UK Record Shops Enjoy Record High

“The number of ‘bricks and mortar’ entertainment stores has reached a record high – despite rising online sales of music and film,” the BBC reports. There are now some 14,800 shops selling CDs, DVDs and Blu-ray, with supermarkets and high-street chain sales leading to the rise … The number of stores selling music and video has more than doubled since 2009, with DVD and Blu-ray available in 14,852 stores in 2015 and CDs and vinyl in 14,727.

Kim Bayley, CEO of the Entertainment Retailers Association: “Conventional wisdom has always suggested that the internet spelled the end for physical entertainment stores, but these numbers show that traditional retail still has a place, particularly for impulse purchases and gifts. After all, you can’t gift-wrap a download or a stream.”

Bayley adds that “the trend is clear – just as the internet has demonstrated that accessibility and convenience are key to selling entertainment, physical stores are demonstrating that if you put entertainment in front of people, they will buy it.”

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How Walmart & Whole Foods Shoppers Are Alike

Perfect Price: “The distribution of spending at Whole Foods and Walmart —stores that are diametrically opposed in the cultural imagination —are actually quite similar in terms of the distribution of spend. Slightly more people spend less than $25 on a trip to Whole Foods, and slightly more spend between $25-$100 at Walmart, but overall, the distribution of how much people spend on trips to these stores are remarkably alike.”

“Far and away, consumers spend the most at Costco, the third largest retailer in the United States … At the very bottom of the list is 7-Eleven, the largest convenience store chain in the United States. The average spend per trip at 7-Eleven is less than 15% of that at Costco … The average spend for trips to Walmart, Whole Foods and Trader Joe’s all fall in the range of $50-$55 .. Trader Joe’s shoppers are heavily concentrated in the $10-$100 range with nearly 9 out of every ten falling in the category.”

comparing_the_amount_spent_on_shopping_trips_to_whole_foods_walmart_trader_joes_and_costco

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You Don’t Have To Be Danny Meyer …

The New York Times: “At Back Label Wine Merchants on West 20th Street in Manhattan, you won’t get very far into the handsome shop before you are greeted cheerfully and offered assistance. The sales clerk may engage you in conversation to determine your tastes and what you are seeking, or will recognize that you are browsing and don’t want a hovering presence.”

“It’s all about hospitality, of course,” said Patrick Watson, who opened Back Label in May 2014. “You don’t have to be Danny Meyer to understand how critical hospitality is to the experience.”

“Hospitality is more than a warm greeting. It’s anticipating how people shop and what information they want. At Back Label, Mr. Watson arranged the display as if following the progression of wines at a dinner party, starting with bubbly and moving through whites to reds, Old World to New World, subdivided by localities. For a more in-depth perspective, he also displays wines by characteristic — those made from grapes grown in limestone soils, say, or wines with lively acidity.”

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Omnichannel Trips Target’s Supply Chain

The Wall Street Journal: “Target Corp.’s plan for a retailing future that marries its stores and online sales is being tripped up by a supply chain from the past. The Minneapolis-based discount chain is moving away from a largely one-size-fits-all model toward one that can be customized to give each of its 1,800 stores tailored layouts, product selections and ordering patterns.”

“But that approach is being stitched onto a distribution system designed before e-commerce demanded that its stores also become local distribution centers and showrooms for online customers … The problems Target is addressing are common to large brick-and-mortar retailers who have added new ways to serve online shoppers … these capabilities—like letting shoppers pickup online orders in stores and shipping from stores—are disruptive to retailers’ regular operations.”

“Customization isn’t just a means to get local delicacies on shelves, but also to tackle some basic problems—like how many feet of paper towels or boxes of cereal are needed to keep shelves stocked in very different locales. In the past, Target could adjust to those patterns more easily when the supply chain required moving goods from distribution centers to shelves. Newer problems are tougher.”

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The Beatings Will Continue Until Morale Improves

“Gary Friedman, head of Restoration Hardware Holdings Inc., painted a dire picture of the furniture chain in an internal memo to employees, comparing its operations to a burning building with people on fire,” Bloomberg Business reports.

“Upset about customer service and late orders, Friedman fired off the message to the entire organization in late January … ‘We were sitting there discussing how the building caught on fire, why the building caught on fire, how long we expected the building to continue burning,’ he said in the memo … ‘NO ONE WAS FOCUSED ON THE PEOPLE IN THE BUILDING WHO WERE ON FIRE. THEIR CLOTHES BURNING, AND MANY OF THEM DYING. WE HAVE LET CUSTOMERS DIE.'”

“’We need a MASSIVE CHANGE IN OUR CULTURE AND ATTITUDE RIGHT NOW,’” Friedman said in the message, which was replete with capital letters. “THE GOAL IS DELIGHT … YOU WILL NEVER GET IN TROUBLE FOR MAKING A DECISION TO DELIGHT OUR CUSTOMERS. YOU WILL, HOWEVER, LOSE YOUR JOB IF YOU DON’T.”

Explaining the memo in an interview, Friedman said: “It’s empowering people in the organization,” he said. “We have a leadership culture, not a followship culture.”

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JC Penney To Display Dresses Like Oreos

The Dallas Morning News: “What does a $2.49 package of Oreo cookies have to do with a $24.99 colorful summer dress? … A prominent display of Oreos in the supermarket includes pictures of the cookies, maybe with milk, and a discounted price in big print. Then there’s a rack of cookies right there. If you had to hunt down the Oreos, you might forget about them.”

At Penney’s, a “rack of dresses will be right behind the mannequins where shoppers can find them. Plus there’s a big sign with the price.”

“We’re making it as easy as possible to buy the dress,” says JC Penney CMO Mary Beth West, who “spent most of her career in the consumer packaged goods business devising ways to get us to spend billions of dollars on brands such as Ritz, Philadelphia, Nabisco, Kraft Mac & Cheese, Jell-O and Cool Whip.”

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Macy’s Simplifies Its Shopping Experience

The Washington Post:”This week, Macy’s announced that it is shaking up its discounting practices: The coupon system will remain in place for full-priced items, but the retailer is implementing a different strategy to get shoppers to pounce on its clearance merchandise. The move is effectively a bet that shoppers prefer simplicity over the thrill of demonstrating their shopping savvy.”

“Here’s how Macy’s new approach works: When an item is on clearance, you can’t apply coupons or other discounts to it. Macy’s said it will apply deeper cuts to the ticket price than it did previously, but the price you see on the tag is the price you will pay. The retailer has also moved all the clearance items to a centralized area in the store — one for men’s apparel, one for women’s — instead of having the racks scattered throughout the store. So far, Macy’s has seen upbeat results from the change.”

“In a conference call with investors this week, Macy’s chief financial officer Karen Hoguet offered this explanation for why the change was getting traction: ‘I think what happens is, customers want simplicity. And when you are looking for deep clearance goods you could just see the price of the item and not have to do the math in your head. And it’s easier.'”

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Customer Service Declines When The Economy Improves

Quartz: “Consumers are more unhappy with customer service at department and discount stores than ever. According to the University of Michigan’s American Customer Satisfaction Index, satisfaction is at its lowest level since 2008, falling during the last year by 3.8%. Consumers are griping about store cleanliness and slow checkout lines, specifically.”

“Of the bigger companies, the steepest decline in satisfaction—an 8% drop—went to Macy’s … While an improving housing market increased competition between Lowe’s and Home Depot, both groups saw drops of 9% and 4%, respectively. Among supermarkets, Whole Foods took a 10% hit, knocking its ranking below Trader Joe’s, Kroger and Meijer.”

“The relatively buoyant economy is partly to blame. After 2008, competition for consumer dollars intensified, prompting discounts and better service. Employees fearful of losing their jobs stayed motivated to work hard pleasing shoppers. Then, things got better.”

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Loyalty Is a Two-Way Street at Starbucks

What defines loyalty in the customer-brand relationship? Until this week, Starbucks defined it as the number of times the customer bought a cup of coffee; buy 12 cups and you get one for free. The retailer has now re-defined loyalty as the amount of money spent. This has caused upset among some of its “loyal” customers, who now must purchase 32 cups of coffee to get that free cup. Starbucks apparently was inspired by certain airlines — Delta and United — that now award loyalty points based on the amount of dollars spent, and not on the number of miles traveled. This might telegraph as: We want your money but we don’t want you.

The Starbucks switch was at least partly motivated by profits; obviously it is more profitable to motivate its most profitable customers. However, it also suggests a change in culture. As reported in The New York Times, the Starbucks loyalty program previously was premised on a warmer, fuzzier idea, as articulated by a Starbucks marketing manager in a 2012 blog post: “At Starbucks, our rewards program comes from a different philosophy. At its simplest, we like seeing you, regardless of whether your purchase is a short-brewed coffee or four Venti White Chocolate Mochas. My Starbucks Rewards is designed to show our appreciation simply for stopping by.”

This would be consistent with the way Starbucks famously welcomes everyone to hang out as long as they like at their stores, even if they buy nothing at all. Sadly, such “customers” are the poor cousins of those who gamed the Starbucks loyalty program by asking cashiers to ring up each item separately to artificially inflate their number of visits. This subterfuge also caused lines to slow, making the Starbucks experience worse for everyone else.

The Starbucks-customer relationship in total calls into question the very meaning of “loyalty,” and whether it even exists in a commercial context. As the Times article notes: “Starbucks fell into a trap that is common with loyalty programs: establishing not just an exchange relationship with its customers based on mutual benefit, but a communal relationship based on mutual caring and support … If customers are going to take a ‘hey, it’s just business’ approach to their relationship with Starbucks, they should expect the company to do the same — and it has.”

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Samsung: Retail as a ‘Cultural Center’

Samsung’s NYC flagship store — Samsung 837 — is a “cultural center” that is designed “to build experiences rather than push product,” reports Engadget. “Across three floors you’ll find a 75-seat amphitheater, a full working kitchen and plenty of bench space for tech support and workshops. The amphitheater hosts a three-story interactive screen that was used for an art installation this week, but will be repurposed for screenings and presentations as well.”

“The ground level art gallery showcases works that use technology in a major way. The current exhibition, ‘Social Galaxy’ by Black Egg, contains a mirrored tunnel lined with Samsung devices. Users input their Instagram handle at the entrance and then, within seconds, the displays pull in images and comments from their accounts, creating a rapid cacophony of sound and color.”

“A set of chairs in the front of the store offer up a ‘4D’ virtual reality experience, by having you strap a Gear VR to your face as you sit in a chair that bobs in time whatever you’re looking at … Samsung 837 sourced a lot of its style locally as well. The employee uniforms came from designer line Rag & Bone, which has a location right across the street. The store also has a partnership with the nearby Standard hotel. Samsung 837 considers itself part of the Meatpacking District community, as well as a destination for both tourists and locals.”

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