Posts Tagged ‘retail’

11
Mar

The Slashing & Burning Stops. A Bit. For Now.

   Posted by: Michael Carney    in retail

We never thought we’d see the day. Wal-Mart, the global giant that’s kinda the hero to many of our leading chain retailers, has cut too deep and is opting for a bit of TLC instead.

Bloomberg takes up the story:

Wal-Mart Stores Inc., the world’s biggest retailer, is bringing back some products it had removed from shelves last year as shoppers turn to competitors for a wider selection of merchandise.

The company met with suppliers about reinstating items to keep customers from going to other stores, said Leon Nicholas, a director at consulting firm Kantar Retail who has spoken with manufacturers about the move.

Wal-Mart is returning some health and beauty supplies, cereal, pet treats, soda and laundry detergent, Nicholas said. The retailer said last month its U.S. stores recorded a drop in sales and had a “slight decrease” in customer traffic in the quarter that ended in January.

Last year, Wal-Mart reduced the number of merchandise varieties, known as stock keeping units, or SKUs, sold in the U.S. in categories such as laundry detergent and bedding. U.S. stores cut inventories by 7.6 percent while increasing sales by 1.1 percent.

Now Wal-Mart is telling suppliers it cut too much in some areas and wants to bring some items back. The retailer is noticing that consumers are visiting other stores and no longer going to Wal-Mart for everything they buy.

Is this a significant paradigm shift? Consumers, now growing more and more accustomed to the Long Tail appeal of the infinitely deep shelves that line the Internet, voting with their feet? Or is it (heaven forbid) that consumers really are brand-loyal, at least to some extent?

It’s a fact of recession life that consumers tend to stick with the brands they know. When there’s not much money around, they want to be certain it’s well spent — and one of the ways to do that is to stay with the familar, the reliable product experience they’ve enjoyed in the past.

Alas, we do fear that the current change of behaviour by the Bentonville behemoth is just a momentary blip in the ongoing struggle between Good and, well, Good-but-in-a-different-way. Until Weta Digital can invent some real-world version of “the shelves that came out of nowhere in the first Matrix film and were filled with absolutely everything”, we’re stuck with a retail environment where longevity instore is based on the “what have you done for me lately” model.

Other news out of the US is decidedly less bullish on the notion of SKU rollback.

According to STORES magazine, efforts aimed at optimizing SKU assortments are in the works at numerous supermarket chains.

SUPERVALU CEO Craig Herkert recently told analysts that the company plans to edit the selection in some categories by as much as 25 percent. The focus is on reducing package sizes rather than entire brands or lines of product, yet in the categories that have already been “optimized,” some brands have been eliminated completely. Herkert says SUPERVALU’s goal is to “increase holding power for our best-selling items and add space for SUPERVALU’s owned brands.”

Industry watchers are convinced that Kroger is also in the middle of an aggressive SKU-optimization process. Though Kroger executives decline to provide specifics, it is widely known that the chain eliminated 30 percent of the SKUs in the breakfast cereal category about 18 months ago. Execs have been largely pleased with results; only one item originally cut from the mix was reinstated.

Trimming assortments obviously frees up shelf space for more economical ["profitable"] in-house brands. Experts believe that the surge in private-label goods experienced by most supermarket retailers over the last 12 months can be attributed in large part to the economy, though the trend has been building for years.

When the nation hit economic low tide, consumers who had heretofore resisted private label began trying items out of necessity. What many shoppers discovered was that the store offering was often as good as the branded product, but cost less. And some private-label products – Safeway’s organics line, for example – are so strong that they have emerged as “brands” in their own right.

As the quest to improve assortment optimization progresses, questions are being raised as to whether shoppers will continue to purchase private-label goods as the economy improves. There is no simple answer. In some categories – like paper towels or plastic wrap, where there is little perceived difference – experts believe private-label sales will remain strong. In categories like ice cream, where the store brand may have achieved a lift as a result of price, the jury is still out.

One consumer trend that Bob Phibbs, known as the Retail Doctor, insists has staying power is the desire for fewer choices. “The brand model that calls for more and more line extensions doesn’t seem to be working,” he says. “There must be 25 versions of Crest and Colgate on the shelf, and if you stand and watch shoppers, most of them are so overwhelmed that they just reach for the old standby.

“In fact,” he continues, “research shows that 63 percent of shoppers are the type of personality that wants to buy the same thing they bought last time … The challenge for the retailer is to whittle down the choices in such a way that it’s meaningful for their unique customer. That doesn’t have to be bad news for brands, but it does mean that if a supplier wants to win space on the shelf, they need to deliver a product that’s going to hit it out of the park.”

Taking Out Your Own Knife
We rather like the notion offered up by Bob Byrne of management consultants A.T. Kearney New York. He believes that marketers should open up their own veins and make the necessary incisions themselves. Here are his ten insights into the delicate art of DIY SKU Surgery:

1. Start with the consumer, not with you.
Redefine what your consumer values, wants, buys, uses—and work backward from there. Although most initial line and SKU decisions are based on rich consumer understanding, they tend to be unilateral and narrow. What have all of these individual decisions done to the overall portfolio and the consumer’s interaction with it?

2. SKU complexity is a hidden consumer tax.
Complexity costs are not a burden on the manufacturer. In reality, these costs are passed on to the consumer, as a kind of nVAT (non-Value Added Tax). You may have 50 variations of shampoo, but 80 percent of your consumers are buying just 10 of them—all priced 7-8 percent too high.

3. A “segment of one” is so 1980s.
Do consumers value variety? Certainly not the way brand managers do. The record is clear: more choice seldom results in more sales, and may even cause shoppers to simply walk away from the shelf.

4. Define your target SKU portfolio by which SKUs are necessary, not by which are unnecessary.
Reverse your thinking: Focus on necessary SKUs. Then use research on consumer preferences and switching behavior to design an optimal product portfolio based on what consumers really want, not what you can produce most efficiently.

5. Cutting the tail (bottom 30 percent of SKUs) is easy—and fruitless.
Many SKUs end up as consumer or business “mistakes” that fragment volume for unnecessary or outdated reasons. But these mistakes are not just the low-volume SKUs!

So forget about eliminating just the easy 30 percent and instead focus on eliminating unnecessary medium- and high-volume SKUs. Imagine taking your highest-volume SKU in a category—24-oz. white—and replacing it with two SKUs—20- and 28-oz. white. Both would probably be pretty good sellers, but they’d be fragmented into two mid-sized SKUs. Wouldn’t you prefer to (re)-consolidate into a single Power SKU?

6. SKU optimization is a tool, not an objective.
This is a huge trap. Is reducing SKUs 20, 30 or 40 percent good? Is it bad? In truth, it’s neither: It’s just something to do. What are you aiming for?

7. The best objective for an SKU optimization effort is growth, not cost reduction.
A large body of evidence shows SKU reduction can be a growth initiative.

How? Start with out-of-stocks. Most leading brands are out of stock at retail 4-6 percent of the time. But the SKUs that are out of stock are not the slow movers; they are the Power SKUs. Simplify the line. Simplify the shelf set. Reduce out of stocks, and grow volume.

8. An effort for SKU optimization should be led by marketing and sales, not by finance and operations.
If you’re starting with the consumer, you need to start with your departments that are closest to the consumer. So rather than running a supply-chain initiative, put marketing and sales in charge. Give them an opportunity to clean out and re-fashion the portfolio. (And give them very big targets.)

9. Use the same discipline and marketing rigor in de-listing SKUs that you used in launching them.
When a company introduces a new line, an enormous effort ensures that customers switch from competitors’ products and don’t cannibalize sister brands by using special introductory pricing, coupons, advertising, sweepstakes, etc.

Now, what happens when a product or SKU is de-listed? Nothing. Why shouldn’t the same discipline and energy expended in fattening the portfolio be expended to get it into shape?

10. SKU optimization should not be a company-only initiative—include your retail partners and share the benefits with them.
Retailers will also reap benefits—better shelf alignment, lower out of stocks, rationalized promotion calendars, and improved inventory turns. It only makes sense to include retail partners in your thinking about SKU optimization.

Marketers as surgical partners rather than patients? Rather like the notion.

Post to Twitter Tweet This Post

Tags: , ,

5
Nov

Idea Worth Stealing: Pop-Up Store Network

   Posted by: Michael Carney    in Experiential, Marketing, Marketing Ideas

Those fine folks at Springwise (an excellent resource for stealing ideas — get yourself on their newsletter mailing list) have pointed us in the direction of  “a nationwide network of pop-up marketing places”:

BrandNew Stores aims to turn fleeting pop-up shops into a chain concept, creating fixed spaces where brands can temporarily present themselves in a regular retail environment. Its first branch opened in the Dutch town of Amstelveen last month, where Alfa Romeo used the shopping mall space to present its new Alfa Mito model. It’s all about experience marketing: companies can use a BrandNew Store for a few weeks to present a product or service, or to reach out to new and existing customers without going for immediate sales.

Targeting premium retail areas where unhurried leisure-shoppers are more likely to explore a client’s offerings, BrandNew Stores will add locations in Groningen, Den Haag and Rotterdam later this year, with more cities to follow in 2010. The stores will be decked out with video screens, interactive floor projectors and other elements that make it easy for brands to present themselves.

Exclusivity has been a major element of the pop-up phenomenon, and brands have mostly limited their temporary attention-seeking abodes to major cities like London and New York. By creating a nationwide network, much of that exclusivity is lost, and the concept becomes more of a regular marketing tool. Which has its benefits: brands can reach a much wider audience, and being able to design once and then move everything to another city significantly brings down the cost per location. Since rents are still down in most malls and high street shopping areas, now’s the time to bring this to other countries.

What can you do with a Pop-Up store?

Lots of things:

nike-pop-up

How about a purpose-built Nike Tennis pop-up-shop, just 1km from Wimbledon? The store was a hub of tennis activity, featuring vibrant art installations, grass-covered signage and historic memorabilia from Nike’s past Wimbledon champions. As a pop-up shop it only existed for the 2-week duration of the tournament, after which the store returned to its original look and function as a DVD rental store.

How about a water store?

vitamin_water_store

Jewelry:

Sikara

Sikara & Co. Jewelry Pop-Up Store makes Union Street in San Francisco its new home as a “pop-up” shop.

“This style of store front allows us to open a temporary store in San Francisco and market test our collections as we roll them out nationally; we are very excited to be one of the first pop-up stores in the city,” said Mousumi Shaw, Founder and Creative Director.

The temporary store features globally inspired designs that fall into four collections: Indian, Italian, Mexican and Egyptian.  Limited edition pieces will also be available for the holiday, many of which are exclusive to the Union Street pop-up.  Sikara & Co. has partnered with San Francisco Stylist, Jill Siefert, as she will be helping customers most Mondays in the store with free styling tips.

As the LA Times reports, popup stores are a blessing to landlords in the current economy:

Designed to generate buzz and lure shoppers with a get-in-while-you-can appeal, pop-ups allow merchants to move quickly, opening up shops to test a new product or market, and closing them without much fuss.

Gap Inc. recently opened a pop-up shop on trendy Robertson Boulevard to promote its new premium denim line; celebrities including Halle Berry and Ashlee Simpson-Wentz turned out to the shop’s launch party. Toys R Us Inc. is setting up about 80 temporary toy shops nationwide, including several at upscale malls previously unavailable to the chain. J.C. Penney Co. touted its back-to-school offerings through interactive pop-up displays in half a dozen Southern California malls.

The pop-up phenomenon is not that new. BusinessWeek wrote about it in early 2007, giving a solid business perspective on the experiential marketing possibilities — and providing us with more inspiration along the way:

Four days. That’s how much time New Yorkers had to get a piece of the upscale design line Proenza Schouler at discount prices. On Feb. 2, the über-chic discount retail store Target popped open a store in lower Manhattan, to display this latest high-fashion-at-low-prices design line. The store then closed on Feb. 5.

In a world of BlackBerries and instant messaging, there’s a growing sense of haste in people’s lives. In response, companies trying to get consumers’ attention are trying to create a sense of urgency. For retailers, who need to get people into stores to try out their clothes, their shoes, and any other new products, the store itself is the new limited edition. So limited in fact that it may last a mere 96 hours. “There’s a certain passion about things that shout ‘act now!’ and that has transpired into the way we shop too,” says Claudine Gumbel, co-founder of Think PR, a New York fashion publicity firm.

These days, retailers are adopting the concept of a pop-up store with gusto. A pop-up store opens up at an empty retail location for a few days in a major city, or a mall, with great fanfare. And then, poof! It’s gone. In November [2006], Nike  opened a pop-up store in Soho for just four days for the sole purpose of selling 250 pairs of the Zoom LeBron IV NYC basketball shoes, named after the popular 22-year-old NBA All-Star LeBron James. The special edition shoes were priced at $250 each.

In May and June, Gap kicked off a ’60s style tour, where it used a school bus as a traveling pop-up store that made appearances in Los Angeles and New York and stopped at beaches on both coasts. Instead of seats, the bus sported shelves filled with t-shirts, flip-flops, and beach hats that people bought and paid for at a cash register near the driver’s seat. Even the stodgy giant Wal-Mart adopted the concept last April, when it showed its new fashion line Metro 7 in a Fashion Cabana in Miami’s South Beach district, open for only two days.

BUDGET BUZZ
Retailers use pop-up stores to generate buzz and excitement around a new product launch, as in the case of Target’s Proenza Schouler line. Sometimes, the stores are a great way for stores to check the pulse of consumers and try out new products. Usually, they are less costly than television ads, which can run in the millions of dollars to produce and broadcast, and the stores generate similar buzz and publicity for new brands.

Even nonretailers are giving it a try. The U.S. Potato Board, which represents American potato growers, opened a pop-up store in New York, during the week of Thanksgiving, for less than $200,000. The group, with the help of cartoon character Mr. Potato Head, promoted the message that potatoes contain more potassium than bananas as well as nutrients like folic acid and vitamin C.

Pop-up stores have worked especially well, though, for brands that don’t have a retail outlet store. Currently, the carmaker Lexus is wrapping up its multicity pop-up art gallery tour in Chicago. There, it has rented retail space to showcase three avant-garde artists—a photographer, a video movie maker, and a wood carver—whom the company feels reflect the innovation and design elements of its latest self-parking car.

For much of last year, Ford opened kiosks in several malls around the country to show off its midsize Fusion. The kiosks, labeled Fusion Studio D, were targeted at women, and offered makeovers, fitness training, and health information. The kiosks would pop up in malls in cities around the country, just days before the local Susan G. Komen Foundation’s Race for the Cure, and signed up people who wanted to run to cure breast cancer.

LOOKING FOR KICKS
Of course, it’s not easy to set up a pop-up store [which is why the notion of a store network is so appealing]. Unoccupied stores in hot retail locations aren’t easy to come by [2009 update: more available now]. Moreover, they can backfire, if a retailer doesn’t staff the store with some of the best customer service personnel, who know enough about the brand. “We had to make sure there were people who live and breathe Florida to explain what they were missing,” says Nicki Grossman, chief executive of the Greater Fort Lauderdale Convention & Visitors Bureau, which set up a pop-up store—complete with sandy beaches, a golf putting hole, lifeguards, and beach beauties—in January in New York.

No wonder companies feel the pressure not only to be cool, but to offer visitors an additional kick. For instance, when electronics company JVC opened its pop-up store, it offered karaoke and let people film themselves using its newly launched video camera and make their own DVDs, which folks could then carry home as gifts. And sneaker maker Fila let people draw their own designs on a computer, which they printed on a T-shirt that shoppers could take home with them for free. “You had the sense that you are creating artwork and you are really engaging the consumer, which is the most important part,” says Gumbel of Think PR.

Retailers have clearly discovered that pop-up stores bring brands to life and let people sample products in a great format, without much cost. “Try getting that from a 30-second ad,” says Claudia Strauss, president of Lime PR, in New York.

Uniqlo, the hip Japanese retailer of casual wear, took the pop-up format to a new level late in the runup to the November 2006 opening of its New York store. To announce its arrival, it drove two shipping containers into the city and used them as stores that “popped up” in various locations over eight weeks to show off the company’s apparel:

Uniqlo

Uniqlo 2

Uniqlo 3

Uniqlo 4

Uniqlo 5

Pop-up stores — coming to an empty location near you. Are you up for it?

Four days. That’s how much time New Yorkers had to get a piece of the upscale design line Proenza Schouler at discount prices. On Feb. 2, the über-chic discount retail store Target (TGT) popped open a store in lower Manhattan, to display this latest high-fashion-at-low-prices design line. The store then closed on Feb. 5.

In a world of BlackBerries and instant messaging, there’s a growing sense of haste in people’s lives. In response, companies trying to get consumers’ attention are trying to create a sense of urgency. For retailers, who need to get people into stores to try out their clothes, their shoes, and any other new products, the store itself is the new limited edition. So limited in fact that it may last a mere 96 hours. “There’s a certain passion about things that shout ‘act now!’ and that has transpired into the way we shop too,” says Claudine Gumbel, co-founder of Think PR, a New York fashion publicity firm.

These days, retailers are adopting the concept of a pop-up store with gusto. A pop-up store opens up at an empty retail location for a few days in a major city, or a mall, with great fanfare. And then, poof! It’s gone. Last year, in November, Nike (NKE) opened a pop-up store in Soho for just four days for the sole purpose of selling 250 pairs of the Zoom LeBron IV NYC basketball shoes, named after the popular 22-year-old NBA All-Star LeBron James. The special edition shoes were priced at $250 each.

In May and June, Gap (GPS) kicked off a ’60s style tour, where it used a school bus as a traveling pop-up store that made appearances in Los Angeles and New York and stopped at beaches on both coasts. Instead of seats, the bus sported shelves filled with t-shirts, flip-flops, and beach hats that people bought and paid for at a cash register near the driver’s seat. Even the stodgy giant Wal-Mart (WMT) adopted the concept last April, when it showed its new fashion line Metro 7 in a Fashion Cabana in Miami’s South Beach district, open for only two days.

BUDGET BUZZ
Retailers use pop-up stores to generate buzz and excitement around a new product launch, as in the case of Target’s Proenza Schouler line. Sometimes, the stores are a great way for stores to check the pulse of consumers and try out new products. Usually, they are less costly than television ads, which can run in the millions of dollars to produce and broadcast, and the stores generate similar buzz and publicity for new brands.

Even nonretailers are giving it a try. The U.S. Potato Board, which represents American potato growers, opened a pop-up store in New York, during the week of Thanksgiving, for less than $200,000. The group, with the help of cartoon character Mr. Potato Head, promoted the message that potatoes contain more potassium than bananas as well as nutrients like folic acid and vitamin C.

Post to Twitter Tweet This Post

Tags: , , , , , , , , ,

2
Oct

Monthly Makeovers

   Posted by: Michael Carney    in Marketing Ideas, retail

The late retail expert Peter Glen ran a New York gift boutique that completely changed its interior design every month. Not just little changes, but a total makeover every month. It made the store a destination in its own right, as people flocked through the doors each month just to view the latest new look.

Is your business an attraction in its own right?

Do your customers shake their heads and say “you folks are incredible”?

What can you do to make your business an outrageous attraction?

Think about, and then swoosh – just do it!

Post to Twitter Tweet This Post

Tags: , , , ,