Women Pay Full Price at Ann Taylor

It’s no secret customers like a good sale, but a recent finding from Ann Taylor shows items can still sell–even with a full-price sticker.

Ann Taylor reported a second-quarter profit and rising sales that even bested their lower-priced namesake Loft chain, which used to be a superstar during the recession. MarketWatch quotes the company saying gross-margin comps “dramatically outpaced” sales performance because of “the strength of the full-priced offering.”

It’s an encouraging report for women retailers. Often, women retailers feel the effects of a recession harder than other companies. When women oversee the household finances, they tend to cut back their own spending first. Plus, Ann Taylor, a retailer known for supplying professional clothing, found itself in a tricky situation trying to sell business clothes amidst job layoffs and potential job layoffs.

While the economy still isn’t in great shape, it’s nice to hear that retailers can do well in the present situation.

Recession Resets Consumers’ Priorities

What does the customer want? It’s a question retailers ask themselves all the time.

According to a recent study done by the Pew Research Center, consumer needs aren’t the same as they once were. According to the study, just 42 percent of Americans say they consider a television set a necessity, down from 52 percent just last year and 64 percent in 2006. The landline telephone also saw a dip in numbers. Of those polled, 62 percent still consider the landline phone a necessity, down from 68 percent in 2009.

“It’s true that in the digital era, consumers know they can watch a lot of television programming on their computers or smartphones,” Pew said. They also can make calls from their cell phones, a belief young people especially share. Fewer than half of those in the 18-29 age range consider a landline phone a necessity, but almost 60 percent think a cell phone is a must have item.

The report also shows people consider cars, clothes dryers, microwaves, home air conditioners and home PCs as less of a necessity than years prior.

“This suggests that the psyche of the American consumer is in a much different place now than it had been in the heady days before the recession.”

Still, just because more people categorize certain goods as a luxury over a necessity doesn’t mean the products aren’t selling. Retailers can take this information and apply what they know to their future marketing strategies.

Consumers Procrastinate Back-to-School Shopping

Retailers, take notes. American families are putting off their back-to-school shopping in an effort to make sure they’re getting the best deals.

Marshal Cohen, chief industry analyst with the NPD Group, told msnbc.com, “The consumer is not in any rush.”

An earnings call from Walmart indicated more shoppers are making their school supply purchases closer to their schools’ start dates. The National Retail Federation also predicted a quarter of school shoppers won’t begin their back-to-school shopping until one or two weeks before school begins. In some cases, families may even put the shopping off until later in the fall after seeing what’s in style and what students really need.

Still, the National Retail Federation predicts American families will eventually spend more on back-to-school supplies and clothes than last year. Back-to-college spending should remain about the same.

Meanwhile, retailers are offering deals for the customers now. Abercrombie & Fitch’s jeans are currently 40 percent off, Target is offering free shipping on $50 online purchases and Amazon.com has bargains on coffee makers, printers, microwaves and textbooks for college students.

The Real Customer Service Story

Upon entering a retail store, the customer knows what’s coming next: it’s the standard greeting, followed by the current sales promotion and then the question, “Anything I can help you with today?” According to recent research published in the Harvard Business Review, that answer is often, “No.”

Corporate leaders dramatically overestimate how much the customer wants to talk to a customer service representative. They believe customers value live service twice as much as self-service. HBR’s data shows customers are significantly indifferent to that claim, and they value self-service just as much as they value using the phone. More interestingly, that indifference doesn’t change across their demographic, issue type or urgency.

It’s an interesting predicament: what should your company do to improve its customer service when the customer prefers self-service? And what’s compelling the customer to repel real-life interaction? It could be argued that with the rise in social networks, people don’t like to engage in as many face-to-face conversations with others. Maybe fascination with technology has won out and the lure of fancy, powerful machines are more attractive than the sales associates. Or, now, everyone considers themselves a control freak and dislikes relying on other people to get something done.

Or maybe, customers haven’t wanted the relationships companies have been pushing all along and this rise in self-service finally gives them the easy way out. That’s not a comforting thought for retailers who build their company on the promises of quality customer service. So, what should those retailers do?

It’s a simple task in the world of automated customer service recordings, information computer stations and high tech self-service cash registers: have customer service reps be real people. Too often, customers blow off the sales associates because they sound like robots reading from a script. If customer service practices create authentic experiences by individualizing how each customer gets served, it’s a good bet that customers will again appreciate that friendly face that greets them right when they walk through the door.

Do Location-Based Social Networks Work for Your Company?

Should retailers check out location-based social networks and let their customers check in to their stores? An AdAge.com post on Forrester Research’s recently released study advises companies to take a second look as to whether LBSNs are right to include in their current marketing mix.

The study reports that only four percent of U.S. online adults use location-based mobile apps such as Foursquare, Gowalla and Loopt. Only one percent update these services more than once a week. Even more, a good majority of respondents—84 percent—claimed they were unfamiliar with the apps, a number to surely make companies rethink how necessary it is to start a marketing campaign using LBSNs.

Those numbers may seem like LBSNs aren’t a great investment at this time, but the report calls for another look. Among location-based service users, almost 80 percent of them are male and about 70 percent of them have a college degree and are between the ages of 19 and 35. Even more importantly, Forrester discovered these users are highly influential. They are far more likely to research products and read customer reviews and frequently have family and friends coming to them for advice before purchasing a product. In this sense, companies in the gaming, electronics and sportswear industry that target their marketing plan to men may want to include an early adoption of LBSNs.

Still, plenty of companies have launched marketing plans with location-based apps that aren’t just for the guys, including PepsiCo and Starbucks. When deciding whether LBSNs are right for you brand, consider your demographic and marketing plan’s goals. Weigh whether you want to establish yourself early in the location-based marketing playing field or whether you’d rather sit in the bullpen and wait until the user numbers grow to give it a try. Like every other marketing plan for a retailer, whether it be holding a sweepstakes, advertising or social networking, location-based mobile apps can be just another tool in a well-stocked toolbox.

Mobile Applications Can Do More for a Retailer

Shoppers are on the move, and they’re taking their mobile phones with them.

Forbes Insights published a study that surveyed leading U.S. retailers’ use of mobile applications in enhancing consumer’s shopping experiences. Researchers discovered many retailers–almost fifty percent–are hoping to capture first-mover advantage as their customers go mobile. The levels of sophistication in mobile design and application vary depending on the retailer and its goals. For many, the mobile features are a scaled-back version of their website. Others have ventured into offering transaction-based and customer-oriented applications that use powerful GPS technology to pinpoint an individual customer’s needs.

Whether you want to try to increase e-commerce sales, give out coupons or suggest products to your customer, mobile applications must be molded to fit your store’s demographic and mission in order to be effective. American Eagle Outfitters, a specialty retailer that caters to 15-25 year olds, was one of the earliest adopters of mobile technology when they launched their mobile website in August 2008. They recognized their customer base was highly engaged in mobile technology and made sure to capitalize on that activity by going to where there customers spent their time: on their mobile phones. Since the experiment began, the store has seen several hundred thousand customers opt in and contribute to sales through the mobile site. Vice President Michael Dupuis cites their success to consistency across all channels. Customers can access all the same information on their mobile phone that is on American Eagle’s website. Similarly, The North Face built applications that use GPS technology to determine the location of skiers, bikers, rock climbers, runners, and more. The mobile phone users can then access information about terrain they soon will face and read suggestions for how to tackle the trails. The possibilities for what kind of mobile application a retailer develops are endless, and it’s important to figure out what your customers want in their hands.

Retailers should know that mobile technology is not a passing fad. Soon, customers will expect stores to have mobile applications. Like a website, mobile technology will be just another part of the shopping experience.

Using Storytelling to Keep the Customer Coming Back to the Store

When people’s time is precious and transportation costs are high, retailers can’t rely on the thinking that if they build stores, people will come. Instead, retailers must offer more than just a physical space that stocks merchandise. They need to entertain, educate and engage consumers to bring them to the store and make them never want to leave.

PSFK advised retailers to think of all store locations as flagship stores and treat customer visits as opportunities to tell the story of the brand. Disney stores executed this idea by remodeling their stores to become a family entertainment hub where kids can interact and play with the merchandise. The New England grocery chain Stew Leonard’s organized their stores by stocking merchandise needed for certain occasions together, such as a barbecue or birthday party. Customers then buy items for an experience and possibly pick up a few things they didn’t think they needed, like birthday hats or corn on the cob holders. Stew Leonard’s stores also have animatronic farm animals kids can play with, flat screens that show feeds of their own daily cows and bountiful offerings of free samples.

The important thing to remember is that the store is an extension of the brand and thus offers a unique opportunity to create an immersive brand experience for the consumer. Apple stores capitalize on this opportunity by keeping their design aesthetic relevant to their brand and by offering product testing stations and optional education classes for customers. Lance Armstrong’s bike shop in Austin, Tex., is meant to be a hub for the diverse biking community, whether people are beginners or almost pros. Mellow Johnny’s even has a coffee shop, showers and bike storage systems to encourage more people to join the cycling community. By creating a community and not just a software store or cycling shop, Apple and Mellow Johnny’s make a visit to their stores not just another stop on an errand run but a place to spend an afternoon browsing and talking with others.
 
It’s also important to note that the stories retailers tell require scene changes. In order to keep up with shopping and cultural trends, retailers need to continually reinvent the shopping experience, all the while still keeping the brand’s core message and story in mind. Product displays and merchandise need to be rearranged and transformed to give the customer a reason to return.

Using Technology to Get Consumers to the Store

No one doubts the claim that the Internet and rise in mobile technology hasn’t transformed the retail industry. It’s the thought that people are no longer making trips to the stores that should be up for debate. The truth is that people still shop in stores. Technology is used to get them there and to make their experience more enjoyable so they keep coming back.

PSFK highlighted some great ideas of how retailers can leverage technology and drive consumers to their stores. For certain retailers, it may be helpful for the customer if they post wait times, store maps and inventory lists on their website. Google has launched an initiative to begin posting pictures of the insides of places on Google maps. Retailers can set up an appointment with Google photographers to get their interior shot and added to the Google places site. In the meantime, stores can post updated interior photos themselves and even set up a web cam so customers can watch a live stream of the store’s activity any time they want. This way, customers can time their visits based on whether they think the photos and videos show it’s a good time for them to shop.

Once a customer gets to the store, employees can use technology to create a more personalized shopping experience. Sales staff can use handheld devices and iPhone and iPad attachments to make transactions on the floor, freeing them from the desks and increasing interaction with customers. iPads stationed in store can run applications that help customers find what they’re looking for or get more information about a product when they don’t want to talk to a sales person.

Stores can also encourage its customers to share their experience on social networking sites by building a station where they can upload a picture or message in store. Diesel in Spain equipped their stores with a kiosk and camera so customers can upload photos to their social networking sties and ask for friends’ opinions as they try on outfits. This summer, JC Penney embraced user-generated content and had kids create YouTube back-to-school haul videos, showing friends what they bought when they shopped at JC Penney. The department store hopes the viral videos featuring ordinary teens will influence followers and friends to make similar purchases.

Technology will continue to be a welcome addition to the physical store environment. It’s a valuable asset in helping retailers create a destination shopping experience through storytelling and product education.

The Future of Retail is Still the Store

According to a recent study by the U.S. Census Bureau, the majority of sales still come from in-store purchases. Certain categories, such as books, clothing and electronics, see high percentages of e-commerce sales, but the overall message for retailers remains the same before the rise of the Internet: attention to the physical store should be a top priority in an effort to attract and keep customers.
 
That doesn’t mean retailers shouldn’t welcome changes to their stores. Around the same time of the release of that report came another study that revealed people are happier if they spend their money on experiences and not material goods. So what’s a store that makes and sells material goods to do? Create an experience around shopping, like B. Joseph Pine II and James H. Gilmore suggested in their 1999 book The Experience Economy. In short, Pine and Gilmore state companies must create memorable events for their customers so the memory becomes the product instead of the tangible good they purchase. It’s why you see more roller coasters springing up in shopping malls and more cafés attached to bookstores and even home goods stores.
 
Online shopping contributes to retail sales, but offline shopping offers an opportunity to create a lasting memory that turns a consumer into a loyal customer for your brand. How do you transform your store into an experience? PSFK, a trends research and innovation company, proposes that successful stores are the ones that leverage technology and push the boundaries of storytelling, product testing and education, two ideas that will be explored in upcoming posts. 

Wal-Mart’s Project Impact has a Positive Impact on Sales

Wal-Mart remains the world’s largest retailer, even after cutting back on the amount of items stocked on its shelves.

The retailer that boasted more than $400 billion in store revenues in 2009 launched a store remodeling initiative named Project Impact in an effort to boost efficiency and sales. The project started in 2008 and is on track to have reached about 32 percent of its stores by the end of 2010. Forbes reports that the remaining stores should be remodeled by 2014.

Project Impact was put in place to declutter stores and highlight popular merchandise while discontinuing unpopular items. Reduced inventory and improved inventory turnover supports Wal-Mart’s goal to be the low price leader and helps attract customers and increase sales. Many believe the remodeling strategy was a way to appeal to consumers who frequent the retail stores Target and Costco.

Project Impact is reportedly yielding positive results. New customer data shows that Wal-Mart is attracting more upscale customers with higher household incomes and has driven a sales boost of between 1.2 percent and 1.5 percent. Even after bringing back several product categories that were initially cut, Wal-Mart still decreased its inventory volume by 6 to 8 percent, improving its working capital position.

In this volatile economy and fast-paced digital age, retailers can’t afford to be static fixtures. Wal-Mart’s renewed attention to customer service, consumer experience and store management has proved to be a winning combination for the retailer, reinforcing the idea that not all change is bad.