Bryan Pearson's Blog, page 13

Transparent Pricing: Shedding Light On The Real Value Of A Shirt, And Brand

What’s the true value of a brand? For some, it is the authenticity of its individually priced pieces.

Photographer: Atisha Paulson/Bloomberg

Take a black-and-white jacquard skirt at the European company Honest By. The skirt’s fabric cost the company $56. The thread came to about 57 cents, and the care tag, 37 cents. All in, the skirt cost $172 to produce; yet the figure on the price tag is three times that — $516.

What makes up the difference? The bones of the brand itself: “staff, research, design, utility costs, transportation, office supplies, rent, insurance, communications, intellectual property rights, maintenance costs, legal, accounting and marketing costs,” according to Honest By’s website, which breaks down every expense of the items it sells.

It’s called price transparency, and it is one of the latest trends to cater to younger, more socially conscious shoppers. Some retail observers believe it will give merchants, largely online players, a competitive edge over major brands.

But the target market itself presents a challenge for merchants such as Honest By and the baggage maker Oliver Cabell, both recently featured in The New York Times. More truth-seeking consumers may view price transparency with suspicion — as a marketing strategy that is ostensible in and of itself.

Put another way, not all shoppers are convinced the end product is worth the sum of its individually priced parts.

$249 For A $104 Bag

Among the goals of transparent pricing is education — if shoppers understand the reasons for a product markup they will be willing to cover it.

This is an astute effort in a time when nearly year-round retail markdowns have shoppers questioning the real price of any products on the shelf. Take Oliver Cabell. An Italian-made backpack on its website costs $104 to put together, including quality control and duties expenses, but it sells for $240.

The $136 difference is explained, in part, by Oliver Cabell’s partnerships with “the best factories” and artisans, which the company’s representatives visit often. As it states: “This hands-on approach is the most effective way to ensure a factory’s integrity.”

Honest By applies a more Earth-responsible mission to its philosophy, described on its website, in part, as: “Our customers should be able to make the most informed choices possible” and

“All of our products should be manufactured in a way that respects life.”

The apparel merchant Everlane offers a slightly different spin on transparency by inviting shoppers to choose the prices they pay. Call up a silk collarless shirt, and Everlane presents three prices. If the shopper chooses the lowest, 10% of that sum will go toward product development and shipping to the warehouse. With the middle price, 20% is earmarked for development, shipping and helping to pay the Everlane team.

At the highest end, 30% of the sum goes toward development, shipping, the team and new product creation.

Make It Worth It: Three Ways

Still, regardless of the model, not all shoppers are sold on the itemization that transparent pricing requires, especially those who can’t afford more expensive products. As The New York Times story put it, referring to Oliver Cabell, “One of his biggest challenges … has been convincing shoppers that the goods he sells are worth the price, particularly when all that people have to go on are the pictures on his website.”

How do retailers convince shoppers they are getting what they pay for? Based on a younger consumer’s proclivity for authenticity, transparency and a satisfying experience, here are a few suggestions.

Invite participation: Trust is essential to young consumers, and a direct way to get it is by asking them to participate in an organization’s operations. This process, of shoppers collaborating with brands, is often referred to as the Participation Economy. If shoppers take part in the design of a new product, say, they will feel more invested in the brand. This dedication could transform into more purchases as well as positive word of mouth. Such offers can be tailored to specific shopper groups — some to members who shop a lot, for example, and others to those who have not purchased in a while.

Tell a better story: Retailers can put a face on their brand by sharing the first-person narratives of factory employees and/or artisans. Humanization displays intangible but highly relatable values of a product, namely that the organization provides people with fulfilling livelihoods. Such motivation taps into a charitable area of the mind — shoppers might buy something in hopes of benefiting that employee and even the economy, which makes them feel good about their purchase and about themselves.

Perk it up: Even if a brand is saving the polar bears, at some point, the expense matters. Nearly 80% of millennials are influenced by price, according to a recent report by CouponFollow, which is detailed in FORBES. Everlane addresses this reality with its three-tiered approach, which gives shoppers the choice of what to pay for a product and what should go to the company. If a shopper is priced out of a brand, she won’t linger. If she is given a choice, or an introductory offer, she will likely spend a few moments considering a purchase. The fact that the product is responsibly made is an added nudge.

Sometimes, convincing shoppers that they are getting what they pay for requires more than basic transparency. Ostensibly, it should be enough, but the first rule of a successful brand is that it really knows its customer. And that customer can be hard to convince.

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

Are You Creeping Out Customers? 4 Ways To Stay Cool With Technology

Retailers have long understood the value of hearing the consumer’s voice; now it’s time to recognize the sound of it as well. But please, don’t recognize the face.

(Photo by Tomohiro Ohsumi/Getty Images)

Voice, fingertips and vision are all personal features the U.S. shopper is willing to share with retailers without being creeped out, according to the third annual “Creepy or Cool” technologies report by RichRelevance, a provider of customer personalization services. Yet consumers rated facial recognition as one of the top creepy technologies.

Merchants should be accustomed to the mixed message. Shoppers have long surprised, and occasionally confused, marketers with the bits of personal information they are willing to share in exchange for better retail experiences. But the new research, combined with older findings, provides some unexpected lessons.

Take My Data — But Nothing Artificial, Please

A confounding finding of the RichRelevance report is that the creepy factor may rise with better customer understanding. It’s the Big Brother effect. Yet 63% of those surveyed by RichRelevance said they would give retailers more data if it improved the customer experience.

As explained by Diane Kegley, chief marketing officer at RichRelevance: “Creepy can simply mean that something is too relevant or hits too close to home … this may indicate areas that will be valuable in the near future as consumers grow accustomed to new technologies.”

Some of the findings bear this out. Among the creepy/cool ratings:

Voice recognition, when used to search and order products, is ranked as the coolest technology overall, at 46% (22% find it creepy). It’s matched by fingerprint scanning to pay for items and get automatic home delivery (46% say “cool,” while 34% find it creepy).
Interactive mirrors and virtual reality glasses get a 41% cool rating when used to suggest products that complement what a shopper is trying on (52% of millennials give it the green light).
Robots, when used to guide shoppers to specific products within a store upon request, got a 40% cool rating overall and a 51% cool rating among millennials.
However, facial recognition is frowned upon if used to send customer preferences to a sales associate — 69% of respondents find that creepy, while just 12% think it is cool. That creepy score is up from RichRelevance’s 2012 survey when 67% found it creepy.
Respondents also bristled at artificial intelligence. Seven in 10 (69%) think it’s creepy for a merchant to know a shopper so well it can use artificial intelligence to order products for him or her. Half think using artificial intelligence rather than a real person to answer service questions is creepy, while 23% think it’s cool.

What A Difference Five Years Makes

But ah, how attitudes change. Back in 2012, customers were still wrestling with the idea of location-based technology on their mobile devices.

Back then, consumers told us they’d rather share mental health information (26%) than give their exact locations via smartphone (15%). Nearly three-quarters said it was creepy to receive offers on mobile devices when near a retailer.

But perhaps the most eye-opening finding from that research: More than three-quarters of survey respondents (78%) did not feel they received any benefit at all from sharing information. That was up from 74% in 2011, indicating that shoppers were getting wise to the use and value of their personal data.

With so many new options to cater to them, or creep them out, that figure may not have changed.

Four Ways To Be Cool

How can retailers be cool with their customers? Based on our research and insights gleaned from the RichRelevance results, here are a few suggestions.

Be an open book: It’s evident from the research that while shoppers like the benefits of data analytics, they want to understand it as much as it understands them. This means explaining in simple language what information is collected, why it is collected and how the customer will benefit. But purpose comes first — the merchant should identify its goals and then collect only the data needed to reach them.

Give them a choice: The “creepy” factor hinges on mistrust, which arises when a shopper is surprised by what a merchant knows about her. However, if she is given the choice of what information to share, that distrust is more likely to transform into acceptance. Choice puts power at her fingertips — literally — and that’s cool: Fingerprint technology, which requires user approval, received high “cool” ratings.

Treat them with respect: If 63% of consumers are willing to share information in exchange for a better experience, then the onus is on retailers to follow through. This extends beyond the retail experience, however, and into how the data is cared for and applied. Retailers should use it only as promised, and not see it as a license to barrage the customer with daily communications that are impersonal and irrelevant. Retailers should ask: Are we offering real value?

Don’t rush it: Attitudes have changed a lot since 2012. It will take longer for consumers to accept certain technologies over others, and age certainly makes a difference. The best retailers can do to accommodate these shifts in acceptance is to focus on why their shoppers choose to spend time and money with them and to cater to those preferences.

Mastering consumer technology is like developing face-to-face relationships. First, the customers share a little and then, with trust, they will offer more. But retailers have to share as well. How else will the shopper recognize the value of merchants knowing her fingers, voice and face?

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

The Disruptors Are Coming: How Pampers, Kiip Are Redefining Loyalty

Photographer: Ramin Talaie/Bloomberg News

More consumers are dumping their loyalty program memberships, but that hasn’t stopped Pampers from trying.

The leading maker of diapers recently upgraded its mobile app to include loyalty rewards for Canadians and Americans. In doing so, it joined a burgeoning industry of which less than half the participants are even active. Of the 3.8 billion reward program memberships in the U.S., 54% (or roughly 2 billion) have been abandoned, many before doling out their first rewards.

These are among the key findings of the 2017 COLLOQUY Loyalty Census, an audit of reward program memberships across industries, combined with consumer sentiment on program relevance. For retailers, the results should be a tip-off to potential future failings, as the industry accounts for more memberships than any other — 1.6 billion, up from 1.3 billion in 2014.

However, the report also highlights an encouraging development: the emergence of disruptor programs, such as the Pampers Rewards app. Disruptive programs are collectively reshaping the loyalty value equation through more personalized, simplified customer experiences that optimize technology and data collection.

Whether retailers should learn from these new players is a forgone conclusion. As the report states: “Disruption has become the new normal in the industry.”

28% Walk Away Before Rewarded

Another normal in the industry is the power of the consumer, who increasingly chooses brands based on convenience and need. Often, the brands that require fewer taps of the screen win.

Key among the Census findings:

Overall loyalty memberships rose 15% since 2014, the year of the last census research.
42% of all memberships are in the retail sector, up from 39% in 2014.
Grocery memberships declined by 24%, to 142.2 million, largely due to acquisitions.
Across all industries, 28% of consumers dropped out of a rewards program before redeeming a point or mile.

Among the reasons for dropping out of programs: 53% of respondents abandoned programs because they did not provide rewards that interested them; 57% said it took too long to earn a reward.

Love, Then Disruption

The report also provided one very important reason consumers do use loyalty programs: emotion. The top motivator for participation in a loyalty program is “I love the brand, company, retailer or service.”

Consumers also are motivated to use programs that are easy to understand, give great discounts and make them feel valued. Here’s how a few disruptive loyalty programs are tapping into these qualities.

Pampers Rewards: Babies go through so many diapers one can equate the value of a paycheck to the number it can buy. The Pampers Rewards app gives shoppers a little something in return for this necessary investment. Users take a photo of or manually enter a Pampers package code into the app and instantly earn points that can be redeemed for gifts, coupons and charitable donations. Important feature: The rewards extend beyond Pampers products to include baby clothing, toys, photography and meal-delivery services.

Kiip: A mobile advertising network, Kiip (pronounced keep) describes itself as a “moment-based rewards platform that targets significant moments in the apps people use every day.” What that means is it rewards members with product samples, discounts, gift cards or contest entries for completing games and other activities(often happy ones) in partner apps. Partners include Home Depot, Coca-Cola, Kraft and McDonald’s.

Travelling Connect: Here’s one way to take the bite out of international roaming fees. This app bestows miles for mobile phone calls, as well as for some texting and data use, made while traveling abroad. It works through the loyalty programs of partners such as Marriott Hotels & Resorts and Hilton Honors. Bonus: No additional charges or taxes.

Takeaways From the Report

Want to cause a little disruption? The Census report closes with four pieces of advice for standing apart in the loyalty arena:

1: Create loyalty to your brand, not just your program. Consumers are motivated to engage with brands with which they have an emotional connection, yet many reward programs build their member relationships on transactions. In short: Focus on emotion, not transaction.

2: Make the redemption itself an experience. Much energy is put into the rewards loyalty members earn, but very little is invested in that important moment when the member redeems. These moments could be celebrated with games, contests and videos.

3: Keep the friction out. Beyond discounts, a program needs to offer solutions to be a keeper. This takes mapping the customer experience to detect common scenarios and pain points the program can address. Think of the Starbucks prepay feature on its loyalty app — no more lines!

4: Push your loyalty program to be better. Simply put, the work is never done. As the report states: “It is time to be more thoughtful about the other purposes points serve, as well as their limitations.”

Excelling at loyalty is a day-to-day endeavor. Retailers that systematically re-evaluate their data and how it is used will arrive at more relevant experiences, as well as efficiencies. These efforts will prevent a program from being dumped, and they can prepare it to become a disruptor.

4 Indisputable Signs Little Local Retail Is Becoming A Goliath

Local retailers are not going the way of the dinosaur.

The biggest competitor on the retail horizon is more likely to be called David than Big Department Store, and he’s got a slingshot full of technology to help him stand his ground.

As major brands from Macy’s to Foot Locker wrestle with competition from Amazon, small independent merchants are gaining a foothold on the retail landscape. More than half (54%) of U.S. sales are generated by small businesses, according to the Small Business Association, and that figure could likely rise.

Why? Technology has much to do with the small retailer’s ability to level the selling field, but other surfacing forces, including those influenced by age, are providing the velocity.

With July being Independent Retailer Month, the time is ripe to explore how small independents are reclaiming their status as a major competitive force, and as crucial components of a thriving community. Following are four ways the little local guy is emerging as a giant in retail.

1: Hyper-Local Power

Social media has yielded a nation of sharers, and they’re accustomed to immediate gratification. They also have high expectations of being heard and understood — but not just online. Increasingly, they want the support of their digital community to extend to the physical community, and this includes commerce.

Small shops, particularly those operated by long-time residents, serve as living-and-knowing communities. They connect with the local population on trends and nearby happenings — a relevant feature among younger shoppers who know the owner and feel invested in his success. None of this is new, except that today the shopper likely follows the merchant on Facebook and promotes him socially.

However, to manage an edge over giants like Amazon, corner shops have to answer to the need of immediacy, meaning fast delivery. More than 40% of consumers (41%) want “hyper-local” delivery, with control over how, when and where their products ship, according to the report “State of Shipping in Commerce” by the fulfillment software firm Temando. Of those shoppers, 38% said they’ll pay for it — but just 24% of retailers offer it.

Fortunately, investors are responding to the demand for hyper-local delivery. Venture capitalists have upped their funding in supply chain and logistics startups more than tenfold in three years, to $2.8 billion from $266 million in 2013, reports “The New Delivery Reality: Achieving High Performance in the Post and Parcel Industry,” by Accenture.

2: Internet Democracy

One way to accommodate the demand for hyper-local delivery is by selling one’s products via Amazon (Amazon shipments for independent merchants doubled in 2016 to 2 billion). Similarly, Etsy, Bonanza, eBay and other platforms, combined with easier and more affordable transaction-processing technologies, enable small merchants to sell their goods as part of the long-tail economy.

The loyalty research firm COLLOQUY coined a term for the emergence of small retailers via digital marketplaces: MomPopolies. These are mom-and-pop shops that have the engagement power to compete with major competitors, yet maintain a local edge. Mix in the element of social media and we are seeing more mom-and-pop social shopping communities — digital marketplaces that combine independent wares from around the world with shopper feedback.

The power of social communities can build empires. A jeweler in New Mexico can compete with Nordstrom in Seattle (assuming delivery is overnight). Or a maker of Bohemian headbands and accessories can make $80,000 a month on Etsy, as was the case for the shop Three Birds Nest before its owner, a mother of three, spun it off on its own.

3. Digital Natives

They may have cut their teeth on smartphones, but most of the members of Generation Z prefer the taste of physicality when shopping, research shows.

Nearly seven in 10 members of Gen Z (67%) shop in brick-and-mortar stores most of the time, with another 31% shopping in-store sometimes, according to a survey by IBM and the National Retail Federation. Defined as those born from the mid-1990s to the mid-2000s, Gen Zers could have significant influence on which of those physical merchants survive. The population counts nearly 70 million spenders in the United States — 2.5 billion worldwide.

What they want in a retailer may be easier for little local guys to capture: authenticity. Being digital natives with lifetimes of online exposure, members of this generation are highly sensitive to sharing personal information, and they are more demanding of transparency and trust. Quality also is critical; 66% of the IBM/National Retail Federation respondents said quality and availability are the most important factors when choosing a store.

4. Digital Money

Independent currencies, the offspring of Bitcoin, are launching with specific markets and missions in mind, notably to support local vendors. Enter Colu, which specializes in generating localized digital currencies earmarked for spending with (and empowering) local merchants.

A recent story out of London details how Colu launched a regional currency in the U.K., specifically to support a local community: “Colu’s digital wallet application supports buying local, offering an easy and convenient way to pay instantly from a smartphone while empowering local businesses,” the story states.

Blockchain currencies such as Colu’s are digital equivalents of cash, making it simpler for shoppers and merchants to transact. Colu specifically provides participating merchants with digital toolboxes, including dashboards, to help them better compete against major chains. And true, while this service is in the U.K., not the United States, the concept is adaptable anywhere.

The rise of small retailers won’t be so great as to upend the power of major merchants, but they are likely causing bigger players to pay attention and recognize why shoppers are spending their money with smaller David, not the Department Store Goliath. In the meantime, technology and consumer preferences are making Independent Retailer Month a more important part of our calendars.

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

5 Ways Whole Foods By Amazon Could Be An Unnatural Fit — And Why That May Be Okay

Amazon sells three books by the CEO of Whole Foods, John Mackey. Now, Mackey is using his most creative communications skills to sell the Whole Foods team on his latest business endeavor — the pending acquisition of the company by Amazon.

(Photo by David Ryder/Getty Images)

He’s got plenty of good material. Amazon’s $13.7 billion deal to acquire Whole Foods will no doubt alter the grocery food scene. Industry observers have been discussing the many ways the merger can boost Amazon’s food offerings while improving Whole Foods’ data insights.

At a town hall meeting before employees, Mackey promoted the deal with much enthusiasm, comparing it to the culmination of a whirlwind romance (just about six weeks) that will lead to a healthy marriage.

“They’re the perfect company for us. There’s no better company in the entire world for Whole Foods Market than this company right here. We just hit the lottery, gang. This is gonna be so incredibly wonderful.”

But the deal was also formed incredibly fast. On a highly practical level, there are many areas the two teams apparently have much to figure out.

1. Culture shock

Whole Foods employees should expect change to their culture after the deal is final, Mackey told them at the town hall meeting. “It’s inevitable. But it doesn’t necessarily mean it’s a bad thing. We’re going to evolve.” A key element of the Whole Foods culture is morale, which is supported by generous compensation, including stock options. Many workers asked about benefits, PTO and culture. “It’s too early to talk about how benefits and compensation may sync up or how quickly. That’s a very important cultural value. I do think, over time, things will evolve at Whole Foods,” Mackey said. He added that Whole Foods workers could be presented professional opportunities with Amazon they might not have had with the natural grocer. “As the companies are integrated, there’ll be opportunities for many of you, if you are interested in them, probably workin’ for … Amazon.”

2. Sprouts doubt

Amazon, through its Prime Now business, has a grocery-ordering partnership with Sprouts Farmers Market, a Whole Foods competitor. That partnership, through which Amazon Prime Now provides digital grocery ordering and delivery services for 10 Sprouts stores, is planned to expand twofold in 2017 and further in 2018, according to a story in Supermarket News, which quotes Bradley Lukow, CFO of the Phoenix-based retailer. Lukow said the Amazon team told him it is “business as usual,” but acknowledged it’s a bit early to predict. He did say Sprout negotiated terms in its contract and was “very clear in the contract that should either party decide to end the relationship there is a long transition period to give ample time to redirect to another platform.”

3. Rewards are a-rollin’

In its most recent quarterly report, Whole Foods said it planned to roll out its tested rewards program to all U.S. stores by the end of 2017. The new program combines elements of Whole Foods’ My 365 Rewards and pilot programs, but it’s relatively young and learning. The Amazon Prime membership program, with an estimated 80 million members just in the United States, is capable of collecting enough high-level customer insights to make a small meal of the Whole Foods program. Further, an estimated 62% of Whole Foods shoppers are also members of Amazon Prime, according to The Wall Street Journal. The Whole Foods rewards initiative could possibly be absorbed into the Prime platform, with lots of benefits for both parties as Amazon could glean insights about the habits of in-store shoppers. The trick will be avoiding confusion, especially for early-adopting shoppers.

4. Makes naturals mainstream

During the town meeting to discuss the Amazon deal, both Whole Foods and Amazon executives assured employees that the quality standards of Whole Foods would not change. “We’ve been assured,” CEO Mackey told gatherers. Jeff Wilke, Amazon’s CEO of Worldwide Consumer, added, “I think it would be crazy to change them.” However, making all-natural and organic foods so accessible will transform the industry from niche to mainstream — meaning less exclusive. And that inevitably will open the door to questions about quality. Amazon could use its technological strength, however, to communicate the quality, sourcing and care of foods provided by Whole Foods.

5. The CEO question

Mackey plans to remain at the helm of Whole Foods after the merger, and as CEO will apparently work most closely with Wilke, but Amazon CEO Jeff Bezos oversees all of them. Bezos has been described as a highly competitive risk-taker, while Mackey is known as a conscious capitalist. Mackey, in selling Whole Foods, is attempting to be freed from a group of Wall Street investors who are pressuring his company on performance. Some reports indicate Amazon is a safer option than another grocery chain that would likely focus on cutting costs and improving the margins. However, Bezos could very likely want to see Whole Foods more competitive on price, especially if other supermarkets further adopt or are acquired by digital sales.

In closing his town hall meeting, Mackey told employees that Whole Foods would be a “far, far better company a year from now than we are today.” In five years, he said, employees should buckle up because it will be “utterly incredible.”

“And it’s gonna be crazy. And it’s gonna be wild. And it’s gonna be great opportunities for the people in this room.”

Still to be seen is whether it will be a natural fit for the consumer.

Bagging The Future: 7 Ways Grocery Will Change By 2020

The item supermarkets don’t yet sell by the pound is the one Americans crave most: convenience. In time, that will change.

(Photo by Chet Strange/Getty Images)

The table is already set for it. When it comes to meeting a household’s grocery needs, we are facing a famine of sorts — not of food, but of capacity. From a lack of time to a paucity of urban space, these shortages will define how shoppers buy their groceries in the coming years.

Compounded by competition from non-supermarket rivals ranging from restaurants to dollar stores, traditional grocery chains will be forced to use their resources in increasingly creative ways. Following are seven ideas on how grocery shopping could evolve as we move past 2020.

Bananas, beer and bites

More people are forgoing shopping in favor of fun. In 2016, Americans spent more on food at bars and restaurants than at supermarkets. To recapture their interest, supermarkets in smaller cities will transform into community social hubs that combine groceries with entertainment and even basic services, such as laundry (sponsored by a major detergent brand, perhaps). In downtown Cincinnati, the Kroger Co. has announced plans to open a store in 2019 that will include a second-floor bar, a food hall with a terrace, a variety of restaurants operated by third parties and ready-to-eat items by vendors. Kroger noted that among the attractions that made the space appealing is its location on the city’s new streetcar line.

Say “cheese”

By 2020, technology will enable supermarkets to affordably go on camera and sell live. In collaboration with major food or household product brands, they will create sponsored online programming that will feature cooking, entertaining and cleaning tips as well as cooking segments. Throughout, viewers will have the opportunity to click and order any of the products featured. A guest chef, for example, can demonstrate a recipe using ingredients the shopper can order live and use that evening. The company TVPage enables shoppers to purchase products showcased in videos on retail websites, including Bed Bath & Beyond and Reebok, through links on the side of the video player.

Mall-mart

Apples and cereals will replace anchor stores in shopping malls. Yes, this is already happening, but expect it to expand. Whole Foods opened a store in a former Sears location at a Florida mall, Wegmans succeeded J.C. Penney in Massachusetts, and Kroger acquired a space once occupied by Macy’s in Ohio. As mall operators turn to supermarkets to replace anchor department stores, ancillary merchants such as international markets, spice shops, wine stores and cooking suppliers will fill adjacent spaces as they open up, to form food villages.

Pop-up provisions

The pop-up grocery concept has been talked about as a way to remedy food deserts for years. It also can solve the need for accessible food sources in dense urban areas where parking (and commuting) can be difficult. Supermarket chains and nutritional startups will roll trailers into tight, urban communities on a weekly or biweekly basis so residents can fill up on monthly staples. The genius is these visits can at the same time serve as community events people plan their days around. Long Table Grocery, in British Columbia, Canada, operates a “Pick Ups & Pop-Up” market every two weeks, as well as home and office delivery, in partnership with local food businesses. All events are planned out on its digital calendar at longtablegrocery.com.

Auto replace

More grocery sellers, pressured by the convenience of fast replenishment services offered by Amazon Dash and Wal-Mart’s Easy Reorder, will include auto-replenishment on their online marketplaces. Shoppers are ready: 47% of U.S. consumers said they would use auto-replenishment for household items such as soap, according to research by Accenture Strategy. More important for grocery sellers is that 43% of those surveyed said they would use auto-replenishment for fresh food items, such as fruits and vegetables.

You’ll kiosk it in

With Amazon entering deeper into the grocery format, traditional supermarket operators will need to be more aggressive and step directly into the paths of shoppers. Enter freestanding kiosks. Installed in office buildings, train stations and other convenient locations for commuters, grocery kiosks will enable quick orders that can be picked up on the way home or delivered. While more expensive than mobile apps, the kiosks will serve the dual purpose of advertising, alerting the busy commuter to overlooked or immediate needs at home. A kiosk could, for example, promote a special on rotisserie chicken dinners. They also could mimic the shopping experience, projecting specific items on a wall (or through virtual reality) so commuters see them as if in the store.

Crowd-sourced sustenance

In many communities, entrepreneurs and residents will collaborate with municipalities and townships to create their own markets that will operate in reclaimed buildings, open lots or parks. Supermarket chains will be able to participate as sponsors or donors, in the spirit of a sharing economy, possibly by donating for use mobile refrigeration units (i.e., cooler trucks) or other resources. Doing so would reinforce supermarket brands as community members and strengthen shopper loyalty.

Seeing grocery shopping of the near future does not require 20/20 vision as much as it requires visionaries. But consumers are guiding the light. Together, food shopping will become more of a collaborative affair and the sooner it does, the healthier the industry will be.

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

6 Reasons Home Depot Is Building A Better Mousetrap

Home Depot does not have to look far to find the tools for weathering retail’s latest difficult environment. How it uses them, however, enabled it to cement a solid first-quarter performance and stand taller than many other retailers.

Photographer: Erik S. Lesser/Bloomberg *** Local Caption *** Carol Tome; Louise Cody

Consumer spending rose just 0.3 percent in the first quarter of 2017, the worst three-month period since 2009, according to U.S. News & World Report. The disappointment was led by major brands including Macy’s, which posted sales of $5.34 billion, short of the expected $5.47 billion, and Lowe’s, which reported $16.86 billion in sales when analysts projected $16.96 billion.

Home Depot, meanwhile, beat analyst estimates of $23.74 billion and posted sales of nearly $23.9 billion.

Following are six of the tactics that have helped pave Home Depot’s path, gleaned from its quarterly report filed with the Securities and Exchange Commission and its earnings call with analysts, as transcribed by Seeking Alpha.

It’s nailing the online experience: Home Depot’s investment in simplifying its online checkout has resulted in a 20% reduction in the customer’s process time, on average. That led to a 15% increase in visits over the same period in 2016, leading to more purchases. Overall online sales in the quarter rose by roughly 23%, to represent 6.6% of total sales. Home Depot’s “buy online, pick up in-store” sales accounted for 45% of the total, executives told analysts.

“In addition, we are leveraging our digital assets and big data to better know our customers and in turn better meet their needs (through) targeted online offerings and localized online experiences,” said Ted Decker, executive vice president of merchandising.

It leveled up its mobile app: In the fall of 2016 Home Depot upgraded its mobile app to personalize the user’s home page based on location, customer segment and shopping patterns. “We are pleased with the customer engagement in response to these enhancements and we are seeing increased conversion rates,” Decker told analysts.

Such investments are becoming necessary. U.S. app users are expected to generate $285 billion in sales on mobile devices by 2020, according to BI Intelligence, a research service of Business Insider. That would represent 45% of total U.S. e-commerce.

It’s got a solid foundation: Home Depot, unlike many retailers, is not hanging its outlook on younger shoppers. Asked by an analyst if millennial customers represent a disproportionately large percentage of its online customer base, CEO Craig Menear said no. Traffic is evenly distributed across age groups, ensuring continued investment in home upgrades as well as new construction.

This is reflected in recently released figures that show consumers ages 25 to 34 are woefully unprepared, financially, for homeownership. Roughly 40% are saving nothing toward a down payment on a home, according to a survey by Apartment List, a rental listing company. Yet first-time homebuyers accounted for 42% of all buyers in 2017, reports The Wall Street Journal, citing Fannie Mae. That compares with 38% in 2015 and 31% in 2011. (Note that first-time homebuyers are not necessarily young buyers.)

It’s insulated against supplier bankruptcies: Home Depot has intentionally expanded into competitive categories, such as appliances, hand tools and storage, to better position itself in the case of rival bankruptcies. As Menear put it to analysts: “We clearly have invested to disproportionately take share in categories that we overlap with key competitors who have been — having their challenges. And we’re going to continue to focus on trying to capture as much business as we can.”

In fact, when a competing appliance retailer recently announced store closings and liquidation, Home Depot experienced a sales bump, executives said.

It’s drilling into innovation: From lightweight drywall to battery-powered tractors, Home Depot’s merchants and suppliers continued to collaborate “to introduce a wide range of innovative new products to our do-it-yourself, do-it-for-me and professional customers,” the company stated in its quarterly report. Among the products are Home Depot’s LifeProof and PetProof carpeting, with technology that offers lifetime stain guarantees, as well as LED lighting that has been integrated into ceiling fans and light fixtures, boosting Home Depot’s commercial and industrial lighting business.


Its credit is no house of cards: Home Depot shoppers — both DIYers and professionals — are using its private label credit card more frequently. Year-over-year penetration rose by 20 basis points in the first quarter, to 22.6% of sales, Chief Financial Officer Carol Tomé told analysts in the first-quarter conference call. The growth of sales by professionals outpaced the company average. “Yes, we were very pleased with our performance in our private label credit card,” Tomé said.

We — consumers and retail observers — should give Home Depot credit where it’s due. When changes in consumer preferences and attitudes have many retailers across categories tearing up the floorboards or re-evaluating their foundation, Home Depot appears to have done neither. Rather, it is simply expanding upon the cornerstones of best retail practices.

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

Is Macy’s Walking In Discounter Shoes? The Brands May Decide

Whether it’s a platform for the next act in retail operations or a slide into the discount store format, Macy’s strategy to turn its shoe departments into self-service areas might be a signal that the department store concept is losing its soul.

Photographer: Chris Ratcliffe/Bloomberg

The chain, following tests of self-serve shoe departments in California and southwestern U.S., announced it is expanding the concept to all of its roughly 670 Macy’s locations by August. In doing so, it takes a big step toward changing its identity.

Some retail observers describe that new identity as one of a discount chain like T.J. Maxx, which is a help-yourself retailer. But based on another of Macy’s key strategies — to continue bulking up its exclusive merchandise mix — the storied department store chain may be moving more toward a Target store model.

Either way, it is uncertain if Macy’s efforts will distinguish it from these rivals, or blend it in with them. What is certain is the self-service tests performed well, producing “a nearly double-digit shoe sales increase in the first quarter, well above the shoe sales trend for the rest of the stores,” Chief Financial Officer Karen Hoguet told analysts during a recent conference call.

‘Leave Me Alone’

The help-yourself strategy, which Macy’s has said will make shoe shopping “less of a hassle,” is designed so shoppers can skip sales associates and try on their sandals, loafers and lace-ups on their own. According to Macy’s, shoppers prefer this option.

“Lots (of shoppers) just say, ‘Leave me alone, let me get the shoe I want and move on,'” Hoguet said in an earlier conference with investors, according to the Chicago Tribune.

This may be true, but if shoppers prefer to fetch their own shoes and beauty products (another self-service area in test), they could feasibly expect the same in the few departments where a sales associate is still required.

And if they do, the only feature separating Macy’s from other retailers will be its expanding mix of exclusive brands. Macy’s has been a leader in this strategy for decades, with private labels such as INC and third-party special agreements, including a new partnership with DKNY, for which Macy’s will become the exclusive U.S. retailer.

Making a Hybrid Store

An exclusive brand portfolio does not necessarily prevent Macy’s from acting like a discounter, however. Some believe the self-service model, combined with competitive prices, are enough to indicate Macy’s is heading straight toward value-chain territory.

“Macy’s is realizing that the traditional department store model is crumbling, and it needs to become more like a discount store to stay competitive,” reports Business Insider.

But is it that simple? Discount stores cover broad territory, after all. If Macy’s chooses to adopt the T.J. Maxx or outlet store model, it may only have to cut prices and employee service to appeal to shoppers. However, with consumers increasingly combining trips, this might not be enough. Enter the Target model.

Envision a Macy’s that displays Tide detergent alongside its (exclusive) wash-and-wear apparel, or Palmolive with the dishware. Perhaps there would be a pharmacy or wellness center in the back, not far from the carryout healthy snacks. (Already, Macy’s operates mammogram clinics at some locations.)

The lines between retail segments will blur further, but perhaps this is what shoppers want — today. Perhaps Hoguet is correct in her characterization of retail as embodied by shoppers who do not want the hassle of employee interference.

‘Never Again’

There are other shoppers, though.

Left out of this discussion are the preferences of those who prefer to be waited on. Shoppers like a friend who recently visited the REI flagship store in Denver, Colorado, seeking hiking boots.

“An associate literally spent hours with the two of us making sure we each found the perfect shoes,” she said. “And they’re returnable for a full year regardless of how much they are used. Guess where I’d prefer to shop in the future?”

Asked what she thought of Macy’s self-service shoe departments, she said, “I read about (them) this morning and my first thought was that I would never buy shoes at Macy’s again.”

That’s just one person, but the challenge is clear. At a time when selling soles may mean selling its soul, the department store industry’s success depends on some very fancy footing.

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

CVS’s Good-Health Mission Raises Burning Question: Should Shoppers Care?

If there was ever doubt that CVS Health Corp. has skin in the health-care game, its latest product decision puts it to rest.

Photographer: Emily Harris.

The $177 billion pharmacy chain, self-described as a “company helping people on their path to better health,” will no longer carry sun-care items with an SPF of less than 15. This follows previous decisions to stop selling tobacco items (in 2014) and removing trans fats from its store-branded foods (in January).

So in addition to standing up for our lungs and hearts, CVS is covering our hides. And it does so with a very broad corporate direction in mind: CVS wants to be more than a mere retailer; it wants to help shape the future of health care. And by extension, it wants to improve the health of its shoppers.

“We looked at our sun-care offerings and felt we should offer customers choices for sunscreen that either meets or exceeds FDA standards,” Judy Sansone, a senior vice president for CVS, told TODAY. “When people use SPF below 15, they are not really getting protection from the sun.”

It is a noble cause, especially since CVS could lose sales as a result. The bigger risk is that its on-shelf changes fail to attract more health-conscious consumers. Its first-quarter financials indicate softer traffic, so any positive message — and experience — would be welcome.

Learning From Cold Turkey

The hazard for a retailer pulling any product or brand off its shelves is that it will alienate shoppers who came for that item. This was a primary observation when CVS decided, in September 2014, to stop selling nicotine products.

With an estimated 44 million Americans smoking in 2014, according to the Centers for Disease Control and Prevention, it was likely CVS’s decision would affect a sizeable segment of its customer base. But sales rose, to $153.3 billion in 2015 from $139.4 billion in 2014 and $126.8 billion in 2013. This was despite expectations, by CVS, that sales would decline by $2 billion as a result of the decision (that was the estimated total of tobacco sales in 2014).

Also in the year after it went cold turkey, CVS changed its name from CVS Caremark to CVS Health. It additionally became retail partners with Target, which agreed to sell its pharmacy business to CVS.

The partnership expanded the CVS sales footprint, and therefore its customer base. CVS posted 2016 revenue of $177.5 billion.

Needing Healthy Recovery

This year’s first-quarter performance, though, indicates fewer shoppers are coming to CVS stores, or that shoppers in general are coming less frequently.

Front-stores sales, where non-pharmacy goods such as cosmetics and food are sold, declined by 4.9% at stores open at least a year. CVS attributed the decline, in part, to a rationalization of its promotional strategy as well as the shift of the Easter holiday to the second quarter 2017.

Still, the company is throwing its shoulder behind a recovery, and it relies heavily on a continued dedication to healthy choices. In particular, CVS is applying a new store design to 70 locations that will expand its beauty, health-care and personal-care businesses, according to a slide deck presented with its earnings call, covered by Seeking Alpha. These new store formats will include wider assortments of healthier foods and health-focused products.

The chain also is exploring its digital capabilities, including in health and pharmacy. Ideas include curbside pickup and same-day delivery.

Lastly, CVS intends to extend its share of store-branded products, which generate 22.8% of front-store sales, by “building on core equities in health and beauty,” the company said.

Enter the trans fat decision. Enter skin health.

Winning Hearts and Hides

CVS’s choice to remove trans fats from its store brands came in January, 18 months ahead of the Food and Drug Administration’s deadline for processed foods to be reformulated without artificial trans fats. The decision to pull products with less than an SPF 15 rating follows CVS’s “Long Live Skin” campaign, which includes advertisements of women sharing advice they wish they had given their younger selves, such as to wear sunscreen. SPF 15 is the FDA’s minimum recommendation against sunburn and cancer.

It’s possible shoppers won’t notice either change, which raises the question of whether these efforts matter. We can argue they do if they support CVS’s goal to “drive innovations that will help shape the future of health care,” as it explains in its annual report.

CVS has chosen its role. Still, while it is important to take a strong stance on health in the market, whether that is enough is the real question.

For its efforts to resonate, CVS has to pair its on-shelf options with an experience that is equally healthy, meaning free of stress and frustration. Same-day delivery and other digital ideas should help.

The CEO of CVS, Larry Merlo, said in a statement that he expects 2017 to be “a rebuilding year.” That takes more than a good-for-you product mix. The most reliable foundation to the rebuilding will be a shopper base that is satisfied, and even feels good, with each trip.

That’s the elixir for good retail health.

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

Will Target/Casper Partnership Awaken Retail To Consumer Needs?

Soft, firm or foam — as long as it comes in a box, the mail-order mattress is becoming the pea that could determine a retail segment’s sensitivity. Princesses be warned.

(Photo by Justin Sullivan/Getty Images)

Target’s agreement to begin selling Casper mattresses is the dominant piece of evidence. The Minneapolis-based chain will begin selling the online-only mattress maker’s pop-out-of-a-box goods on its own website in June, according to the Minneapolis Star Tribune.

Target is not the first major retailer getting into bed with the online mattress industry (Casper also sells mattresses on Amazon as well as at WestElm.com and in some West Elm stores), but the move is still likely to garner lots of peer notice. The simple reason is sales — online mattresses can demand higher coin because of the convenience they offer (and, let’s face it, the novelty). Overall mattress prices are climbing, possibly because of the growth of this industry.

However, the shift toward folded, boxed and mailed mattresses also implies a deeper consumer requirement. Namely: that the key to creating new revenue streams is to simply take the pain out of practical purchases.

Mattresses Online, Pillows In-Store

Dollar Shave Club made this realization a reality when it offered to mail razors to anyone willing to pay as little as $3 a month for a subscription.

Thanks to companies such as Casper, Tuft & Needle, Leesa and others, that logic — to slip efficiency into a necessary evil and make it attractive — is now being applied to the place where we spend a third of our lives. Even Sealy, a seller of mattresses for more than 100 years, has jumped in with its Cocoon direct-to-consumer mattress line.

Target’s deal with Casper follows its partnerships with Harry’s and Bevel, two direct-to-consumer razor retailers. Under the mattress agreement, Target will begin selling the Casper line in mid-June, and Casper will become the only mattress brand available online through Target.com (Target has for some time sold mattresses online, including those by Ashley, Simmons and Serta).

In addition, Target will sell Casper accessories in about 1,200 of its 1,800 stores, including pillows, sheets, a mattress topper and a lounger (the latter two will be exclusive to Target), according to the Star Tribune. Further, mattresses will be displayed at 35 Target stores, most likely to appeal to the needs of shoppers who like to test a mattress before purchase.

But even without the option to try them out, consumer demand for home-delivered mattresses is steadily rising, proving people are willing to pay to avoid the headache of installing their own. Anyone who’s tried to maneuver one up a flight of stairs knows standard mattresses just don’t comply with sharp angles and low ceilings. And all that follows the perplexity of navigating the sea of indistinguishable foam that describes many mattress stores today.

Sexy Business  

In fact, some consumers are apparently willing to pay more for the mattress if it comes compressed and folded into a box roughly the size of a mini fridge.

A price comparison on the website Sleep Like The Dead shows a Casper queen at $950, while a Sealy Posturepedic is priced at $500 to $670. A Leesa queen sells for $890, and a Serta Perfect Sleeper runs $350 to $1,230.

Some industry experts may contend that online-order mattresses are contributing to the rise in overall mattress prices, even if unit sales have been on a slight decline. The average selling price per mattress rose 4% in 2016 over 2015, and 4.5% in the first quarter of 2017, according to the International Sleep Products Association. And the industry’s presence is expanding.

While the online mattress market represented just 6% of the entire segment in 2014, it is believed to have now reached 10%, according to a story in USA Today. One source estimates the industry, which is essentially a startup, is at $1.5 billion.

“This is considered a really sexy, cutting-edge business,” David Perry, executive editor of Furniture Today, told USA Today.

Pea Soup

But few categories stay sexy for long.

The challenge will be maintaining appeal in a market that is crowding. If online mattress retailers are the salve for a sore shopping experience, the fly in the ointment is whether the model is sustainable and, if so, what that means for traditional mattress sellers.

Online mattress merchants have the flexibility to be more competitive because they cut out the middleman — the retailer. Target’s involvement turns the dynamic inside out, as it takes advantage of the online merchant’s flexibility to pad its own sales.

Retailers have been struggling to recapture consumer dollars that are increasingly directed toward experiences. Magical mattresses that pop out of a box could seduce those wandering dollars, and Target gets a cut. A shopper who buys a mattress is likely to linger online and buy ancillary items, such as bedside lamps, tables and linens.

What it shakes out to is a shopping experience that is pleasant rather than painful. To refer back to the fairytale, the shopper doesn’t feel peas, just peace.

But other mattress sellers, including department stores, may have an unwelcome awakening if they do not find a way to similarly take the nuisance out of the purchase experience.

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