Technology Puts Retailers on the ‘Map’

The Wall Street Journal: “Making technology investments to improve customer experiences has traditionally been the domain of retailers, which have introduced robots, touch-screen mirrors and virtual-reality goggles to attract shoppers to their stores in recent years. But as pressure from store closures continues to mount, some mall landlords also are … investing in mapping functions to help shoppers find parking spaces, navigate mall corridors or check out a flash sale at a store one floor above. The goal: to better connect with shoppers in hopes of sparking more activity.”

“Jibestream, a firm that creates interactive mall maps to guide customers from store to store on their mobile phones as well as help them find parking, has rolled out its technology to hundreds of malls … Other vendors are offering ways for landlords to better analyze foot traffic in malls, a key metric cited by landlords and retailers as online shopping continues to gain traction and pose greater challenges to bricks-and-mortar stores.”

“By tracking the cellphone signals in a mall, companies can study the paths visitors take as well as how effective display windows and in-mall advertising are in drawing customers. This is similar to how is able to measure user engagement by how long cursors hover over a certain part of a webpage.”


Price Trap: Beware the Amazon ‘Buy Box’

The Washington Post: “Researchers at Northeastern University tracked pricing of 1,640 of the best-selling products on Amazon’s site over four months. In particular, they were examining what prices were featured in what’s known as the ‘buy box,’ the area on the right side of an Amazon product page that invites you to add an item to your cart … It has been estimated that about 82 percent of sales on Amazon are made through that box.”

“Amazon relies on an algorithm to determine which seller ends up in the buy box for any given product … the process is significantly more likely to give that spot to sellers who use real-time pricing, in which software is used to automatically optimize prices on the fly based on what competitors are charging.”

“Here’s why that matters: Most sellers using that kind of pricing model don’t have the lowest prices on the site. In fact, the researchers found that 60 percent of those that use real-time pricing have higher prices than other sellers of the same item on Amazon. Most of the time, the price difference is about $1, but … researchers found ‘many’ cases where the price difference was in the $20 to $60 range.”


Amazon Has Bullseye on Target

Quartz: “Target has a supply problem. The discount retailer has too much unsold merchandise on its shelves, and hasn’t figured out how to get all of it to customers quickly. To make matters worse, a new survey shows that two in five Target shoppers are also members of Amazon Prime and among those that aren’t, one in five are considering a membership in the next year.”


“Target has made some attempts to keep up: Participants in the company’s REDCard credit card program get free shipping on all online orders. ‘I do think we can get more credit for REDCard than we potentially have,’ Target’s chief digital officer told Recode last month.”


Treasure Hunt: The Joy is in the Journey

The Wall Street Journal: “The internet isn’t just a way to speed up the shopping experience; it is a tool to draw it out. Consumers enjoy the anticipation of a big-ticket item, in contrast to the quick fix that comes from an impulse purchase at an inexpensive, of-the-moment fashion chain … The result of all this due diligence: Shoppers are feeling much more satisfied with their purchases.”

“Stylitics, a fashion technology and analytics company, partnered with market research firm NPD Group to look at this behavior. Handbags are a natural fit for this thoughtful approach, as women seek to combine fashion with function. The study found roughly four in 10 women ages 18 to 34 said they started thinking about their most recent handbag purchase more than a month in advance. Six in 10 said browsing online stores was a major influencer in their handbag shopping.”

“Once shoppers go through the drawn-out process and make up their minds, they are happier. Handbag return rates at luxury online retailer Net-a-Porter are among the lowest across the site.”


The Walmart Goliath

Quartz: “Walmart isn’t a unicorn, and it’s no longer sexy. But it is massive. With $482 billion in revenue, it sells more than Apple, Amazon and Microsoft put together, according to Fortune’s annual ranking of companies by revenue … It’s bigger than the No. 2 company, Exxon Mobil, and No. 3, Apple, combined. Its sales are greater than the GDP of Poland.”


“The future of shopping may be online, with goods delivered via self-driving cars and drones. But will be a long time before anyone topples the Walmart goliath.”


Quote of the Day: Tim Berners-Lee

“Ad revenue is the only model for too many people on the web now. People assume today’s consumer has to make a deal with a marketing machine to get stuff for ‘free,’ even if they’re horrified by what happens with their data. Imagine a world where paying for things was easy on both sides.” ~ Tim Berners-Lee, creator of The World Wide Web, quoted in The New York Times.


Project Pinnacle: Caddy Tests Virtual ‘Test Drive’

Wall Street Journal: “Buyers walking into a Cadillac dealer in the near future could find an interesting thing on the car lot: nothing … Cadillac President Johan de Nysschen will this month begin looking for commitments from some store owners willing to set up showrooms where buyers can get a car serviced or learn about products via virtual reality headsets without getting behind the wheel. Driving off immediately with a new vehicle will be impossible because these stores won’t have inventory.”

“Virtual stores are a part of ‘Project Pinnacle,’ an extensive retail-strategy overhaul by Mr. de Nysschen,” who “is revamping the way the company compensates its dealers by rewarding them less on the basis of vehicles sold … and more on the way those dealers mimic better performing luxury brands with perks such as free roadside assistance. Those who do adopt the virtual model will have tester cars on site, which can be loaned to people getting their car serviced or used in test drives.”

“Auto makers have long flooded dealer lots for two reasons: car companies book revenue on production volumes, not retail sales. An overabundance of output can boost revenue, and the problem can be taken care of later via discounts or production cuts. Car buyers are also used to having ample selection to choose from. Mr. De Nysschen says this isn’t the case with luxury car buyers. He said: ‘I don’t think Hermès or Rolex are famous because they have a sale every month. They have brand cachet’.”


Loyalty Cards Pivot: From Discounts to ‘Experience’

The New York Times: “Research … shows that while people say discounts are important, they also ‘overwhelmingly say they want special treatment and offers not available to others in a loyalty program’, says Emily Collins of Forrester Research. ‘They come for the perks, but they stay for the experience’ … Sephora’s rewards program offers free samples and tutorials to loyal customers. It has three tiers, and the top spenders are invited to free closed-door events like Beauty Before Brunch, where they receive makeup lessons, discounts and a goody bag.”

“The samples don’t cost much, but are of great value to customers who want the newest makeup and hair products … and store loyalists often share these discoveries on social media, which draws in more customers. And that’s a crucial part of the equation: making sure customers aren’t just loyal, but also loud. Brands rely on them to spread the word far and wide about great loyalty programs.”


Birchbox Unboxes An In-Box Experience

Bloomberg Business: “Birchbox is famous for cutesy cardboard boxes filled with delicate tissue paper and diminutive samples, the stars of countless unboxing videos on YouTube. But that may not be enough anymore … As it seeks a bigger slice of America’s $16 billion prestige beauty industry, Birchbox is struggling to become a full-spectrum retailer rather than just a precious peddler of monthly subscription boxes … The company is looking for an identity somewhere between the online box business and the retail store, a hybrid that can do battle with traditional beauty retailers and the horde of rival beauty boxes.”

Birchbox’s “New York store is a two-story smorgasbord of beauty products … The goods here are organized by type, not brand, unlike traditional cosmetics areas in department stores and even pharmacy chains. The format encourages shoppers to discover new labels, just as the sample boxes are meant to do. Down the light wooden stairs sits the men’s grooming section, a segment Birchbox added four years ago and a testament to its willingness to seek out new customers and one day become a multibillion-dollar brand.”

“Birchbox is still fighting to be profitable, and it hasn’t received new outside funding since a $60 million round in 2014 … Meanwhile, the move to stores has raised doubts among industry observers about the company’s devotion to the sample box. The very existence of Birchbox’s stores goes against its original pitch as the first beauty seller to do online right.” Co-founder Katia Beauchamp comments: “We really want to change the potential customer for the beauty industry. We want to change her relationship with beauty. She doesn’t have to have this boring, errand, I-have-to-do-this experience.”