Tag Archives: shopping

Post Modern: the new architecture of retail

No longer enough to have bricks & mortar
No longer enough to have impressive bricks & mortar

We hear the description “Post Modern” increasingly in industry chats today, especially from some of our colleagues emerging from the recent National Grocers Assn. Show in Las Vegas.

We’re not talking about the lauded design styles of masters such as Philip Johnson or Michael Graves, but of the new structural elements of shopping behavior.   In short, the Post Modern approach is the new architecture of retail, and marketers need to adapt to it…or start to crumble.

Kantar Retail details this trend in their “Retailing 2020” report, an excellent overview of some of the topics we have addressed in these posts as well, such as channel blurring, segmentation,  customer profiling, and others.

The report’s premise is that the Post-Modern period (which we are entering now) decries the end of Supercenter Era.  Hypermarts and big boxes will give way to “small, urban, ―alternative retail formats, as well as reliance on multi-format portfolios to capture future growth.”

Comparisons are made to Europe, where real estate is through the roof, chains are fewer and competition fierce, forcing retailers to be efficient and effective.  Private brands, direct to consumer advertising and more robust marketing are some of their strategies for survival.

We recently caught up with busy retail-wonk, Kantar EVP David Marcotte, who launched our fascinating discourse with the revelation:  “When clients ask me to show them who’s doing the best job in retailing today, I send them to Mexico.”

He went on to explain that Mexico has embraced the latest in digital with innovative design to deliver the experience their rising-income customers want.  (This merits its separate post:  stay tuned!)  Actually, emerging markets such as all the BRICs (Brazil, Russian, India, China and now, of course, Mexico) essentially leapfrogged to digital over the last few years from their Cro Magnon-era phone services.

Our discussion evolved into some of the key buzzwords that marketers should be familiar with in today’s Post-Modern retail architecture, such as:

  • data architecture, the art of proper intel mining skills; not just collecting it, but creating a compelling and engaging story that links the data sources.  In fact, we believe that having a compelling story to tell  customers is going to be the hallmark of successful businesses.
  • footprint no longer means the spot where the store stands, but the overall influence it has.  In fact, it may mean no store at all, or comprise multi-footprints, including digital,  etc.
  • transparency.  Shoppers are gaining (and now expecting) much greater access to the entire supply chain by following products from your plant to their place.   The good news is that info can mean higher efficiencies for manufacturers, but also result in consumers clamoring for removals of things they don’t like (i.e. the recent Subway ingredient incident )
  • wall-less retailing provides seamless channel transition and thus delightful shopping experience for the customer:  it looks like one big room full of good stuff!

A final thought on this reverts back to our premise of Post Modernism in relation to architecture:  that it  stemmed from the perceived limitati0ns of the Modern Movement that preceded it.  Folks felt that  buildings had become too stark and functional, and did not meet the human need for comfort and beauty.  It’s the same with shopping.

“Not your father’s” marketing trends

Could it be 25 years already that the TV ad spot  “This is Not Your Father’s Oldsmobile” (see video below, starring the still-slender William Shatner) became an instant classic?!  The catchy phrase was quickly adopted in any context (“This is not your father’s whatever”) reflecting the gestalt of the era.  In other words:  things had changed…

Yet perhaps the change mantra has never been so applicable as in marketing today.  The game has changed, and for many reasons.  To commemorate the New year, below are some of the key ones we see:  the trends we see coming at us less like an Olds and more like a Corvette:

  1. CONSUMER AS CREATOR.  God forbid you asked the customer to help develop your product!  You only dared came out with it after exhaustive research, branding and budgeting.  In today’s era of crowd funding and social signals  (“Like”, “Follow”, etc),  consumers want to share in the creative process.
  2. CALLS TO ACTION VS. CAMPAIGNS.  Used to be you planned a nice and orderly campaign months in advance and ran it on the media schedule you chose.  Today, you need to communicate with your customer all the time:  they pick the time they want to receive your (timely and relevant) message.
  3. MOBILE MATTERS.  It’s all about the smartphone now.  If you don’t have a mobile app you lose cred with consumers, period.
  4. SOCIAL STRATEGY SMARTS.  Before, getting your company name or product up on Google was enough.  Now, with tighter content controls, search engine optimization (SEO) has become quite a science.  With SE recognition of complete questions instead of just keywords,  this provides more opportunity for capturing them (the good news), but you have to keep working at it.
  5. INBOUND ABOUNDS.  It’s not about pushing your product out the door any more.  Attracting customers by the online content you create and the value your company provides is the all-important pull strategy that builds long-term loyalty.
  6. OMNICHANNEL SURFING.  Back in the day, it was solely the bricks & mortar  that counted.  Today, you may still want to get them in the store but the outreach now involves additional platforms, all working together to achieve “omnichannel”, or seamless shopping experience for the customer. (We’ve posted about this trend a few times, so please check out the topics on right)
  7. B2B SPECIALTY.  More than at any other time, business-to-business marketing is becoming a recognized and respected specialization.  Helping businesses do business better is critical in these times of reduced resources, higher costs, aggressive competitors and demanding consumers.

The Retail Games

Black Friday line
Let the Games begin!

For the sake of your health and safety, not to mention sanity,  we trust you came away unscathed from the recent shopping madness this past weekend that concluded with Cyber Monday.

What’s next:  “Techie Tuesday”?, “Wacky Wednesday?”  (Don’t laugh, and remember:  you saw it here first).

You’d hardly know there was a recession going on for the crowds that made this Black Friday allegedly the best on record (final sales figures still to be tallied), sending retail chain stocks soaring 5%+.  The Occupy Wall Street folks who organized to boycott “big chains” during the Holiday didn’t seem to have made a dent.

For marketers this urge to splurge is a rather thrilling, if unsettling, phenom.  After all, it was only a few years ago that the term “Black Friday” even became part of the American lexicon.  An elderly family member still thinks it’s some newfangled  religious holiday…

With stores now open during the sacrosant Thanksgiving Day, retail is now a new ball game:  one where nice guys finish last.

The protests of the pious about spending this time with family makes a good point, but the harsh truth is that retailers would not be opening their doors if there wasn’t demand.  And consumer demand has apparently reached a fever pitch as shoppers with pepper sprays and push strategies win the day.

As marketers, here are some key questions to ask ourselves about this trend:

  • If everyone’s already shopped out by Black Friday, what becomes of other Fridays…or any other day before Christmas?
  • What happens to manufacturers when inventories are already depleted for the Holidays and no new orders come in?
  • What do retailers do when their gross margins are dented by these deep discounts?  Do they dive even deeper?
  • If consumers only crave deep discounts, how will we wean them back into EDLP?

You may recall the halcyon days when many chains employed  Hi/Low pricing strategies, where discounts were something to be savored, special promotions were creative hallmarks, and blowouts only occurred post-Holiday. 

With Everyday Low Pricing the norm and “extreme couponing” the end game, it’s a challenge to make a case for brand-building.  Or is it?

We’ve blogged about the complex human character that hungers to shop.  There are elements at work in our subconscious that take pleasure in these animalistic rituals taking place in the retail jungles.  In short, the Thanksgiving spending spree is just one big game hunt.

Yet, once the thrill of the chase, the stampede of the crowd, and all that glitters disappears and shoppers finally view their prize quietly at home, do they hear the little voice asking:  “What is this garbage you just spent your last dollar on?!”

Rewriting retail rules

Apple Computer
Temptation greater than Adam & Eve's fruit

Lately, we’ve been focusing on some of the new things that are making us look at marketing in a different way.  We’ve discussed social media, shopping apps, on-line gaming and auctions, plus the myriad ways marketers make money by using badly-disguised “tricks”.

Yet one thing missing here lately has been report of innovative bricks-and-mortar retailing.  Not surprising, as we read about the consistent quarterly downturn of majors such as Walmart, The Gap and so many others.

While savvy chains like Target, Tiffany, Costco, Publix — plus our frivolous favorite, Gumps — are doing well or just holding their own,  let’s admit it, many chains haven’t added any real “Oomph!” to their operations in a while.

But there is one company you really never thought of as a retailer which  is now making the corporate suits at the chains tremble, and that’s Apple.  From all trade reports, not since Adam and Eve has there been such excitement over an opening.

Ten years after its first Apple Store opened its door, the company has grown “faster than any retailer in history”, fawns a recent feature on USA Today, heralding the opening of their latest New York emporium.  With sales last quarter topping $ 3.2B — an increase of over 90% YTD — Apple is said to be rewriting the rules of retail. (Darn, and we were just learning them!)

What’s amazing is that this growth comes when the entire category (computer retailing) appears to be dying.  Witness the list of chains that have already shuttered all or some stores, or plan to:  Gateway, Circuit City, CompUSA, and Best Buy.  In contrast, Apple plans to add 40 new stores to their current total of 330, all expected to create the camp-outside-night-before-opening fervor they inspire in their fans.

To us, the Apple Store mystique is not entirely new.  We were already onto them way back on 8/24 when we posted about how fun they were.  After parting with beaucoup bucks for an iPad at one last year, well, we simply became groupies like the others…  

Not that we actually hang for hours at these stores, sitting at different terminals, writing a book (as apparently one customer did) or flirting with the quirky Genius Baristas (their “geek” sales team).  After all, we do have a business to run!

But we sure like to visit them.  The stores exude excitement and coolness, like a hot, stylin’ nightclub where you’re a VIP and from where you’ll never be bounced, and finally emerge, hours later, drunk on new tech.

Then, one day, not long ago, the iPad developed a serious problem:  the on/off switch stuck.  So we bundled the baby up and rushed it to the nearest Apple Store.  Like an efficient paramedic, a Genius Barista immediately came by, looked at it grimly and rushed it back-stage.  We feared the worst…

But it was just minutes later that the young Genius emerged with a brand, new iPad.  No muss, no fuss, no questions, and certainly no request for more money.  Could retail be any sweeter?!  

(Did we even bother to ask why the thing stuck in the first place?  The answer is an equivocal “No”.  We simply took the new unit and ran…)

The person responsible for this retailing nirvana is none other than former Target merchandiser-in-chief,  Ron Johnson.  Focusing on the the customer experience and sound assortment strategies that made Target a great place to shop, Johnson did what many said was impossible:  he turned a great computer-maker into a great retailer.

Marketers like to say:  “Well, we focus on our core competency, nothing else. ”  Heck, we’re guilty of that same sentiment.   But we admit we may be wrong here, as many apparently were about Apple. 

It’s not that they even had to go into retail.  Or, as though they weren’t already on top of their game with their numerous “iProducts” and now, the brand new, barrier-breaking iCloud.   And it’s not like Steve Jobs isn’t already a guru, if not a god, becoming more so with each re-appearance of his ravaged body at new product launches.  

It’s just that this is a company that decided to take total control of their brand.

That’s why Advertising Age just named Apple “Marketer of the Year”.   If they’re also named “Retailer of the Year”, well, then the rules really have to be rewritten.

Working it in store

supermarket 70774
Where impulse will get'cha

The proof is in the pudding, as the saying goes, and especially so when you are talking ROI for marketing programs.  We’ve posted often enough about the value of metrics and measurement, and nothing is quite as satisfying for a marketer than to see those sales needles jump in-store.

That’s because no matter how brilliant or elegant your marketing plan is, if it doesn’t play in Peoria (or wherever your target market is) then you’ve failed.  The ability to have it work in-store — where the rubber meets the road — is where it counts.

This is especially so when you consider that in-store marketing has recently surpassed the $18 billion mark and is projected to grow significantly in the next five years.  Regardless of the relevance and performance of  primary drivers (see last week’s post), over 70% of buying decisions are said to be made in-store .

Savvy retailers then partner with their vendors to ensure they are keeping a sharp eye on the results of their programs.  Unfortunately for most retailers, developing a program template that achieves reliable results is still a work in progress.  According to MarketingLab, most claim less than half of programs are successful, but as with much of media, the question is:  which half?

The chart below reflects the interesting results of  what promotions and merchandising activities seem to work best:

To us it’s not surprising that “Seasonal Programs” are the  most effective , with almost 30% of responses.  After all, if most shopping is done on impulse then “what’s hot now” is certainly a key motivator.  We would combine this with the “Short Term” stat because, again, it’s the now-or-never inpulse that drives sales.

Within the seasonal focus we would add themed promotions.  We’ve found that when you build an event and display around a well-executed theme — even ones as mundane as “Christmas in July” “Winter Wonderland”, “Fruitful Fall”, or even “Fiesta Days” –customers are drawn in by the visuals (retailtainment)  and the promise of a bargain.

When it comes to the second most effective in-store tactic being media-specific, again, we are not surprised.  Radio, especially, which does not require shoppers’ active attention and plays a strong subconscious influence, is the most cost-effective and easily-measurable.  

VOXPOP, a leading in-store media company, reports that over 40% of shoppers who listen to in-store radio are influenced to buy differently.  They also report 300%+  lifts from their campaigns.

Finally, the higher percentage of success with in-store as well as department-specific programs reinforces that a cohesive effort that goes across all store departments is the best.