Bryan Pearson's Blog, page 18

When Change Is In Store: How Starbucks, Stouffer’s And Others Manage Transformation

The old chestnut goes that the only constant is change, but in retail this is not true. The other constant is the risk of failure, and knowing how and when to make the correct change. A look at three major misstep areas.

 

Photo Credit: Stouffer’s

If only Sports Authority had spotted what was waiting at the goal line, it might still be No. 4.

The sporting goods chain, once the fourth-largest, filed for bankruptcy protection in March and then, unable to tackle its debt and sales issues, shuttered all of its 460 stores months later. Analysts had blamed the company’s collapse in part on its failure to adapt to shifts in consumer behavior, particularly the migration to online shopping.

Put another way, Sports Authority died because it did not quickly change its playbook.

Yet plenty of retailers suffer serious setbacks because they did the exact opposite: They embraced change. Which suggests that the adage about change being the only constant in life should be amended for business. We should consider that when it comes to business and retail, in particular, there is another constant – that adapting to change can sometimes lead to failure.

And one of the key ways to avoid failure is in knowing when to steer into, or away from, change.

It’s an area of considerable operational insecurity. Nearly half of 534 global executives surveyed (48%) believe their companies are somewhat or not at all prepared to pull off a successful business transformation, according to a 2014 Oracle/Forbes Insights survey. The leading cause for failure, they said, was inefficient execution – 41%.

The subject can fill chapters in a retail textbook (and not just Chapter 11). But there are a few common areas where most retailers have considered or will have to consider change at some point. Let’s look at how some major brands managed change of their products, online experiences and loyalty programs.

Product Change: Stouffer’s Seeks Sweet Spot

Remember New Coke? Triggered by competition from “New Generation” Pepsi, that product-reinventing debacle epitomizes the truth of another adage – if it’s not broke, don’t fix it.

But sometimes a good product is forced to transform to meet shifting consumer behaviors. Coke might not have been one, but a migration toward healthier eating is forcing many brands to reconsider their formulations today. Perhaps most notable, the first required change in 20 years of U.S. Nutrition Facts labels will take effect in 2018 and require brands to list all added sugars.

As a result, some cereal and snack food makers are reformulating their sugary additives with healthier alternatives. These modifications have apparently led to a broader movement among other processed-food makers to replace other preservatives and additives. Stouffer’s, for example, is reformulating the recipe of its lasagna to include ingredients people recognize from their own kitchens.

Supermarkets, too, are climbing on board. The Kroger Co.’s Simple Truth line of healthier foods boasts an absence of 101 artificial preservatives and ingredients. Unlike Coke’s internal decision to replace its iconic beverage, the product changes by Stouffer’s and other brands respond directly to consumer preferences.

Also, and importantly, Stouffer’s and others are not loudly promoting their product changes. This would lead to comparisons, and the risk that customers – particularly younger customers, who can be pickier – would not like the new tastes as much.

Loyalty Programs: Starbucks Rewards Understanding

Few customers are as damaging to a brand as the customer scorned. When Starbucks changed the earnings structure of its 11 million-member Starbucks Rewards program, awarding points based on dollars spent rather than the number of visits, the blowback was immediate and fierce.

Starbucks, addressing member concerns, heavily promoted monthly double-point days (for quicker rewards) as well as other specials, including a chance to win free Starbucks for life. But perhaps most important to weathering the shift was its Mobile Order & Pay app, a time-saver that enables members to order ahead and pick up in store. Starbucks continues to test new ways of rewarding its customers that benefit the bottom line, such as a partnership with the ride-sharing company Lyft. Program membership is now north of 12 million, proving that a well-executed engagement strategy in the midst of a significant change can help to smooth out the bumps.

Others have not recovered to change so well. The Australian supermarket chain Woolworths is in the midst of altering its loyalty program for the third time since 2015 as it strives to resonate with customers.

The program originally awarded frequent-flyer points with the airline Qantas, but Woolworths replaced them with “Woolworths Dollars” that were awarded only for the purchases of select items. Following a consumer backlash, Woolworths allowed the points to be transferred to Qantas miles. Still, just 41% percent of those surveyed in June said the program offered good value, according to news.au.com.

In late August, Woolworths replaced its reward currency again, with Woolworths Points. These can be used toward discounts at Woolworths or as Qantas points. This iteration may appease shoppers, but so many changes in so short a time causes confusion and indicates an inability or unwillingness to understand the customer.

Online Experience: Tumi Packs New Approach

In 2014, the premium luggage maker Tumi decided it needed to upgrade its ecommerce site for one clear reason: It felt its online experience needed to better match the high quality of its pricey product. This was no small feat – for many Tumi customers, the brand experience begins online. But the company thought the back-end process of getting new items loaded and catalogued onto its site was taking too long, and the imagery was not dynamic or interactive enough for its high standards.

Tumi decided to take the online presentation work, previously managed by a third-party provider, in-house. To assist, it acquired a suite of technology from Adobe and began to monitor the analytics.

The added capabilities from the software enabled new interactive features, such as a monogram function that overlays varying fonts and colors onto images of luggage. Among the benefits of the change to the company: Session times on the Tumi site increased by 40%. The company also learned that consumers were moving from online shopping to mobile shopping at a faster rate than expected.

In direct contrast to Tumi’s highly focused change is the online design merchant Fab, once an ecommerce darling valued at $1 billion. Launched as a social network for gay men in 2011, it first transitioned into a flash sales site, scaling up to 11,000 products from 1,000 across a range of categories. This expansion caused it to lose its selective edge, so in 2013 it pivoted again, transitioning from limited-product flash sales to a retail platform that sold a range of trendy gift-type items from smaller suppliers.

That last change might have been the correct one to drum up sales, but execution fell short. Fab.com spent a lot of the money on advertising but did not offer the kinds of distinguished products, style or prices to set it apart from Amazon and the growing number of other online competitors. In 2015, it sold to PCH, a customer design manufacturing company. It continues to operate as Fab.

Similarly, if Sports Authority had paid closer attention to its customers and how their shopping habits were changing, it might still be operating. Maybe not with all 460 locations, but with an overall experience that would be relevant to shoppers.

If anything, it might have had the chance to fight so it can face tomorrow.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here. 

The Hidden Value Of Thanks: 3 Ways Apple, Lululemon And Others Do It

Recent research shows a third of consumers prefer that companies thank them in the form of points or miles – indicating the pervasiveness of loyalty programs. But retail interactions occur well outside purchase, and recognition extends beyond loyalty programs. How some retailers are thanking customers in fresh ways. 

 

Photo by Andrew Burton/Getty Images

If love means never having to say you’re sorry, then loyalty should mean always having to say thank you.

It can come as a verbal word of gratitude, or in the form of rewards points. One factor does not change when it comes to retail: Consumers like to be thanked and recognized for their patronage.

That’s my takeaway after reviewing the results of a recent survey by TD Bank, which measured consumer attitudes about giving and receiving thanks in both personal and commercial settings. Not surprisingly, when it comes to being thanked by others, 84% of those surveyed said they prefer their thanks to come in person.

However, just how consumers like retailers and other companies to deliver their thanks is a different story.

For instance, 33% of those surveyed prefer companies to thank them with points, miles or other loyalty rewards. This is a great boost for loyalty marketing and rewards programs, but I don’t think the takeaway should be so cut-and-dry. Retail interactions involve much more than a purchase, and a rewards program will realize its full potential only if a retailer shows its thanks across all shopper touchpoints, such as the online experience, its social channels and customer care.

There are ways to generate customer recognition beyond traditional loyalty programs, as Apple, Lululemon and REI have proved. Let’s explore them; but first, let’s look at the research.

Gratitude Generates Loyalty

More than three-quarters of consumers surveyed (77%) said they are more likely to be loyal to a brand that expresses gratitude, according to TD Bank’s online survey, which took place in July.

That loyalty figure skews slightly higher among consumers ages 18 to 34 (81%) and women (80%). Meanwhile, 60% of the respondents said a direct thank you is more genuine, while 44% find a personalized thanks to be more authentic.

However, when asked specifically how they would like a company to thank them, 68% of all respondents chose rewards such as points, miles or other loyalty program benefits. Just 34% chose a verbal thank you.

As earlier stated, one-third of the respondents said loyalty program rewards are their most preferred way to be thanked (a close second to freebies). Just 13% of the respondents chose a verbal thanks as their most preferred form of recognition.

Other findings:

Younger consumers ages 18 to 34 are more likely to say freebies are their most preferred way to be thanked (39%, versus the 55-plus set, of which 25% most preferred freebies).
Of the 34% who said they like a verbal thank you overall, 38% fall into the millennial category (18 to 34) while 29% are older than 55.
The survey results aren’t good news for the stationery industry, as the good old-fashioned, hand-written thank you note did not fare well across any segment. Just 7% of millennials and 4% of consumers between 35 and 54 most prefer receiving a written thank you note from a brand. The figure does not much improve among those 55 and older – 9%.

3 Fresh Ways of Giving Thanks

It is not a revelation that consumers crave acknowledgment, but it is surprising to me how few consumers, across age groups, prefer a verbal or written thank you to a reward or freebie. I suspect this is a sign of conditioning because of the pervasiveness of loyalty programs.

But with that pervasiveness comes a higher bar – to stand apart and remain relevant as a retailer and a brand. This means resonating with the shopper, and making him or her feel genuinely appreciated, at all retail touchpoints as well as in unexpected places. Here are a few examples.

Teach them something new (about you): Retailers can invite customers to free events that educate them about products or processes central to that brand – further ensuring their relevance. REI, the outdoor activities company, offers a broad selection of free courses, from bike maintenance and GoPro training to land and water conservation. (Fee-based classes such as photography are discounted for those who become REI members.) Similarly, Apple offers free workshops that extend from the basics of using its products to digital photography, as well as free field trips for kids and teachers.

Bowl someone over: Retailers are familiar with the concept of surprise and delight – wowing a shopper with an unexpected gesture that will remain fondly in his memory for years. The classic example is when a call center employee at Zappos.com sent flowers to a customer whose mother died. In this area particularly, loyalty programs help because the insights they gather enable more tailored communications. Morton’s The Steakhouse once blew a customer away after he tweeted the chain jokingly requesting that a steak be delivered following a long day of business travel. To his surprise, an employee met him at the airport with a porterhouse steak, a colossal shrimp, a side of potatoes and silverware to boot.

Feed their passions: People choose brands that support their lifestyle interests; they stick with brands that encourage and share them. Lululemon, the seller of yoga, workout and athleisure clothing, provides its regular shoppers complimentary in-store yoga classes led by local instructors. For those who are not near a store or cannot make it, Lululemon offers free online classes. By extending these free services, Lululemon is reinforcing its support of a passion that is increasingly shared by its best shoppers. And so the bond strengthens.

Thanking customers across all touchpoints is good practice simply because it is good manners. It also could be good business. If practiced genuinely, an unexpected thank you brings its own rewards in the form of many welcome returns.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here. 

5 Major Retail Fails From P&G, Macy’s, Walmart (And What They Teach Us)

Some of the most attractive investments in retail have proven disastrous. Fortunately, retailers have learned to rebuild from past mistakes. Following are five major retail fails, some of which passed under the radar, and what to learn from them.

 

Photo: Getty Images/Home Depot

In the annals of retail, few leaders understood the importance of missteps – and of profit – as well as Sam Walton. “All of us profit from being corrected,” he said, “if we’re corrected in a positive way.”

The founder of Walmart might have been talking about his associates, but I suspect the words applied to him as well. If Walton were around to see the empire he had built today, he’d likely still be advising, as he once did, to “find humor in your failures.”

But humor comes more easily within the context of learning. The best retailers acknowledge their failures, dissect them to see what went wrong, and then use the guts to nourish their comebacks.

Following are five examples of major retail missteps – some relatively unknown – and what we can learn from them.

Whole Foods’ high-priced reputation: Whole Foods can be misunderstood, and many say that is its own fault. The supermarket chain tolerated its “whole paycheck” reputation for too long, even as Kroger and other rivals started nibbling at its organics market share. Whole Foods responded and lowered prices on some items in 2014, but few people realized it because, as  some analysts pointed out, the promotions were not well marketed. By 2015, Whole Foods’ sales – and stock price – took a significant hit.

In 2016, Whole Foods not only began promoting lower prices, it also put a name on the idea. It introduced its first Whole Foods 365 store, a chain of more affordable, neighborhood-y spots that combine fresh food with local flair. At just three locations, the concept is still a bit small to measure for success, but Whole Foods has made a point to reach out to members of each community and customize each location by including local vendors. Smart move – by putting local faces on its stores, Whole Foods is attempting to mask the “whole paycheck” image.

Procter & Gamble’s bleach mistake: Going back a number of years is a misstep that, regardless of age, still keeps many leaders up at night. In the 1980s Procter & Gamble attempted to sneak a new product into market without its competitor, Clorox, noticing. P&G cleverly chose to introduce the product, a color-safe bleach called Vibrant, in Portland, Maine, because of its distance from Clorox’s home base in California. Former CEO A.G. Lafley told the Harvard Business Review decades later that P&G thought it could “fly under the radar.”

But Clorox caught the blip and planned its own stealth attack. It sent a free gallon of Clorox to the front door of every household in Portland, effectively eliminating the need for bleach in the entire market for months. P&G took its bleach and went home but learned a valuable lesson. A few years later, when Clorox tried to enter the detergent category, P&G, maker of Tide, sent a similar message and won. P&G, meanwhile, took the R&D from Vibrant and created Tide with Bleach, at one time a half-billion-dollar brand.

Macy’s and the Fingerhut fiasco: In August, Macy’s gained headlines for its plan to close 100 locations, recognizing the undeniable power of online competition in an overstored U.S. market. But as far back as 1999, Macy’s was taking the first of many critical steps toward creating its successful internet business. And that turned into a critical misstep.

Macy’s, back then called Federated Department Stores, paid $1.7 billion for Fingerhut, a catalog known for its extensive direct marketing and internet expertise. Fingerhut was a master at database marketing – quite an asset. A key role of that data was enabling Fingerhut to separate customers who would not pay their debts from those who would, to whom it extended installment plans. Federated, however, replaced that system with credit cards, and in doing so reduced the predictive reliability of the database. Credit limits rose and customers fell behind on payments. By 2000, Fingerhut had lost $400 million.

Federated sold the business in 2002. Some experts suggested that the department store chain did not understand the catalog business or Fingerhut’s lower-income customer base. That being said, Federated clearly gained valuable insight into e-commerce – its online business generated $1 billion in sales in December 2015. Now, with the closure of 100 stores, it plans to invest more in improving its online customer experience.

Home Depot’s failure in China: Home Depot is the largest home improvement chain in the world thanks to strong performances in Mexico and Canada. But its 2006 expansion into China, despite precautions, presented a key unexpected challenge. Not that Home Depot was unprepared. When it entered China through a retail acquisition, Home Depot had already opened a businesses development office to gain better insights to strategically plan its entry, and it had sent an executive to study the markets and competition in 25 Chinese cities.

The problem was that Chinese consumers had little interest in doing it themselves – to them this was a sign of poverty. Besides, labor was highly affordable. As one Home Depot spokeswoman put it: “…this is more of a do-it-for-me culture.”

Home Depot shuttered 12 large-format stores in 2012, taking an after-tax charge of $160 million, but it maintained a string of specialty locations that focused on paint and design. The lesson: Home Depot studied the market and the competition, but it apparently did not examine the preferences and values of the emerging Asian consumer.

Walmart’s SKU rationalization: Back in 2009, in an effort to make its stores less cluttered and easier to shop, Walmart pulled thousands of items off its shelves. The plan was to enable Walmart to focus on faster-growing categories by eliminating slower-moving products and adding more “upscale” items.

The plan backfired, however, when shoppers could no longer find their preferred detergent or clothing and took their entire shopping lists elsewhere. Sales declined for seven consecutive quarters. In April 2011, Walmart added 8,500 items back to its mix. To emphasize the customer’s influence on its restock strategy, Walmart applied flags that stated, “It’s Back.”

Sam Walton would approve. The missteps that define retail today could fill a series of books, but let’s not make the mistake of spending too much time examining others. Instead, as we approach the day’s challenges, keep in mind another gem from Walton: “You can learn from everybody.”

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here. 

Why Walmart Pay Doesn’t Measure Up To CVS, Starbucks And Taco Bell

The reportedly limp-along introduction of Walmart Pay may cause some retailers to rethink entering the payments game, but others, including Starbucks, are excelling. Meanwhile, CVS Pay just launched. A look at what makes them different.

 

Rewards, frequency, fringe benefits. Of all the features that describe a trip to Walmart, these are not high among them

Photo Source: Walmart blog

Yet they may form the backbone of a successful retail payment app. Early reports indicate Walmart Pay, which launched nationally July 6 following seven months of testing, is struggling to get traction. The absence of these elements may be why.

Only 5.5% of surveyed shoppers said they would use Walmart Pay over the following 90 days, according to a May survey by 451 Research. That compares with 17.8% who planned to use Starbucks’ mobile app.

Indeed, Starbucks, Dunkin’ Donuts and even Taco Bell have all associated significant sales boosts with their mobile payment apps. Now major retailers outside of food service are testing the technology – CVS Pay recently launched in select markets. In fact, more than 25% of smartphone users rely on a payment app at least once a month, according to recent research from Parks Associates. And while Apple Pay may come quickly to mind, the report states that consumers use retailer-specific apps more frequently.

So why is the largest retailer in the world struggling to ring up sales by smartphone? The reason may have less to do with size and more to do with how Walmart fits into consumers’ daily lives. I see three differences between Walmart Pay and the others: a link to a rewards program, shopper frequency and added features such as order-ahead service. Let’s explore each.

Pay And Earn

A key benefit of linking mobile payments to a rewards program is it delivers perks straight into the consumer’s wallet. This translates to immediate value and encourages the consumer to spend more with that brand so she can add to that value.

Take, by example, a regular coffee drinker. Before joining Starbucks Rewards and downloading the app, she visited one of four coffee shops based on timing and convenience. Now she makes all her coffee purchases at Starbucks in a quest to earn more “stars” toward free food and drinks.

The Dunkin’ Donuts app proposition is similar. Members of the DD Perks program can place orders ahead, pay with the app and earn a point for every dollar spent.  (Like Starbucks Rewards, DD Perks cards can be preloaded online.)

Likewise, CVS Pay, now in Delaware, New Jersey, New York and Pennsylvania, incorporates the benefits of its ExtraCare rewards program. Users of CVS Pay no longer have to produce a physical card to earn rewards at the register – they are earned as they pay via the app.

Frequent Visits A Must

Walmart Pay does not offer loyalty benefits, according to Walmart’s FAQ page, but perhaps it can encourage more trips in others ways, which would be essential to gaining a foothold.

The typical Walmart shopper may swing by one of its stores once a week, possibly less if making infrequent, big-basket trips. That means its Walmart Pay might be used four times a month at most. Compare that with a Taco Bell or Starbucks customer, who may visit a location daily or every few days.

With such frequency comes relevance, as those payment apps integrate into day-to-day activities. Like gym memberships and Italian language lessons, a payment app’s value correlates directly with how often it is used.

Case in point: The “vast majority” of Starbucks Rewards members, of which there are 12.3 million active, pay by mobile app, accounting for roughly 25% of all transactions, President Kevin Johnson told analysts in a July conference call. The Starbucks Rewards program enhances the likelihood of these consumers shopping the coffee chain more frequently, which in turn encourages them to use mobile pay, and the cycle continues.

Fringe Benefits

Just as frequency enhances the relevance of mobile payment apps, it also justifies investments in app-related perks that heighten the entire value proposition for all involved.

Those investments pay off. Consider the addition of order-ahead features enabled by mobile payments. Starbucks’ Mobile Order & Pay option now accounts for 5% of its U.S. sales and nearly 20% of mobile payments, the company reports.

At Taco Bell, the average size of an app order exceeded in-store orders by 30% in the first quarter, according to Business Insider. Its parent company, Yum! Brands (also owner of KFC and Pizza Hut), reported that digital orders made up 46% of its total delivery and carryout sales.

The order-ahead option works so well for these companies because it addresses a key need of the target shopper  – getting commodity items quickly.

To this end, CVS Pay offers a pharmacy tie-in. Users can manage multiple prescriptions – from refills to verification – within the app. They also can store credit cards and other payment cards associated with their flexible spending accounts or health savings accounts.

These three elements – rewards, frequency and fringe benefits – are what make a payment system practical. They are pertinent enough to compel the consumer to adjust her behavior and choose one brand over others.

Walmart Pay may not include these three features yet, but it can quickly adopt the third category, fringe benefits, by sending coupons, special offers and other customized specials to its users based on previous shopping behavior.

In short, retail payment apps succeed when they are more than a payment opportunity. They have to offer experiences and value options, features that should describe every retail service.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here. 

Kroger Deal Highlights 3 Reasons Blended Data Is A Must In Retail

Partnership with data provider IRI enables the retailer and manufacturers to share the same customer insights, for more customized experiences. If other retailers do not follow suit, they could lose in the battle for the consumer. Three reasons data continues to change the retail game.

 

At Kroger stores, a box of Oreos may soon tell the greatest story a cookie has ever told.

In July, Kroger entered into an agreement with data provider IRI that will enable the supermarket giant and its manufacturing partners to see the same customer data and then compare the results with those of the rest of the industry. The tool making it possible is IRI’s Liquid Data platform, which includes factors such as weather, gas prices, macroeconomic trends and information from loyalty cards and social media.

Photographer: Daniel Acker/Bloomberg

But key to the tool’s effectiveness is the collaborative aspect of working with vendors. This industry-wide, blended data “will lead to better insights and help us create even better experiences for every customer,” Mike Donnelly, Kroger’s executive vice president of merchandising, said in a press release.

Kroger is not the first to realize the significance of sharing such wide-ranging, real-time data. Albertsons entered into a similar agreement with IRI in the spring.

If other retailers do not follow suit and find ways to collaborate with their vendors through shared data, and have quality conversations about joint outcomes, they risk losing relevance with customers in the aisle. Worse, they risk being casualties in the battle for the consumer.

IRI Talks Liquid Assets 

To find out more about the IRI partnerships, I posed a few questions to IRI’s vice president of public relations, Shelley Hughes. She said Liquid Data enables retailers to track the sales of millions of products at their own stores and others across the United States. They can then cross-reference these figures with a number of sales variables, including TV viewing by household, gas prices, loyalty card data, local weather and even local flu outbreaks.

So, for example, the data can contrast how well Oreos sell on a sunny Saturday in Seattle compared with a soggy Saturday in Saratoga.

“This precise ‘rest-of-market’ outlook coupled with specific sales variables will enable Kroger and Albertsons to unlock new opportunities and relevant insights,” Hughes said. “For instance, they can overlay this real-time data with in-store displays and Twitter activity to tweak marketing tactics.”

Partner manufacturers can track sales of their products using the same “rest-of-market” outlook. “This will allow retailers and suppliers to move away from manual joint business planning to real-time collaboration,” Hughes said. “Category managers can now work with their key suppliers to boost sales in the future, not just explain how consumers behaved in the past.”

When retailers and vendors have access to the same data, they can customize the shopping experience down to the store level, Hughes said. “Shoppers at Mariano’s in Chicago, Kroger in Indianapolis and Fred Meyer in Portland can all have a different experience that is targeted to their personal wants and needs.”

Kroger’s in-house analytics company, 84.51˚ (formerly DunnhumbyUSA) will continue to collect data as well, Hughes said. Kroger, which co-created DunnhumbyUSA with United Kingdom-based Dunnhumby in 2003, acquired the 50-50 balance of its stake in April. That Kroger is now partnering with IRI in addition indicates that retailers are seeking added interpretations of, and dimensions to, their data

Atomic Growth For Vendors

A recent story by Chicago Crain’s illustrated the importance of blended data as a sales tool, even among the makers of such small products as Atomic Fireballs.

Todd Siwak, the CEO of Ferrara Candy, said IRI’s blended data is playing a key role in his mission of doubling Ferrara’s revenue to $2 billion by 2020. The data shows him in real-time how many Fireballs are selling by store and enables him to adjust in-aisle marketing tactics based on information about his in-store displays and social media activity.

“We’d be hard-pressed to grow as aggressively as we are without it,” Siwak told Crain’s. “We’d be flying blind.”

Many manufacturers, and retailers, still are flying blind to a degree. To prove our point, I’ve tapped into the experts at Precima, our global retail strategy and analytics company, to reveal three little-known but fundamentally important truths in retail.

60-20 is 20-20: Lots of retailers and vendors abide by the old Pareto Principle, or the 80-20 rule. In truth it plays out more like 60-20, or better – 60-75. Twenty percent of the best customers generate 60% of retail sales and 75% of profits. And they shop in complex ways. A retailer’s best customers not only spend more, they also buy from different stores on different days and have varying preferences on quality, selection, service, convenience and price. Blended data enables the retailer, and its CPG partners, to capture those variables.

Loss leaders have a decent loser rate: While some loss leaders, such as milk and bananas, may be effective, 25% to 50% of all loss leaders – products sold below market cost to stimulate sales of other items – fail to increase retail traffic or lead to ancillary purchases. They may, in fact, cause the retailer to lose money. Real-time blended data, combined with store-based basket data, is essential to identifying which products will succeed as loss leaders, not losers.

Pricing to compete: Lots of retailers allow a competitor’s prices to influence what they charge on the shelf. Kroger may set its prices to fall within 5 percent of Albertsons, for example. This approach is not based on consumer data, however, and therefore risks treating all categories and items the same. Customer insights on price sensitivities, combined with external influences such as gas prices and social media campaigns and then competitive price information, would deliver a more accurate pricing strategy.

There are a number of solutions out there to engage the shopper in ways that result in higher sales, but more power comes with collaboration. The question is whether the retailer and the vendor can shift their approach, share their data and have productive conversations about their results. In my experience, these have sometimes been lacking in the world of vendor-retailer relations.

But if this changes, the insights can lead to millions of dollars or more in sales and savings. Considering how much is spent on in-store marketing alone, that’s a lot of Oreos.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here. 

Filling Big Shoes With Square Feet: What Dollar General-Walmart Deal Means

While Walmart, Target and other chains test ways to maneuver into smaller footprints, other retailers benefit from their missteps. Most recently, Dollar General acquired the slightly larger Walmart Express stores. Still, the future of retail depends more on connections than size.

 

Dollar General is committed to showing the world’s largest retailer that it can fill some pretty big shoes.

The value-price chain in July acquired 41 former Walmart Express stores, and in doing so laid the groundwork for adding a new concept to its portfolio – larger-format stores. It is the exact opposite of what Walmart had hoped to achieve with its Express brand – to operate small-format locations that upstage and outsell the dollar stores.

Instead, Walmart abandoned its Express model in early 2016, five years after its launch, and shuttered all 102 stores. Enter Dollar General. The shift implies that while Walmart, Target and other chains are testing new ways to maneuver into smaller footprints and tighter markets, other retailers are poised to benefit from their missteps.

And back to the theoretical drawing board I go, but only to confirm my hypothesis.

I recently wrote about the shift among mega-merchants to smaller-format stores, concluding that the retailers of tomorrow will have less to do with size than with making consumer connections. It can be a connection as practical as having the items the shopper wants at prices that give her peace of mind, or as frivolous as dressing room mirrors that make purchase suggestions.

The hard part is, and always will be, determining the right stuff to make these connections with the target shopper. Particularly because retail’s persistent cycle of change – thanks to shopper-enabling technologies – is spinning ever tighter.

Making The Most Of Little

Many consumer wallets continue to be tighter as well, and that is a factor when considering the retail of tomorrow. A thriving segment of the retail industry, including Dollar General and Walmart, is built to serve the cost-conscious shopper.

Dollar General, in its first quarter earnings report, describes its core customers as “often among the first to be affected by negative or uncertain economic conditions … and are among the last to feel the effects of improving economic conditions.”

“Because the customers we serve are value-conscious, many with low or fixed incomes, we are intensely focused on helping them make the most of their spending dollars,” the company states.

Little Big Chain

This focus has led to significant growth – Dollar General opened almost 250 stores in just the first quarter of 2016 and plans to open 900 total for the year.

The Walmart Express acquisition involves 41 slightly larger stores in nearly 12 states, according to The Wall Street Journal. Dollar General plans to move many of its stores into these locations, filling some of the additional space with fresh produce and meat.

These are not Dollar General’s first larger-format stores, nor the first that carry fresh produce. It operates roughly 120 such locations now and expects to add the former Express locations by October. That is a small percentage of its almost 13,000 total, though the chain plans to expand to 20,000 U.S. stores by 2020, according to the WSJ. A higher percentage of the new locations may be larger formats.

Seeking The Relevant Sweet Spot

And this, I suspect, gets to the heart of all of these changes. Big store or small, succeeding at street level requires having the items and experience shoppers want and will show up for.

Consumers can order plenty of staple items online, and that segment is growing as well. Dollar General’s customer may not fit squarely into this cluster, but having said that, this can change deceptively fast in today’s quick-moving tech space. That same consumer may have less incentive to slip on a pair of shoes, check her teeth and drive to the store in the future.

Dollar For Your Thoughts, Shoppers

The challenge, again, is the tightening cycle of change at the consumer level. Retailers cannot read their shoppers’ thoughts, though shoppers wish for thought-reading experiences.

This is in part why retailers are so keenly interested in data technologies and marketing that help them connect to individual customer behaviors – tools such as loyalty programs or technologies that mine detailed transaction logs. Dollar General offers an email couponing program, through which it can collect basic data about what participating shoppers purchase, when they redeem. That is still a limited-size net.

So Dollar General, like others, is planning its stores of tomorrow with what it does know. Some will be larger, but like Walmart, Target and others, some also may be smaller. According to its quarterly report, Dollar General also is testing stores of less than 6,000 square feet, “which we believe could allow us to capture growth opportunities in metropolitan areas as well as rural areas with a low number of households.”

It would be easy to say that in a digital age, size doesn’t matter. But as long as experiences are relevant, convenience is a necessity and wallets are tight, it will play a role. The store will only succeed, however, if it contains the promise of a connection.

Creating those connections, regardless of price – those are the biggest shoes to fill.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

Hope In Store: How Lululemon, Starbucks Stand Out In A Fear-Filled Election

Few modern events have demonstrated the effectiveness of fear as a motivator as plainly as the presidential election. But in actuality retailers have used fear as a marketing tool for years. Here’s how turning fear in the inverse, to hope, is benefiting major brands.

 

Hmmm, which is less scary, the plaid pants or the stripes?

Fortunately, whichever style we choose will have less effect to national safety as it might on the golf course. But as we inch toward November, I would not be surprised if more consumers are approaching everyday purchases with a little more apprehension than usual.

The Starbucks store located in Trump Tower on 5th Avenue in New York. TIMOTHY A. CLARY/AFP/Getty Images

We may, in part, blame the coming presidential election. Few modern events have demonstrated the motivational power of fear as plainly as this campaign. However, retailers have used fear as a marketing tool for years. From cosmetics chains to DIY stores, retail’s marketers understand that even the most minor concerns (my teeth are yellowing) are just a step or two removed from a deeply rooted fear most of us share (no one will love me).

Which explains why even subtle fears can become significant motivators in the aisle (plaid or stripes?). The challenge, I believe, is that while fear can influence consumers to make certain purchase choices, it does not generate the kind of positive emotional experiences that result in brand loyalty.

What if we turned fear on its head, and marketed on hope? Think of well-loved brands such as Starbucks, Zappos and Trader Joe’s, which embrace a sense of community and belonging. Or Honest Co. and Lululemon, which inspire better living.

To understand how these brands do it, let’s first explore our fundamental fears.

Five Basic Fears

Psychologists identify five principal fears that influence human actions: death, strangers, the unknown, chaos and insignificance. Here is how retail marketers capitalize on them.

Death: Sellers of many vitamins, herbal remedies and whole foods benefit from the fear of poor health (our probiotics are gluten free!). Other retailers, such as auto dealers, may calm our fears about impending death by promoting their safety packages, or taking advantage when other car models are being recalled for malfunctions.

Strangers: Outsiders can attack us, woo away our significant others or even take our jobs. The company Nest, known for its remote control thermostats, in July introduced an outdoor security camera. Ring.com makes and sells a variety of monitoring products, including a video doorbell. Men’s apparel stores, meanwhile, can protect us from unknown professional rivals, by helping us look handsome and competitive in advance of the Ivy League’s incoming class of 2016.

The Unknown: Ever notice when shopping online and selecting a great pair of pants that the site will warn you, “Only two left”? We know what is in store today, but what about tomorrow? Scarcity is a key tactic of fear, as Apple and other brands have effectively demonstrated with “order now or you might have to wait” messaging. What if I do not buy the striped pants and they sell out? As consumers, we prefer knowing we have the power to manage our tomorrows. This is why we tend to fall into routines.

Chaos: We are hard-wired to want order, some more than others. Entire retail companies, such as The Container Store, benefit from the fear of chaos or disorder. Lots of DIY chains do as well, by promising to prevent our homes – and in essence ourselves – from falling into shambles. On a smaller scale, most household cleaning products appeal to our fears of looking messy and out of order.

Insignificance: Perhaps our most marketable fear is the one that taps into our insecurities, or of being inconsequential. A range of products from mascara to jumbo-screen televisions can be sold based on the fear of insignificance. Don’t want to be popular? Then don’t get an iPhone. Don’t want to be loved? Then drive right on by Victoria’s Secret.

Turn Fear On Its Ear

But is fear the secret to winning consumer’s hearts? I don’t think so, though there is no denying it’s an effective sales tool. This is why I think turning it on its inverse, into hope, makes much more sense. We are still recognizing a fear, but appealing to the brain’s more positive way of dealing with it. Apple, for example, has joyful ads, but they also trigger a fear of being left out.

So then, rather than a retailer marketing on the fear of death, it can appeal to wellness and security. The Honest Co. does this with its baby and household products, each of which is “safe” and eco-friendly. As a bonus, Honest delivers its products to members, eliminating worries of not knowing how the baby will act at the grocery store.

Our suspicion of strangers is calmed when retailers put a face on their brand. Think of Starbucks, and you picture a smiling barista making you a cup of job-winning inspiration (take that, Ivy League grad).

The free return policy at the ever-friendly Zappos.com quells our fear of the unknown, while our worries about getting our packages on time is resolved by Amazon Prime. And there is a reason why all Target locations follow the same store format – to cater to our love of routine (and our fear of the unknown).

Our fear of chaos is crushed when we are promised the feeling of balance and confidence –thank you, Lululemon. And our unease about insignificance is handily managed every time we visit Trader Joe’s or Nordstrom, whose staff members treat us as if we all are longtime friends. And they do so even if we are wearing plaid pants.

Which is to say that fear is embedded in all that we do. Plaid pants, striped pants, GMO free or eco-friendly, fear is leveraged even when hope is used as the marketing tactic. In many ways they are two sides of the same coin.

But how that coin lands will determine a brand’s lasting effect on a person. When it comes to choosing its motivator, a retailer should ask: Will I keep these customers longer because I scare them, or because I inspire them?

Back-To-School Trends A Lesson In New Math

Sixty percent of parents plan to use their mobile devices for back-to-school shopping this year, while Amazon is projected to capture 25% of the $17 billion increase in back-to-school sales. If retailers do not begin focusing as much on the digital experience as bricks and mortar, it could be a hard lesson.

 

Call it the new math of consumer shopping behavior. Divide $540 billion in potential spending by 60% of parents with mobile phones, and we’ve got a textbook shift in consumer shopping behavior.

Photo by Justin Sullivan/Getty Images

Now subtract out $200 billion or so for Amazon, and the result is not merely a shift as much as an acute need for traditional retailers to sharpen their pencils.

In this case, the change applies to back-to-school shopping, which is about to undergo the same physical-to-digital channel inversion as other major shopping events.

Key among the changes this year is that parents will be phoning in a lot of their back-to-school purchases, literally. Sixty percent of parents plan to use their mobiles phones for some school shopping. This may be why online giant Amazon, through its shopping app, is expected to surpass longtime standby Staples in terms of sales. Last year, Amazon controlled 38% to Staples’ 39%.

For retailers, these shifts highlight the whiplash pace in which shopping behaviors can change, sometimes with immediate effect thanks to the real-time gratification mobile interactions provide. Those retailers that do not respond to these urgent shifts by putting the digital experience front and center, alongside bricks and mortar, could be in for a hard lesson.

$17 Billion Increase In School Spending

Consumers are expected to spend $540 billion in the back-to-school season this year, a $17 billion increase over 2015, according to Customer Growth Partners’ 14th Annual BTS Forecast.

The figure includes all consumer spending from July to September, drawing on the Department of Commerce/Census Bureau retail sales base to represent every spending category except auto/fuel, grocery, restaurants and home improvement. Categories such as health and wellness, furniture and sporting goods are included, as well as apparel, shoes and school supplies, according to Customer Growth Partners President Craig Johnson.

Much of the increase is projected to come through digital channels. While overall back-to-school sales are expected to rise 3.3%, according to the BTS study, online sales are estimated to climb by 11%. And of those transactions, mobile will play a proportionately larger role. Six in 10 adults said they plan to do at least some of their back-to-school shopping via mobile device, according to the Rubicon Project, a tech-based ad firm.

And what better option is there for these shoppers than the retailer that defined online retail? Amazon’s back-to-school sales are not only expected to exceed those of Staples this year, Customer Growth Partners projects Amazon will account for roughly a quarter ­– $4.25 billion – of the total $17 billion increase in overall seasonal sales.

Apps To School 

The cause for higher mobile purchasing is rooted in basic acclimation. More adults are viewing videos through a streaming service like Netflix. As they grow more familiar with such options, they also grow more trusting. One digital act leads to another, which explains why retail mobile apps are gaining acceptance.

Nearly 50% of those surveyed by Rubicon (47%) have downloaded Amazon’s app and 71% said they plan to use a retail app before making a purchase. Two-thirds of those shoppers (66%) will compare prices, others (64%) will look for sales.

This leaves traditional back-to-school staples such as, well, Staples, in a quandary. The office supply chain is on the mend following its failed effort to merge with rival Office Depot, and the pre-school season is a crucial proving ground for investors and consumers.

In short order, such merchants require a major, viral-level event to nab roving consumer attention.

ABCs Of Mobile Schooling

In many ways, retailers should frame their back-to-school plans, and other strategies, as viral events – rapid, widespread and typically shared. Let’s complete this lesson with a new ABC in retail:

Augment: Not only should retailers ensure their digital and in-store experiences get equal footing, they should also establish comparable offerings via mobile. Every single digital option should be considered with the mobile experience in mind, in fact, from how a backpack’s features look on a five-inch screen to the checkout process. Also, since we are talking augmentation – augmented reality is now a national activity, thanks to Pokémon Go. Fleet-of-foot retailers can take advantage of this interest before it wanes.

BOPIS: The option to buy online, pickup in store gained attention last holiday season when department store chains such as Nordstrom offered it as a service. But BOPIS is particularly well suited for parents of back-to-school college students. Here’s why: Parents (or students) can order what they need the day kids are planning to return to campus. On the way to school they can pick up their orders – not near home, but at the store location closest to college. Now take it one step further. If the retailer has an opt-in app, it can push offers to the student and/or parent as they near the location. Staples, notably, does offer BOPIS. (Bed, Bath & Beyond, meanwhile, is trying an in-store version with its Pack & Hold service.)

Cyber Monday in July: If Walmart and other retailers were able to extend Cyber Monday into a Cyber Week, I am sure they can propel the shopping holiday across the calendar into July and onto our phones. Cyber Monday traditionally occurs the Monday after Thanksgiving, but traditions can be tested. This is essentially the idea behind Amazon’s Prime Day, which can be credited for its expected back-to-school success. Sales on Amazon’s second annual Prime Day rose 50% from 2015, Chain Store Age reports, beating 2015 Cyber Monday by 19% and marking the largest U.S. sales day ever.

These ABCs are achievable but should still be approached with the fluidity of consumer behavior in mind. Like new math, viral-level events can be vexing to stay on top of. However, those that do so will be at the head of their class.

Megastore On The Bubble: What Shrinking Target And Walmart Stores Mean

Smaller locations may have been the solution for shoehorning large-format retailers into densely populated cities. But the proliferation of digital shopping is proving location matters less and less, and it raises the question: Is the megastore even necessary?

 

The footprints might be smaller, but some of the latest stores by Target, Wal-Mart and others are covering a lot of ground.

Photo: Mark Ralston/AFP/Getty Images

They are, at least, in terms of sales opportunities. The operators of the nation’s best-recognized megastores have been finding success in smaller formats as they maneuver their way into densely populated, physically limited urban areas. The revelation, however, is that these smaller formats do not require an urban setting to succeed.

With digital commerce enabling customers to order online and pick up in store, request specific products be shipped to their preferred location, or choose from an array of other omnichannel services, the actual size of the store seems to matter less and less. Retail is progressively becoming an order-as-you-like it business, and bricks and mortar an increasingly questionable investment.

It causes one to wonder: Is the megastore even necessary?

Shrinking Target, Walmart, Lowe’s

A simple review of how the average consumer dollar is spent can help answer that question. In 2015, e-commerce sales rose by nearly 15 percent over 2014 and accounted for more than 36 percent of total retail sales growth. It was the sixth consecutive year that e-commerce sales rose by nearly 15 percent – or more.

With so many sales taking place on a handheld (or desktop) device, footprints are becoming less important in the customer service strategy. Among the big changes:

Target: The mass merchant known for its affordable, exclusive designer labels began opening small-format stores (less than 50,000 square feet) in 2012 and now operates more than 20. These locations were originally called CityTarget and Target Express, but to eliminate confusion the company dropped the names in late 2015. Now Target is stepping up expansion. In 2016, it plans to open 14 small-format stores, but just one large one. A location that opened in Queens, New York, in mid-July covers just 21,000 square feet. Additionally, Target has entered into a development agreement with CVS to potentially build small-format stores, according to Target’s annual report.

Walmart: The world’s largest retailer has been exploring small-format stores for years. Its Neighborhood Market stores, which average 42,000 square feet, date back to 1998. In 2011 it opened two Walmart.com stores in Southern California malls, designed to show off its online efforts. And also in 2011 it began rolling out Walmart Express stores in neighborhoods for shoppers making quick, fill-in trips. The Express concept was not designed to answer to the evolution of omnichannel services, however, and it struggled. Walmart abandoned the Express store in 2016, partly because of competition from Dollar Stores, experts surmised. Today Walmart operates 667 small-format stores.

Lowe’s: The DIY chain in 2015 opened two diminutive stores in Manhattan – just 30,000 square feet compared with an average of 110,000 square feet – as part of a growth strategy that includes urban locations. Aware of the potential challenges (Home Depot had earlier opened, and then shuttered, a series of small stores), Lowe’s studied Manhattanites, their contractors and plumbers for 18 months, according to Bloomberg.

Mall Anchor Stores (Sears, J.C. Penney, etc.): The shift in consumer spending is evident in shopping malls, as well, as I wrote last week. An increasing number of former department store anchors, having been abandoned, are being replaced by unconventional tenants such as hotels, by several smaller merchants, or a combination of both. Many mall operators now favor small tenants over large ones.

Europe Feels The Squeeze 

Meanwhile in Europe, a tight economy is forcing shoppers to eschew giant weekly shopping trips in favor of shorter, more frequent visits.

The result: a desire for smaller, convenience-style stores. Locations that operate outside of cities, requiring a drive and an investment in time, are declining in popularity, according to British news reports.

As a result, leading chains including Tesco, Sainsbury’s, Morrisons, and Waitrose are opening smaller stores to compete. Carrefour, Europe’s largest retailer, in April reported a slight decline in its first-quarter European same-store sales as the business “continues to struggle to get its core hypermarket format motoring once again,” reports Retail Week.

Retail Of Tomorrow

Where all these changes lead retail will have less to do with size than with connecting, however, regardless of location.

Shoppers may be channel-agnostic, but when it comes to experience, they can be reverent. They do not care how the retailer makes the item available, only that it is available, when and how they want it.

The future of retail will be faster, more customer-specific, more cost-effective and even greener. Increasingly, the industry will be managed by individuals who make specialized items that can be ordered from anywhere. Unlikely partners will match up, and megastores could transform into mini-malls or experience centers for their key brands, much in the way department stores have treated cosmetics for years.

Many major names likely will fall away from the landscape.

What’s clear is the path of retail has rarely been a straight one. The best we can do for its future is to learn by following in its footprints.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.  

Fall Of The Mall? How Mergers And Millennials Are Changing An American Icon

Shopping mall operators are seeking increasingly unconventional tenants and attractions as retail mergers and disinterested young consumers cause traditional retailers to reduce numbers. That means identifying tenants today that will appeal in the mall of tomorrow.

 

In Dearborn, Michigan, Lord & Taylor has been tailored for Ford.

The Fairlane Town Center in suburban Detroit is retrofitting the former department store space and several other vacancies to accommodate offices for Ford Motor Co. The automaker will move 2,100 workers to the mall as it converts 240,000 square feet of former retail space into a product-planning center.

Photo credit: Fairlane Town Center

If it sounds unconventional, that’s the point. “Most major malls are overbuilt, meaning they can’t support the square footage they have allocated to retail,” retail analyst Jeff Green told Michigan Live for a story about the project. “Which is why they’re starting to look at nonretail uses being brought on the mall site.”

True enough, Fairlane is one of many malls across the country signing on non-traditional, high-traffic tenants as mall vacancies rise. Retail mergers and consolidations have resulted in fewer traditional department store anchor options. And younger consumers, accustomed to round-the-clock digital stimulation, are more likely to find the standard mall, with its cavernous walkways and recurring terrain of familiar shop windows, boring.

Roughly 200 U.S. malls are at risk of shuttering in the coming several years, according to Green Street Advisors. The analytics firm also estimates retailers will need to close about 800 locations, or a fifth of total mall anchor spaces, in order to achieve sales productivity of the mid-2000s.

That’s a lot of wide-open retail space. The risk for mall operators is falling for seemingly sexy new tenants that may not have the staying power of experienced retailers that better understand their market bases. Experienced retailers such as Apple, which has installed glass staircases and Edwardian decor to complement the locales of its many locations. Or custom menswear chain Alton Lane, which serves cocktails and conversation to better understand its customers.

Which leads to the question: If today’s major mall can serve as a planning center for a major automobile manufacturer, what will the mall of tomorrow hold? One hint: To survive, it must serve the shopper’s desire to connect and preserve the shared, relationship-based shopping experiences people long for.

Art Markets And Aquariums

In order to predict what tomorrow’s mall will hold, it is helpful to explore what today’s mall is changing into. For some centers, such as the redeveloping Stony Point Fashion Park in Richmond, Virginia, change means fire pits and gourmet grocers. At the Great Lakes Crossing Outlets in Michigan, it meant adding an aquarium.

Here is what some others are doing:

– In some shopping centers, displays of household items are being replaced with actual households. The Monmouth Mall in New Jersey is being converted to include apartment units and hotels. At the Laguna Hills Mall in Orange County, California, renovation plans include 350 apartments, and at the historic Arcade Providence in Rhode Island, former eateries and shops have been transformed into nearly 50 mini-lofts.

– At University Mall in Tampa, Florida, major redevelopment plans include a 37,000-square-foot health club to replace a former J.C. Penney. Among a health club’s advantages, mall operators said, is it brings people in several days a week and at different times of day.

 – In New York, the Westfield World Trade Center, scheduled to open in 2016, will include a Ford Hub as well as a couple bakeries and a range of specialized merchants from Dior to Kingkow kids clothing. Overshadowing its lengthy tenant list, however, will be the features that enable shoppers to connect. Among the services: the ability to order online and pick up in the store, and in-mall screens featuring products mall-goers can purchase via digital devices. The center’s developers describe it as a place “Where playtime, ‘me’ time and a new outlook comfortably coincides.”

– In some cases, the methods used to attract tenants are as creative as the tenants themselves. At Prescott Gateway Mall in Prescott, Arizona, the Miller Valley Indoor Art Market is filling a space vacated by Kirklands. Among the incentives the mall operator is offering new tenants is free rent during certain periods.

The Mall Of Tomorrow

So how will all of these changes manifest in the mall of tomorrow? I visited this topic a year ago and had the same takeaway then as I do now: As long as humans are hard-wired to connect and congregate, the core purpose of retail will not change.

From the days of early civilization, people came to market not merely to buy bread and spices, but to socialize. What has changed since then is what consumers expect in return for their transactions. We are spending our money in different ways, and increasingly on experiences. It is up to the retailer what that experience will be.

In some places, the mall of tomorrow will hold amusement parks and white-collar employers. But it also will continue to include clothing stores and cosmetics shops. The difference will be the reasons consumers congregate: to work, to spend the night, perhaps to buy a shirt. Mall operators, and their retail tenants, simply need to serve those needs as more space opens up around them.

This is the core purpose of retail, to supply needed goods but also the makings of a better lifestyle. There is still room for traditional retailers, but the old mall model – a million square feet of competing merchants – is no longer tempting; it’s lost its luster. The mix of tomorrow, and today, requires a balance of practical and exhilarating, more lifestyle integration and diversity.

In Michigan, the country’s first automaker is spelling this out. In the rest of the country, the writing is on the malls’ crumbling walls.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.