Want to Deliver a Compelling Brand Experience? Get Back to the Basics

This morning I received via e-mail the latest article from Retail's Big Blog. Today's installment touched on the central topic of this blog, the importance for retailers of delivering an outstanding customer experience and the ways to do it. More specifically, it featured an interview to Rob Gruen, EVP for Marketing and Business Development at Array Marketing. Here are some important passages from that interview.

"While there is plenty of buzz surrounding the effect omnichannel retail is having on the industry, retail executives must remember to get ‘back to the basics’ when it comes to leveraging a memorable in-store experience. Retailers must ask themselves — Have we forsaken the basics of retail inside the four walls of our stores? Are we forgetting the impact of in store marketing and the need for a compelling brand experience?

A strong grasp on how consumers perceive your store is critical to success. In order to have brand integrity and consistency in the store and online, retailers should have their store managers do these things first:

Measure your store traffic - The old-school gauge for success is knowing how many people are coming through the front door. It’s important to determine if customers have a compelling reason to come in and shop, and if they understand the brand message you’re trying to convey in an appealing, easy-to-shop manner.

Take a look at your in-store conversion rates - A mainstay metric of online retail, conversion rates are still an important factor on Main Street. Don’t overlook the 4 P’s of Marketing – store layouts and store presentations are designed to maximize sales. Paired with the right product at the right price, customers will find a reason to come back and shop.

Look at the average transaction - Are there enough impulse items? – A recent study by OlilvyAction reported in RetailWire indicated that 29% of respondents made unplanned category purchases when going into a store. Retailers should not lose sight of the effect of eye-catching, point-of-purchase products as a way to drive sales and build transaction size.

Spend time in your stores watching and talking to the customers and store associates - Don’t just rely on reports coming across your desk. Watch how customers shop, what they are buying, and more importantly, what they are not buying.

The success story of Lululemon immediately comes to mind. I was impressed by comments in a recent article which said, ‘when it comes to making decisions, Lulu has gone back to basics. It doesn’t use focus groups, website visits or customer-relationship management software, which tracks purchases…Instead, Chief Executive Christine Day spends hours each week in Lulu stores observing how customers shop, listening to their complaints, and then using the feedback to tweak product and stores.’ I think this type of customer engagement is something all retailers can benefit from."

You can find the entire article and interview at this link. Mr. Gruen suggestions and advice to retailers are right on point and I have to agree with him that getting back to the basics is indeed a fundamental point.  Often flawless execution is forgotten, while it should be the cornerstone of any retail strategy.

Business Plan: The Necessary Tool to Implement a Unique Retail Concept

I have repeatedly stated in this blog that retailers need to develop a remarkable and engaging customer experience if they want to be successful in the long run.  In my post, How to Create a Unique and Engaging Customer Experience,  I gave an overview of how to go about doing it.  All my other posts brought ideas, suggestions and case studies that can apply to many different retailers, from small businesses to big box stores.  However, all those ideas and strategies need to be clearly outlined in all their details to be effective.

In this post I am going to focus on the importance of writing a business plan to ensure the successful implementation of any strategy.  Business plans are erroneously thought as just tools to achieve outside financing from either financial institutions, investors, or family and friends.  Instead, they should be considered as the road map that guides any business owner to execute the desired strategies and to determine the necessary resources.  Business plans are also records of financial estimates and can be useful to determine the business success.

So here are a few tips to help you in this task:

• Create your Unique Business Proposition - Any retailer should be able to define what distinguishes its business from the competition. 
• Develop a Mission Statement - Spell out your vision, your retail concept, your message.  Outline also a set of values, which will encompass all your company's activities. 
• Identify your Target Market - You should be aware of who is going to be most interested in your unique retail concept.  Identify your primary and secondary consumers.
• Research your Industry - Study your competitors and their business models.  Identify what approaches have succeeded and improve upon them.
• Design your Marketing Plan - Develop strategies to reach your targeted customer and to get them in the store.  Consider the need for advertising in all media, PR, direct mail, promotions, and more.
• Determine your Staffing Needs - Select the number of people and roles necessary to implement your retail concept.  Recognize the appropriate skills that each employee should possess.
• Define your Merchandising - Identify the products to stock and the suppliers.  The selection should be based on your customer's tastes, on your competitor's current offerings and of course on your retail concept.  Devise a strategy to dispose of aged inventory as well.
• Set Goals and Rewards - Be precise about financial goals and about employees rewards that would result from reaching those goals.
• Forecast Sales - Estimate your market penetration and as a result conservative sales figures. Take into account market conditions, competitors and customers' spending habits and potential.
• Calculate the Necessary Budget - Determine the necessary investment in the business based on your sales estimate and the costs associated with marketing, staffing and merchandising.
• Anticipate Challenges - Build a series of scenarios to account for better or poorer than expected results.  Include strategies to deal with those scenarios.

After writing your business plan, make sure to consult it periodically to ensure that your strategies and direction are still consistent with your original road map.  Moreover, continuously evaluate your actual performance with your business plan forecast.  Considerable variations should lead you to further research and potentially to modify your original plan.

Finally, any business owner should recognize the importance of getting a second opinion.  A consultant, a retail expert, a trusted industry veteran, or even an objective friend could point out possible weaknesses and come up with additional improvements to a business plan.  I am personally always available to look at business plans for new and unique retail concepts.

Can Vending Machines Improve Retailers' ROI?

In the last two weeks, I was travelling to high-end department stores and jewelry boutiques across the US.  I wanted to personally visit some of ZYDO Italian Jewelry closest retail partners ahead of Mother's Day. 


In one of the malls I noticed a Proactiv vending machine.  As you might know, Proactiv is a treatment for acne, which is typically distributed via infomercials and mall kiosks.  This was the first time that I saw their products in vending machines, despite, it turn out, that they introduced this channel already a few years ago. 


I started to consider the merits of selling products with vending machines.  Soda and snack companies have been doing it successfully for decades.  However, can this practice be as beneficial for more expensive non commoditized products?


Proactiv is not the only premium brand that has utilized vending machines.  Others include mostly technology and beauty companies like Best Buy, Ipod, Sephora, and Clinique.  

The vending machines that they all employ are similar and provide a useful service when located in niche areas. I found particularly useful Best Buy's vending machine selection when placed in airports to provide travellers with products to kill time or with items that they might have forgotten, like chargers.  Other travellers must have liked their utility too, as Best Buy's airport vending machines and especially Ipod vending machines have proven successful in selected airports.


However, I am skeptical about placing these vending machines in malls and shopping areas, essentially as substitution to a proper retail presence.  Despite a cost reduction compared to a typical retail store, these machines do not provide the necessary customer experience that should be expected in a retail setting.  These machines cannot customize their product presentation to fit the customer, offer suggestions, or create a comfortable and compelling buying experience.  Therefore, retailers should adopt the vending machine concept only in very specific settings to avoid negative effects on brand perception and ultimately on sales.


This is going to hold true at least until vending machines will be able to offer a customer experience that more closely resembles a store shopping experience.  I would venture to say that that day is still far away, even though vending machine technology is improving fast. 


The vending machine pictured below is a new state of the art machine developed for JR East Water Business in Japan to distribute their beverages in train station throughout Tokyo and nearby cities.

From afar, the vending machine looks like a digital billboard, flashing ads on a large screen. Three motion sensors detect when someone is near suddenly displaying three rows of drinks.  A tiny camera just above the 47-inch touch screen estimates a buyer's sex and age, using the data to recommend a few things that he or she might like.  The buyer touches the image of the chosen drink, IC-chip readers below the display respond to the swipe of a commuter card or cellphone filled with electronic cash, and your choice drops into the dispenser below.


At the end of the transaction, all the collected data is transmitted over a citywide wireless network to the company's central computer servers (http://www.fastcodesign.com).  The real-time information allows the company to observe and learn from each customer's buying behaviors and to eventually refine its recommendation process.  The same data could be used in the future to deliver a different ad experience and a more targeted product presentation.


Intel, most typically known for its microchips, is also developing a vending machine.  Called Intelligent Vending System, it contains similar features as those that characterize the JR East Water Business vending machines, including the large touchscreen display, the camera with facial recognition technology, and the wireless connectivity.


Both of these vending machines are certainly a step forward compared to the systems that are commonly used in the US.  However, as I mentioned above, they are still far from being capable of delivering a truly exceptional customer experience.  Retailers seeking to improve ROI, should not turn to vending systems just yet.  The should rather develop an innovative and unique in-store concept that would ultimately increase sales, as I have showed in my other posts in this blog.

Mass Customization as a Tool to Develop an Engaging Customer Experience

I am a persistent proponent of the idea that store owners have to develop innovative, unique and engaging customer experiences to achieve defensible and long term success in the ultra competitive retail environment.  In this post I would like to discuss the idea of mass customization and the beneficial results that it can provide in terms of customer experience.
 
Here is a quick definition of mass customization: "Production of personalized or custom-tailored goods or services to meet consumers' diverse and changing needs at near mass production prices. Enabled by technologies such as computerization, Internet, product modularization, and lean production, it portends the ultimate stage in market segmentation where every customer can have exactly what he or she wants". (http://www.businessdictionary.com/)

The classic example of mass customization is Dell, which allows customers to essentially build their computers by selecting every product feature through its website.  A number of e-tailers now provide customization for almost everything including, shoes, jewelry, clothing and even chocolate bars.

Even though mass customization is most often adopted by online retailers, I would argue that it could be particularly beneficial and profitable for selected traditional retailers.  In fact, the customization process itself would add a level of engagement, which would certainly appeal to an increasing number of customers. 

Retailers could set up design areas where customers would be able to design their own customized product with the help of dedicated staff acting as "stylists" or "designers".  The customers would then be able to pick up their personalized item at the store, where they could apply additional small modifications.  The personal assistance and dedicated advice would place this service ahead of the online offers.  The design center would also draw additional customers in the store, increasing the sales of other regular items as well. 

Nike adopted this very concept in its New York flagship store by introducing the Nike iD Studio back in 2007.  Production methods and technologies for mass customization are now more commonly available and the decrease of the associated costs make it a possibility for smaller retailers as well.   

Prodir, a company that produces writing instruments, is one such company.  In its concept store in Zurich, Switzerland, it designed a multi touch application to let its clients create and personalize their writing instruments and pen-books.  See the video below.

Timbuk2 is another retailer that employs customization.  As a matter of fact, it makes it the central part of its business.  Timbuk2 has been making custom messenger bags in San Francisco since 1989.  As you can see in the video below, customers are able to touch and feel all the various features that will be part of their bags.  Moreover, they can use the touchscreen with the help of the retail staff to finalize their personalized bag.

Mass customization for most retailer would be a small part of their business.  However, it could be another tool to increase in-store traffic and customer engagement.  It would also help retailers to develop a competitive advantage and a defensible position versus their competitors, as consumers increasingly demand more and more personalized products and services.