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The CPO is alive, well and definitely in charge

If you doubt the power of the CPO, check the latest stats 

In Retail University, we’ve been highlighting the “CPO” for a long time – Chief Procurement Officer.  In the US, the CPO definitely controls the purse strings and influences a majority of the purchase decisions for the American home.  The latest “infographic” from the Business Insider confirms that women are definitely in control.  Yet, it is amazing how many retailers and manufacturers fail to understand this fact, and how to effectively market to women.  Clearly, Apple is a notable exception.

The CPO – Chief Procurement Officer of the Home

In corporate business, the “C Suite” is getting crowded.  It is filled with the “chiefs” in charge of setting strategy and making decisions.  By last count, a typical company has a:  CEO, CFO, CMO, CIO, CTO, COO.  These are usually the “guys” that are responsible for setting the strategy, running the business, and making decisions about how to return a profit to the shareholders.

In Retail University, we focus on selling through retailers to reach families and consumers.  We have coined the term “CPO” of the home to denote the importance and power of the decision maker regarding family finances and purchase decisions.  We have a bit of fun pointing out how influential the woman is during a purchase decision, whether she is physically there or not.  In the US at least, women guide research on purchases and proactively make, or influence a majority of purchase decisions for the home.

Infographic - The Purchasing Power of Women

I personally love the latest “infographic” trend in many of the business articles and “Smartbriefs”.  Infographics are a simple one page format to summarize some great factoids and information on a topic in a very graphical consolidated way.  The Business Insider just published: Infographic: Women Control The Money in America.  It was designed and created by MarketingZeus.com.

If you doubt the power of women in terms of purchasing power, or influencing the purchase decisions for the home, check out some of the key metrics from the Business Insider.  Let’s start with the stat that 90% of women control the family’s purse strings in terms household items and have the final say on major home and car purchases.

Other highlights from the Business Insider Infographic include:

 

Even if women are not totally in charge of purchase decisions, they clearly think that they are … and who’s going to argue with them.

 

The CPO appears to be more than a US phenomenon

I have been using the concept of the CPO for the home in recent International Retail University workshops.  I’m always interested in seeing if the power of women in making purchase decisions is a western cultural phenomenon, or if it applies across cultures.

Based on my most recent experience in Singapore, there seems to be vote for the power of women influencing purchases in many cultures, including India and Asia.  Even though some of the male workshop participants proudly proclaim that they are in charge at home, it is surprising how many women talk to me on breaks to confirm that it is in fact the women who hold the decision power.  They proudly state that they either make the final decision, or hold “veto power” over major purchases for the home, especially those purchases related to family, kids, health and education.

It would seem foolish to ignore the power of the CPO

Unfortunately, we don’t have similar statistics for other countries.  The percentages may vary.  It would be an interesting case study to benchmark the amount of purchases made or influenced by women for different categories of products.  For the US, the percentages reported by the Business Insider are compelling evidence that the CPO not only exists, she is in command of procurement for the American home.

Ok, guys … you are NOT in charge!  You might want to quibble with some of the percentages, but clearly the women personally buy, or make the final decision on major purchases.  But come on … even on PCs?  Isn’t technology the last bastion and domain of males?  Not so much if the PC is used for the home, especially for education with children.

Most tech retailers and suppliers don’t seem to get it!

Over the course of my career, I’ve had the opportunity to work with most of the PC manufacturers in the US.  They just don’t seem to get:

• The power and influence of women in purchasing technology.
• How to market more effectively to women.

So, what do women as CPOs really want?  For the most part, they want simple ways to understand the benefits of the product and its value.  They respond to marketing that shows them how the product can be used by her, her family, and especially her kids.  

Do women, look at specs and prices?  Absolutely, they are not stupid!    But, specs are not where they start. Yet, what do most tech retailers and product manufacturers emphasize – Features!  Particularly technology features where “bigger is better”.  For example, look at the top of Sony’s web store landing page or their tablets.  The focus is almost exclusively on product technology, specs and price!

There are of course retailers and suppliers who understand how to effectively market to women.  They don’t “talk down to them”.  They don’t just focus on features and price.  The companies that truly understand the woman as CPO, market the benefits of what it will be like using one of their products in her home, with her family.

ONE company absolutely knows how to sell the CPO

There is of course one company that really understands the power and influence of women as purchasers and influencers.  They also truly understand how to market value and lifestyle to women as purchasers, and CPOs for their home and family. 

The secret sauce of Apple as a technology manufacturer, marketer and retailer is that they effectively market lifestyle value, not individual products.  Apple’s focus is on showing the products being used and the benefits of owning an Apple solution.

Compare Apple’s tablet landing page on their web store to the previous Sony example.  There are very clear reasons why Apple dominates:

And you know what, Apple’s approach to marketing benefits of ownership, and what the product does vs. what is in the product, works equally well with men, even if we are not in charge. 

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“Emerging” retail markets are exploding …

Growth of the “small screen” moves retailing online

I always relish the opportunity to take Retail University courses abroad.  Inevitably, I find that the Professor learns as much as the students.  While much of US and western European retail has been homogenized by the large big box chains, Asia is truly a land of diversity in retailing. There is nothing like first-hand experience of visiting retail stores in Asia.  But, the biggest retail trend is not about stores … it’s happening online!  Read on to discover a new resource to watch the trends unfold in Asia.

Singapore – Crossroads of retailing in the “East”

Night life and retail come alive at Marina Bay Singapore after dark.

Our Retail University workshop was held in Singapore, which was not surprising since Singapore has been a port of call and crossroads for travelers in the east for a long time.  One only needs to look at the harbor to see the ships still stacked up for miles.  Singapore is a natural meeting place for Asian Pacific countries and China.

Not only has Singapore catered to tourists and international shoppers, shopping is literally the national past time for this small island nation.  You will find shops of all major brands in the high end malls that rival anything you would see in the US or western Europe.

The trend to watch is small screen, not retail shops

What I noticed on this trip, more than anything else, was the amount of people with smartphones.  Over 70% of Singapore citizens own a smartphone, and they average 1.5 mobile contracts per user.  But as a crossroads of the East, you have the opportunity to watch all the visitors, especially those from China, use their phones while they shop.

As the “retail guy” I also went out to explore the retail stores in Hong Kong on my layover.  The diversity of the shops and shopping in Hong Kong defies description.  But, the overwhelming trend that strikes you is how many use smartphones while shopping.  It is simply amazing to watch people standing in the stores checking prices, or shopping for something entirely different while waiting for a clerk in the clothing aisle.

BRIC is no longer emerging – They are set to explode

BRIC has long been an acronym for Brazil, Russia, India, and China.  They have historically been described as “emerging” or developing markets.   In terms of retail, they are set to explode in growth.  The retail press headlines are dominated with stories of key brands rapidly expanding in these markets, especially China.  In fact, Bloomberg reported that Forever 21 is paying $1.4 Million per month for rent in their Hong Kong store just to get their brand launched in Asia.

Singapore's malls and luxury stores rival those anywhere in the world.

The branded luxury shops are always interesting and make for sexy headlines. But, the real story in these dense urban markets is the exploding growth on online internet sales.  The China Post recently reported that the amount of luxury goods purchased online in China last year already exceeds that purchased online in the US.

Even a very small percentage in the single digits of the population of China or India’s growing middle class quickly dwarfs the entire population of US consumers.

A new retail resource to watch Asia trends unfold

We have long been a big proponent of reading “Smartbriefs” to track trends in retail.  One of our new favorites for Asia is Penn-Olson.  A recent post by Julia Zhu documents the explosive online B2C growth in China.  The best part is that she uses some creative “infographics”. 

That’s right, at the end of 2011, 200 Million Chinese shopped online! 


Amazon is far from the top player in the Chinese market.  And, in addition to traditional B2C retailing sites, China has a number of “group buying” sites that are garnering sales and millions of users as seen in the graphic below.



What does all of this mean for vendors and suppliers?

 

Hong Kong is an example of Asia's dense urban markets that make smartphone internet shopping a natural.

In the US, consumers still drive to shopping malls and stores.  However, the growth of Amazon and other online retailers is quickly challenging the big box retailers, who have expensive stores to operate.  In dense, urban markets of Asia where a short cab ride can take hours, the growth of online shopping is a natural phenomenon, which parallels the growth of smart screens on phones and tablets.

In addition to working on localizing store merchandising for Asia, suppliers need to increasingly focus on:

·         Getting products on top Asia online retailers

·         Customizing content and landing pages for Asia online

·         Optimize graphics and content for mobile screens

·         Track and pilot opportunities for mobility marketing

·         Learn how to do business with telcos and carrier stores

Multi-channel retailing has become a reality worldwide.  To lead in Asia it might be more important to focus on mobile and online first.

To receive more information and sound bites from IMS follow IMS Results Count on Twitter, Facebook, Google+.

**Photos courtesy of Chris Petersen.

The Future of Retail – Assortment is Job #1

Have retailers lost the art of managing assortment?

To be fair, the new normal of retail is change at an ever increasing pace.  Retailers are not just competing in stores, but online and on mobile devices.  Yet, as many as 75+% of consumers still purchase in store, at least for consumer electronics.  In the frenzy over competing on ads, promos and price, retailers have tended to neglect their most important job of managing assortment.  If management can’t answer the basic question of why consumers shop their stores, they are in deep trouble!

Too many SKUs = Lack of Assortment Management

In the simplest sense, assortment management is curating and customizing an assortment of products that meet your core consumer’s needs and profile.  It is perhaps easiest for the high end, specialty retailers who focus on limited SKUs from select brands.  For big box retailers and hypermarkets, it is not so easy to assort for the masses.

Walmart is often touted as one of the best merchants at optimizing assortments.  They have amassed massive amounts of store data to dissect which SKUs sell by market at the local store level.  They have developed new segmentation to optimize assortments for Hispanic communities, seniors and other local factors.  Yet, in appealing to the masses, some Walmart stores stock as many as 165,000 SKUs, with as many as 50 kinds of toilet paper.  Is that necessary or profitable?

With so many products, assortment is job one!

While a large Walmart or Tesco can stock up to 200,000 different products, Amazon has more than 4 million online.  Today’s retail challenge is the abundance of products available, as well as the increasing number of retailers online competing to sell them to you at the lowest price.

A fundamental ground truth of retailing is: retail is detail!   Consumers tend to shop a couple of preferred places within a category.  Ask them why, and they tend to talk about how those particular stores make them comfortable and have the products “that fit my style and needs”.  That’s retail assortment 101!  Retailers today can NOT afford to be average or “me too”.  One of the best ways to stand out is through managing assortments to achieve brand identify and store differentiation.  

Assortment Management – It’s both Art and Science

Another one of the great FREE sources of retail information is the HBR (Harvard Business Review) Forum.  They have published a series of great articles on The Future of Retail.  In fact, HBR just had a recent post by Dieter Brandes and Nils Brandes entitled: “In Retailing, Assortment is Job One.”  The core essence of their post can be summarized in their statement: It’s the assortment, Stupid!

The Science – SKU Rationalization.  One aspect of assortment management lies in the science of data and analytics.  I have personally participated in “SKU Rationalization” analyses employing metrics like GMROII and Cost-to-Serve, in order to have benchmark criteria to reduce SKUs.  But, as  Brandes point out,  “Don’t leave it to computers!”  Walmart used primarily data and metrics to narrow their assortments a couple of years ago, and then suffered a backlash when consumers complained about not finding their favorite brands of peanut butter, cereal or soap.

The Art – Gut Plus Listening.  Some retail merchants just have the “gut” feel as to what appeals to their best customers.  The best retailers actively engage store managers and staff in listening to consumers and what they want to see in “their store”.   However, too much gut and local decision making can result is disparate assortment across stores, a lot of out of stocks, and impossible forecasting for replenishment.  Even the assortment artists need to employ some discipline in testing assortments in ways that can be measured, so results can be replicated and scaled.

Most important retail question -  Why shop in this store?

In our recent posts, we have been making the case over and over again:  Differentiate or Die!  Only a select few retailers can compete on lowest price.  Bricks and mortar retail stores will die quickly if they try to compete with e-tailers on price.  So, if a retailer is to survive in today’s competitive landscape, management cannot “sit between the chairs” and try to be all things to all consumers.  They must answer the fundamental question:  Why do consumers shop in our store (this can also be applied even if it is a virtual store).

Retailers can differentiate stores in a number of ways:

• Consumer experience
• Quality of staff
• Superior services
• Assortment – selection, variety, customization

It is almost impossible to execute on the first three without having the assortment that draws the consumer to the store!  

What Assortment Job One means to Suppliers

In teaching Retail University workshops to suppliers, it is simply alarming how many simply do NOT understand the changing face of retail.  Far too many suppliers are still operating on the “sell to” retail model and focus on “selling in” their product lines and assortments.  For these old school suppliers, assortment management is interpreted as “getting our SKUs on the shelf in as many stores a possible”.   Not only is this strategy more difficult today, it can be very unprofitable.

The most important question for suppliers to ask – Why should our SKUs be in these specific stores of this particular retailer?  Not even Walmart needs, or can stock 50 SKUs of mice and keyboards in every color.  The question for today’s supplier is not getting on every store shelf, but working with retail merchants to get the right assortments in the right stores where consumers shop and purchase.  

When Assortment becomes Job One, suppliers will need to:

• Work with retailers on the science and use data to help determine where to stock specific SKUs
• Be able to localize assortments based on store and consumer attributes and selling patterns
• Understand and assist retailers in differentiating assortments so they don’t compete on the same SKUs
• Accept the fact that not all SKUs will be stocked in all stores
• Understand that retailers must use “house brands” to differentiate assortments
• Become category sensitive and understand the retailer category dynamics, not just their own brand SKUs

When looking at the future of retail, it just got harder.  You can’t just sell in the line and ship.  Success will require “retail sweat”.  What is old is now new again … and Assortment has not only become Job One, it is the foundation for survival.

 

To receive more information and sound bites from IMS follow IMS Results Count on Twitter, Facebook, Google+.

Sources:

• HBR—The Future of Retail: In Retailing, Assortment is Job One, December 19, 2011

Are you 1 of the 80% that will fail multi-channel?

#1 Challenge of retailing today - It ain’t what it used to be 

As I’m preparing for teaching a Retail University class in Singapore next week, I asked myself the question I always get asked:  What is the #1 challenge in retail today?  The answer use to be different by region.  But today, retail has become a multi-channel reality worldwide.  An interesting study by Gartner predicts that by 2015, 80% of retailers will fall flat in a multi-channel world.  What will retailers and suppliers need to do differently worldwide in order to succeed in retail by 2015?

Consumers voted – Multi-channel is not going away

In my travels last year, I reported on how much retail has changed in all countries, even in the smallest countries like Malta.  In our post, I described how pervasive the competition from e-tailers has become worldwide.  In the case of Malta, consumers can often order products cheaper online from England than buying them in store at their local retailer.

Web retailing is just one retail channel catching on worldwide.  Social media is alive and well, not just for connecting friends, but as another channel of commerce outside of the retail store.  Indeed, some retailers have put their entire former catalogs on Facebook pages.  And, if you look at mobility as a channel, consumers are aggressively using their mobile phones and tablets to shop anywhere, including in the retail store aisle.

One of your best FREE resources for retail today

Another thing I get asked often in Retail University classes is where do you get all of your information on retailing and trends?  I have posted before about the number and quality of “Smartbriefs” available on a variety of retail topics and trends.  

One of my current favorites is a web resource that publishes very salient articles on consumer experience in retailing is: RetailCustomerExperience.com.  I would highly recommend that you subscribe, or add it to your feeds.  It is a tremendous resource on retail, and as the name implies, focuses on the consumer experience.  The best part is that is FREE, and it has a great archive of past articles and posts.  They also have great headlines and one of them caught my eye for my post this week.

Are you 1 of the 80% that will fall flat in retail by 2015?

How can you possibly ignore that headline? And, the one that follows is just as good:  4 Ways to avoid failing at multi-channel.  These headlines come from a post by Cherryh Butler.  She does a great job of underscoring the crucial nature of multi-channel retailing and what it will take for retailers to succeed going forward.

Butler begins her post by quoting a Garner report.  It predicts that by 2015, 80 percent of retailers will find that their solutions are falling flat.  The premise of the Gartner report is that a majority of today’s retailers were founded in a store based world, and are still focused on trying to improve old-school product-centric strategies.  In today’s world of online retailing worldwide, social media, and mobile shopping … it truly has become a consumer centric world, and the consumer is not going back!

According to Mim Burt, a Gartner analyst:

"It's about trying to understand more about customer behavior ... customers, now more than ever, are telling retailers how they expect them to operate all their channels — old or new. Any company looking to profit must listen.”

How to avoid failing in multi-channel retail

There are just as many challenges for suppliers as retailers in a multi-channel world.  In fact, retailers are already facing the reality because they live the pressures of sales shifting across multiple channels every day.  Suppliers by their nature are product centric and tend to focus on how to push and optimize features.  So perhaps the single greatest piece of advice for success in a multi-channel world is to realize how consumer centric it has become!  

In her post, Butler offers 4 pieces of advice for retailers and suppliers:

1. Try new things
2. Purge what’s not working
3. Put the experience design ahead of the business design
4. Get connected

I wouldn’t disagree with any of Butler’s points.  But, old habits die hard, especially for #3, which requires a monumental shift in both strategy and execution.  

The key shift – Focus on your Consumer’s Experience!

Based on retailing heritage, the most significant challenge for today’s retailers is point number 3 – Putting consumer experience ahead of the business model.  In these pressing economic times, retailers are hard pressed to make their numbers.  They will do almost anything to get the sales, including trying to compete with web only retailers on price.  

In times of crises, the danger is to retreat to what you know best – and for many retailers that is product centric merchandising in stores or on an e-commerce site.

Today’s consumers shop any time and everywhere.  They are just as likely to use their smartphone or tablet as their computer.  And, they are using new forms of social media like Pinterest to connect products with life styles and their networks.  How many of today’s retailers’ online assets work equally well on a smartphone with easy to use social connections, scan bar codes, and enable location capability?

The Bottom Line:   Retail systems and metrics are geared to past business models focused on selling products in stores and on web sites.  As consumers are shifting to experience across many channels, retailers and suppliers may be too slow to invest without new metrics and approaches to measure results from consumer centric retailing.

 

Your time to tell us, click on the link:

Who do you think is the best multi-channel retailer today?

To receive more information and sound bites from IMS follow IMS Results Count on Twitter, Facebook, Google+.

Sources:

• Retail Customer Experience: Are you 1 of the 80 percent? 4 ways to avoid failing at multi-channel, January 23, 2012

6 Amazing Stats on Smartphones in Store Aisles

A quick update on smartphones & mobile price checking 

Normally we strive to post something weekly about an emerging trend or retail topic.  Since our post yesterday, we have seen a bunch of posts and tweets on the emerging trend and retail store threat of consumers doing price shopping in aisle with their smartphones.  We ran across this infographic with some amazing stats that was just too good to pass up.

6 Stats that should be a wake-up call for all marketers

Eric Anderson of White Horse recently reported on an interesting ethnographic study of consumer behavior in the store aisle.  They set out to study how consumers actually use smartphones today.  According to Anderson, the White Horse study:

“Set out to identify the areas of greatest opportunity for retailers and CPG to develop a mobile experience strategy that aligns with changing mobile behavior. Our research included a 390-person survey of smartphone users, as well as “shopalongs” with smartphone shoppers in a range of retail environments.

The infographic below summarize 6 amazing findings from the study which is available for download.

Source:

• Marketing Profs: 6 Stats on In-Aisle Mobile [Infographic], January 23, 2012

Target takes aim at Amazon & Price Apps

The war over smartphone price checks is heating up

It happened rather innocently the last couple of years as consumers started surfing the web while shopping in retail stores.  But, the battle for price conscious consumers reached a fever pitch last holiday season. Amazon poured salt in the wounds of retailers by offering an additional $5 off if consumers used their Price Check app to scan bar codes in a retail store.  Will it be an Amazon world, or can big box retailers fight back?

Retail store prices are under siege by web e-tailers

In the “old days,” consumers waited for Sunday ads to check prices before they went shopping.  Today, 79% of shoppers research online before going out to stores.  But, the new and increasing threat is the consumer today is armed with a smartphone and price app to literally stand in the aisle and check prices against the best deals on the web.

Allison Enright just published a timely piece in the Internet Retailer entitled:  “Target takes aim at web-only retailers”.  In this article, Enright quotes some amazing stats from a survey regarding the use of smartphones by in store shoppers:

• 58% of smartphone owners checked out electronic prices in a store AND then purchased elsewhere online
• 41% checked out shoe prices in store and then bought online
• 23% checked in store but bought appliances online
• 22% for sporting gear
• 19% checked in store, but bought home & garden online

Retail stores are doomed if they price match the web

It is every consumer's right to check prices.  It always has been and always will be that way.  What has changed dramatically is the growth of smart phones and the ability to check prices while standing right in the store aisle.  In the US, the growth of smart phones has been dramatic:

• In the US, 44% now have smart phones, up from 18%
• In 2010, shoppers pent $3.4 billion using mobile phones
• eBay’s RedLaser price app was downloaded 16 million times

We have written previously about this subject -- there is absolutely no way that retail stores can consistently match web prices, even from their own websites.  The old school retail strategy of lowest price guarantees is a recipe for bankruptcy.  The biggest strategic challenge facing retail stores in 2012 will be consumers asking for prices they found on their smartphone by scanning bar codes in store.

How Target is taking aim at Amazon and price Apps

Target is certainly not the only retailer to be hit by the loss of revenue and profits from smartphone comparison shoppers.  Best Buy is reported to have suffered considerable losses to web price based shoppers last year.  Even Walmart’s flat growth is attributed in part to more smartphone price comparison shopping, especially for high ticket items.

Target has recently been much more vocal about fighting back against Amazon and web only based retailers.  According to Enright’s article, Target is aggressively changing its policies:

• Target has sent letters to suppliers stating that it does not want to become a showroom for e-tailers selling the same products.
• Target has asked some suppliers to renegotiate agreements so that Target can be competitively priced with online only retailers.
• Target is considering membership or subscription based pricing for products sold in store at web based prices.
• Target will continue to aggressively expand “house brands” of products exclusively only sold at Target.

Walmart is also taking action, and adds a twist

Amazon’s holiday promotion of offering consumers $5 for scanning bar codes woke up and ticked off a lot of people.  Be careful when you tick off the 800 lb. gorilla of retail!  Walmart is aggressively building its own online web retailing presence to compete with Amazon. However, like Target, Walmart has policies that say its stores do NOT match prices found online, even those listed on their own-ecommerce sites.

In a very interesting twist, Walmart has actually opened some pilot web stores in California malls!  The purpose of these stores is to act as showrooms for items that Walmart sells on the web.  Consumers can touch and test some feature products in these stores, but can only make purchases from kiosks in the store directing them back to Walmart.com.  A very smart way to challenge Amazon’s selection and web experience if you can deliver!

Why suppliers must care about smartphone price apps

It could be easy for manufacturers to say:  “That’s the retailer’s problem … I will still get my sales regardless of where consumers purchase.”   While that may be true, what will happen if consumers do not have an experience in store, or access to places to see demos, or have associates explain how to use products?  

All of those things related to the consumer experience in store add to the costs of the retail store operator.  If the consumer uses their store for the experience and then purchases from their phone elsewhere, that store can’t make sale.  If the store matches the online price, it won’t make a profit given its extra overhead costs.

Imagine that you are Microsoft launching Windows 8.  It is one of the most important product launches in your company's history.  Not only will this new platform impact PCs, but will be pervasive across tablets and phones.  If you were Microsoft, where would you rather have consumers experience the “wow factor” of your new Windows 8 – as a landing page on Amazon, or on end-cap demos and every device in Best Buy, Walmart and Target?

Consumers now hold the power of shopping by phone, anywhere any time.  To survive and compete, retail stores must go back to the basic Law of the Retail Jungle: Differentiate or Die!  2012 is going to get a whole lot more interesting as even the largest retailers must differentiate on more than just lowest price.

 

To receive more information and sound bites from IMS follow IMS Results Count on Twitter and Facebook.

Sources:

• Retail Customer Experience: Target takes aim at web-only retailers, January 23, 2012
• Retail Customer Experience: Wal-Mart takes e-commerce to the mall, November 10, 2011
• Wall Street Journal: Retailers Try to Thwart Price Apps, December 23, 2011

Pinterest … “Fantasy football for women”

Is Pinterest a fad, or opportunity for today’s marketers?

One of the hottest items in social media of late has been Pinterest.  It seems to be particularly attractive to women, who like the visual bulletin board interface.  One of the best descriptors I’ve seen for Pinterest is “fantasy football for women”.  While Pinterest has been getting a lot of press, is it another passing social media fad or an entirely new format offering new marketing and branding opportunities?

What in the world is Pinterest?

Pinterest is yet another new type of social media/network.  What makes it so unique is the visual aspect of literally “pinning” your likes to a visual board.  As you create your “pin boards”, you are creating visual icons of things you like, places you might like to go, or products you are interested in purchasing.  In the simplest sense, Pinterest is a way of visually putting "post it" notes all over the web.

Of course, you can already collect links to sites that interest you in a number of ways, including the traditional “favorites” in Internet Explorer.  But, rather than a URL or short name, Pinterest enables you to select a photo that becomes an icon to the product, place or website.  Not only can a Pinterest pinner curate their own collection of interests, they can track what others on pinning across 32 different topic areas from art to science.  Most importantly, they can share their Pinterest pins quickly with friends through Facebook and Twitter, and that is what makes it so powerful and attractive to marketers.

What makes Pinterest unique?

Pinterest is unique in its approach.  One differentiator is the highly visual nature of the links vs. traditional URLs. The act of “pinning” a representative photo is very symbolic of creating a bulletin board with post-it notes, with the ability to organize and categorize them.  This visual act of “curating” collections seems to have an unprecedented popularity among women.

What makes Pinterest  both interesting and valuable is being able to share your “pins” and “boards” with others  through other social media forums, such as Facebook.  For example, a bride to be can pin a variety of wedding dresses to their board, and then share them with all her friends.  She can also see if others “repin” her dress selections to their boards.  For inspiration, she can search Pinterest categories to see what others are spotting and selecting as trends.  All of this can be done in a completely visual way using photos and images.

Is Pinterest a passing fad or something worth exploring?

Over the holidays, my daughters told me that as a marketer I had to get on Pinterest. My initial reaction was: “Oh great, another social media tool, and I haven’t even really cracked the code on Twitter.”  To be honest, I hadn’t really heard of Pinterest and questioned why marketers should care.

I was surprised to learn that Pinterest has become one of the top 10 social media sites and forums.  And technically, it is still invite only.   But, despite rapid recent growth, Pinterest has less than 5 million users in contrast to Facebook approaching a billion.  So, it’s still very new.

What makes Pinterest so compelling is the visual appeal to users, especially women.  And the key to curation of “likes” on Pinterest is that it is often about “dreams”, “passions” and lifestyles.  Said another way, there are many sites to search for products and descriptions, but Pinterest is about how people see themselves using products and services.  In fact, Pinterest etiquette clearly states that it is not a platform for self-promotion and “hawking” products.

Why brands and retailers care about Pinterest?

If Pinterest is not a broadcast medium like Twitter, or a social connection like Facebook, why should marketers bother?  For one thing, Pinterest has captured and engaged women. But, the engagement is not about products per se, but about the “idea” behind the product and the lifestyle of the brand.  

Through Pinterest, users become not only aspiring purchasers, but powerful advocates who share and even promote those interests to others in their network.  Indeed, one of the real fascinations of using Pinterest is to see what others have on their pin boards … and who repins what you have on yours.  (How do I know this … I had try it out on my Pinterest account with photography!)

Who is using Pinterest today to reach consumers?

There have been a number of recent articles on Pinterest in the social media.  Not surprisingly, the early adopters and power users on Pinterest have been in the fashion categories.  Retailers like the Gap have used Pinterest to effectively promote their Holiday Gift Guide. 

Pinterest is not only for women’s fashion.  You will find furniture stores, restaurants, travel, universities, museums and even tech companies like AMD on Pinterest.  The reality is that anything can be “pinned” to your board on Pinterest.  I have pinned articles, websites, blogs and YouTube videos to my photography boards.

How brands and retailers can use Pinterest …

The key to using Pinterest is not about pushing products.  The success seems to come from promoting a “lifestyle” and showing products or services being used.  In essence, Pinterest is a vehicle for brands to promote aspiration and differentiation, rather than features at the lowest price.   Amen!   This could be very valuable in this market and economy.

One of the articles I would highly recommend is Laren Drell’s piece in Mashable entitled:  Pinterest for Brands: 5 Hot Tips.  Drell does a good job of explaining what Pinterest is and ways to use it, including:

• Promote a lifestyle
• Promote brand, company values
• Differentiate your experience as a retailer, place
• Consumer research – use it like a live focus group
• Crowd source for ideas, connections and advocates
• Run contests to engage with consumers and advocates
• Inspire and mobilize your team and staff

 Still wondering if Pinterest is for you – Try it!

While Pinterest may have special appeal for women, it has potential appeal for all consumers if brands and retailers explore how to use it. It is a very unique media and interface, with the power to easily and quickly link through other social media like Twitter and Facebook.

Beyond signing up and starting to pin your favorites, there are nuances on how to optimize it as a marketer. One reference I would highly recommend exploring is an article by Stephanie Buck entitled:  Pinterest: 13 Tips and Tricks for Cutting Edge Users.

If still undecided, it is extremely easy to get started and explore.  However, when you go to the Pinterest website you will not be enabled as a user right away.  You have to wait for your invitation in email, which in itself piques interest and appeal.

The bottom line:   Facebook or Twitter will not rule the world.   Whether it is Pinterest or a clone, there seems to be high consumer interest in sharing aspirations and passions around aspirations, lifestyles, places, services and events.

 

To receive more information and sound bites from IMS follow IMS Results Count on Twitter and Facebook.

How Target spoke volumes without saying a word

Sometimes the “Art” of retail outweighs the “Science” 

With a blog title of “Results Count”, we do a lot of posts on the science and numbers of retail.  If you scan the archives in the search bar on our blog site, you will find a lot of previous posts on scorecards and metrics of retailing. This week’s post is about the “art” of retail and how Target made a bold statement without saying anything.  Kudos to Target!

Retail is a brutal business run by the numbers

Make no mistake about it, retailing is truly a brutal business. The “Laws of the Retail Jungle” are about detailed execution 365/24/7. At the end of the day, the retailers that survive long term must make their numbers work in their business model, and generate an operating profit.

Target is a very interesting case study of a mass merchant retailer that goes head to head with Walmart.  And, like everyone else, Target is also feeling the pain and price pressures from online retailers like Amazon.  But, Target has been successful by following a core rule of retailing today: Differentiate or Die!

Target’s differentiation survival strategies

There is no way that Target can compete head to head on price with Amazon or Walmart, and they don’t attempt to.  A primary Target strategy is to differentiate by carrying different types and brands of merchandise that consumers can’t purchase anywhere else.  For example, Target has a number of “house brands” like Cherokee jeans, which has now morphed into a clothing line that is only sold at Target. 

Target is also one of the best practitioners of the “Art” of retailing.  They have designed their stores to be very appealing to women, especially moms with kids.  Their plan-o-grams are meticulous and consistent making their stores easy to shop.  They have designed their stores with wide aisles with bright lighting.   As a result, Target has come to “own” the female consumer when she shops bricks and mortar stores.

Target’s numbers not so hot for holiday

All strategy and merchandising aside, Target’s numbers were not so hot for the holiday period.  Like most retailers struggling to make sales to middle class America, Target offered a number of deals and discounts to lure shoppers.  One promotion was a “50% Off” the day after Christmas focused on scrounging up last minute sales.  So while sales were up, profits were marginal due to all of the discounting and promotions.

On the whole, Target did not fare well in fourth quarter.  Earnings forecasts are down.  But to be fair, other competitive retailers like Kohl’s and JC Penney also dropped forecasts based on holiday sales.  It is becoming apparent that long term strategies will need to:

• Focus on value beyond lowest price
• Develop relationships with consumers
• Create a brand and loyalty beyond merchandise & price

In short, future success will require both the science and art of retail.

Going beyond the “mainstream” … leading by example

Few probably know that I started my career as a “teacher” for special needs students.  It was not a career choice, but more of an opportunity to put food on the table by applying my BA in psychology.  What started out as a “job” became a rare opportunity to learn some lessons in life.

Four decades ago, a very large number of handicapped and challenged children were not in public schools.  Part of my job was to get these special kids equipped to be part of the new “mainstream” movement enabling them to attend public school classrooms.  The most memorable moment of my early teaching career was when Tommy, a student with Down Syndrome, was removed from my “special” education class because he became “just a student” at his local school.  

You may have missed Target’s ad that spoke volumes

All the numbers aside, Target ran an amazing Ad that you probably missed.  If you missed it, it was by design.  Target very skillfully featured Ryan in one of their ads … with not a single word about it.  

There is nothing remarkable about this ad.  In fact, the ad is for $5 shirts, not some remarkable product or deal.

What makes the ad significant is that it features Ryan on the left.  Ryan lives with Down Syndrome, but in this ad he looks and poses just like all of the other kids.  Most of us wouldn’t notice … and that’s the point. 

Why is Target’s Ad worthy of recognition?

Target could have engaged a PR firm or used their extensive social media to call attention to their ad and how they included Ryan.  But, Target did none of that.  The way I found out about the ad was through my daughter who sent me a link to Noah’s Dad blog.  Noah’s Dad created a blog to write about his son with Down Syndrome.  He very eloquently captures what makes this Target ad special:

This wasn't a "Special Clothing For Special People" catalog. There wasn't a call out somewhere on the page proudly proclaiming that "Target's proud to feature a model with Down syndrome in this week's ad!" And they didn't even ask him to model a shirt with the phrase, "We Aren't All Angels" printed on the front.

Target has made its share of mistakes and taken its lumps.  But, in this case, Target got it right in terms of communicating the right message in the right way … without fanfare.  It is one example of how retailers need to work at building brand identity and relationships that last beyond the lowest price of the day.

I would encourage you to go to Noah’s Dad blog and read his thoughts on the “5 Things Target Said By Not Saying Anything”. 

And, that my friend is the new “Art of Retail” … getting consumers to be your advocates and say things that you could never buy or say in advertising or even in your own social media.

To receive more information and sound bites from IMS follow IMS Results Count on Twitter and Facebook.

Sources:

• Retail Customer Experience: How Target said it best when it said nothing at all, January 3, 2012
• Noah’s Dad: Target Is ‘Down’ With Down Syndrome: 5 Things Target Said By Saying Nothing At All, January 2, 2012


Photo Sources:

• Minnesota Public Radio: Target Consumer Image
• Retail Customer Experience: Snapshot of Target Ad

Snapshots in Time … Kodak vs. Lytro today

Case studies of technology and adapting to change

In reading my “Morning News Beat”, I ran across a great post by Mark Sansolo entitled: “Snapshot of the Future”.  While his case examples are about the technology of photography, Sansolo does a great job of capturing the essence of change and why companies must continue to evolve, at an even more rapid pace to remain competitive.  Kodak is a snapshot of the past … and Lytro could well be the picture of the future.

Case studies in change … and the lack there of

Chances are very high that you took photographs over the holidays and they were “digital”.  Most kids today have never seen a roll of film.  Yet, when I grew up, Eastman Kodak ruled the world of photography.  Today, Kodak is in virtual ruins and has become a poster for a company not being able to change to compete.  

I had an opportunity to actually consult with Kodak early in my career.  We worked with them on retail strategies and even taught some of our Retail University courses.  But, Kodak’s problem was not retail per se.  Their heritage was film and paper prints.  They saw retail only as a channel to reach consumers to sell their core “product lines”.  

The real threat for Kodak was from the coming age of “digital” where it is now possible to view an “image” without paper.  Even in the face of digital cameras, Kodak clung to its heritage of pictures are prints … people will still want to print their digital images right?  Not so much.

Eastman Kodak – Snapshot of a past giant who is dying

As it turns out, the heritage and DNA of what made Kodak great did not prepare it for the rapid revolutionary change in consumer photography in a digital age.  Kodak did not anticipate rapid adoption of cell phone cameras, and the fact that many consumers came to prefer to send or text their photos rather than print them.  They also did not know how to cope with social media like Facebook, where all things are shared digitally rather than on paper.

For a number of reasons, Kodak simply did not foresee the future or react quickly enough.  Today, Kodak’s share price is below 50 cents, and the Wall Street Journal reports they are on the verge of filing for bankruptcy.  But, the ultimate irony noted by the WSJ article is that Kodak “actually invented the digital camera – in 1975”! Kodak is another case study of Polaroid … deja-vu all over again. 

The only certainty of Change – It accelerates!

Pardon me if I am a bit nostalgic about Kodak.  This was a great company that had great products and great ads.  Kodak in fact ran a classic series of ads about “how quickly life changes” (with very powerful emotive imagery of why we need photography to capture those “Kodak moments”).  Who knew it would be a crystal ball of Kodak’s future.

I can’t remember who said it, but the thing about change today is that it is not only inevitable … it continues to accelerate.  I’m quite sure that Kodak had incredible engineers and planners, who no doubt thought they had seen it all.  They figured out the premier path for photography … in a film and print world. 

The problem for Kodak was that innovators moved the goal line … in fact they completely changed the game to digital.  But nothing is “safe” or stable.  The digital world is poised to be turned upside down by new disruptive technology by companies like Lytro.

Snapshot of the Future – “Light field cameras”

In the switch to digital photography, the image was captured on sensor pixels and converted to digits rather than in silver emulsions on film.   Digital images still require you to choose a subject to focus on.  Once snapped, the image is then fixed in that static photograph.  But, what if any viewer could go back and move the focus around in photos that have already been taken?

I’m guessing that like me, most of you haven’t heard of Lytro.  Go take a look at Lytro’s website and be prepared to be amazed at what their $400 camera will do.  Without getting technical, their camera does not “capture the image”.  Rather, it captures “the light field emitted by a subject” in a computer system, which in turn allows you manipulate a photo after you take it.  It is easier to experience than explain … click around on areas within a Lytro photo to see what happens.

Click on the picture

What does all of this mean … take nothing for granted!

Lytro’s new photographic technology is not quite ready for prime time, but it is already in the market today.  It represents just one possible “tipping point” that could literally upend digital photography.  Will Canon, Nikon and Sony be able to think outside of the box, or get stuck in the ruts with their own baggage of heritage like Kodak did?

Of course, revolutionary change is not just about photography or even technology.  Walmart has long dominated mass market retailing.  But, it will be the discounter Dollar General, who is opening 662 new US stores in 2012, not Walmart. Best Buy was the absolute category killer in consumer electronics, but it is Amazon and Newegg who are showing remarkable double digit gains in year over year growth, while Best Buy struggles.

The New Year is a natural time for planning.  As we enter 2012, we would do well to not to live in the past and fight the wrong battles on a playing field that could be turned upside down over night.  If you want to see what happens when consumers leap “across the chasm”, just go ask the shareholders of what used to be Kodak.

“The future ain't what it used to be.”  Yogi Berra

 
To receive more information and sound bites from IMS follow IMS Results Count on Twitter and Facebook.

Sources:

• MorningNewsBeat:  Sansolo Speaks: Snapshot Of The Future, January 4, 2012
• Wall Street Journal: Kodak Teeters on the Brink, January 5, 2012

Photo Sources:

• Dim Bulb: Kodak Image
• Lytro: Lytro Camera Image

Dec 29th Kicks Off 53 Weeks of Retailing in 2012

Using the 4-5-4 calendar is an essential for next year

Today’s retailers strive for consistent year over year planning and reporting.  Since the 1940s, they have been using a 4-5-4 week format to create consistent months and quarters.  Only one problem … this format only accounts for exactly 52 weeks and 364 days.  So, about every 6 years retailers have to add another week to the year.  2012 is one of those retail years with 53 weeks, and New Year’s Day in retail is Dec 29^th!

Why do retailers use a 4-5-4 Calendar?

Like most businesses, retailers used a standard monthly calendar to run their businesses for decades.  By the 1940s, retailers were growing in size and aggressively advertising sales on weekends.  As sales increasingly shifted to Saturdays and Sundays, retailers needed to more carefully plan and track weekends.

The problem with traditional monthly calendars is that the number of weekends in certain months varied from year to year.  In order to plan ads and supply chain fulfillment, retailers needed comparable months that were consistent year over year.  By adopting a calendar with consistent weeks per month in a 4-5-4 cycle, retailers and analysts can improve information, accuracy and forecasting.

So, why does 2012 have 53 weeks?

Creating a 4-5-4 calendar improves year over year consistency and accuracy, but it only has 364 days (52 weeks X 7 days = 364).  Since it takes mother earth 365 and a fraction to complete its revolution around the sun, the 4-5-4 calendar quickly gets out of sync.

In order to maintain the 4-5-4 monthly format and stay in sync with the solar year, it is necessary to add a 53 week to make up the difference.  This anomaly occurs approximately every 5 or 6 years.  2000, 2006 and 2012 are all 53 weeks years for retailers on the 4-5-4 calendar.

4-5-4 Retail Calendars are published by NRF

The National Retail Federation (NRF) publishes the guidelines for the retail 4-5-4 calendars with retail week numbers throughout the year.  Calendars are already available for 2012 through 2014.   The NRF calendar shows that 2012 begins on Dec 29^th and ends on Jan 2^nd.

NATIONAL RETAIL FEDERATION

2012 RETAIL SALES REPORTING and

4-5-4 MERCHANDISING CALENDAR (2012 Not Restated)

 

*  Fiscal Year 2012 is a 53 week year. 2012 should be restated for comparability to 2013.

 ** Green shaded boxes indicate a Sales Release Date. Black shaded boxes indicate the following Holidays: Valentine's Day, Presidents Day, Easter, Mother's Day, Memorial Day, Father's Day,

Independence Day, Labor Day, Rosh Hashanah, Yom Kippur, Columbus Day, Halloween, Election Day, Veterans Day, Thanksgiving, Christmas, New Year's Day, and Martin Luther King Day.

*** Rosh Hashanah and Sales Release fall on 9/5/13.

Vendors, you had better know what day it is in retail!

The interesting challenge for vendors is that few of them end their fiscal year at the end of the calendar.  But, in reality it doesn’t matter.  The key is adopting a planning calendar that is on cycle with how retailers plan.  The good news is that many vendors appear to be incorporating a 4-5-4 planning calendar.  In fact, one of our most searched blogs in our Results Count archives is titled:  “What week is it in retail?”

Retail is detail more than ever today.  It requires precise planning, analytics and forecasting.  If vendors are not in sync with their retailers’ calendar, they are literally not in the game.  The 4-5-4 calendar is literally a prerequisite for doing business profitably with large retailers today.

What calendars do e-tailers use?

No one is quite sure what the future holds for online e-tailing.  In the case of web sales, peak volumes do not necessarily fall on weekends, but on Monday’s or during midweek.   However, many top e-tailers also have stores, so they typically use a 4-5-4 calendar for planning supply chain and reporting sales.  

All retailers strive for consistency in data in order to establish year over year comparatives in reporting.  So, many e-tailers also use the 4-5-4 calendar for consistent reporting, even if they focus on Cyber Monday instead of Black Friday.

What does all of this calendar stuff mean for you?

One thing is for sure … consumers determine when the cash register rings!  While the 4-5-4 calendar is essential for optimizing retail planning and execution, the most important “calendar “ for you is the one that you use to make purchase decisions.   As a consumer, you might find however that retailers do become more aggressive in promotions and discounts as they end their 4-5-4 calendar quarter.

If you want to get a head start on the New Year, then you might want to adopt the retailer 4-5-4 calendar and start celebrating on Dec 29^th, which kicks off 2012 in what will be a very interesting year for retail.

To receive more information and sound bites from IMS follow IMS Results Count on Twitter and Facebook.