Bryan Pearson's Blog, page 12

Size Matters: 3 Things Luxury Retail Can Learn From Kmart

Kmart

On a scale of one to 10, Kmart is giving its shoppers an 18, and it’s likely overdue.

When the low-priced chain in early September extended every component of women’s apparel, from socks to skirts, into plus sizes, it did so with a great deal of insight. Not only did it extend sizes in all clothing categories; it also bucked a merchandising convention and integrated them with other sizes throughout the store, as well as in designated spots.

In making this investment, Kmart is recognizing the market validity and substantial lucrative potential of a consumer base long neglected by more upscale retailers and brands. The sales of plus-size apparel in the U.S. rose 17% from 2013 to 2016, to $20.4 billion from $17.4 billion, according to the NPD Group. Yet many mainstream retail brands, including mid-scale to luxury chains, have had fickle relationships with the category, often testing but not committing to a full-scale, permanent effort.

“Millions of our members shop in extended sizing apparel and we wanted to take action,” Kelly Cook, Kmart’s chief marketing officer, wrote in an email. “We’re the only U.S. retailer to do this. In fact, 22% of Kmart’s apparel members are ‘Plus Active’ shoppers. They are very loyal: Over 32% shop 11 times or more a year.”

Saks Fifth Avenue, Neiman Marcus and even Macy’s should take note. Looking and feeling great doesn’t require being a size zero or six. By extending and integrating the range of size offerings throughout their stores, they could extend their own potential by helping to eliminate the big-size stigma.

Kmart

Luxury’s Slim Miss

Kmart’s embrace of the plus-size market is likely an effort to boost its performance. Since 2012, its store numbers have been reduced to 482 from 1,305, and parent Sears recently announced it would shutter 28 additional stores this year.

Importantly, Kmart’s efforts go beyond size. It completely changed the messaging around the segment, deep-sixing the term “plus size” and replacing it with “Fabulously Sized.” In doing so, it has removed the need to physically designate the clothing; it can be racked alongside the size sixes and 10s.

“When we reached out to our members on social media, they told us we needed to have a better assortment and that we should call it something different,” Cook said. “They absolutely love this whole mantra of ‘Fabulously Sized.’”

It’s important to note that Kmart even asked. Higher-priced brands may not be doing the same, considering that just 0.1% of all premium and luxury apparel is plus size, according to Edited, a retail analytics company with offices in New York, London and Melbourne.

Katie Smith, a senior retail analyst at Edited, believes plus-size apparel represents one of the most promising opportunities in retail, but she said there is a misconception that plus-size lines should have a different narrative than other clothing.

“In fact, the messaging can, and should, be the same,” she said. “These factors may have acted as deterrents, but that’s something the industry needs to move beyond.”

What She Wants: Style, Comfort

Enter Fabulously Sized. Not only did Kmart listen to its shoppers; it listened to women who were not brand-loyal.

Kmart conducted a nationwide survey of female consumers including, specifically, non-Kmart shoppers. It then analyzed its data brand by brand to design its collections. Among the findings, plus-size women seek clothing that is comfortable as well as fashionable, basic but also classic.

“Knowing what they liked more (fit, comfort, style), we develop our collections according to what they really want,” Cook said. “We also tested our brand statement, ‘Be whoever you want to be,’ and more than 90% loved it (members and non-members).”

Here are three points upscale brands should take away from Kmart’s Fabulously Sized move:

Invite your shoppers to vent: All shoppers want to be heard, whether they’re spending $10 or $1,000. Retailers should be there for them and ask them to share specific pain points that interfere with that brand experience. Kmart relied on social media and other feedback. Members of loyalty programs may be invited to private surveys (with a reward for incentive), or special retail panels can be established for long-term feedback.

Words matter: Messaging is a crucial element of the retail experience, and for a long time the language targeted toward plus-sized women (outside of specialty stores) has been unremarkable. By rebranding a generations-old, stodgy clothing segment into something fresh and positive, Kmart recognizes the shoppers who buy from that department as remarkable, valuable and worthy of one-to-one attention.

Change with your shoppers: Retailers can have a tendency to think of what their shoppers want from the perspective of their own aisles. Instead, they should consider what the shopper wants from a blank slate, or even from a competitor’s aisles. Accommodating a major market segment could require a wholesale change in merchandising. If so, that is likely a step in a profitable direction — it indicates the segment may have been overlooked.

Lastly, retailers should recognize that if they limit fashion to a small range of sizes, they are limiting their market. As Cook put it: “Fashion has no size.”

“Our goal with this campaign is to celebrate all women regardless of their size, age or shape,” she said. “Because fashion is ageless, shapeless and weightless — we want to empower women to embrace their individuality.”

Gaining Shopper Trust Through Advisory Panels: The Nordstrom Way

Opinions can move a lot of merchandise, but they can also stir passion — just ask Nordstrom.

Photographer: Ben Nelms/Bloomberg

Since 2007, the Seattle-based chain has been talking to some 14,000 shoppers, mostly women, to learn what they think about its marketing efforts, services and brand mix. They are part of its Advisory Panel, a community of dedicated customers who for 10 years have provided feedback to help Nordstrom improve its shopping experience.

Nordstrom is among a small but influential group of retailers, including Kroger and CVS Pharmacy, asking shoppers to provide direct commentary in return for their brand influence and other perks. But unlike standard feedback mechanisms, such as random surveys, many of these panels are comprised of dedicated members, each of whom is registered. And these registrations enable merchants to gather a steady stream of data from their most influential shoppers through games, contests and other engagement tools.

More importantly, the panels enable a necessity of any trusting relationship: two-way communications. Nordstrom, for example, connects with its panel members once or twice a month through online surveys, spokeswoman Brenna Sussman said.

“Our community members are some of our most engaged shoppers. It’s always surprising how specific and detailed their feedback is for us,” Sussman wrote in an email. “(It) has helped shape our marketing messages, product selection and shopping services, and deepened our understanding of our customers.”

True Test of Loyalty

The shopper’s willingness to share opinions may also lead to more tested loyalty.

Think about it: When people feel trusted, they are more likely to trust back and become emotionally invested. Research into employee trust, for example, revealed that 50% more of those working for high-trust organizations planned to stay with their employers over the next year; 88% more said they would recommend their companies to family and friends as a place to work.

Many merchants rely on third parties to provide these kinds of shopper-provided insights. Some retailers use Nielsen’s Homescan Shopper Panel, for example, to understand the motivations behind brand sales.

But Nordstrom and others have taken the task in-house, possibly so they could tailor the queries to brand-specific missions and experiences. Nordstrom mailed members of its panel an infographic that shared highlights of what it has learned since the panel launched in 2007:

Of its 14,000 members, 90% are female; 48% are ages 35 to 54 and 34% are 55 and older.
Most (71%) ranked the opportunity to express their opinions as their favorite Advisory Panel experience.
Roughly half (53%) ranked the chance to win prizes as their favorite experience, while 48% like learning about new products or ideas.
Loyalty really is a motivator for participation, as 46% of members said their favorite experience on the panel is helping Nordstrom succeed.

Community Rewards: Kroger, CVS and L’Oreal

Other retailers are finding similar rewards in dedicated shopper communities.

Kroger’s MyMagazine Sharing Network is a space where members share feedback and opinions on products, complete surveys that help Kroger better understand them and participate in tailored discussions. In return, members receive special offers, insider access to new content and the opportunity for free products. Members also may qualify to participate in ambassador programs that include activities through which they can earn badges.

The CVS Advisor Panel is a group of registered shoppers who have volunteered to share their opinions in several annual online surveys. To participate, shoppers must be ExtraCare reward members and fill out short profiles that include selected CVS products and services in which they are most interested. Their feedback guides decisions involving products, services and even philanthropy. Members earn ExtraCare rewards and savings that encourage more spending and data sharing.

L’Oreal’s Consumer Participation Panel is designed to gauge reaction to products yet to hit stores. Members who register are provided passwords for access to a dedicated website and surveys. Members can test products at home or at physical test centers in select locations. Once the tests are complete, participants fill out surveys and then wait to receive a package of free, full-size products from L’Oreal and its other brands, including Lancôme, Kiehl’s, Kérastase, Vichy and La Roche-Posay.

3 Steps to Trust, With or Without Members

Gaining trust does not require dedicated shopper communities, though long-term memberships and related activities do assure continuous streams of conversation and the insightful data that travels with them.

For merchants wishing to baby-step the process, there are plenty of short-term trust efforts from which to learn. In one effort, Trader Joe’s recently  and employees to vote for their favorite products in honor of its 50th anniversary. Trader Joe’s then narrowed their picks to a list of the 50 best, from Sea Salt & Turbinado Sugar Dark Chocolate Almonds to all-natural boneless, skinless chicken breast. 

Regardless, all customer feedback efforts would likely perform better with a few key mechanisms:

A clear objective: Merchants should have sharply defined goals of what they expect the panels to accomplish and help out with. This will help determine reward systems and communication channels.

A ramp-up survey: Tailored surveys should help the brand determine the best-suited, most serious shopper candidates. Questions should reflect the brand’s specific values and appeal for the best-suited candidates.

A next-phase strategy: Along with shopper preferences, the first consumer feedback round may reveal weaknesses in the panel itself. Retailers should use these findings to reinforce what works well and adjust what does not. The best-suited shoppers may not respond to a physical reward, and prefer experiences, for example.

Shoppers like to have a say, and they like being heard even more. Once they recognize that their voices have influence, they are likely to raise them with more frequency and emotion. It’s the foundation of any good relationship.

This article originally appeared in Forbes. Follow me on Facebook and Twitter for more on retail, loyalty and the customer experience.

Setting The Stage For Food Theater: A Shopping List Of 7 Needs

She used to come to the supermarket for diapers and bananas. Now she comes for duck confit, live bands and a break from it all.

LILLIAN SUWANRUMPHA/AFP/Getty Images

Welcome to the supermarket matinee, or better yet, the multiplex. Increasingly, anytime is show time at the local supermarket as more grocers dedicate space in their stores to food theater — dine-in settings that hold up as destination experiences, even for special events.

Since 2008, the “grocerant” market has grown 30%, according to The NPD Group, a research firm. This translated to 2.4 billion foodservice visits in 2015 (most recent year for figures), resulting in $10 billion of spending. And as the market grows, so do the offerings.

Dine-in features at the grocery have gained enough credibility that the industry’s leading trade groups are offering “grocerant” education. The trade magazine Progressive Grocer 2017 Grocerant Summit is scheduled for late September. And the Food Marketing Institute’s Energy & Store Development Conference, also to be held in late September, will feature a session called “Becoming a Grocerant: Winning the Customer Through Comprehensive Food Service Design.”

Design is just one element of grocerant success, as any restaurateur knows. Based on research into what top retailers are doing, from Whole Foods to H-E-B, here’s a grocery list of what it takes to pull together a supermarket restaurant that will steal the show.

Manage the hot spot: Space for the kitchen will likely be tight, so efficiency should be baked into kitchen planning. This begins with assessing the menu and then building necessary work stations around the offerings. If there are a lot of grilled options, for example, a grilling station would be essential. Same if the menu is heavy on salads or pastas. The bonus of this kind of planning is it requires discipline to focus on what the staff is best at preparing. The good news: A supermarket restaurant does not require a lot of storage space, since the ingredients are all stocked in the aisles.
Be label-to-table: An in-store restaurant is among the most cost-effective places to get people to try the brands stocked on the shelves, especially private-label brands. That being said, merchants should be wary of not overwhelming guests with a litany of brand names on the menu. Noteworthy ingredients, such as spice blends, gourmet marinades and local items, should be specified. A mix of locally sourced ingredients — from area farms to neighborhood startups — will add intrigue to the menu while ensuring a sense of community.


Be buzz-worthy: Restaurants, even supermarket restaurants, need features beyond convenience to attract customers. This includes buzz, like the kind that grocery chain Hy-Vee got when announcing plans to add menu items from Wahlburgers restaurants, co-founded by actor Mark Wahlberg and his brothers. Hy-Vee CEO Randy Edeker said the collaboration represents “a bold step to deliberately evolve our business to meet the change in our customers’ lifestyles and spending habits.”
Hire top chefs: Supermarkets should look at celebrity chefs, whether they are local or nationally known personalities. The key is identifying a chef whose personality fits the overall depth of the marketing strategy. The experiential goals of a hyper-local or statewide chain might require the familiarity of someone more local, while a well-known celebrity chef might better support a broader, experience-bending strategy. Through exclusive entrées, ingredients and even preparation techniques, the brand and chef are more likely to maintain relevance. Kroger Co., which announced plans to invest $2.5 million in a culinary training and education center, could for example develop its own in-house techniques or recipes.


Location, location, food station: Shoppers who dine at the grocery store don’t need to be reminded of where they are. Overhead announcements and typical aisle noise should be muffled by walls or shielding. In-store promotions should remain in-store. A separate outdoor entryway is ideal. Texas chain H-E-B, which operates individual restaurants at several locations, provides indoor and patio seating at its Café Mueller Restaurant in Austin. Among the attractions on the patio is live music — not your typical grocery fare.


Don’t fear the niche: A supermarket restaurant does not have to be all things to all people. It should reflect the immediate market, which can be sharply defined in both urban and rural environments. At Mariano’s supermarket in the small town of Frankfort, Ill. (and other stores near Chicago), Todds BBQ offers in-store smoked meats that draw crowds, served with a variety of sauces that can be purchased in the store. And a Kroger store planned for Kentucky will include a restaurant, called Kitchen 1883, that will specialize in comfort food, to reflect “the community and the foods they love.”


Dine in, but carry out: Restaurants can make for bigger baskets. If the dining guest is dying to bring home a bottle of that wine she just drank with her salmon, or another slice of that salmon itself, a store runner could bring it to her. With a store app, the guest could order many of the ingredients (and select prepared entrées) on the menu, which store staff can have ready for pickup by the time the guest pays her tab.

 

Lastly, there should always be a takeout plan, or exit strategy. The menu may only hold up for a year, or the chef may move on to other pastures. A quarterly analysis of operations, with frank discussions among all parties, should encourage creativity and alert change. If it’s a good team, the shifts should work out — a second act is only as good as its talent.

This article originally appeared in Forbes. Follow me on Facebook and Twitter for more on retail, loyalty and the customer experience.

Makeup Remover: 3 Ways To Capture The Shopper In The Evolving Beauty Aisle

(Photo by Andreas Rentz/Getty Images for #SephoraXKaufhof)

Behold the beauty aisle; prepare to put on your war paint. Once invulnerable to promotions, price cuts and similar commodity-moving tactics, the beauty category — specifically higher-priced, prestige beauty — is buckling under competitive pressure from savvy consumers finding new ways to purchase venerated brands. As a result, some of the best names in the business are doing what was once unthinkable: negotiating deals.

These deals are appearing in the form of rewards programs, online promotions or straight-up freebies. New retail channels, including brand-specific sites, are forcing traditional beauty sellers such as department stores to offer up bargains that would make old-school cosmetics purveyors blush.

But retailers have themselves to blame. Shoppers, loath to wait for service personnel or veer too far from convenience, are carving out their own paths to purchase, often on the fly thanks to mobile devices. Luxury cosmetics brands from Shiseido to MAC responded with online stores while an industry of specialty beauty chains blossomed with easy-to-shop formats.

Department stores struggled to maintain interest. The department stores’ share of the prestige makeup market dropped to 19% in North America in 2016, from 23% 10 years ago, according to Morningstar, citing the market research group Euromonitor International. In the same time span, market share among specialty beauty retailers rose to 20% from 14%.

Competing for Attention — Macy’s to MAC

The net result isn’t less spending, but more, indicating that shoppers have a healthy appetite for beauty innovation and trends. U.S. sales of better cosmetics rose 11% in the 12 months ending May, to $8 billion, according to the market-research firm NPD Group Inc. Among traditional brands vying for a cut:

The luxury chain Bloomingdale’s, operated by Macy’s, recently offered members of its Loyallist rewards program a $25 gift card for every $100 spent on beauty products, according to Morningstar. On top of that, members continued to earn double points for cosmetics and fragrance purchases — now that is double dipping!
Macy’s opened 16 freestanding Bluemercury beauty stores in the fiscal first quarter. It also is looking to boost beauty sales through the relaunch of its rewards program in the fall, and by making its beauty departments easier to shop, Morningstar reports.
Nordstrom recently granted as much as 40% off select beauty items on its website and regularly gives free samples with purchases. During its anniversary sale in July, the Seattle-based chain offered a selection of beauty tools such as anti-blemish devices, which seldom get discounted, at 33% off.
Cosmetics maker MAC promotes exclusive offers on its website as well as free shipping and returns. Through its Back to MAC program, customers receive a free lipstick for every six packaging containers they return (in store or online). Members of its MAC Select program get free samples, access to exclusive member products and anniversary gifts.

Accentuating Ease

Indeed, many if not most major brands offer online-exclusive deals; they have little choice. Digital beauty is one of the key perpetrators of the battle for the beauty customer.

However, it’s not the first. One could track the market upset to Sephora’s U.S. launch more than 15 years ago. Its model of inviting shoppers to help themselves to a variety of labels was liberating — no more waiting for a professional to fetch that eye shadow or lipstick. The model was duplicated, notably by Ulta but also many others, and is now a sizeable industry. Sales at specialty cosmetics stores rose 30% since 2006, according to USA Today.

The upshot is shoppers are skipping department stores in favor of specialty chains, online options, drug stores and mass merchants, many of which are of expanding their prestige selections and then layering on promotions that were once uncharacteristic of better brands:

Specialty chain Sephora’s online beauty site features limited-time markdowns, exclusive sales and free products for members of its rewards program, Beauty Insider. During one recent week, offers included half-priced eye shadow palettes by Tarte, four-times bonus points on rouge and free samples with $25 purchases.
Target’s foray into prestige beauty includes the labels La Roche-Posay, W3LL People, ZuZu Luxe and Bliss. Its website includes a page dedicated to beauty and personal care deals — recently a $5 gift card for every $20 purchase.
CVS is the exclusive carrier of the Korean beauty line Peach Slices, by Peach & Lily. Members of CVS’s ExtraCare Beauty Club program earn $5 off for every $50 spent, a 10% off beauty shopping pass and exclusive promotions and new product information.

Time for a Makeover

The blend of new labels and nonglamorous outlets accentuates what many traditional department store beauty counters have been missing: the needs of the shoppers.

There was a time when consumers had little choice but to wait for someone to notice them at the beauty counter. Today they have expanding options, and traditional beauty has in many cases been slow to catch up.

Macy’s and others could recover lost sales, but their efforts will require three essential ingredients:

Singular experiences: Specialty makeup stores feature private group classes, color palette tutorials and technology that allows shoppers to virtually try on cosmetics. Drug stores and mass merchants present an opportunity to buy mascara, toothpaste and pet food in one trip. Department stores will have to work within their offerings to make the trip to their cosmetics counters worth it.
Data: Shopper data collected through a loyalty program will enable merchants to understand the customer’s path through the store and determine, for example, if promotions for free makeovers will succeed in the prom-dress section. Credit card–tied reward programs further reveal shopper preferences outside the store, for a more complete understanding. Such insights could reveal if he or she prefers all-natural ingredients, for instance.
Value: All-around discounts aren’t necessary, but a beauty brand should spell out clearly why it’s a good deal for the shopper. It may be unique ingredients, donations to a charity or free samples with every purchase. But today, when there are so many choices, the shopper expects to feel she is getting a little more than the item she paid for.

The beauty aisle may not be at full-blown war, but the battle for the shopper is in full swing. The influx of online and specialty beauty will mature just like department store beauty, but shoppers are guiding the progression. Capturing sales, therefore, means choosing the shopper.

Does Whole Foods Need The Middle Aisle? What The Shift Toward Fresh Means For Retail

(Photo by Drew Anthony Smith/Getty Images)

The Keebler Elves are going to need a smaller tree.

Kellogg, the maker of Keebler cookies, Frosted Flakes, Pop-Tarts and Pringles, recently posted a 2.5% decline in second-quarter sales due in part to a consumer shift toward fresher, healthier foods. Kellogg wasn’t the only big-food brand to see its sales slip: Kraft Heinz, General Mills and Pinnacle Foods (Duncan Hines, Birds Eye) did as well.

While their losses are in part due to a consumer preference for more natural foods, they are more directly caused by supermarkets. Many are dedicating more space to healthier options, including wholesome prepared meals, private labels and in-store dining, all of which indicates a crowding out of the middle aisle. Few events may accelerate this change as dramatically as Amazon’s pending acquisition of Whole Foods.

Through Amazon and its Prime two-day delivery program, Whole Foods could sell more of its shelf-stable goods, including its 365 Everyday Value brand, online. This could free up more in-store space for restaurants, fresh prepared meals and natural foods. Other supermarkets are paying attention, and many will likely follow its lead.

Wall Street agrees. Shares of stock in packaged food companies in the S&P 500 fell more than 11% in the last year, while the rest of the index rose nearly 14%, according to a report by CNBC.

The Keebler elves will either have to renovate — or rightsize.

Dining In, Processed Out 

For major food manufacturers, renovation may mean adding a new kitchen — in the supermarket.

More grocery chains, including Whole Foods, are upping their investments in takeout and dine-in experiences:

H-E-B is opening its first restaurant drive-thru, a BBQ place, on Aug. 11.
The natural-foods chain Sprouts Farmers Market offers a variety of to-order spreads including fresh fruit trays, vegetable trays and sushi trays.
And Kroger plans to open a store in 2019 that will include a second-floor bar, a food hall, a variety of restaurants operated by third parties and ready-to-eat items by vendors.

As more square footage is dedicated to dine-in and carryout foods, the shopper dollar will be similarly allocated. Chains that focus on healthier fare are already at an advantage — sales at stores that sell more fresh foods rose by 4% in 2016, compared with 1% for other stores, according to the CNBC report, citing Nielsen.

These figures resonate with food manufacturers, many of which are reformulating their recipes to include cleaner ingredients, either for the kitchen or the shelf.

Private Labels Cleaning Up

However, even with cleaner ingredients, big food manufacturers face their toughest competition on the same shelves where they are fighting for attention. Private-label foods, which are becoming a staple for more major retailers, are penetrating the packaged-food aisle in greater numbers and with more natural ingredients, threatening to shoulder out big-food brands.

In-store brands account for 14% of all grocery sales, according to a UBS analyst interviewed in a separate report by CNBC. Kroger’s private-label portfolio, which includes its growing Simple Truth and Simple Truth Organics lines, represents more than 14,000 items at a store, according to its annual report. Whole Foods’ exclusive brands, led by 365 Everyday Value, accounted for 15% of its sales in fiscal 2016, it reports.

Most grocers — 72% — see healthier foods as a gateway to private-label expansion, according to the Food Marketing Institute’s 2017 Report on Retailer Contributions to Health and Wellness. So it’s not surprising that retail observers expect Amazon to extend its private-label offerings through the Whole Foods 365 brand. If so, more of these items would be available online, with two-day free shipping for Prime members.

Should sales of 365 goods shift significantly to Amazon, there could be reason to reduce the number of them on Whole Foods’ shelves, and ship directly from the warehouse.

Fresh-Blend Solutions

Packaged food makers are scrambling to adjust by getting in on the game. Recently, Kraft Heinz partnered with Oprah Winfrey on a line of comfort foods, called O, That’s Good, all of which are free of artificial flavors and coloring.

Similarly, many big-food companies are creating or buying up healthy labels. General Mills bought Annie’s Homegrown, Pinnacle Foods owns Evol and Earth Balance; Unilever, owner of  Ben & Jerry’s, is investing more in natural ingredients. Meanwhile, Tyson and Perdue are now producing chicken and meats in line with Whole Foods’ clean-label standards. Tyson’s meats sell under the Open Prairie Natural Angus label and Perdue under the Harvestland brand.

Still, with so many supermarkets controlling their own healthy-eating options, packaged foods makers are at a disadvantage. They need to catch up faster. But to go where? If the middle aisle is shrinking, where will these healthier options be stocked?

I think the solution may be a new merchandising categorization that blends all healthy foods — packaged and fresh — to reflect the shopper’s path. Think of the refrigerated salad dressings in the produce aisle. All-natural cereals can be displayed near organic milk and berries; sugar-free condiments near the fresh meat case; and canned soups near whole-grain, fresh breads. Those labels that make the cut will simply meet the shopper’s desire for honest nutrition at a fair price.

It would require a complete shakeup of the food store format, and such change might not be well met, but small-format stores can serve as tests. After all, smaller food footprints will likely become by-products of the transition to fresh. Ask the Keebler Elves.

Why Amazon, Staples Are The Teacher’s Pet (And 4 Ways To Be One, Too)

Shine up your apples and your analytics, retailers. When it comes to gaining shopper loyalty, you can learn a thing or two from schoolteachers.

Photographer: Scott Eisen/Bloomberg

Rather than the three Rs, practice the PETs: Price, ease and tailoring. This is what teachers seek as they spend 11% of their own salaries on classroom items this year.

According to a survey of 674 teachers by the retail software maker SheerID and Agile Education Marketing, grade school educators spent an average of $468 of their own money on classroom supplies this year; 77% spent at least $200.

On the high end, some teachers reported spending as much as $5,000.

These numbers provide a lesson in target marketing that is pretty fundamental. Winning the classroom dollar means shifting the advantage to the teacher, not keeping it with the brand. These additional findings bear this out:

• Respondents are 96% more likely to purchase classroom materials from a company that offers a teacher discount online.
• More than eight in 10 respondents (83%) said a discount of 25% would get their attention, up 5% from 2016.
• Nearly half (49%) prefer to shop online.
• More than a quarter of respondents, 27%, would abandon an online purchase if the site had a complicated checkout process; 41% will bail if they have to pay for shipping.

 

Crash Course: Staples, Amazon and Office Depot Stretch the Dollar

But teachers will buy supplies, one way or another, as was painfully brought to attention in Oklahoma. There, a teacher recently panhandled on the side of the highway to raise money so she could buy school supplies.

Her dedication draws attention to the need to stretch the teacher dollar, and retailers could come to their aid. Teachers have long been tasked with buying classroom supplies out of pocket; budget cuts across school districts are adding to the burden.

This may be why many teachers extend their classroom spending across the school year. According to the SheerID/Agile Education Marketing survey, 36% of the respondents shop every few months; 28% shop every month. Among the retailers the respondents most prefer: 

Staples: Through its two-tiered Teacher Rewards Program, the office supplier gives 10% back on teacher- and art-supply purchases, 5% on most other purchases, free shipping on all orders and free next-day shipping on orders over $49.99, among other benefits. Premier members, who spend $1,000 or more a year, gain access to additional perks such as tech services.

Amazon: Members of Amazon’s Business for Education program get price discounts, tax exemptions and free two-day shipping on orders of at least $49. Teachers can enroll individually or as groups, including administrative and support staff.

Office Depot/OfficeMax: The supply chain’s Give Back to Schools program donates 5% of qualifying purchases to designated schools. The Office Depot/OfficeMax reward program gives 2% back on all purchases (VIP members get 5%) and it operates a dedicated teacher resource center.

The takeaway: Merchants should not underestimate the value of price reductions. Discount use among teachers is trending upward, helping to keep the total spending numbers in check.

Lessons in Learning the Market 

It’s elementary: Winning over the increasingly perennial teacher market simply requires viewing the products and services they need from their perspective.

Don’t add assignments: Never underestimate teachers’ ability to solve problems. Though nearly half prefer to shop online, few will linger if they encounter complicated checkout systems, fee-based shipping and other barriers. If faced with complexity, they’ll go elsewhere. Problem solved.

Use simple math: The percentage of teachers enrolled in discount programs dropped to 39%, down 20% from the previous year, according to the survey results. SheerID and Agile Education Marketing suggest this indicates a desire for easier redemption methods. If retailers offered programs through which earning and redeeming rewards were immediate and simple, perhaps with mobile apps, teachers may be more inclined to enroll.

Don’t take summer break: According to the survey results, two-thirds of teachers shop every month or every few months, so they want discounts across the calendar year. This should extend to the summer months, when teachers can stock up and invest in upcoming school-year needs. Think Christmas in July.

Spell it out: Most teachers, 71%, hear about teacher discounts from a friend or co-worker. However, 54% learn from marketing emails and 43% from social media. This implies that a targeted marketing strategy will capture their attention, and encourage them to spread the word — if the benefit is clearly stated and succinct. Rely on good data, and opt for being clear rather than cute.

Teachers aren’t complicated. To become a pet, retailers only need to do what good students do: show up on time, listen, learn and do the homework. This will earn teachers’ loyalty throughout the school years. There are no substitutes.

Is The Search Taking The Joy Out Of Online Shopping?

Online retail is supposed to make the shopping trip easier. But whoever expected it to take the joy out of shoe shopping?

Photo credit: Twiggle.com

Anyone who has searched for a pair of loafers online might know the experience. Enter the type of shoe you want, and the site could retrieve a selection big enough to fill a warehouse. By the time you narrow the search down by size, width, color, heel height, heel type and brand, a good chunk of time has passed and you’ve either still got a hundred pairs to cull through or none that appeal to you at all.

For online merchants, this translates to a sizeable chunk of change, said Amir Konigsberg, the CEO and co-founder of Twiggle, a firm that specializes in simplifying the online product search for retailers. The search is perhaps one of the most crucial elements of the online shopper experience, and given search is often the gateway to experience, this leads to missed sales — but how much?

“Let’s say you have 2 million new visitors to your site each year,” Konigsberg wrote in an email. “About 30% of visitors to retail sites will use the search box. If 50% of these visitors bounce because of bad search (the number is actually much higher; studies cite bounce rates as high as 80% due to bad search), you’re losing 300,000 visitors.”

If the average order value is $150, and the average conversion rate is 2%, then a retailer would lose close to $1 million, he said. That does not include money spent to attract shoppers to the site in the first place and the investment needed to bring them back, he added. “Whatever the exact numbers,” he said, “we are talking very real money.”

Recapturing that real money can be as simple as avoiding frequent slip-ups. Konigsberg and Daniel Tunkelang, chief search evangelist at Twiggle and the individual who works with Apple, Etsy, Yelp and others, shared four of the most common mistakes, with good and bad examples.

1: Retailers focus more on result rankings than on query understanding. Investments in query understanding and rewriting often provide larger and faster returns than efforts to improve ranking, Konigsberg said.

For example, Amazon’s ranking for the query “women’s flats” is, in Tunkelang’s opinion,  “terrible” (socks and liners lead the search results along with shoes). He describes Macy’s, by comparison, as decent. “(The) ranking should take as a given that relevant results are shown above irrelevant results — ideally irrelevant results aren’t there in the first place,” he said. The search should promote products that are more popular, of higher quality, on sale, and so on.

2: Underinvesting in autocomplete. Autocomplete (finishing a term the shopper has begun typing) isn’t just a way to reduce the search effort; it also guides shoppers toward good queries, Konigsberg said. This in turn helps to ensure a successful — and profitable — search experience.  

Among the best examples of autocomplete is the Google web search, which delivers a manageable number of results (six or less). Further, the suggested terms are “unambiguous queries that perform well,” Tunkelang said. On the other end of the spectrum is Gap.com, which does not use autocomplete at all. “It’s a very jarring experience.”

3: Neglecting the overall search experience. Konigsberg thinks it’s dangerous for retailers to assume they know what is and isn’t important for an online shopper. Each shopper differs, day to day, under the best of circumstances. Toss in environmental stimulations, time constraints, and whatever might have popped up on her calendar, and she’ll appear to be a completely different person in the evening than she was in the morning.

“Treat each decision about your search experience as a testable hypothesis,” Konigsberg suggested. Chances are, the merchant will not know which decisions matter until it tests them independently.

4: Changing too many things at once. “Almost all innovation happens one step at a time, through a series of controlled experiments,” Konigsberg said. Retailers would benefit from reining in the temptation to make complete redesigns when their search results do not deliver the immediate desired outcomes. Instead, they should isolate problems, such as why shoppers leave the site after three attempts to find a pair of shoes, and tweak those areas. In short, “dream big, execute incrementally,” he said.

To further emphasize the importance of incremental change, Tunkelang referred to a presentation by Pinterest engineer Andrea Burbank. She explained that when big changes succeed, the organization doesn’t know which parts were good and which parts were bad. In essence, the organization is vulnerable to repeating small, but consequential, mistakes.

But repeat we must. Achieving better footing in online search technology is an ongoing process, and new missteps will likely replace old ones. But if retailers stick to the basic elements, they should be able to keep ahead of key challenges.

And in the process, they should realize the “very real money” a few thousand happy shoe-shopping trips can yield.

Whatever Happened To Showrooming? How Big Retail Is Taking Back The Shopping Trip

Enter a Best Buy store and you will see why the technologies that once threatened to condemn physical retail are in fact becoming its nourishment.

(Photo by Rachel Murray/Getty Images for NYX Professional Makeup)

An updated mobile app, expedited delivery, highly trained employees who can explain products in sophisticated detail — these features are the result of one of brick-and-mortar’s most vexing, looming threats: online ordering and, specifically, showrooming.

Once feared to diminish the traditional store model, showrooming — when consumers research products at the shelf and then comparison shop for them online — might have actually made brick-and-mortar stronger.

It’s a testament to retail innovation, and scrappiness. A good salesman knows how to sell, and a better one knows what motivates customers to return. But the key to turning a menace into a meal is using that customer knowhow to make lasting impressions with speed and flexibility. This requires confidence in one’s shopper analytics, and there are some notable cases.

Presented here are five ways retailers can shut down showrooming, illustrated by some of the most traditional physical brands.

Reason 1: Order in-store and pick up wherever. There’s no need to limit selection to the aisle anymore. Walmart, at its new stores in Texas, installed in-store kiosks where shoppers can peruse endless aisles of toys at Walmart.com. Similarly, retailers could provide associates with tablets and other Wi-Fi-enabled devices and assign them to traverse the aisles and assist shoppers who are researching products. For encouragement, associates can extend a special offer if the customer orders right then.

Reason 2: Employees with advanced training. This is particularly the case in areas of technology or required skills. If shoppers are provided in-depth details (and demonstrations) about how a smart home device works or how two refrigerators compare, they are more likely to feel invested in the store and buy from it. Home electronics and DIY stores in particular can benefit from such employee training, which can extend beyond the aisle. Home Depot, for one, offers classes for adults and kids that range from building toy trucks to installing ceiling fans.

Reason 3: Special customized services. This feature takes training a step further. Best Buy, for example, is rolling out in-home advisory services, through which its shoppers get free consultations on how to connect all the electronic products in their homes, such as TVs, computers and security systems. Similarly, cosmetics chains can (and some do) boost sales through personalized beauty consultations. An on-staff professional can help a shopper select the best colors for her skin tone and provide application tips.

Reason 4: They bring checkout to the shopper. At its urban stores in New York, Lowe’s arms employees with devices so they can scan product codes and check out shopper purchases right in the aisle. Nordstrom Rack stores also are known to employ roving cashiers who can check a shopper out before she even looks in the direction of a cashier. These on-the-spot checkouts reduce the chances of research-and-runs as well as shoppers choosing to leave rather than wait in line.

Reason 5: They do the price comparison for them. The motivation for showrooming is price, or using technology to find the best offer online. Many major chains, including Best Buy, are going head-to-head on price when it comes to big sellers. But retailers can go a step further and do some of the footwork for shoppers — by posting side-by-side the prices of products they sell with the prices offered by major online outlets, such as Amazon. One small retailer in Montana, as described in a column in the Billings Gazette, identifies the online price leaders for the hot sellers on his shelves and then posts their prices next to his, ensuring his are always lower.

3 Themes Feed Strategy to Out-Showroom

From specialized services to multi-channel ordering and delivery, all of these efforts have three themes in common, and they have more to do with the shopper than retail strategy. These themes should shape any competitive decision:

They dialed into mobile activity. Even with all that technology, customers aren’t always trying to chase down the lowest possible price. If retailers know how their customers use their mobile devices for shopping, they can turn those devices into engagement tools. Opt-in apps, for example, enable retailers to push special offers to shoppers as they near certain products (thanks to Bluetooth/beacon technology). The same apps can issue rewards for purchase, if linked to a loyalty program.

Know why they come. To engage customers beyond price, retailers need to understand why they enter the store in the first place. If they are repeat customers, retailers can use their purchase data to see what they bought and how much they spent in a given period. This data can reveal brand preferences, pattern shifts and category price sensitivities, which can be parlayed into experiential offers that stretch the value proposition beyond price. Beauty consultations, cooking classes, product demos and contests or games all count.

Adapt like a shopper. What shoppers look at today can influence what they might need tomorrow. If a retailer succeeds in preventing a shopper from showrooming, it can use the information gleaned from her purchase to inform future offers. It also should consider how she made the purchase — did she order online from an in-store kiosk? Did she purchase the product after a class? These behaviors will help narrow down the most effective channel or method for engaging her next time.

It’s important to act fast. Chains such as Best Buy persevere not only because they are willing to take risks and innovate, but also because they didn’t dally too long on straightforward solutions. Knowing the shopper simply means figuring out how to solve her problems, both in the showroom and outside of it.

The $6 Trillion CMO: 3 Ways To Put Personalization Into Hyper-Focus

“We can rebuild him. We have the technology. We can make him better than he was. Better, stronger, faster.”

Somewhere, along the way to making retail faster, frictionless and more personalized, technology has transformed the chief marketing officer into a version of the $6 million man. Actually, make that trillion.

Photographer: Simon Dawson/Bloomberg

That is the amount consumers are expected to spend on apps alone by the year 2021 — $6 trillion. And with each handheld interaction, their expectations of efficient personalized experiences will elevate. Yet it’s just one of many emerging data streams retail CMOs must manage to better understand their shoppers.

It’s little wonder that many merchants are conflicted about how to approach, and manage, customer personalization. The result is a retail chief marketing officer who is forced to act as a super-hybrid — half brand marketer and half systems integrator.

The result may also be high turnover. In the first half of 2017, 187 marketing-leader appointments were made, according to Russell Reynolds Associates (RRA), which analyzes CMO moves twice a year. That is the greatest number observed since RRA began tracking close to five years ago.

Different Philosophies

Core to the conflict are incongruous commitments to personalization, arguably among the most important factors for effective marketing.

Consider these recent survey results of 146 retail, commerce and media executives by the digital marketing firm Sailthru, which specializes in customer engagement. From the gate, we see different business philosophies regarding the role of personalization:

61% of those surveyed view personalization as a business strategy, while 39% think it is a marketing tactic. The good news is more are seeing it as a long-term strategy and not a tool.


Fewer than half, 47%, said they use personalization technology to deliver one-to-one communications.
42% believe lack of resources (such as time, people and budget) is a primary barrier to effective personalization; 23% say collecting, structuring or using data are major hurdles to achieving even a minimum level of personalization.
It’s not surprising, then, that 60% believe it is critical to involve an analytics team in the process.

 

Technology Is Not Enough

However, based on the Sailthru research and other trends, analytics technology alone might not be enough to empower CMOs to meet the shopper’s preference for a one-to-one “you’re special” kind of engagement.

Rather, they’ll need the backing of their entire organizations.

The chief reason for so much backing is that personalization is not a short-term tactic, regardless of what 39% of business respondents believe. It requires years-out planning, and therefore a culture that will spearhead and oversee implementation.

Consider that 60% of the Sailthru respondents (111 of which were retail executives) pointed to their data science teams as the best for the personalization job. That so many recognize the need for data scientists may reflect the extent to which merchants feel stymied by their data-use abilities, or inabilities. However, six in 10 is a pretty low number.

All of them should all be enrolling data scientists in the job of warming up to the customer. How else do they expect their marketing teams, whom 80% of respondents said are important for implementing personalization efforts, to parlay all that data to its best use?

The fact that just about half of those surveyed (51%) said their information technology teams are key to personalization underscores the blind spot.

How To Build A Better CMO

The fact is, to build a better CMO, a retailer needs to enroll the talents of pretty much all departments, as well as vendors and even customers. Personalization takes a community. Here are three ways to build one:

Begin at home: There is no reason for the marketing department to hoard customer data. The store planning, product development and merchandising departments could find opportunities in it as well. For example, by overlaying purchasing patterns, retailers can learn not only what brands their customers prefer, but also what significant lifestyle changes they experience, how they navigate the store and what kinds of communications and price points they respond to. This information can inspire personalization efforts in unexpected places, including the aisles (thanks to beacon technology), assortment and promotions.

Reach out to neighbors: Retailers can share their customer insights beyond the boundaries of their organizations with vendors and other partners whose information, when combined, could help all of them better tailor the shopper experience. Retailers at the same time can engage their shoppers in a dialog by inviting and responding to their preferences and other information in both one-to-one and social environments. When shoppers are given an acknowledged role in the experience, they are more likely to feel empowered and invested in the brand.

Be a good role model: Personalization requires earning the shopper’s respect and trust. Data is essential to achieving this, and good data management is crucial to retaining it. Shoppers increasingly expect more transparency from their brands, and that extends to how their information is used. Retailers that are upfront about the information they collect and how they apply it to better serve the customer will avoid the hairy eyeball of suspicion. They also make an overall cultural shift, from an organization dedicated to building a business to one dedicated to building customer ties.

Which is just another way of saying community. Personalization may require the transformation of the CMO’s role, but it also demands a change in how an entire organization — and its partners — operates. Being better, stronger and faster just helps achieve that.

Amazon, Adult Diapers And 4 Ways to Clean Data In A 2.5-Billion-Gigabyte World

If there is a single product that embodies the power of data analytics gone awry, it is this: a cell phone cover displaying an adult diaper worn by an elderly man with a crutch.

(Photo by Joe Raedle/Getty Images)

This is the result of a mischievous bot on Amazon that collected frequently searched images, applied them to iPhone covers, and then put them up for sale. Apparently the bot’s algorithm went rogue, and its chosen imagery took a curious, and sometimes sordid, turn.

Amazon should be forgiven for not catching the bot, called My Handy Design, sooner. A massive wave of consumer data —2.5 exabytes, or 2.5 billion gigabytes — is generated every day, and a significant portion flows into retail.

That wave is expanding as quickly as the online shopping crowd on Prime Day, thanks to mobile devices and the data-gathering technologies they enable. From artificial intelligence to digital wallets, much of the sources creating data today are inhuman. So how do retailers make relevant human connections, not to mention desired experiences, through them?

“Retailers these days mainly face massive machine-generated data. It is projected to occupy almost half of all data in the next several years,” said Sansom Lee, chief scientist at Zero Gravity Labs, a Toronto-based innovation and experimentation group operated by LoyaltyOne. “The challenges are size and relevancy.”

Asked how retailers can clean out the “gunk” in all this data and get to the good stuff (meaning no phone cases featuring adult diapers or collections of toilet paper tubes), the team of data experts at Zero Gravity Labs offered these four steps. Combined, they help locate the best insights.

Let the machines deal with the machines. It’s pretty straightforward: The larger the group of machines working in unison, the more data they can manage collaboratively. When the data surge reaches fire hose scale, retailers can turn to distribution systems that portion out and store the data in multiple locations and process it similarly across various nodes. On this front, the cloud comes to the rescue.
Let the math deal with the complexity. A challenge of vetting such massive sets of data is that the rules designed to detect anomalies (called a rule-based system) can’t keep up with the task. The solution: statistical methods that filter and smooth out the signals.

For example, if the shopper data varies for some reason — let’s say seasonality — the rule-based systems likely would not be able to cope with the changes. Statistical methods can, however, by selecting random windows of data through which to detect the anomalies and derive conclusions. Statistical methods could detect whether a Best Buy store that posts high sales volume during the holiday season is a high-performer in general.

Let deep learning deal with discovery. Next, retailers can seek out behavioral patterns in larger data sets by using deep-learning networks. Deep learning is the product of neural networks — advanced systems of hardware and/or software patterned to operate like neurons in the human brain. Self-driving cars use this technology to gauge the environment and steer themselves.

Neural networks can decipher various forms of data, including detecting sentiment in human dialogue. The technology is not a far reach and, importantly, the learning curve is not steep. An online course or two would be enough to understand the basics of deep learning and possibly to build some models to act on a company’s data.

Let artificial intelligence deal with humans —to a point. From digital house-remodeling to virtual fashion shows, artificial intelligence uses these perceptions enabled by deep learning to emulate human intelligence. When used to meet specific shopper needs, AI can help retailers interact with customers in ways that demonstrate they are evolving their understanding and driving interactions due to new reasoning and insights. The key is offering something useful, not just flashy (or, as in the adult-diaper phone case, cringeworthy).

The luxury department store chain Neiman Marcus uses AI technology to enable what it calls Memory Mirrors. The mirrors enable shoppers to digitally compare themselves in different outfits by capturing full views that shoppers can share with friends by email and social media. Again, the shared data is used to inform more relevant interactions.

And squeezing relevance out of data is the point of the entire exercise. Data well used — including responsibly used — would produce for retailers and consumers a pattern in which both parties mutually benefit from sharing information. True, it might result in the occasional odd product or rogue algorithm, but risk and mistakes will be part of the process.

Just ask Amazon.

This article originally appeared in Forbes. Follow me on Facebook and Twitter for more on retail, loyalty and the customer experience.