Retailers are trying to keep up with the price-cutting frenzy of competitors, extreme-couponers and daily deal sites.
Many feel they can only attract shoppers if it is a “deal,” so that is how they are merchandising their stores.
Not necessarily smart… Continue reading Merchandising: How To Attract Retail Customers Without Discounting »
Manufacturers took a lot of flack when they opened distribution channels like big box stores and sold to online retailers. As a businessman, who could blame them? To grow sales you need new ways of delivering your products to more customers.
That’s why the announcement by Hunter Douglas Window Fashions Monday was such a bombshell. In an email President & CEO Marv Hopkins said in part, “We have made the decision to cease sales of all Hunter Douglas brand products through the large and growing Internet sales channel, effective June 1, 2010. By discontinuing Internet sales, Hunter Douglas will lose significant sales volume in the near term. We are confident, however, that this policy will best serve our goal of preserving and enhancing our brand image and reputation and will also lead to far greater sales through our Aligned Dealer network over the long term.”
This is a game changer. All we’ve been hearing about lately is the growth of online shopping and by extension shopping via mobile. With this move Hunter Douglas has said, ‘Even if it hurts sales, we’ll control our brand, our standards and customer satisfaction.’ They have embraced the expertise of their extensive dealer network and in particular their top-tier Gallery dealers who have invested tens of thousands of dollars in fixtures where you can see all of their products in actual windows, sales training, e-learning and product knowledge. This is their reward.
Hunter Douglas sold nearly $2.3 billion in 2009, this isn’t some little company with a few employees.
Online shopping is frequently only about price, not fit or service. Hunter Douglas’ independent bricks and mortar dealers were the ones performing the hard work of explaining to the customer what their options were and then being rewarded fixing possible mistakes when the customer ordered online. They have expanded their dealer tools and web presence to drive business to their bricks and mortar dealers.
To help you see the impact of such a decision, look at this like Starbucks eliminating all of their licensing agreements with places like United airlines or various supermarkets so you could only find Starbucks in their coffeehouses that used water filtration, the best brewing equipment and had extensive training. They wouldn’t let others undermine their quality name. You can learn more about their strategy from these quotes from Hunter Douglas VP of Merchandising Joe Jankoski.
Online isn’t the begin all and end all, it still only represents about 9% of total retail dollars. Bricks and mortar stores aren’t going away and here is a company willing to stake their future to the dealers who made them successful. Other manufacturers need to look at this because their brands can be commoditized as they are reduced to price and the brand cannot manage that online.
Maybe there’s a lesson for your bricks and mortar stores as well. Instead of chasing the fickle coupon clipping, Internet scouring cheapskates who often cause more problems then they attract, focus on your core customers. Reward them with the integrity of your brand providing an exceptional experience and hold them tight so they know their number one priority is them – not some faceless keystroke.
I recently read a blog post that the world doesn’t need what you have to sell; that the world can get by without it. And if they do, they’ll get it with or without you.
Well yes, I guess that is true to some extent. But I think the world needs what you have to sell.
I was selling when I was 3
Take coffee for example; everyone knows it. If they were to blind taste-test it, I’m sure 90 out of 90 people could tell you, “that’s coffee.” But is it good coffee? Is it bad? Is it old? Is it to their liking? All of that comes about by educating customers as you sell them.
For example, as a coffee drinker, do you know why the coffee you make at home doesn’t taste as good as the coffee you like at the big chains like Starbucks or Peets? Here are a few facts:
Since coffee is 98% water, they use a reverse osmosis system which removes microorganisms, organic chemicals, and inorganic chemicals, producing very pure water. Most people use tap water full of impurities and chemicals.
Since coffee loses 25% of its’ flavor within two weeks of roasting, they only use coffee roasted within days and keep it whole bean until just ready to brew. They store it in airtight containers. Many home users store their coffee either whole bean or ground in the refrigerator freezer where it can absorb flavors and the delicate oils can degrade.
Since the true flavor of coffee is produced by the oils which rise to the surface of the bean during roasting, the beans are ground which allows more surface for the oils to mix with the water. Most home grinders slice and dice the beans which also builds up heat degrading the oils.
Coffee oils are what make it delicious
Since you only have one shot at getting the oils from the beans, they use water just off boil to flood the grounds and drain quickly which releases the oils but leaves the “graininess” of the beans behind. Home brewers often recirculate the coffee back over the grounds which brings out the grainy flavor.
Since the beans are to be brewed for drip coffee, they grind the beans specifically for that brew method. Many consumers use a generic grind which can be too large letting the water go through too quickly for the oils to release or too small letting the coffee’s more bitter flavor come through.
Since the oils are what makes the coffee, they use a lot of coffee, about two tablespoons per 6 oz of coffee, that’s about a ¼ cup for a 12 oz mug. Most people use half as much which results in a weak brew.
Most people use a cheap coffee maker which never gets the water hot enough and then keeps applying squirts of coffee over and over to the beans which gives a weak brew, more like dunking a tea bag than brewing the coffee.
Since coffee begins to break down after brewing, chains throw out unused coffee on a regular schedule (usually within two hours) and they never put on a burner or reheat. [Except in Canada where consultant Doron Levy posted about Tim Horton’s] 
Some people actually reheat coffee in the microwave.
Do you need all that information? Do you want all that information?
An Analytical personality probably will want all the nuanced details which make the coffee better. A Driver personality could probably have a taste test with a cheap Krups $39 machine and a Capresso $219 machine with the salesperson demonstrating how the coffee tastes and let the customer decide.
The problem is 63% of the world, the Expressive personalities and the Amiable personalities, will be overwhelmed by much of that information and even the price tag. They often settle because no one ever took the time to show and sell them the differences of what it takes to get as close to their favorite coffee house taste as possible. So they settle for the $39 machine because Macy’s has a coupon, robbing themselves of the experience of a great cup of coffee in their home; especially if they are trying to save money by making it at home in the first place.
I used coffee in this example but it could just as easily be window coverings, flooring, cashmere sweaters, you name it.
Until you and your crew can understand and model that, you’ll be stuck with a race to the bottom cutting profits and crying the blues.
You want to succeed ? Remember, the world needs what you have to sell!
To learn more about the various personalities and how they play out in your crew and customers, order my book, The Retail Doctor’s Guide to Growing Your Business (Wiley & Sons).
They all laughed at Christopher Columbus when he said the world was round; 
They all laughed when Edison recorded sound;They all laughed at Wilbur and his brother
When they said that man could fly;They told Marconi wireless was a phoney
- George and Ira Gershwin
A few months ago it was leaked that Starbucks had created a new instant coffee. Pundits scoffed, what were they thinking?
This week the instant coffee arrives in stores with the name: Via. Ad Age had a great story about how Starbucks plans to market the new blend. It reported in part, “The chain is expecting between 8 million and 10 million consumers to visit its 7,500 company-run cafes in the U.S. and Canada to participate in a taste test that runs Friday through Monday. Participants will receive a “thank you” card good for a free coffee on their next visit, and $1 off their purchase of Via at any Starbucks.
The CEO chairman and mastermind of Starbucks Howard Schultz said in a call with reporters,”I’ve been fooling people for almost a year now, at home, at the office. I make coffee for my wife almost every day. I tell people this is the instant version of Starbucks brewed coffee and they’re shocked.”
What makes this such an interesting story is that I can’t think of one other brand trying to get you to try their cheaper version and then proudly saying you can’t tell the difference. It’s kind of like Ralph Lauren’s POLO or Coach spending millions to tell people their outlet stores had the exact same merchandise.
“This is not your grandmother’s instant coffee,” Schultz said. “The quality of Starbucks Via is a mirror image of the quality and taste of Starbucks brewed coffee.”
This is not like GAP owning Old Navy but defying someone to tell the difference. GAP realizes they are covering two distinct markets that have some overlap and my guess is so does Starbucks but they are crazy like a fox.
Do they really expect the Starbucks venti customer will switch to instant? Probably not but it gave them the opportunity to come back to the market with lots of press. They also sent out coupons to their 4 million Facebook Fans. What was the hook?
You have to come in to the stores to taste it.
Whether they buy Via or not, Starbucks is expecting 8 to 10 million customers to visit from Friday through Monday. And while they’re there they also may become reacquainted with the habit of their morning coffee.
In a recession the first thing to go for some are the indulgences of specialty coffee; a weekly habit can easily cost $100 a month. It’s not a secret that their traffic counts are down, this may just be the gimmick to bring those who have built Starbucks into one of the most easily recognized brands in the world back to the cup. They’re addicts after all trying to be good and not realize they are being led down the garden path to their old ways.
Via
Sure, Via is a product that is targeted to the larger fast food and vending machine market which is a big; somewhere between 17 and 21billion. Yes that’s with a B. Who wouldn’t want a branded Starbucks cup of coffee out of a vending machine at your mechanics or hospital waiting room over the swill that had been sitting on a burner for two days?
Pundits are still puzzling why Starbucks would “push instant” at the expense of their premium brand. Crazy like a fox.
Notice they could have just as easily sent packets in the mail for you to try or bundled it with your morning newspaper. But they knew the goal of their event: to get people to come back to the store and rebuild a brand sorely in need of a jolt.
Instead of thinking how you can give profits and product away, find a way to have the guise of a giveaway mask your main objective: to get them to return to your store.
Numerous articles covered Starbucks shareholder meeting late last month where they talked about the 900 store closings in the US and Canada in 2009. One of them can be read here.
With Starbucks unique ability to spot great locations, the leases already signed and the equipment already there, is Starbucks preparing to franchise those locations? All signs seem favorable.
While they do have some partnerships with notably Magic Johnson in inner-city areas, as a whole franchising is not something Starbucks has or will pursue under their ubiquitous green logo.
The stores aren’t generally big enough to support a Dunkin’ Donuts and I doubt if Starbucks would want any other company such as Caribou Coffee, It’s A Grind Coffee or the coffee company with the worst name ever for marketing -Bad Ass Coffee -to capitalize on their pioneer work to land coffee customers . But…
But what if Starbucks sold off their lower performing stores as Seattle’s Best franchise units? 
You would have the power of the national brand, they could look like they are taking on Starbucks and since Starbucks already knows the market, they could help individual franchisees build on what Starbucks learned. In the end, it would all still feed the same shareholders.
In a press release dated February 3, Seattle’s Best Coffee announced “it will expand its franchising program to offer cafe opportunities in the U.S. This strategic decision to build Seattle’s Best Coffee through franchising allows its parent, Starbucks Corporation, to utilize a multi-brand strategy that leverages both the Starbucks and Seattle’s Best Coffee brands to capture more of the growing specialty coffee segment, ultimately providing options and variety in the marketplace. This decision comes after nearly four years of successful development of the Seattle’s Best Coffee brand, through a national licensing program, to more than 550 cafes across the U.S.” In essence they would be building their own phantom competitor.
It wouldn’t work to sell the 900 Starbucks locations off piecemeal to mom & pop owners as it would take too much time and the new owners would enjoy no name recognition. It would be too much of a leap for coffee lovers to go from the preeminent national chain with high standards to for instance, Vivian’s Espresso House. Plus the fact that the leases, even with depressed demand, would still be more than most single unit owners would be willing to pony up; I know this from experience.
If they asked your opinion on a location and you told them, “the money is at Third & Main, but it’s going to cost you,” a few would come back to you with a location a block in off Main with little foot traffic and impaired sight lines. They would justify it by telling you, “My rent is 1/3 less so I’ll still make money even if demand is 1/3 less.”
This was always a ridiculous way to justify being pennywise and pound-foolish. The best opened at Third & Main.
If you don’t pay it in rent, you are forced to pay it in some type of advertising to get people to find you. The smart money as we all know is location, location, location. You don’t want to be 100 feet from success.
Times are tough for Starbucks, you may have read my post about their new “value meal” breakfast a few weeks ago. They are looking for the transition from coffee craze trend, to staying in business. Franchising, just might do the trick due to their locations.
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