LIFE AT THE MARGIN

   It’s earnings season for many retailers who ended their fiscal years at the end of Jan. Results have been lackluster at best. Walmart, for instance, sold nearly $1,000,000,000,000 – that’s a trillion – in 2013.  (Of that amount, only $30 billion – about three percent – was online. Amazon did about $75 billion.) Though biggest in the world, Walmart's sales actually fell for the fourth quarter in a row in the US. Best Buy saw sales drop 3.5% for the year. JCP sales fell 7.4% after falling off a cliff (25%!) in 2012. Target saw sales slump 2.5% in 2013.

   Are people buying less? Nope – there’s simply more competition than ever before. It’s a tough world out there.

   Retailers may focus on margin but they also live on the edge. They don’t create demand; they fulfill demand. And they compete ferociously for every dollar. They win when shoppers come to them and become buyers, either online or in-person. They and the brand marketers from whom they buy strive to win shoppers’ attention and then their dollars. None of it is easy.

   Though online options draw much attention these days, the in-store environment remains where the game is largely won or lost. Do it well there and win; do it poorly and lose.  Stores are a high-stakes game.

   As they scrap for every penny and percent, shoppers benefit from that intense competition. Great store interiors, inviting environments, knowledgeable staff, ample supplies of the right products – these are the factors that spell success. The right packaging, displays and fixtures are key parts of that equation.  At the margin, it all matters. 

SEAMLESS RETAILING

   Global consulting company Accenture just came out with research that documents what we’ve been saying for years: online and in-store are converging as shoppers demand bricks-and-mortar stores evolve to provide the benefits of online and vice versa.

   Specifically, the report highlights these insights:

1.    Online Experience In-store: More people are buying online but picking up at a store.  Some are also ordering in-store and having delivered to their homes.

2.    More Webrooming, Less Showrooming: The study found that 78 percent of U.S. shoppers had webroomed (browse online then visit a store to make their purchase) in the 12 months before the latest survey, while 72 percent had showroomed (visit a physical store to see a product and then search online for a better price and make  purchase online).

3.    Free Beats Speed of Delivery: Though people have expectations of faster delivery, 57% of respondents preferred to wait rather than pay for next-day service.

4.    Retailers Aren’t There Yet: Survey respondents noted that they find offerings vary too much between online and in-store.  Retailers who figure this out – and many are working feverishly to do so – may enjoy a competitive advantage.

   As Chris Donnelly, global managing director of Accenture’s Retail practice, says, “Delivering a seamless experience across all retail touch points remains both a key challenge and prime opportunity for retailers today.”

   As long as shopping remains a vital part of the American economy, retail stores will, too.  Those retailers that deliver seamless shopping experiences - whether from one's phone, PC or shopping cart in an aisle - will remain vital to American shoppers as well.

RETAILING 2020

   Mark Twain was a rock star of the late 19^th century.  Unlike today where any star can be continually tracked through technology, people didn’t have the same access to their idols.  As he aged and infrequently spotted in public, gossip swirled that Twain had died.  He famously remarked, “The rumors of my death are greatly exaggerated.”

   Rumors of retailing’s demise continue to be greatly exaggerated as well.  Amazon, the great bricks-and-mortar slayer, just reported sales and earnings on Thu.  Sales grew 20% in the 4^th quarter of 2013 but earnings were less than 1% on sales.  The market punished the stock by sending it down 7% overnight because they aren’t making much money with their business model. 

   The world’s largest furniture retailer sees their future in-store.  Though IKEA started as a mail-order company, had 10 million new app downloads last year and saw online sales grow 20%, chief executive Peter Agnefjall says, "I think that in 2020 the absolute majority of sales will still be in our stores."  http://lnkd.in/drYKMCC.

   People still want to touch, feel, smell, taste and more fully experience many products before they buy.  Shoppers buy more when they can engage more of their senses.  That’s why the best retailers see that it makes sense to engage and enthrall shoppers, something that cannot be completely accomplished online.

   By 2020, new retail formats and technologies will emerge.  Many retailers of today will perish by then, especially those that fail to choose the right merchandise, the right messages and the right ways to deliver them to an evolving consumer landscape.  I predict without fear that that new landscape will include many great new retail stores.

IN-STORE WILL BE MORE LIKE ONLINE

   Think of your favorite store.  Do the people who work there know you?  Bet they do - and that's partly why you like to shop there.  My daughter loves our local Subway because they always know that she’s “six-inch Italian chicken breast toasted with lettuce & lite mayo.”  They know her.  And that’s part of the reason we like online shopping.  We share information online and feel amazed that they know what we’ve bought before, what others like us have bought and when we have a birthday!  Duh.  They capture and leverage information.

   In-store experiences will become more like online – interactive and personalized – as we get comfortable sharing more information and doing so becomes seamless.  Imagine someone greeting you in a store with a tablet that includes, with your permission, your recent online searches, purchase history, sizes, preferences, etc.  They could help you successfully find and purchase goods.  Shopping becomes better.  Everybody wins.  

   The technology is already available to make these in-store experiences more online-like.  Barriers are (a) retailers investing in equipment, (b) staff training and (c) shoppers getting comfortable with the intimacy.  Since we already share much online, notwithstanding Target’s recent security breach, and we actually appreciate feeling like we matter to the store associate, I don’t see the last one stopping in-store shoppers from having in-store experiences that rival – or exceed – the best online shopping experiences.

   What examples are YOU seeing of in-store becoming more like online shopping?

5 NEW YEAR'S RESOLUTIONS FOR THE RETAIL MARKETER

   EMBRACE THE OMNICHANNEL SHOPPER.  People gather information from more sources than ever and want to survey the virtual landscape from their phone, tablet, laptop, desktop – and through the unalloyed advice of others.  It’s a brave, multi-dimensional world, retailers and brands.  Stop obsessing over showrooming and start obsessing over connecting with your shopper.

   IMPROVE YOUR ANTENNAE.  Consumers aren’t the only ones employing technology; so are your competitors.  Big Data is a big competitive advantage to more than the NSA.  Are you winning at understanding the big picture?  If you’re unsure, you’re losing.

   DON’T FEAR CHANGE.  The Ron Johnson and JCP debacle notwithstanding, marketing at retail is an inherently experimental, experiential realm.  If you’re not moving forward, you’re falling behind.  Test.  Analyze.  Repeat. 

   BE AUTHENTIC.  Don’t stuff the ballot box and use black hat techniques to influence purchase decisions based on trumped up input.  Instead, find ways to genuinely engage shoppers, understand their needs beyond a survey or focus group.  You’ll be rewarded with greater loyalty – and results.

   SHOP.  I’m continually amazed at marketers who spend so little time in the marketplace.  Are you in stores every week?  If you’re not, no matter what your job is, you’re not doing your job.  There’s no substitute for spending time in stores, soaking up the experience, seeing what works and what doesn’t, observing behaviors firsthand.

   Do these things and 2014 can be your best year yet.

MORE EVOLUTION THAN REVOLUTION

   As the year draws to a close, many of us focus on family, festive gatherings and food.  As we wrap up Christmas shopping and the presents we buy, retailers and manufacturers are wrapping up 2013 and looking to the future.

   Amazon recently announced plans to use drones to swiftly deliver some goods to their metropolitan clients within the next five years and are expanding their reach into grocery delivery too.  Carrefour, the world’s second-largest retailer, announced the purchase of 127 European malls.  Many of North America’s larger retailers have only modest plans for growth in 2014.  Consumer packaged goods companies, retailers and those that serve them continue to evolve as they seek profitable means of delivering value.

   Drones notwithstanding, selling through store environments continues to be the primary means of moving products from manufacturers to consumers.   Stores engage consumers’ senses, meet their desires for immediacy, provide social stimulation and represent the most economical means of delivering products to homes.  

   Not too many years ago, cellphones and overnight package delivery were the things of science fiction.  Today, 80% of 18-to-34-year-old Americans own a smartphone.  There are more cellphones than toothbrushes in the world.  Technology keeps getting better, faster and cheaper; retailers and consumer goods manufacturers are using it all to serve their customers.  Technologies may change quickly but human nature won’t change so radically in our lifetimes.  

   So, calm down, Jane and George Jetson: groceries and most Christmas gifts are still coming home in your trunk for the foreseeable future.  

SHOPPING AS NONSTOP BALLET

   The heart of holiday shopping season arrived Black Friday yesterday.  Stores busy, shelves overflowing with products, advertising wherever you turn, even videos of shoppers run amok.  If you spend time in stores throughout the year as we do and see the activity through the eyes of a retail environment designer, you might marvel as the complexity and synchronicity of selling products at retail.

   Display companies are part choreographers, part set designers, part stagehands.  We set the tone, we manage the stage, we present the world of the store for the audience: shoppers.

   Increasingly, that dance occurs both in stores and the virtual stores of the Internet.  Probably 50% of American shoppers will have made a purchase online this past weekend.  Does this spell the death of retail stores?

  Of course not.  People still love the intimacy, immediacy and interactivity of the store.  Plus, many stores are doing an excellent job of catering to the wishes of omnichannel shoppers: people who wish to shop and buy whenever and wherever they choose.  That means using a tablet in the kitchen in the morning, a PC at the office midday, a smartphone on the street after work, ordering by phone in the evening or the wandering the aisles of Target, Toys’R’Us or your local mom-n-pop store on the weekend.

   Shoppers want to shop when they want to shop.  That’s why you had stores open 24 hours a day and now on Thanksgiving.  That’s why “blue laws” that once shuttered stores on Sundays exist few places today.  Consumers – and consuming – drive our economy and the decisions of retailers to meet shoppers wherever they are.  It’s a 24/7/364 dance of our own creation, America.  Don't look now but that 365^th day – Christmas – is now at risk, too.

E-COM WON'T KILL IN-STORE

   The U S Department of Commerce tracks online buying as closely as in-store buying.  Online grew 18.4% in the second quarter of 2013 over the same period in 2012.  Impressive.  But in gross volume, online remains pretty minor: $64.8 billion out of $1.126 trillion.  In other words, only 5.8% of all US retail sales occurred online.

   The growth trajectory of online over the past decade has been steady but it won’t end in-store retailing.  In fact, there are 1.1 million retailers in the US today; there were 1.027 million in 2003.  Online isn’t killing in-store; online is making in-store better as shoppers have better access to more information so they can make better purchase decisions.

   We are seeing the rise of the omnichannel shopper as people use more and better resources to research, find, comparison shop and purchase goods from diapers and detergent to diamonds and Dodges.  

   The retail environments industry remains strong because (a) people still like shopping in stores and (b) retailers compete more ferociously than ever to win business from savvy customers.  The strong get stronger while the weak cease to exist.  Just as with online resources, the best retailers make use of all of the tools at their disposal: in-store, online, catalog, advertising, couponing, promotion, sampling, etc.  Oh, and products their customers want to buy at prices they’re willing to pay.  

RETAIL EVOLUTION

   How has shopping changed in your lifetime?  Have you seen stores come and go?  Have you come to rely on online reviews, e.g., Yelp, before making purchases?  Do you “shop” online?  How have your shopping patterns changed?  How are they different from the way your parents or grandparents shopped?  When you think about it, I’m betting that much has changed for you.  And you will see accelerated changes ahead.

   Retail is one of the most dynamic sectors of our economy.  Consumers drive ~70% of our economy.  And we’re tough customers!  Stores pop up while others go away.  Stores succeed or fail on the value they deliver for shoppers.  As shoppers, we vote with our feet (and fingers). 

   We also shop with our senses, seeing intriguing things on display, smelling the coffee or baked goods, feeling the fabric, hearing the advice of knowledgeable sales associates.  We like to interact with our prospective purchases; both online and traditional retailers know this.

   Retailers will continue to evolve to meet our changing wants as shoppers or cease to exist.  The marketplace determines retail winners and losers. 

   Like the gazelle and the lioness, both arise to face a new day.  The gazelle knows, “Either I run fast today or I become someone’s dinner.”  Likewise, the lioness knows, “Either I run fast today or I have no dinner for me, my mate and my brood.”  Whether we’re the hunter or the hunted, we must run fast each day to survive.

   Display and fixture companies must run fast each day too to serve the dynamic world of at-retail marketing.  Retail never stands still!

SHOWROOMING: BOON FOR RETAIL

Showrooming isn't so bad after all?  http://hbr.org/2013/07/how-pinterest-puts-people-in-stores/ar/1

BETTER INTERACTIVITY

In-store marketing is rooted in bringing the consumer and product together in one place.  Improving that interactive experience remains a focus of in-store marketing professionals.  This technology shows the direction in which we are all moving as we bring the power of connectivity and the point of purchase together.

MOVE OVER, MALL OF AMERICA

China has just opened the largest building in the world - and it's primarily a mall.  Check out the amenities of this enormity here.  MOA has 4.2 million square feet of gross space; the New Century Global Center has roughly 18.3 million square feet.  Wow!

WEBROOMING

   Many observers and participants in the retail realm wring their hands and burn up brain cells wondering if online will make in-store obsolete.  I’ve expressed my judgment many times and can sum it up in one word:  poppycock.

   In reality, those with eyes to see understand that the difference between online and in-store is dissolving as the two become one.  Amazon builds retail lockers for customer pickup.  Toys’R’Us has long offered order-online-pickup-in-store services.  Best Buy develops ship-from-store capabilities.  People use online resources to make the in-store shopping experience better!

   An emerging term for the convergence of in-store and online is webrooming: researching online before purchasing in a store.  This builds off of the concept of showrooming whereby people go to a physical store, examine their product options but then buy online.  Bricks-and-mortar retailers like Best Buy have felt harmed by the practice because they provide the showroom without the benefit of selling the product.

   Shoppers are inventive.  They will find the best way to get the best deal.  In-store can deliver the best value (i.e., price, convenience, instant gratification, tactile interaction, expert advice, etc) shoppers seek.  Retailers – and the store fixture companies who love them – are up to the challenge of evolving to meet shoppers’ needs.

HOME SWEET...MALL?

   As a child in the ‘60’s, a big shopping excursion on Saturday with my mom was going to downtown Canton or Wooster.  By the ‘70’s, the model changed as suburban malls sprang up with ample parking, the best stores and comfortable, convenient environments.  Westfield Belden Village in Canton was the largest indoor mall in the world when it opened in July 1969.  The Mall of America – still the largest US mall – opened in 1992, perhaps the apex of the traditional mall.

   Twenty-plus years later, many US malls struggle.  Occupancy rates average only 92%, some malls have been shuttered altogether and rents are around 2006 levels.  Coincidentally, the last time a new one opened in the US was also in 2006.  Instead, we’ve seen the rise of “lifestyle centers,” e.g., Easton in Columbus, OH, which combine shopping with fine dining, entertainment and high-end apartments.

   As online retail grows exponentially, we have also seen dollar stores, “power centers”, outlet malls and other formats arise and thrive.

   Retail remains a rapidly-evolving, exciting and inviting world for shoppers and brands alike.  Meeting the timeless needs of people to (1) physically interact with products for potential purchase, (2) gain insights from knowledgeable sales staff, (3) interact with friends as they weigh their options and (4) enjoy the instant gratification of finding, buying and taking purchases home on the spot makes the world of displays, fixtures and retail planning a great challenge worth doing well.

TELL 'EM WHERE TO GO

   I cannot resist referring to Herb Sorenson again.  If you want to understand the science of shopping, there’s no better place to start.  In his books and his blogs, Herb shows where so many retailers and consumer packaged goods companies go astray.  Common sense isn’t so common.

   In this 2010 blog post, Herb points out that shoppers want to know what to buy.  They want to be told where to go!  Think of it: the average shopper enters a store seeking three-to-seven items.  They may be attracted to the store by the massive array of products – maybe 20,000 up to 100,000 items – but must then try to find the needles they want in the retail haystack.  ATTRACTING is very different from SELLING. 

   Great store design helps people quickly find and buy what they want with a minimum of hassle.  Frankly, common wisdom among retailers runs counter to this idea.  Instead, they look for ways to keep shoppers in their stores longer.  The most successful retailers today, e.g., Costco, Trader Joe’s, Aldi, understand how the science of shopping works. 

   Tusco Display does, too.  As display and fixture producers, we advise our clients on how to put these same lessons to work as we encourage CPGs and retailers to think about ITEM management more than CATEGORY management.  When we all help shoppers spend their money faster, everybody – marketer, retailer, shopper and consumer – benefits.

THE FATHER OF SHOPPER MARKETING

   One of the delights of GlobalShop, North America’s largest trade show for the in-store marketing industry, is hearing from some of the world’s premier experts on what works in stores.  Herb Sorenson PhD was one of those delights for me in mid-April this year.

   Herb is arguably the father of shopper marketing.  Though retired, he still actively preaches the art and science of in-store marketing through his blog: www.shopperscientist.com.  I’m a big fan of his excellent books, too.

   One of the many meaty tidbits he shared is the concept of visual width.  Studies prove that people instinctively move toward open space in a store.  It’s a simple, sensible concept.  Yet, store planners often ignore this and try to funnel/drive shoppers, focusing solely on the floor plan and not the sight plan.  They fight human nature and frustrate shoppers who in turn shop less, buy less and return less frequently.  Nobody wins.

   In-store marketing is indeed both art and science.  Some store planners over-emphasize the art part; don’t miss the science, folks.  If you don’t balance the yin with the yang, you risk losing shoppers and sales.  Science may not be sexy but it is essential to understanding how shopper marketing works.  Learning from and working with experts helps make retail environments better.  Thanks for the reminder, Herb!

QUESTIONS OR ANSWERS?

   Asking great questions is both an art and a science.  Done well, it leads to truth, trust and value.  At Tusco Display, there’s no greater compliment from a client or supply chain partner than to have them say, “You ask the best questions!”

   People often make a mistake about questions.  They feel that asking them shows weakness, uncertainty and ignorance.  Perhaps it goes back to our school days when raising our hands meant opening ourselves to potential ridicule by classmates or showing our teachers that we hadn’t understood something.  Yes, technically, questions indicate that you don’t have all of the answers.  Do you really think that others believe that you already know everything?  Ask your spouse, child, parent or true friend for that answer.

   We so often focus on developing great answers that we miss that it’s time spent developing the great questions that lead to great answers.  Ask the right questions, get the right answers.  Ask the wrong questions and…well, you know that answer.

   Effective in-store marketing isn't so much about answering every question that a shopper may have as they cruise down an aisle.  More often, it's about getting them to stop and wonder about what they see, feel, smell, hear, sense.  It's about letting THEM supply an answer to the question your product display presents.  "Hey, I could use that product when I..."

   Worry less about how you’ll answer questions and focus instead on asking great ones - in-store and in life.  From great questions spring great answers.

IN-STORE WINS - BY A MILE

   At a recent industry meeting, another producer of displays lamented the dire prospects for retail and, thereby, our industry because of the Internet.  My response: "Poppycock!"

   Consider two indisputable facts:

1.    People still buy most goods from stores.  Whether it’s toothpaste or Teflon pans, sausage links or kitchen sinks, food or Fords, shoppers shop and buy in retail environments.  They want to interact with products and they want what they want now.  Though in some categories (e.g., music, electronics) the percentage is quite high, still only about 8% of all dollars are spent online.  Bricks swamp clicks.

2.    Stores are the most economical delivery method.  Moving most products by the truckload to central locations where shoppers come to pick out, pay for and carry home the goods costs less than shipping to individual homes.  If the USPS went to a similar strategy, i.e., eliminate home delivery and require pick up at the post office, how much less would it cost them to handle the mail?  

   Online and direct-to-home delivery will continue to grow but, as transportation costs climb, low-cost, bulky and heavy products may never leave the store environment – except in your trunk or truck bed.  "FedEx me some kitty litter!" said no one ever.  UPS won't become your new milkman.  And people will still appreciate the chance to see, smell, touch and buy what they want on the spot.  

   In-store is the last three feet of the marketing plan; the shopper is the last three miles of the distribution plan.  

VISUAL LOAD

   I recently spoke with a long-time industry friend who does consulting for retailers.  She chatted about the challenge of managing “visual load” in stores.  As anyone with eyes to see can attest, walking into most stores is an assault especially on our visual senses.

   Our job in display design and fixture execution is to better organize, even tame, the visual onslaught so shoppers can be put at ease, more easily make sense of what they encounter and find what they need without confusion or distrust.  This is tough as every brand vies for the attention of that shopper and every store tries to sell her everything they can.

   At Tusco Display, we do more than make racks.  We create spaces where our clients’ products are found and can flourish.  We choose colors, materials, fasteners, angles, dimensions and graphics to complement the products.  We improve the in-store experience for those searching, overwhelmed shoppers.  We lead clients to put their best feet forward on their most important stage: the store.  We make a true difference for shoppers, brands and retailers alike.

   It’s easy for people to overlook what we do in creating environments, in presenting products, in uniting consumers and products in the marketplace.  It’s honorable, vital work about which every one of us can feel pride.

FRIENDS

   Each adult American knows, on average, 600 people, Andrew Gelman of Columbia University writes in The New York Times. The estimate is based on an ingenious method: Asking a sample of individuals how many people they know with a variety of memorable names such as Brenda and Keith (because people with such names are easily recalled), then factoring in the prevalence of those names in U.S. society. Despite the large number of acquaintances, Gelman says, most Americans know just 10 to 25 people well enough to trust them. Source: The Average American Knows How Many People?

   How many BRANDS do you count as friends?  Jeep?  Nike?  Fruit of the Loom?  Ford?  Starbucks?  LL Bean?  Kelloggs?  Zappos?  You may be familiar with dozens – even hundreds – of brands.  How many do you really trust?

   One of the ways we develop brand trust is similar to the way in which we develop trust in friends: we put them to the test.  How do they wear?  How do they hold up under duress?  How much can I rely on them?  How do they make me feel?

   Whether we’re going with a tried-and-true product or something completely new, the point of purchase interaction is a key one for shoppers.  It’s often a key first step toward establishing brand trust.