much of the "production" work necessary to get the beautifully packaged, pre-sliced and "ready-to-eat" produce into US and European grocery stores happens at the country of origin, as processing there both takes advantage of the lower labor cost and reduces the net weight shipped by removing the rinds, seeds, etc. While much of the food supply chain can be slowed to prevent spoilage, idle workers in factories in food production countries like Ghana will likely be laid off.

Mail order goods / ecommerce

Every thing we read about the ever-expanding retail channel of ecommerce would be now suddenly stalled. There would be no overnight delivery options and even a 5 - 10 business day cycle from order to delivery are compromised. Just two weeks ago I waited on bated breath for my new Karen Millen jacket to arrive from the UK. That wait alone pained me something awful, but that was because I wasn't willing to pay extra for expedited shipping, so I had no choice. Now there would be no choice what so ever so my decision to purchase from a retailer "over the pond" would be completely impossible with a 3-4 week delay for ground shipping.

Fashion

While the fashion supply chain on the whole doesn't move as fast as perishable food, one area that will definitely be affected by a long-term reduction in air freight capacity is the emerging "fast fashion" category, where collections are turned 10-15 times a year instead of the more traditional 4-5. One retail exec we spoke with suggested that unforseen delays in the availability of one collection in stores will have a cascade effect on other collections and that having collections too close together could pose some problems, but as our source said, prefering to remain anonymous: "But the reality is that retailers are very resourceful, and you could only accurately calculate that long term effect if the retailer did nothing to change course or react to the circumstances - and we always do." So for the time being, the impact on fashion is an inconvenience to mail-order shoppers, but the brands should be fine in the medium and long terms.

Pharmaceuticals

Pharma relies heavily on air freight due to the high value and low weight of the products, but other than extremely perishable products (vaccines, plasma, etc.) most drugs will be able to be rerouted onto train and ship freight. While rail travel within Europe can make it feasible to get products from factories in Germany and Switzerland to stores from Norway to Spain, manufacturers with facilities only in the US or Asia where the "slow boat" method would create weeks of delays are now at a competitive disadvantage to those with more regionalized production capacity. One short term opportunity: pharma retailers should be stepping up to help stranded travelers with prescriptions, regardless of where the prescription originated.

Intra-EU rail freight

While the focus over the weekend has been passenger traffic, rail transport and cross-channel ferries are instantly adding capacity to cope with the increased demand. The Eurostar train connecting London with Paris, Amsterdam and Brussels eight additional routes and carried an additional 50,000 passengers over the weekend, and the Dover-Calais ferry operated by P&O Ferries saw 6000 passengers on Friday. The load on a normal day is several hundred...

Restaurants

Certainly this is loosely connected to retail, but it's worth mention. If shoppers aren't able to get product at the store level, they won't be seeing it in their favorite restaurants as well. So many menus feature prominently fresh ingredients flown in from overseas. Sushi in London or Meditteranean mussels in New York? Forget about it... if it can't be frozen and ground shipped, you won't see it on the menu. Look to see menus adjust, as restaurants loath disappointing patrons by telling them "we're out of that." The impact of this will be delayed a few days as restaurants use their stocks and food wholesalers feel the pinch, and remembering the advice never to buy sushi on a Sunday, most sushi restaurants got their fish deliveries on Thursday before the flight lockdown took effect. Look for shortages throughout Europe starting Tuesday when Monday's non-delivery has a sudden sharp impact.

Overall economy

It's too early to predict the long term impacts of the eruption of the volcano, but even in the short term, workers are taking a hit. SAS is prepared to lay off 2,500 ground workers due to the shutdown. Laid off workers means less money for retail, so the "ripple effect" of Eyjafjallajökull will be with us for quite some time after the initial shockwave passes. The bottom line is that even the four days so far of this shutdown are hitting retailers hard: they represent 1% of annual sales, and with retailers struggling to eke out 5% growth year on year, Northern European retailers will feel this disruption for the remainder of the year without doubt. And when you consider that three out of the top five global retailers are Northern European, the impact on retail as a whole is likely to be profound, even if US shoppers don't feel the pinch immediately and the US media continues to ignore the global business implications of the eruption.

It's anybody's guess at this point as to how long this will last. And for the poor weary European travelers I met in the airport that were so desperate to return home that they were seriously discussing a slow boat out of New York as a way to get home, I know they wish it was more than a guess too. 

The World Retail Congress has officially been postponed to October, and though we're disappointed not to experience spring in Berlin, GREC is glad that we'll have the chance to attend and provide coverage. Last year's speakers and topics in Barcelona were outstanding and the retail executive attendees represented some of the world's largest. 

But, in its own way the Icelandic volcano (which is named "Eyjafjallajokull", by the way) represents one of the largest truisms in retailing: you can't predict the future, even a week out. And as travelers around the global struggle to discern whether the delays this week are a temporary disruption or a "new normal" for European air travel, so too will retailers have to explore what this means for them, both in the immediate term and strategically going forward.

The Retail Experience: JAPAN - The Zenith of Customer Service

I've been back for well over a week now from our trip to Japan and in addition to the terrible jetlag (which is finally wearing off), there seems to be something going on in me besides terrible jet lag. It's a sort of melancholy I get when I go into a store here in the United States. Any store... grocery, boutique, big box... you name it, it doesn't matter. I haven't been able to properly put my feelings around this emotion until today.

It was a sudden jolt... a moment in which I needed help and none was to be found... standing stranded in a dressing room half-undressed waiting for help and hearing the staff person chatting with another associate for a good five minutes while I stood... waiting and waiting and waiting... what I wanted at that moment was my JAPAN-LEVEL CUSTOMER SERVICE!!!

What is Japan-level customer service (or JLCS for short) you ask? Well, if you have been to Japan, you know exactly what I mean. There is a pervasive spirit focused on simply meeting the needs and desires of the customer.

It's the going to the hotel lobby needing a battery charger for your camera at 7 o'clock at night.. and the concierge ensuring that by the next morning you not only know what store carries the battery you need (it's Bic Camera, by the way...), but that it will be held for you, you will know what train you need to take to get it, AND the proper Japanese translation for the request will be written out for you to hand to the store employee. Yes... that's JLCS.

Now you might say... "That's only if you have a concierge in a fine hotel...right?" No. JLCS is anywhere and everywhere. From the ubiquitous combini (convenience stores) to drug store to high-end boutiques in the Ginza, service is SERIOUS business and they all seem to know that and deliver on it. As a customer, I would never know if one of the people that took care of me was having a bad day or that they thought my request was over the top. Every shopping experience came with a sense of anticipating my need and a true desire to fulfill it. Though I haven't yet been to EVERY country around the world, Japan is hands down the one country so far to which ALL retailers should aspire in terms of service.

As operational efficiency and product assortment become the norm throughout the industry, retailers have to find new ways to stand out and make money... and they should be looking to service. This, my retail friends, is the one area where the customer can be king, and you can make more profit.

I would like to share with you two examples. I could give you HUNDREDS, but these two truly stand out.

EXAMPLE #1. Giorgio Armani, Ginza.

We spent a great deal of time in the Ginza looking at department stores as well as the upscale fashion clothing flagship stores. This area of Tokyo is recognized as one of the most luxurious shopping districts in the world. I personally am in awe of their splendid-ness, but honestly am not a customer (though of course, I would be if I could...). However... in terms of brand... my heart belongs to Giorgio Armani. Always has, probably always will. So now that I've outed my bias toward the brand, I want to call attention to what I never expected.

I walked into this 5-story store (Surprisingly an entrance from the Ginza station as well as street level.) and expected the same type of service greeting I get when I've been in most luxury stores... ignore me OR make me feel somehow like I might lift something and run. Neither make me all too comfortable... ;) Anyway... I went in to look around and made my way to the second floor women's fashions where I was warmly greeted. I then quietly began my appreciation (okay, it was worship) of all the beautiful suits and gowns. At one point my hand must have lingered a bit longer on a raincoat. (I recall I basically touched the top of the coat at the hanger.) I moved to another room never having been pushed or made to feel suspect and as I motioned towards leaving it was at this point where the sales woman approached me and said in Japanese (I speak Japanese, but definitely look like a "gaijin"...) "It seems you may have liked the blue coat, would you like to try it on?" to which I expressed my fondness for the coat, but that I needed to leave due to a meeting we were heading to. Long story short, she encouraged me to try on the coat and after I did (and graciously declined to purchase it, thinking perhaps the purchase would require the sale of at least one of my kidneys) she thanked me for taking the time with her and trying on the coat despite my busy schedule. Then she rushed off to get me an Armani bag compete with a copy of the newest Armani catalog and DVD. As she escorted me to the glass elevator with my "parting gift," I was thinking how I didn't feel bad for not getting the coat, but how impressed I was by how gracious and attentive she was. As the doors closed to the elevator taking me down, I watched her maintain a deep bow even after it was quite clear I was no longer really able to see her. In summary... I left the store blown away.

OK so now you could argue... "yeah, but that's how the high end fashion experience is SUPPOSED to be. Right?" Now mind you I have had great service at luxury stores before, but this was a whole new level: a combination of the style and quality of the Armani brand with warm and welcoming service unlike that in other shopping hotspots like 5th Avenue, Oxford Street, and the Champs Elysee.

EXAMPLE #2. Fujiya Confectionary Store, Ginza.

Fujiya is one of Japan's better known candy brands and I decided that my 6 year old daughter's sweet tooth just might be satiated with the gift of a candy or two. The small store was teeming with shoppers, but one of the associates made sure to tell me immediately that she knew that I had entered the store with a "irashaimase" followed with a direct comment letting me know that she would be right with me after she finished with the customer in front of her.

Once it was my turn she helped me to navigate through the myriad of sweets and select just the right ones. Never once pushy or acting put out by my questions. At the end she held out my purchases, showing me the expiration date on each packaged cake/candy making sure that I still wanted to purchase them being that they were perishable. She also inquired as to whether the items were gifts and immediately took to wrapping each item exquisitely and point out any items that were fragile so that would arrive to their recipient intact.

At the end of the purchase, she came around from cash wrap, bowed, thanked me for my patronage and handed me my parcel. Now I know that some retailers in the US are taking to this idea of coming around the cash wrap and handing the bags to their shopper, but it hasn't caught on fast enough as a common practice.

I could go on and on... Examples abound: fast food restaurants, convenience stores, grocery stores, bakeries, pharmacies, and even a 100 yen store... all delivering consistently exception service, at least by the "are you SURE you don't want the extended warranty with that?" standards we Americans are accustomed to. Certainly there are exceptions here, but the opportunity to embrace service as a differentiator quite a "greenfield" in many areas outside Japan, and the return from exquisitely packaged sweets to the casual jumble of my first grocery shop on my return left me pining for even a little taste of JLCS...

(And ironically, JLCS extends to "self-service" as well, embracing state of the art vending systems... a subject we will be exploring soon in this blog...)

Lululemon Athletica: global brand + local presence = loyal shoppers

While some might not consider it "breaking retail news" we thought it was worth a shout-out to a retailer who is doing an amazing job of engendering loyalty among its shoppers (and increasing basket size) simply by embodying the values of their brand.

This past weekend my children put on a shoe drive for Haiti at Lululemon Athletica's store in Portland, Oregon. They wanted to actually DO something to help the victims of the earthquake, and - since they didn't have any money of their own - ended up organizing the kids in my son's Cub Scout pack to collect up shoes to help the Soles4Souls program, a nonprofit that collects new and gently worn shoes in the US and distributes them to needy people around the world. With the kids organized and the charity selected, the only thing left was to determine a date and a place to do it.

That's where Lululemon Athletica came to the rescue. I regularly go on a long run Saturdays with a wonderful group of people, and many of those runs are hosted by Lululemon. They provide a place to meet, a bathroom, snacks, water, and a lovely 15% discount off everything in the store for the day. That generosity alone has kept me loyal to their brand, but their support for the shoe drive truly embodied the "global brand, local presence" values of the retailer: without requiring special approval or a lot of rigamarole, the store manager and staff invited us to host the shoe drive in their store. While many retailers support community events like this, Lululemon truly went above and beyond by setting up a table for my kids, Tweeting about the drive and even creating an event for it on Facebook! The exposure was the perfect complement to our own actions, and as a result of Lululemon's help, my kids collected over 150 pair of shoes in just a matter of hours!

I could just simply thank Lululemon Athletica here for really going above and beyond for a couple of kids, but in the bigger picture this retailer shows clearly how to create and keep brand loyalty:

• Don't just sell product, embrace your shopper's passion and lifestyle: Lululemon sells great product, but they also help support the activities where I use their product, and that embrace makes them first on the list when I choose to open my running-related wallet.
• Be a great global brand, AND be a part of the local community: Lululemon doesn't relegate community support to a tiny bulletin board in the back of the store, it's the first thing you see when you walk in. And their support of events like my son's and my running group make them a part of the local fabric in ways that few retailers can match.

In a 2009 NRF blog post, Lululemon CEO Christine Day shared her thoughts on what differentiates the retailer from its competition. Our experience with the store manager last Saturday was a perfect embodiment of these ideals. I didn't have to fill out a form or go through "community relations"... They simply wanted to help, so they just made it happen.

One of the hot buzzwords at NRF this year was "social media," and the irony is that for all the talk, very few retailers understand what it means to be truly SOCIAL. Just as Facebook is more than a one way channel for promotions of products and coupons (note: if that's how your brand uses it... it's called a "Web site," not social media), shoppers need to feel that they are a part of something other than a fabricated marketing campaign... they need to be invited to participate in the brand. And this is part of what Lululemon has done that is so fresh and exciting: shoppers not only feel a part of a stylish global brand community, they also feel at home there. It's truly a global brand with a local presence.

150 pairs of shoes collected by my children only makes a small dent in a massive crisis in Haiti, but if more retailers embrace the spirit of Lululemon Athletica, shoppers will not only be able to make a difference in the lives of those less fortunate around the world, they'll also be able to enjoy supporting a great brand while they do it.

The Battle of the Basket: Part One... "The Winds of War"

The past few weeks have seen a flurry of stories as the "cold war" between retailers and CPG manufacturers over the hearts and minds of consumers has been escalating and heating up. 

Getting this blog post going has been a heck-of-a-lot more challenging than I originally thought it would be. Suprisingly, it wasn't a procrastination issue (which MANY times it is for me) but one where the information I could use to draw from just keeps on coming in and I've been waiting for the right time to write. 

Last February, the buzz around private label goods started really heating up.  It's not like it was "net new", but every segment - from grocery to fashion to consumer electronics... even beer & wine - kept spinning out story after story about retailers laying new claims to brand territory. I started to consider even way back then what did this really mean - not only to the consumer, but the entire ecosystem of retail. The recession was a sobbering reality and social media a massive movement that was just beginning to hit retail. Add to that the distant thunder of the mobile phone's impact on retail and brand channel strategy and suddenly the players are all on the field and spoiling for a fight. Even the store shelves are changing... store brands are suddenly prominent at eye level, with national brands relegated to the top and bottom rows.

Fast forward.. and suddenly a few months an increasing number of articles appear about the changing relationship between retailers and CPG. As with many skirmishes, it's almost impossible to tell who fired the first shot, but clearly the bullets are flying back and forth... and each side is slowly bringing the big guns to bear for a larger battle:

• Costco refuses to restock Coca-Cola products in their warehouse clubs. The reason? "Coca-Cola has not provided Costco with competitive pricing so that we may pass along the value our members deserve."
• Kroger and P&G trade blows. Kroger refuses to accept P&G's digital coupons, deciding the idea of loading coupons from multiple sites was less useful than keeping shoppers locked on kroger.com. Then P&G launches a direct ecommerce site as a "learning lab."
• Walmart reduces its SKUs, hitting brands hard. It's not a temporary response to the recession, it's a long-term acknowledgement that for many consumers, price trumps brand loyalty.

So the battle begins, and war has been declared. The opponents: retail & CPG. The battlefield: the store shelf. What they are fighting for: the almighty shopper's basket.

These examples are but small skirmishes, but they portend a growing conflict. Over the next few weeks, stay tuned as this "war correspondent" explores the dynamics and strategies of the combatants:

Part Two: The retailer's arsenal... tools and tactics to seize shopper loyalty

Part Three: The brands strike back... shifting the field of battle away from the store shelf

Part Four: The embattled consumer... casualty or victor?

The Retail Experience: The Future of Fitting Rooms, Part Two

In Part One, I discussed the setbacks retailers face in the fitting room department. The overall message is that the fitting room could and should be a central part of the shopping experience, where the customer is guided (but gently!) towards purchasing options. Ideally, the fitting room should be a destination in itself, so the customer is more likely to bring clothes into a fitting room, even if the goal is to see the actual room! There are many ways retailers can achieve this objective, from simple techniques to more sophisticated options, and many retailers provide strong examples of what the future of the fitting room will look like.

My favorite example of a simple technique to improve the fitting room is from a blog post by Sarah Freedman, in which she describes the treatment she received at Ted Baker in Glasgow. With her brother tagging along (and not happy about spending the day shopping), she promised she would be quickly in and out of the store. However, when her brother sat to wait for her, he was greeted by an associate offering him a beer! Obviously, this immediately changed his opinion of shopping with his sister, and he was no longer urging her to leave the store (in fact, he may have even urged her to spend more time in the store!). This simple focus on not only the customer, but also their shopping companion is a brilliant method of making the fitting room experience much more beneficial for both retailer and consumer. Not only did Ted Baker get Sarah to spend more time trying on outfits in their store, but everyone involved had an extremely positive experience that inspired her to tell everyone about. And I’m willing to bet the next time you’re in Glasgow, you’ll check out their Ted Baker store. I know I will!

Even more appealing is the Dressing Room Bar and Boutique in New York City, which acquired a liquor license and has a FULL BAR inside their store. Let me repeat - a clothing store with a FULL BAR INSIDE. They even offer entertaining drinks, such as the “Dressing Room Special,” or - my favorite - the “Waiting Boyfriend,” which is a shot of whiskey and a Miller High Life for $5. (To the owner of the Dressing Room: If you want GREC to visit and review your store, I’d be more than happy to be flown out to New York to do so!)

There are tons of examples of retailers like Ted Baker or the Dressing Room who focus not only on making the fitting room a fun experience for the shopper, but also the shopper’s companions. One of the most appealing techniques is used in places like Lyell in New York, where shoppers and their companions are given their own secluded room to have mini-fashion shows in, separated from the rest of the store by a curtain. This way, the shopper doesn’t have to parade in front of the whole store if they don’t want to, and it creates a more intimate and fun shopping experience for everyone involved. Even simple comforts like including a television for the waiting friends, or comfortable couches to sit on can do wonders for making the experience a memorable one for everyone involved.

Another simple way to make the fitting room a more enjoyable experience for the shopper is to focus on three main aspects: the lighting, the mirrors, and the hooks. According to USA Today, the “old” way of lighting in fitting rooms was using simple overhead fluorescent light. However, this often leaves clothes looking much different than they would in the outside world under real light, so "new" fitting rooms are tending to provide a more natural light to cut down on the amount of outfits returned after the customer decides they don’t like the way it looks in the real world. Similarly, “old” mirrors often were distorted, making the shopper appear skinnier. However, “new” mirrors in dressed-up fitting rooms do what mirrors should do: accurately reflect the consumer’s appearance. And as far as hooks go, USA Today found a near-ubiquitous complaint from shoppers is that there are either not enough hooks to hang their belongings, or there aren’t enough. This is solved easily enough - give the shopper more hooks and places to put their belongings when they’re trying on outfits!

Of course, there are also more complicated challenges retailers face, such as the challenge of making sure the customer can be constantly attended to by associates. If you’ve ever needed to call an associate while trying on items at Victoria’s Secret, you may not know the name but you’re probably familiar with Alert Technologies: their system lets shoppers call for assistance at the touch of a button, as well as giving staff an overview of which fitting rooms are available, full, or in need of service. Tech services in the dressing room such as this create a much more seamless, ordered experience for the customer and makes the entire process of trying on and purchasing items much less stressful for everyone involved.

Taking that idea even further is the fairly recent addition of “smart mirrors” in dressing rooms, which open up the possibilities to a near-endless amount. Smart mirrors can do just about anything: In addition to calling the associate for assistance, the customer could even select on a touch screen an item they would like delivered to their fitting room, to save themselves the embarrassment, for example, of having to ask for or hunt down an item in a larger size. Internet-enabled smart mirrors can also be used to send pictures of the customer in an outfit to their friends’ mobile devices for immediate “yes/no” reactions on outfits, to help the customer make up their mind. And with RFID tags, smart mirrors can immediately recognize any items brought into the fitting room and provide on the screen a slew of information - from care instructions to what country the cotton in the product came from, even to suggesting matching shoes or accessories in stock! The possibilities really are endless, and stores such as Prada in New York are just beginning to experiment with these new devices.

However, it remains up to each individual retailer to decide what fits best within its budget and customer demographics. Obviously, if you deal primarily in clothes for the elderly, installing the most advanced smart mirror system in your dressing rooms probably won’t go over so well with the clientele as it would in, say, a store aimed at teenagers and young adults. But every retailer should look at their own fitting rooms and figure out a way to make it more appealing. It’s really up to you; would installing an advanced technological system help your customers, or would simply providing more hooks, better lighting, and the occasional beer do the trick? (My two cents: Beer, please! Lots of beer.) 

The Retail Experience: The Future of Fitting Rooms, Part One

It goes without saying that there are many factors retailers must consider to ensure their customers have a pleasant experience in which they not only spend money in the store, but want to come back again. Everything from the way a customer is greeted to the manner in which they are sent on their way should be carefully tailored to ensure a successful shopping visit. However, while retailers spend intense efforts on revamping and planning their stores, one major component has been overlooked by many for far too long, and it’s time retailers make a change. I’m talking, of course, about the fitting room.

 Many retailers fail to understand the importance of the fitting room, instead opting to give their customers a glorified closet - a small, five-by-five room with roughly two hooks, and a few mirrors at the end of the hall. The incredible potential for the fitting room is overlooked by many, to the detriment of their own profits.

Imagine this scenario: You’re browsing through a rack of shirts and a store associate approaches you and suggests a shirt. Do you buy it? Or say you’re purchasing a dress and as the cashier is ringing up your sale, they point you to accessories and suggest a pair of earrings. Do you walk over and grab the earring? Most shoppers wouldn't, and this behavior is only amplified by the economy: Retail Forward reports that the recession is causing 34% of female shoppers to spend less on impulse purchases, so gently nudging shoppers towards additional purchases has become even more vital.

Think of it this way: During the three main segments of a typical apparel shopping experience, when is a customer most likely to choose what they're going to buy? - when they're browsing the racks, actively trying on clothes in the fitting room, or at the point-of-sale? Given that shoppers in the fitting rooms are examining the way they look and feel in the clothes they are potentially going to purchase, doesn't it seem natural that they are far more likely to be in "purchasing mode" in that environment, and therefore more open to trying on suggested additional items?
Dressing room feeling blah and familiar?
Don't worry, there's "room" for a new "model"...

One of the major challenges retailers face is how to better connect customers to the sales associates in the dressing room. How many times have you found yourself needing assistance when trying on clothes, only to have to hunt down someone to help you? The problem is even worse when shopping for (ahem) "intimates", where you don’t want to chase down an associate in your underwear, so you have to put your clothes back on in order to go search out help. It’s no surprise that, according to Marge Laney of Alert Technology, "97% of customers that we surveyed have left a fitting room and just walked out of the store at one time or another ... They just say, 'Screw it, I don’t need it that bad.' and leave."

On the other end of the spectrum is the associate who is too involved in the shopping process. Many people think of clothes shopping as a social experience, bringing along friends or family to offer opinion. But even if a shopper is alone, it doesn't mean the associate has to become the consumer's new BFF. As my mom so eloquently put it about a recent trip to a local clothes store in which the clerks paid her a little TOO much attention: “The salespeople are freaky -- they’re what Scientologists must be like. ... I go in to try on pants, and before I know it they’ve brought me 14 shirts and 5 pairs of shoes.” This shouldn't ever be the case, because it threatens to overwhelm the consumer and potentially drive them out of the store.

So it’s up to each individual retailer to figure out how to balance providing too much assistance to the customer and not providing enough. You obviously want your customer to end up spending more at your store than they intended, but you also don’t want them leaving feeling as if they were pressured into trying on clothes they didn't want or donating their life savings to a cult. There idea is for retailers to transform their fitting rooms from what is essentially a broom closet with a hook on the wall into an essential part of the shopping experience, and create an experience so exciting people tell their friends about it.

Now that we've given you the bad news about the state of the dressing room, stay tuned for part two where we discuss how to change things: from new innovations in lighting to new technologies that make mirrors seem magic. Stay tuned!

The Retail Experience: Touch me, watch me, taste me and NOW you want me to do WHAT?

Recently I've seen a dramatic increase in the quantity and variety of interactive displays in retail stores. Though some of these have been the more traditional "kiosks" (and yes, we all know they're growing in number), many have been different form factors that don't fit into an existing tracked category of technology penetration.

Here are just a few examples...

KLEENEX: I'm walking through the grocery store and I'm encouraged to push a button to watch a short video clip of a mini ad.

SAFEWAY'S CORDELICO SIRLOIN STEAK: I'm stopped at a mobile food cart in the parking lot to sample a featured new steak that's available in the store.

COLUMBIA SPORTSWEAR:  I'm waiting to get through the security queue at the airport and the window display directly in front me has an enormous projected touch screen kiosk beckoning travelers to explore the newest in Sorel winter boots. 

THE LEGO STORE:  There is a special kiosk set up so that shoppers who can't find what they want in the store can order it online right there and have it direct shipped to their homes.

It all sounds so COOL and retail 2.0 right?  Well, maybe not. Let me explain.

If the entire purpose of these interactive engagements for retailers is to get my attention for a few minutes, then yes, they certainly do succeed at that. I stopped for all of the above, and there was a brief moment where my interest was indeed piqued. But... THEN WHAT? Each of these stories ends not with a purchase that put money in the pocket of the retailer, but instead left me scratching my head and ultimately walking away. 

And now for the rest of the story...

That video display in the aisle at the grocery store?  It was located directly in front of the product to be sure, but mounted at about knee level.  At that height, only my 6 year old or someone walking hunched over would even notice it, let alone reach down to push the button to trigger the video. And if you do watch the video (and don't run off screaming at the stereotypical "mom" portrayals), then what? No call to action, no reward of a coupon... simply the vague annoyance at having my time wasted with a message unrelated to the task at hand: getting me to buy Kleenex.

That steak in the parking lot? Despite the weather conditions, at first glance I thought this was a GREAT idea!  And... it was tasty steak. This approach reminds me a lot of food carts - and those are gaining in popularity all around the United States right now and are ALL the rage here in Portland, Oregon. On one hand, this was brilliant: they captured my attention right in the parking lot, before I even entered the store, and in fact... that yummy bite did get me thinking "mmm... steak..." They also gave me a "recipe card" sized flier with information about the steak and pointed me to the back of the store, promising more samples and information in the meat department. And if you do wend your way through the store to the back in search of steak, then what? No signage, no new information... and even a customer service faux pas as the guy behind the meat counter didn't even know anything net new about the promotion in the parking lot, jokingly told me he didn't know how to pronounce the brand of meat on sale, and (when pressed) even admitted that the labeled meat in the case wasn't even the same product they were sampling out front! HUH? What a waste of my time and their promotional dollars. (To top it off, when I got home and tried to learn more about that delicious meat... a Google search for Safeway Cordelico yields a whopping 91 hits... none of which tell me anything about the product... So, I'm not very likely to come back in for it another time.)

And then there's the airport. The way that airport security lines usually move, I'm definitely a captive audience while in the line, but I easily can't step out of line to a kiosk and still hold my place.  And by the time I get to the security checkpoint I'm certainly not pondering a new boot purchase. (Heck, with the 50 lb limitations and bag check fees, I can barely fit those kicky heels into my luggage, let alone a big pair of winter boots!) Great idea and a nice kiosk implementation, but beyond the momentary distraction, then what? I'm not buying, and I can't play with it long enough to make the brand more sticky to me... it just doesn't jibe with the realities of the target audience standing in the security line. Plus, though Columbia Sportswear certainly works in multiple climates, D concourse travelers headed for the Hawaiian Airlines flight to Maui sure aren't going to be thinking about Sorels regardless of the season. Definitely some confusion between the retailer and the brand. To their credit, I did see a fair number of kids going up and playing with it while their parents watched, grateful for any distraction, but it'll be years (even with today's allowance inflation) before they become shoppers themselves. 

And when it comes to distraction... the Lego Store takes the cake. Yes, they did have a kiosk set up for on-line ordering in the store. The problem is... it goes to the lego.com site... complete with all the online games hosted on that site. So the kiosk was constantly mobbed by kids, playing the online games (at full volume) and keeping aggravated parents wanting to order product fuming at bay. The kiosk was "retail hardened" meaning the volume was set and locked, leading one of the employees to tell me (after shooing my 9 year old son from the kiosk) that it's been very hard for them to control use in the store and clearly wasn't being utilized as intended. So if you're in the Lego Store and get tired of playing with the augmented reality kiosk and actually want to BUY SOMETHING online, then what? Clawing your way through a crowd of kids to spend your money on a machine may have been fun at video game arcades in the 80s, but as a harried mom on a shopping mission... no thanks, I'll pass on it in a store in the 2000s.

This leads me to think that retailers embracing interactive marketing touchpoints need to think less gimicky and lot more about the call to action.  If there were more emphasis on the store experience instead of the "gee whiz" factor, and communication between shopper and store associate were improved, none of the examples I sited above would have discouraged my actual purchase. But, as it stands, there are breaks in the shopping experience that lead me to drop off at certain points, and in each of these examples... I walked away unsatisfied and the retailer was left without my purchase.

As interactive marketing continues to grow and new touchpoints within stores and beyond multiply, retailers are faced with the same choices they have always had: focus on the needs of the shopper and meet them, or dazzle the customer briefly with flash and glamour and leave them unsatisfied and shopping elsewhere. New technology doesn't change that game, the rules are still the same. And the retailers who win will be the ones who give the shoppers a "then what" that helps close the deal and brings them back the next time.

Retail Innovation Trend: Pop-up retailing

The holidays have arrived and it's time for me to make that traditional annual visit! No, not to grandma's house... but to the mall!  Here in the United States and abroad malls (aka "shopping centres") have a similar vibe, format and purpose: Provide a disparate collection of chain stores under one "roof, a big box category killer or two, and anchor it all with a couple department stores or hypermarkets at the ends. It's a model that worked well for many decades, but like so many things in retail... is struggling in the "new normal" of 21st century retailing. According to Georgia Tech professor Ellen Dunham-Jones, coauthor of Retrofitting Suburbia, beginning in the mid 1990's, a decline in tenant occupancy began, suggesting shoppers were beginning to shy away from the tried and true mall model. A downward spiral began: vacant store windows and shuttered doors meant fewer choices for shoppers, leading many of them to look elsewhere, and the decline in foot traffic lead to even more vacancies, starting the cycle anew.

Now add in a global recession with an unprecedented number of retailers closing up stores: suddenly the sprinkling of vacant space "available for lease" has become in some cases whole corridors or even the entire mall. There's even an entire website dedicated to mourning the passing of shopping malls.

So how are malls trying to stave off demise or even prosper? Promotions? Increased advertising? Retrofitting? All of these are parts of the solution, but truly if that's all it takes, why are so many malls still going under or suffering so badly?

While there are many new ideas for how retailers can embrace new formats (and we'll be exploring several of them here on the GREC blog), this posting is about a particular concept that's rising in popularity all over the world: the pop-up store. According to RetailTraffic, the pop-up is where a retailer is allowed to sign a temporary lease lasting anywhere from two months to six months. Mall owners have pushed hard against this trend - preferring the perceived stability of long-term leases - but given the rising vacancy rates and big-box store closings, more and more are seeing the value in changing their mindset.

Pop-up retail isn't about the calendar/game stands or Halloween costume stores that spring into being during the holiday seasons or the ubiquitous kiosks selling everything from faux hair extensions to emulational sleeping kittens... pop-up implies something more...

I saw it in a mall in Hong Kong: A strikingly beautiful all glass building temporarily erected right in the middle of the main floor. The merchandise was unique graphic t-shirts artfully arranged as if in a museum. The entire roof was signage, announcing to the 7 floors of escalators that it was, indeed, the "I.TXX POP UP STORE" in unmistakable language. In short... it had my attention.

What makes the pop-up different isn't just that it's temporary; there are three major types of pop-up that are now gaining popularity:

• well known retailers testing the waters in a new territory or capitalizing on a season (for example Toys R' Us Holiday Express stores, or Target's pop-up stores in Sydney or their docked ship in Manhattan)
• brand names or startup retailers pulling out the stops on a product launch (for example adidas Originals at London Fashion Week)
• brands and retailers creating in-store experiences that reinforce their core brand values and customer activities in ways that don't fit their store formats (for example Quiksilver Pop-Up Skatepark)

So why is pop-up retailing the "big idea" that reinvents the mall and gets retailers and shoppers back into the mall space? Because pop-up retailing changes the rules: the store is an event - not just a destination. And this new paradigm gives retailers the flexibility to try new things, delight their customers, and create a sense of urgency without the "sale prices end Friday!!!!" hype. And I'll add one other point to that... consumers EXPECT more from the shopping experience - even in existing formats - so adding a pop-up experience to how shoppers see your brand can lead to increased sales in your existing stores as well.

And for extra customer satisfaction: for all of us who face this holiday season with lowered expectations, fully prepared for another trip to the mall to see the same tired holiday displays and "Black Friday" sale prices on the way to see Santa, surprise and delight us... Give us an incredible pop-up experience, and use a combination of social media and a mobile retail experience to lead us there to shop!

The Retail Experience: ON THE ROAD - Shopping for Shoes the New Fashioned Way

My post today is strictly based on retail DESIRE - not observation about what is happening in the world of retail. So read my musings if you like... this blog is meant to provide insight, hopefully inspire, and maybe even incite a lil' rebellion. And this entry is about shoe shopping... no not the pretty kind, but the functional kind, where the shopping experience could use a little improvement.

I tend to get my best ideas while out running, which means I spend a lot of time running trying to keep my creative juices flowing. Well, all that running takes a toll on my feet and shoes, and despite knowing that recent blisters and sore joints were caused by the cushion in my running shoes being completely worn out, I went many, many more miles on them than I should have. So I took the time today to purchase a new pair.

At a recent race I'd managed to pick up a coupon for 10% off at a local running store (without an expiration date mind you), and after finding the (of course printed) coupon in the junk drawer of my kitchen, I thought I'd take them up on the offer and buy a new pair from them.

Thinking ahead I called the store to make sure that they had my brand, in my size, and in stock. The result... a resouding NO. So they lost the sale. Now I don't speak for every hard core runner out there, but I have been wearing the same Saucony Omni 8's for the past 4 years and I am a brand loyalist. I wouldn't trust my feet in anything else. They manage my pronation, help keep me relatively injury free, and achieve some personal running bests! I'm not about to switch now. They retail for $110 and IF I can get 10% off somewhere and they have them in stock, they have my sale.

SO here's where I begin to think about the retail experience and where the loyalty to brand and the consumer experience could get FAR better in my opinion. Knowing what I know about running shoes, I should be getting new shoes about every 300 to 500 miles (there are a lot of variables to how many miles, but I won't deep dive here...) and I know that I like to track and log my progress.

Recently I began to use an app in Facebook called RunLogger to do this and I also know that there are several mobile apps that do that AND log for you. Many phones are GPS enabled and will tell you quite a bit about your run. THAT is fantastic! But these applications could do so much more...

What if - during that time period where I was likely to need new shoes - I was messaged by a nearby retailer and told that they have my Saucony Omni 8's in a size 8.5 in stock to either ship to me or come into the store to buy? If they wanted me to come in the store and try to upsell me on a few other goodies instead of just having my new shoes delivered, they could offer simple services like an analysis of my last pair of shoes (a review of how they are wearing, any injuries had since the last purchase, etc.) or free pair of socks to sweeten the deal. They could even make it time sensitive - my own personal "one week only sale" to get my 10% off.

And where is the natural place to reach out and touch me with a retail offer based around my running habit? MY PHONE OF COURSE!!!

So I ask you, what other things in your life do you routinely need? Milk? Diapers? Cereal? Toilet paper? Shampoo? Where does your loyalty as a consumer lie - to the brand or to the retailer? Especially with products where you KNOW how much you use and when? And what do you as a retailer really KNOW about those habits? Probably a LOT, but you aren't using that information to help me buy more, or more frequently, or higher end products.

As mobile applications create a new model for consumers to share data with retailers - and profit from the sharing, retailers need a new engagement model that spans ALL the touchpoints with shoppers - from their inbox to Facebook to their mobile phone. And don't forget, some of us rely near exclusively on the mobile versions of sites like Facebook... and if your strategy is to simply buy ads there, guess what? We don't even see them...

In the end, I bought my shoes at another store - and paid full price. They had great in store service - but the only reason I even found out about that was the simplest retail draw of all: they had my shoes in stock when I called!

And one parting thought: When I went up to the counter, they asked my name and looked me up in their CRM system... but as far as I could tell, didn't do anything at all with that little morsel. Remember, retailers: if you ask us for info, use it to help us. And a note to that particular retailer: you've got 300 miles to figure out how to get me back for the next pair of shoes...

The Retail Experience: AROUND EVERY CORNER - Shorter Path to Coffee? Sign Me UP!

Happy first day of Fall everyone! Retailers are already messaging me that Christmas is right around the corner and get to shopping!  After a rough retail summer analysts are busy speculating what this holiday season holds and signs suggest that incentives to get me into their stores will continue aggressively in the 2009 holiday season.  

Just this last week, a whole batch of discount cards meant to entice me into their stores came via my physical mailbox... Some offered a percentage off, others with a modest cash discount.  From the looks of it, my first purchase needs to be a bigger wallet to hold all of these cards!  

Everything from reward cards to gift cards to loyalty cards are scattered around my house, my car and in many of my purses.  And the most painful part of it all?  I NEVER seem to have the ones I need when I am out shopping!!! So this morning I took a pick of my most recently acquired assortment and began considering... What good are they all to me OR the retailer if I never use them?  I count my nickels as much as the next guy, but realistically I'm not going keep a 2" thick rubber band bundled collection of plastic cards in my purse!  OK... Maybe with the exception of my daily used Starbucks Gold Card...  

AND that said... Just this morning the NY Times Gadgetwise Blog a glimmer of hope was offered based on a mobile phone-based test Starbucks in running in several stores. I'm delighted to read this and I don't think it's too far fetched to say that soon I'd love to be able to ORDER my special "grande, nf, 3 pump, no whip mocha" without having to even state it and PAY with a simple swipe of my mobile!  Heck, my phone is the one item I can always guarantee retailers I'll have on me!!!

Starbucks is joining a rapidly growing number of retailers that understand and are preparing for the implications of billions of smartphone-armed shoppers in their stores.  The Global Retail Executive Council has partnered with CTIA for the inaugural GREC Mobile Retail Experience™. Attendees will have the opportunity to experience mobile retailing both on the show floor in the dynamic and innovative "Tag Your IT!" pavilion and in an exciting and informative conference tracking featuring a range of topics of critical importance to both industries.

So if you’re a retailer and want to be in the know, please join GREC in San Diego - Wednesday, October 7 and listen to a dynamic lineup of speakers covering the gamut of issues faced by retailers exploring this mobile shoppers realm. www.mobileretailexperience.com And if you don’t... at least get ready to start thinning out your wallet!!!