| 10/30/2007 |
Nikki Baird |
| The New World of New Business |
I read an article last week about a small retailer in the northwest that is bucking all the trends – it’s called Romy. In three years, the chain is up to 10 stores with $3.5M in revenue, which is up 13% over last year. The company has plans to open as many as 8 new stores next year. Romy is boldly striking at one of the toughest places to be – stuck in the middle. It’s going after the tough to find (and serve) the 25-40 year old female segment – stuck between baby boomers and teens. It’s also going after “above bargain” but “below boutique” prices as it struggles to gain purchase as another entry into mall-based retailing – a format getting squeezed between mass merchants and life style centers.
But they don’t look like any “new” retailer that I know, and technology is a large reason behind the difference. Sure, they don’t even have a website yet, and I’m betting that their technology use is just about what you would expect from a very small, very new retailer. But when you look more closely, you see some interesting things. Romy designs their own clothes, done in partnership with a Chinese manufacturer. It’s incredible to think that a 10-store chain is designing and manufacturing private label merchandise sourced globally – standing shoulder to shoulder in the world economy with the likes of Wal-Mart. What do you think?
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| keywords: Retail, Small Retailers, New Markets, Technology, PLM, Private Label Merchandise |
| 10/23/2007 |
Brian Kilcourse |
| Customer Mobility Gets an E-Ticket |
Last week, the International Air Transport Association, which represents 240 airlines worldwide, announced approval of a standard that will enable airline passengers to download 2D barcodes to their cell phones or PDAs, and use those barcodes to check onto a flight. The capability is now being tested by Air Canada. Essentially the way this new capability will work is that when customers buy tickets online, they will register their mobile device, which will enable the airline’s system to subsequently download a 2D barcode via a text message. When boarding, passengers will present the barcode image to a reader.
AirCanada’s website offers the following instructions: “If your mobile device supports 2D barcode technology as most do, you will now receive two SMS text messages to confirm your check-in: one SMS text containing the details regarding your flight, and another SMS containing a link to a barcode image.” Even the instructions themselves underline the absurd level of ubiquity of mobile technologies, including as they do two technology buzzwords, “2D barcode” and “SMS.”
This innovation speaks to the tremendous capabilities of mobile technology for delivering value directly into the hands of consumers- without paper and in real time. Projects are cropping up all around the globe. Competition in South Africa between banking institutions FNB, MTN, and upstart WIZZIT for cell phone-based banking has been well documented in trade press. Digital marketing is finding acceptance as well. For example, South African mobile marketing company StarFish Mobile boasts clients as diverse as Cadbury and Coca Cola. Australian company Divoco offers mobile services for German retailer Nah & Frisch with mobile marketing capabilities. Another test project at the University of Muenster in Germany enables users to take pictures of coupons digitally displayed on public payphones with their cell phones and later redeem those coupons at local merchants’ stores.
So what’s happening with mobile commerce in the U.S. market? Although cell phones, Blackberries, and iPhones are everywhere, most offerings are still built around specialized use cases. For example, Starbucks is currently rolling out a capability that enables customers to buy songs from iTunes to their iPhones and WiFi-enabled iPods via the instore T-Mobile hotspot. The company expects to have this in all stores by the end of 2008. In another fairly well known example, EBay and PayPal work together with most of the major U.S. carriers to enable customers to bid on and pay for auction items.
Mobile cell phone-based banking is starting to heat up in the U.S., although it has yet to gain wide acceptance. Firethorn, a company that provides electronic commerce services, announced a partnership in September with America First Credit Union (one of the top ten U.S. credit unions) to provide mobile banking capabilities to over 400,000 of America First’s customers., with a “go live” date in early 2008. Clairmail, a competitor of Firethorn’s, announced a partnership in September with Verisign to offer mobile banking capabilities to financial institutions. While consumers continue to drag their feet about accepting chip-enabled debit and credit cards because of concerns about data security, cell phone-based payment systems would enable companies to leapfrog to a technology that consumers already embrace.
Although mobile commerce in any flavor hasn’t really hit hard in the U.S. market quite yet, “the times they are a-changing.” What does it mean for retailers? RSR research data indicates that retailers are still skeptical of the value of cell phones as an information, sales, and marketing channel; our last benchmark on multi-channel retailing (published in late-2006) showed that at the time, only 15% viewed the channel as “very important,” while 44% said “somewhat important” and 41% said it is “not important.” This is one technology where retailers don’t want to follow the industry’s traditionally long adoption cycle. Already in other parts of the world, companies have added mobile technology as a “touchpoint” to consumers, and they seem to accept it as easily as they do text messaging. Indeed; in London earlier this month, we were struck by how many advertisements on taxis and buses ended with the message, “To find out more, text message us at….” What do you think?
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| 10/15/2007 |
Steve Rowen |
| Has Digital Video Arrived? |
The desire to know more about what happens within the store has prompted some significant IT spends throughout the years.
Retailers have parted with their dollars via revamped store designs that employ multiple crow’s nests of one way mirrors, via store “detective” and secret shopper programs, and most recently, via analog CCTV systems – all hoping to get a glimpse of the bad behavior that permeates all corners and players on the retail battlefield.
Therefore, when digital video technologies began to emerge in the past few years, it is understandable why many remained skeptical of the high-cost/low-proof solution: the sentiment of “let me know when it really arrives” was pervasive.
Last week, I attended a conference held in Copenhagen, hosted by Axis Communications. Axis makes the cameras that adorn retailers’ stores, and while there are many sleek models from which to choose (based on application, lens angle, and megapixel resolution), the event’s focus was really aimed at informing of Axis’ significant push into the retail segment and the capabilities of its partners – those whose integration and software tools convert the images these cameras capture into actual intelligence.
The keynote speaker, David Gorman, formerly of Wal-Mart and now working as a loss prevention consultant, shared some data regarding the 500,000 shoplifting events that occur each day in the US alone, as well as some behind-the-scenes information comparing the retail giant’s past and present LP practices. “Wal-Mart used to fully prosecute every shoplifter it caught, hoping to deter future thieves by making an example of those caught in the act. However, this has simply become too expensive to do any longer.” In his opinion, digital video surveillance has, indeed, become a viable and cost-effective solution to nearly all other theft-avoidance methods.
And Flemming Bang Dammann, the Corporate Head of Security for Danish-based supermarket grocer Dagrofa Group, (164 stores in Denmark and Greenland) agreed. While slip-and fall claims are practically non-existent in his corner of the world, Dammann’s concerns lie more with crime, employee safety (25% of Danish retail employees report threats and verbal abuse at work), and the ever-present shrink. In fact, Dagrofa openly admits that while network video surveillance is the security component it spends the largest part of its budget upon, it views the investment as well worth the cost: employee satisfaction has increased while shrink, pickpocketing, and petty crimes have decreased significantly.
And while many of the presentations were highly compelling, most notably that of Johan Akesson and Jumbi Edulbrehram, who outlined Axis’ direct retail initiative, much of the event’s value resided in the small solutions center adjacent to the conference classroom. Here, attendees had the opportunity to hear how Axis partners’ integration and software tools convert the content these cameras capture into less shrink, increased productivity, and less manpower.
Checkpoint, Milestone, Genetec, InSupport, IBM – all were on hand to discuss how their particular solution made the most – automatically – from content captured by network cameras. Functions included immediate alerts when user-defined events occurred at the POS (open cash drawers, transaction logs not matching video of items scanned), at the shelf (multiple or high-end products removed, traffic-flow analysis of store and merchandise layout), or even at the point of entry and exit (utilizing face recognition software to identify “unwanted guests” and license plate recognition software to ascertain tag identification from suspect vehicles).
Further, what separated these vendors’ presentations from many I’d seen before is that they were not canned demos – several employed live, real-time video feeds of multiple camera set-ups from their homes and offices to drive a nail through serious doubts of functionality. And while each insisted that its software is sold on a “per-camera” basis, the buzz throughout the conference confirmed that most are now willing to negotiate to accommodate the retailer’s individual needs, pricing their software to move. Maybe digital video surveillance has arrived, after all – what do you think?
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| 10/15/2007 |
Nikki Baird |
| Retail Media Networks: The Business Case |
Retailers are a cautious bunch – a technology needs to be proven before it can make any headway in terms of adoption. A classic example: retail media networks (RMN). This technology has emerged as a viable affordable technology within the past ten years. But while some retailers have successfully deployed RMN’s, overall adoption within the industry still remains low.
With more than three years of pilots, rollouts, and case studies available, the industry has finally begun to accumulate the data needed to overcome doubts and objections, but a definitive business case for RMN’s – one focused on those retailers who lack a natural base of advertisers to fund a network, and face the daunting prospect of installing thousands of dollars of equipment in each and every store – is still lacking. I set out todefine a methodology and create specific metrics around what the financial opportunity, or business case, really can be.
That research is available for download from our site. You can also download an Excel workbook that provides variables and calculations to help you customize a business case for your specific circumstances.
But I know I don't have it all in there, so this blog is set up to provide a forum where you can provide feedback on the report and the tools. Think I missed the mark? Think I over- or under-stated a benefit? Share how your experience has been different. The objective is not to create the be-all end-all of business case, but to get the discussion started, and hopefully benefit the entire industry as a result.
Thanks in advance for your participation - I look forward to hearing your comments!
Nikki
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| keywords: Digital signage, in-store media, retail media |
| 10/8/2007 |
Paula Rosenblum |
| Retail Winners Unify Data Across Channels and Departments |
It has been widely estimated that the customer gives you 2.3 chances to get it right in retail. Mess up a third time, and the customer is gone for life. Switching costs are low and relatively pain-free. As my colleague Nikki Baird frequently says, “Success is no longer determined by how and what you want to sell, but by how and what your customer wants to buy.” The customer is more demanding than ever. The meaning for retailers is clear:
· Call centers MUST be easily accessible and have knowledgeable operators at the other end of the line.
· Retailers must respect their customers’ time.
· Never get into a situation where your customer knows your product better than you do.
· Insure that information on products and customers are aligned and available on the selling floor and in call centers.
Retail winners already know these axioms. In a competitive world, fragmented views of data can cause a world of pain.
Fragmented and Incomplete Data Drives Customer Frustration: The Cable Story
Everyone has a story about cable TV service (or lack thereof). Commercials and comedians make fun of indeterminate technician arrival windows, and dark movies have been made about technicians or “cable guys.” Industry consolidation and a non-competitive environment has kept things status quo. Saturday I had a lot of time to think about this as I waited out my 8am to 7pm technician arrival window.
The tech was coming to fix a long-standing problem – inadequate signal strength to support all my high-tech devices. No one seemed worried about this when they sold me all the DVR’s. None of the 4 previous installers said a word about any potential issues. But they are there.
I had hoped the technician would help me with a second problem that I supposedly had – failure of my “On Demand” feature to work at all. In brief: we had a cable outage earlier in the week. The cable service came back, but “On Demand” programming kept failing with an error. When I called tech support, I was told that the problem was related to the signal strength problem I was waiting for the technician to resolve and there was nothing to be done. Never mind that everything had worked fine before the outage. I had inadequate signal strength.
The service tech was unable to install the amplifier… but like magic, within about three hours, On Demand was working just fine again. Has my signal strength suddenly improved? Do I want to wait on the phone for two hours looking for an answer? No one really knows what happened.
Fragmented Data and Wasted Time
Here’s the point: at every step along the way, a singular view of data could have solved a world of pain.
· If, in fact, an amplifier is required to drive all these devices, the call center should have been warned when I called to request the last HDTV box. We could have made decision about how and where to put in an amplifier then.
· The call center assigned a technician who did not know how to install an amplifier. And the scheduler never asked me if there was a necessary free electrical outlet near the cable entry to the house (there isn’t). She didn’t have pre-requisite data in hand.
· The call center had faulty data about my On Demand problem. Clearly, the problem from three days before had not been completely resolved. Had she just known that, she could have set proper expectations.
What it Means – Retail’s Universally Different and Moving Forward
Moving beyond bitterness and the obvious – that competition is a good thing, there are far reaching conclusions that can be drawn from this experience. In today’s hypercompetitive environment, retailers can’t afford these sorts of missteps. Technology is available to solve discontinuity between departments. Our annual multi-channel retailing benchmark report is coming soon, and will show the progress that’s been made by retailers in integrating information across channels. Soon, we’ll be working on merchandising benchmarks to see how retail winners have moved beyond fragmented planning processes to improve their earnings per share.
Interestingly, these retailing goals are universal. A recent registrant to our site is a Russian supermarket chain, X5. The company’s corporate rules are impressive:
· Be proud of your company. Trust in it;
· We are one team. Trust and support each other;
· Employees of the company are its key value;
· Be purposeful, energized, emotional and enjoy what you do;
· Our opportunities are defined by our objectives;
· Defining your priorities, focus on result;
· We do what adds value to our customers only;
· To stay competitive we must be the best in cost efficiency;
· Learn from your competitors, to be more efficient and successful than they are; and,
· We are a socially responsible company.
Cable operators may lag behind, but retailers are moving forward. RSR will strive to look beyond North American retail, to find best practices around the world. What do you think?
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| keywords: Business Intelligence, Multi-channel retailing, Call centers |
| 10/2/2007 |
Steve Rowen |
| Happy Holidays: Sort of |
We’d be very interested to hear your thoughts on this year’s fast-approaching holiday retail season.
The NRF recently released predictions of retail sales numbers for a near-term holiday that are highly optimistic. And while it is indeed very good news that polling shows spending this Halloween is expected to be up from last year (the average person plans to spend nearly $65 compared to last year’s $59), predictions for the “real” holiday season are not so encouraging.
To date, retail-specific polls and estimates across the board are calling for a flat holiday season: 2007’s gross retail sales will remain on par with those from 2006.
What is disconcerting about this prediction is that online shopping for this year’s December holidays is projected to be up – way up – in many cases, to the tune of double-digit increases over last year’s online spend. In fact,Forrester Research is calling for a 23% online shopping boon in 2007 holiday sales.
What then, if online sales are to blossom to expectations, does an overarching prediction of “flat” say for in-store sales this November and December?
For starters, it says that rising fuel costs may finally have a significantly negative impact on landed retailers. With an economy currently dancing with the “r” word, consumers may have finally hit the wall fighting crowds and traffic for both purchases and returns at a national average of $2.80 a gallon (Detroit Free Press).
It also suggest that shoppers’ experiences in recent past years with retail stores may have been more than temporarily damaging. While out-of-stock, pricing, and promotional flubs have always been bad business, retailers’ errs during the 2005 and 2006 holiday seasons may not have only sent the customer across the street, but actually forced the customer off the street altogether.
And while personal computer and high-speed internet prices continue to fall, it is our contention that the customer has already had the ability to eliminate the in-store holiday shopping experience for quite some time. The real reasons that shoppers are voluntarily taking themselves out of the store extend well beyond “I don’t have to visits stores anymore.”
What do you think?
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