Retailers Miss Mark With ‘Targeted’ Emails

The Wall Street Journal: “Traditional retailers were once pioneers of using data to zero in on what customers want. But as the importance of their catalogs and mailings have been overtaken by email and other online media, they have struggled—sometimes to the frustration of their customers.”

Brendan Witcher of Forrester comments: “Nearly 90% of organizations say they are focused on personalizing customer experiences, yet only 40% of shoppers say that information they get from retailers is relevant to their tastes and interests. The ugly truth is that most retailers haven’t done the (hard) work of understanding how to use the data.”

“At no time is that more evident than during the year-end shopping bonanza, when retailers deluge customers with messages. During last year’s holiday season, retail emails increased 15% compared with the rest of the year, but shoppers opened 15% fewer of them, according to a study of eight billion messages by marketing-services firm Yes Lifecycle Marketing.”

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The 3 C’s of Retail Revival

Quartz: Ryan Raffaelli of Harvard “studies how mature organizations and industries faced with technological change reinvent themselves. Raffaelli has termed this line of research ‘technology reemergence.’ It began with his study of the Swiss watch industry, which collectively reinvented itself (and thus survived) in the wake of digital watches. Five years ago, he set out to discover how independent bookstores managed to survive and even thrive in spite of Amazon and other online retailers.”

“Here are some of Raffaelli’s key findings so far, based on what he has found to be the ‘3 C’s’ of independent bookselling’s resurgence: community, curation, and convening. Community: Independent booksellers were some of the first to champion the idea of localism; bookstore owners across the nation promoted the idea of consumers supporting their local communities by shopping at neighborhood businesses … Curation: Independent booksellers began to focus on curating inventory that allowed them to provide a more personal and specialized customer experience.”

“Convening: Independent booksellers also started to promote their stores as intellectual centers for convening customers with likeminded interests—offering lectures, book signings, game nights, children’s story times, young adult reading groups, even birthday parties. ‘In fact, some bookstores now host over 500 events a year that bring people together,’ Raffaelli says.” He adds: “The theoretical and managerial lessons we can learn from independent bookstores have implications for a wide array of traditional brick-and-mortar businesses facing technological change.”

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Black Friday Tricks of the Trade

The Wall Street Journal: “Instead of copying Amazon.com Inc.’s playbook, retailers such as Wal-Mart Stores Inc. and Target Corp. are coming up with new tricks to maximize sales ahead of Black Friday … In the months leading up to the holiday, Target has shifted away from ‘up and down’ pricing moves, streamlining the number of promotions to focus only on ‘impactful’ sales … The company has also reduced the phrases it uses for discounts from 28 last year to seven, dropping language like ‘weekly wow’ and ‘as advertised’ … It is also offering extra incentives to its loyalty card holders, such as early access to Black Friday promotions.”

“Wal-Mart, which has long emphasized an ‘everyday low price’ message, has been experimenting with a new online system, which at times results in higher prices online than in stores for goods that would otherwise be unprofitable to ship. Some product listings on its website now indicate an ‘online’ and ‘in the store’ price … The Bentonville, Ark., retailer said it would sell more exclusive products this holiday as compared with last year.”

“For the first time, Best Buy Co. offered hundreds of Black Friday deals on TVs and other devices in early November in hopes of driving sales before the competition heats up. The electronics giant has a price-matching guarantee, but the offer doesn’t apply to items on sale Thanksgiving through Monday.”

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Real-Time Retail: Fanatics Seizes Micro-Moments

The New York Times: Micro-moments “happen all the time in sports: A player reaches a milestone, has a breakout performance or is traded to a new team. Apparel companies have traditionally been poorly positioned to meet the accompanying fan demand as it surges. Fanatics … a sports merchandise company … is changing that and, in the process, carving out a lucrative niche in a fiercely competitive online-retail industry largely dominated by Amazon.”

“The company is similar to fast-fashion retailers like H&M, Uniqlo and Zara, integrating design and manufacturing with distribution to fulfill orders within hours. After the Chicago Cubs won the World Series last year, Fanatics used Uber to deliver championship gear to some fans within minutes … As a result, Fanatics has more than doubled its revenue in just a few years.”

“Among the micro-moments that highlighted the new need for speed was Jeremy Lin’s emergence as a sudden star for the New York Knicks in 2012 amid the so-called Linsanity phenomenon.” Fanatics chairman Michael Rubin comments: “When Linsanity happened, within 12 hours to 24 hours, there were no jerseys to get. So you had this huge demand, and there’s no jerseys available. Then you order them like crazy, and by the time they get in, the moment’s over.”

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Robo Ocado: The Grocery Without a Store

Fast Company: “Ocado, a British online-only supermarket that delivers orders to customers straight from its warehouses … sells everything you can find in a brick-and-mortar supermarket–from meat, dairy, and produce to its own brand of home products, third-party goods, and even flowers, toys, and magazines … While other companies rely on human workers to find and buy all of the items on an online customer’s shopping list, Ocado is using a new kind of robot–or, more specifically, a swarm of them.”

“At an Ocado warehouse in the English town of Andover, a swarm of 1,000 robots races over a grid the size of a soccer field, filling orders and replacing stock. The new system, which went live earlier this year, can fulfill a 50-item order in under five minutes–something that used to take about two hours at human-only facilities. It’s been so successful that Ocado is now building a new warehouse that’s three times larger in Erith, southeast of London. When it comes online, it will be the world’s largest automated warehouse for grocery shopping.”

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Amazon-Whole Foods Yields Instacart Boomlet

Forbes: “As the obits piled up, Apoorva Mehta couldn’t help but shake his head. It wasn’t his death that the press was heralding, but that of his startup, Instacart, a five-year-old grocery and retail delivery service valued at $3.4 billion. That morning in mid-June, Amazon stunned the world by announcing its purchase of Whole Foods for $13.7 billion. As shares of grocery chains plunged, many in the tech press noted that few had more to lose than Instacart.”

Yes, but: “As Whole Foods executives broke the deal news to Mehta and Instacart’s chief business officer, Nilam Ganenthiran, in a 6 a.m. call, the two messaged each other with thumbs-up emojis. As if on cue, Mehta’s and Ganenthiran’s phones began ringing and lighting up with text messages shortly after–and they didn’t stop all day. It was execs from grocery chains, including some of the ones whose stocks were cratering, calling to talk business.”

“Within months, Costco announced that it was deepening its partnership with Instacart and would offer delivery directly from the Costco.com website. After discussions that spanned four years, grocery giant Kroger inked a deal for Instacart to deliver from its Ralphs subsidiary. Several smaller chains also signed up, bringing Instacart’s partner count to more than 165.” Mehta comments: “It really was like a thermonuclear bomb against the entire grocery industry.When we look back, that may have been a turning point for Instacart.”

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Virtual Eateries Put the ‘App’ in Appetizer

The Wall Street Journal: “Tucked inside industrial parks, commissary kitchens and refitted basements in cities like New York, Chicago and San Jose, these restaurants have no dining room, no wait staff, no takeout window and no signage … Many don’t take orders over the phone and are accessible only through online services like Grubhub, DoorDash or Postmates. Virtual restaurants, with their low overhead, are allowing restaurateurs to shift away from the capital-intensive model that kills 60% of new restaurants in their first five years toward something decidedly more techy.”

“Virtual restaurants tap into a larger trend: Americans’ increasing aversion to cooking for themselves. For the first time ever in 2016, Americans spent more at eating and drinking establishments than on groceries, according to U.S. Census data. The food-delivery market is a small slice of that sector: It is only $30 billion in 2017, but Morgan Stanley estimates it could balloon to $220 billion within a few years.”

“The fundamental challenge that all these players are trying to solve is that prepared food remains one of the least-scalable businesses in our economy: Production has proved resistant to automation, the materials themselves are highly perishable and swiftly changing consumer tastes can destroy momentum. A typical internet startup can go from 3,000 customers to 3 million customers just by spending more on Amazon Web Services. No restaurant can do the same.”

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Amazon & The Delivery Experience

Axios: “Amazon has gotten so good at moving merchandise that it now accounts for 43 cents of every dollar spent online in the U.S., according to eMarketer … Lost in this torrent of news are indications that Amazon’s revenue formula is fundamentally changing: from a reliance on retail and cloud services, the e-retailer appears likely to power future growth with fulfillment and shipping services to third-party sellers.”

“Amazon’s latest offerings — Seller Flex and Key — are next in the line of this tradition. Seller Flex launched last month: It’s a new courier service that ships goods from outside sellers to customers’ homes. Amazon Key was announced last week: Using a smart lock and an indoor security camera, this program offers in-home delivery for Amazon Prime members. ‘This is not an experiment for us’: Peter Larsen, Amazon’s vice president of delivery technology, tells WSJ, ‘We think this is going to be a fundamental way that customers shop with us for years to come’.”

“The key to understanding Amazon is its monomaniacal focus on giving the customer what he or she wants, even before they know they do. Amazon is not going to wait around for FedEx and UPS to experiment with changes that could improve the customer experience, whether that means new products for home entry or faster delivery options. And history shows it would be wise to take notice when Amazon starts experimenting in your backyard.”

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Lord & Taylor Sinks Its Flagship

The New York Times: “In selling its Italian Renaissance-style building to a WeWork joint venture for $850 million, Lord & Taylor and Hudson’s Bay are acknowledging that even the grand physical shopping spaces of old are now worth more as office space catering to millennials.”

“As Lord & Taylor struggles to find its footing in the e-commerce age, WeWork is capitalizing on the needs of the new economy. The company is offering flexibility and informality to a generation that is increasingly untethered to traditional offices. It allows workers like entrepreneurs or graphic designers to choose the size and style of the space they prefer, and to lease it for as long or short as they want.”

Hudson Bay executive chairman Richard Baker comments: “What we figured out is that, for the retail business, we could make our stores more interesting and younger.” WeWork, he added, “was looking for great locations that were convenient and fun.”

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Late & Great: Arthur Cinader

The New York Times: The late Arthur Cinader “decided to start J. Crew in the early 1980s while running the Popular Merchandise Company, a business, founded by his father in Rye, N.Y., that used a catalog to sell affordable clothing and home furnishings directly to consumers … The new venture took the word “crew” from the water sport and affixed a J in front because it was thought to be graphically appealing … Mr. Cinader empowered his daughter, Emily Scott, to conceive of the company’s aesthetic and oversee the design of its apparel while he focused on the financial side of the business and on marketing through the J. Crew catalog.”

“J. Crew opened its first store at the South Street Seaport in Manhattan, followed by stores in San Francisco, Chestnut Hill, Mass., and other places. The segue proved successful, and by the mid-’90s the company had several dozen stores collectively generating revenue in excess of $500 per square foot … The success of the company owed much to Mr. Cinader and Ms. Scott’s scrupulous focus on their target demographic: affluent, high-achieving people who wanted to signal a certain pedigree with their fashion choices, but not one so stuffy that they would think twice before associating with it.”

“Articles in the business press over the years have described J. Crew’s niche as one notch below Ralph Lauren and one notch above retailers like Gap or the Limited. While the company’s first catalog featured photographs from the Weld Boathouse at Harvard, J. Crew marketed itself to the man or woman who might have attended any college or university and simply wanted to evoke a hint of the Ivy League.”

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