This is an excerpt from my new whitepaper which you can download here.
It’s almost funny the way negative retail holiday stories so predictably appear. This year they are three weeks earlier than last year with Mike Kraus headline, “Lower Retail Sales Predicted This Holiday Season” on AllBusiness. In spite of the fact they quote both the NRF and ISCS as saying it will
Continue reading Beware of 6 Retail Holiday Doom and Gloom Stories »
The current state of retail trends is alarming; from what passes for service, to the hype of online coupons and “going mobile.” If you are a C-level executive, owner or manager you are bound to hear that retail has “fundamentally changed” since the recession. It has but not how you may think.
That’s why I researched and created this manifesto detailing the great dangers that exist for retail along with how to fix them. Below is the setup to the special report detailing the important retail trends. To receive the full manifesto by email [registration required] click on this link, the blue graphic below, or at the end of this post and let me know your thoughts.
The Situation
Have you ever seen one of those movies like War of the Roses or American Beauty where the characters have been together a long time but don’t really talk?
You know, the old couple who dismisses the other’s feelings? The young couple ready for divorce?
They all have one thing in common, one partner became numb to the other person. After years of abuse or neglect, they feel abandoned and disempowered. Crying for someone to notice them they turned inward. Or turned to drugs or alcohol to numb the pain.
I think that is what we have done to customers in retail shops. Whether it is the big-box or the specialty independent retailer, we have destroyed the in-store relationship by hiring employees who have no interest in truly helping a customer or business, we have let them thrive as long as they could stack merchandise and keep the store organized.
We collectively have let customers find frustration, anger and disappointment where they once found fun, enjoyment and fulfillment.
We didn’t realize how angry they were getting.
Until…
Until the Recession occurred and Continue reading Manifesto: Brick & Mortar Retailing At Risk In The Digital Age »
With the struggling economy, I hear a lot of independent bricks and mortar stores saying they need to build an online store. The image is millions of people perusing your products, shipping to exotic locales like Pacoima, Paris or Peru. A website delivering the amount of customers you lost in the last two years with low overhead.
Here’s the reality: major brands are segmenting visitors to their websites by person, they are tracking where you the customer went to customize their banner ads and even which page you will see when you return. They have a valuation for each consumer relative to each SKU, they know how the consumer will react, to which offerings and when, how fast they’ll shop and what % they’ll have to eat in returns.
They can connect the dots of a customers’ age, past purchases with other online sites, household income and spending patterns. They know what the consumer zoomed in on, what they reviewed, with whom they have social media influence, what they researched on a page but purchased on another. They can track back their online wardrobe purchases from the past six years and build a virtual closet of what the customer owns.
They know who the bargain hunters are – like a parched woman in the desert dying for a drink, the die-hard bargain hunters will wait until the price drops to what they will pay – they know they are in the distinct minority and make up those losses elsewhere.
They know who the high priced affinity shoppers are - the 5% of people making 20% of purchases. Because of that, they can micro-target whoever they want with a customized list of products suited to that one consumer.
How do I know this? At the National Retail Federation’s Big Show, Nielsen said they track 5.55 million transactions a day worldwide, that they slice, dice and resell that information to major online sites.
Here’s the point, if you can’t be as committed as Amazon, Best Buy, Toys R Us, and the big boxes to deliver a seamless experience, then don’t tip-toe around it. Heck, even Sears which is dying as a retail bricks and mortar store, is committed to capturing online biz with their new iPhone apps as well as their marketplace site , then put your money elsewhere.
Oh and one more thing: many of these big guys are selling merch online at a LOSS to build fans. 
Take a look at January’s price for Sarah Palin’s Going Rogue. List price was $28, Amazon had it for $9.98. That’s probably $5 below what the average small bookstore would pay for it exclusive of shipping.
Just how much profit would you have to make to recover the loss you would incur if you matched Amazon’s price? Since a great independent business only keeps about 3 cents out of every dollar, one book at that price could take $150 in profitable sales to make up for that one discount.
Its those kind of decisions you have to be able to make in your bricks and mortar and online store. I cover more of the financials in my new book.
The easy money online has passed. If you want to have an online store presence, you need to invest the money to be at least as good as the big boys. Just like an independent coffeehouse has to be at least as clean as the local Starbucks with a speed of service no slower, with a product at least as fresh, you have to meet the competition’s standards just to be in the game.
Don’t pay attention to these harsh web realities of 2010 and you’ll continue to discount your goods online, upsetting your in-store customers, robbing your store of cash flow and losing focus to what really can move profits – your interactions with customers on your sales floor.
If you can commit to making your site vibrant, not just a discount place but also offering unedited reviews of your products, number of items in stock and online chat – have at it! A better use of your money is to make your website a draw to customers, then give them a reason to come into your store so you can standout, sell more and develop a relationship built on something other than low price.
What say you?
I attended the National Retail Federation’s 99th Annual Big Show in New York this past week. While primarily geared to the biggest retailers, they had an excellent half-day sponsored by American Express OPEN for independent retailers, which was a first and should be expanded. 
No real surprises as to what the most prevalent topics would be: social media, new ways of using technology both online and in-person, and m-commerce (mobile phone payments and shopping.)
Personalities are the focus of my new book so I might as well tell you now, I’m a Driver personality; an innate fixer. While I think it was a great convention, here are fourth things that would have made it even better – maybe next year when the Big Show turns 100:
1 – A Giant Twitter Board.
Instead of rehashing social media do’s and don’ts like it was 2008, how about a dozen huge HD displays showing actual tweets about the largest brands in attendance. Bonus would be displaying all the #nrf11 tweets in real time – both good and bad. The board could do the same with Facebook Fan pages and others. It would have brought the need for monitoring social media, personality of your business, etc home to all the attendees much better and sparked dialogue among attendees.
2 – Wi-Fi Throughout The Javitts Center.
This has to be embarrassing to NRF that this facility can’t provide reliable connections. NRF should partner up with their solution providers AT&T and Verizon and the rest to fix it. Social media was worthless on the show floor and cost vendors some buzz.
3) Split The Award.
The NRF Foundation Customers’ Choice award, conducted by BIGresearch came up with these results:
What disturbed me about these awards was that most were online shopping pages. Though 90% of business is still done in stores, 8 of these awards went to only 9 or 10% of the industry; LL Bean only has about 14 stores nationwide.
“Customer Service” is a very gray term. Was it because you could return things easily? You got great coupons? They had free shipping? Is that “customer service”? Not in my book.
This is a dangerous message to me that it is not about PEOPLE but policies. I would suggest NRF split this award going forward into the top 5 online shopping pages (like Overstock.com, Amazon, etc.) –and the top 5 bricks and mortar stores that may also have a multi-channel approach (Nordstrom, JC Penney, Carte & Barrel, etc.) Otherwise, it’s just a way of rewarding the programmers, not the people who interface with customers every day. Which leads me to my fourth…
4) Remember It’s About People, Not Computers.
Got it technology is important. Got it analysts can slice and dice information a million ways. Got it the IT gurus know who’s shopping. But how can we hear over and over again about the “customer experience” and leave out the people engagement? How do retailers surprise and delight when management has decided to manage by % of labor, not human capital? Smart retailers will realize that they need to sell the merch in 2010, not just stack it. That doesn’t come about by price-matching and encouraging customers to stare into the palm of their hands, but engaging them with interesting and interested employees.
The National Retail Federation is a great organization that brings the industry giants in one place each year as well as sponsoring various events and programs throughout the year. If you attended the convention this year and any of these ideas have value or if you can think of others, please include in your comments below.
Tomorrow: putting some of the flagship retail brands to the test in SOHO and lessons for success.
I’ve been in NYC since Saturday at the National Retail Federation’s BIG show at the Javits Center. I’ll be posting my thoughts over the next few days between speeches. One of the most talked about areas was the Sonic Bar Experience. It was a pavilion featuring several new technologies and how they might be used in the music store of the future.
One of the most interesting was Joe Engalan from VECTORform who took the time to explain how his company took last year’s hit product, the large format, multiple image Microsoft computer table and wrote a new interface for a music store.
Joe Engalan, Head of Development for VECTORform
They also hooked up a wall unit to show the dozens of onlookers. With a “gee whiz” type of attraction, Joe showed how someone could come into the music store and lay down a card that had their personal information (probably evolving to their cell phone.) The computer would read it instantly and read their personal music like their Ipod playlist, maybe make suggestions. OK, so what Joe, the Genius playlist in Ipod already does that.
True enough but it also could let you know which of your artists were coming to town and get tix for you, it could show you their new videos and more.
You could also mix your own dj mix using the cool touch interface (which is available now as a free download to your Iphone from the App store – search “Surface DJ”). If you liked what you created, you could email it to yourself. Or drag it to your address book on the table to the right and email it, or the tix, or the song, to your friends.
As we talked further, it seemed this would be much better at the premium product level where someone could work with the customer and use the table to interact and guide the customer.
Joe smiled and told me about a BMW dealer in Germany using it to show customers exactly how they could customize their BMW. For the dealer, there are cards with actual samples of every leather. Once the customer finds the exact shade they want, they place the card on the table, it reads and stores it. They can do this down to the minutest detail.
Sure it can generate pictures at various angles but it captures all of the information, stores it, can email it and issue another card the customer can simply take with them to order online, call or email. All that time is not wasted and the employee who helped them gets the credit – brilliant!
Are you going to see this in a year or two? Definately not in the mass markets but as retailers are looking to differentiate themselves, make shopping fun and technology increases accuracy and choice, you’ll see it in premium brands.
Imagine if you were able to bring in a photo and such a system could read the photo, add it to the table and you could choose your flooring in real time from actual samples in store. Or do over your kitchen cabinets. Or add your Hunter Douglas window fashions. Anywhere thousands of dollars are being spent for something customers traditionally have to take on trust should be looking at this now to brainstorm what such technology could do for them!
In coming days I’ll update you also on KeyRingThing, the Microsoft Commerce Server robot, Creative Communications direct mail kiosk and even CEO Lee Scott’s revelation that just last week Wal-Mart had a 25% increase in a very premium product. Stay tuned!
