FEATURE ARTICLE
Time Dictates
Today's retailing trends
is a powerful mix of technology-adaptability and consumer-knowledge.
Noted retail and marketing speaker Tom de Leon identifies
emerging consumer and technology trends to help retailers
position themselves in the new century.
High Tech, High Touch
The exciting world of retailing is really going “high
tech, high touch”. What does this mean? Well, traditional
retailers have seen the power of technology, particularly
its contribution to bottom line results. Yet almost intuitively,
these same retailers know that getting close and personal
to their customers must likewise be given priority.
Read on about the top
10 global retail trends and learn how we can capitalize
on them.
1 Content and
context - speaking the customer's language
The success of some
of the star retailers on the Global 100 list, such as
Wal-Mart, Carrefour, Tesco, The Home Depot and Seven Eleven
Japan is best understood in terms of a new market mode:
customer relevance.
These companies ascended
into the top ranks because they positioned their products
and services against the “human values” of
target customers. They understand clearly the standards
of the consumers and they consciously build relationships
and provide offerings that resonate with these needs and
wants. Instead of focusing primarily on the content of
a sale, they strike a more balanced and appropriate view
of content and context, that is the manner in which the
transaction is carried out and how it fits into a customer’s
life.
For instance, retailers
that successfully addresses the market's need for convenience
and/or competitive pricing will have the edge. Hongkong's
popular supermarket chain Park and Shop is a good example.
In this fast-paced era, we see stores paying more attention
to cross-merchandising, speedy payment counters, and checkout
areas. We also see the emergence of superstores and malls
like the country's SM Supermalls that offer food, entertainment,
products, and services all under one roof. Shoppers shop
for "items" and no longer purchase from any
vendor exclusively. That’s why retailers such as
Saks Fifth Avenue focus on filling their shops with new
merchandises - representing goods from all vendors.
A research study conducted
by Ernst and Young proved that this successful balancing
of content and context explains Wal-Mart’s continued
dominance in the world's top retailers, Carrefour’s
move into the No. 2 spot, Tesco’s phenomenal growth,
and Seven-Eleven Japan’s meteoric rise from the
67th position in 1996 to the 29th position in 1999. This
was contrary to common belief that these superstores'
prowess stem from the introduction of the hypermarket
concept, domination of the supply chain and even by acquisition.
The study also found
that failures in global retailing result when a company
misses a key perspective on the market and speaks a different
language than its customers.
In essence, the customer’s
definition of seemingly obvious terms such as “price”,
“service”, and “experience” should
correlate with the retailer's.
2 Creating
personalities in store design
Closely linked with
customer relevance is retailers' continuous search for
store designs that would appeal to their target market.
Two years ago, the Tommy Hilfiger men’s department
in Bloomie’s Manhattan measured 2,400 sq. ft. complete
with an interactive kiosk, a wall of video monitors and
custom fixtures. Today, the shop has been relocated and
downsized to 1,500 sq. ft. While Hilfiger's custom signage
and fixtures are still there, the videos are history.
Retailers are using
multi-dimensional storefronts that create a distinct identity
and unique appeal that will stand-out inside malls. Department
store and mall owners are using merchandise themes to
create a coherent and exciting personality for their stores.
Maritime Square in Tsing Yi, Hongkong uses the "marine"
concept in dressing up the entire shopping center.
Retailers are also
discovering that changing merchandise displays more often
will attract consumer attention.
3 What's in
a name? branding and co-branding
What's in a name? These
days it's everything. Retailers are discovering that branding
not only adds value to their products, but also helps
to differentiate them from the competition. Disney leveraged
its well-known name to create a successful branded line
of retail products including clothing, toys, key chains,
jewelry, and videos.
Co-branding happens
when two businesses or brands form a strategic alliance
to produce/market products jointly. Co-branding not only
creates added value for their products, it also means
higher marketing efficiency by attracting more customers
at lesser costs. Co-branding is also believed to be the
solution to generate new dynamics to individual brands
in difficult or emerging markets.
Also a popular innovation
in franchising today, co-branding was designed to reduce
franchise marketing costs, optimize operational and administrative
costs to increase profit. Examples include Taco Bell and
KFC, Burger King and TCBY, and Baskin Robbins and Dunkin
Donuts.
4 Growth in
lifestyle products - the promise of a better life!
Lifestyle has been
defined as "a way of life". Lifestyle also encompasses
the way we live or want to live our lives, the things
that we want and aspire for. It has also been dubbed as
the "dream factor in selling, the promise of something
better" said Professor Martin M. Pegler who teachers
visual merchandising at the Fashion Institute of Technology
in New York, USA.
It's true that while
shoppers seek convenience, quality, and value-for-their
money in purchasing goods, they are also seeking "personal
satisfaction". That's why from store designs, product
brands and logos to merchandise, retailers make sure they
tickle the hearts and minds of their market with the message:
"We know what you want and who you want to be and
we're here to help you realize your dreams".
The country's first
interactive sports superstore - TOBY's Sports Arena located
in Ayala Mall believes in providing customers an "experience"
that is rich and rewarding as much as selling merchandise
on the floor.
The multi-level sports
superstore is designed as a sleek arena environment, with
a track oval, a 30-foot high ceiling with exposed steel
trusses, and a stylized bleachers section. As customers
enter the store, they are greeted by a nine-bank video
wall featuring highlights from different sports events.
A realistic, 20-meter long mural of a cheering crowd competes
the stadium look and feel. According to Toby Claudio,
the company's Operations Manager, the Arena gives customers
a "sensory experience", with authentic arena
music, video entertainment, and various interactive features
that make people feel they are in more than just a sports
store.
Using this lifestyle
concept to tickle the imagination of the athlete, sports
enthusiast, or avid fan, the Arena hopes to engage them
in a buying spree.
5 Managing
costs - increasing profits
Cost-effective technology
that will reduce energy consumption is on top of the wish
list of every store operations and facilities manager.
Managers agree on the need for control systems that can
manage equipments, lights, and other building functions.
The use of energy efficient lighting such as light-emitting
diode (LED) technology is effective in lowering store-lighting
and energy costs.
Retail facilities managers
who participated in a round table discussion expressed
interest in increased on-line capabilities that will monitor
energy-management systems in their stores. “It would
be great if those systems could communicate utility-data
information on what the current rates are so that we could
make real-time decisions as to where we can shed load,”
says Brian Schadrie, facilities management engineer-HVAC,
ShopKo Stores, Green Bay, Wisconsin, USA.
6 Selecting
the right partner - outsourcing
Outsourcing has been
gaining popularity in energy and facilities maintenance
for some time for major retailers. Chain stores have outsourced
many of its key functions. The Limited, a high-end clothing
shop, with roughly 5,000 stores nationwide in the United
States, discussed its philosophy in a recent survey conducted
by Chain Store Magazine. “The Limited is very good
at marketing and selling clothes but that is less true
for facilities management, maintenance and things like
that,” explains Jonathan Swann, Senior Manager for
Energy Services. “For us, outsourcing has everything
to do with an organization’s core competence.”
Selecting the right partner is the key to The Limited’s
strategy. It considers whether the outside company has
the technology and infrastructure to do the job more easily
and better than it could be done in-house.
7 Maximizing
turnover - using technology in inventory management
Since merchandise inventory
tops the list of valuable physical assets in almost every
retail company, it is not surprising to find today’s
merchants devote substantial time and money in finding
new ways to make these huge investments work harder.
Retailers have long
understood that by streamlining their ordering and replenishing
processes, they can maximize turnover and improve in-stock
positions. In the process, they enhance customer service
levels—as well as their own bottom lines. It is
the role of technology to drive this effort. The more
quickly and accurately retailers can capture, analyze
and act on inventory movement and sales data, the better
they can respond to customer needs and preferences and
at the same time improve cash flow.
A survey conducted
last December 2000 by leading retail consultancy Kurt
Salmon Associates (KSA) analyzes the frequency with which
retailers monitor inventory movement to evaluate performance
- one clear sign of the importance retailers place on
tracking inventory movement.
Forty percent of the
retailers surveyed said they track changes on a weekly
basis; another 30 percent monitor inventory movement once
a month. Discounters (50 percent) and specialty apparel
stores (56 percent) were most likely to analyze inventory
movement on a weekly basis, hoping to find in small variations
the opportunities and exceptions that will help them respond
more quickly to market and fashion trends.
8 The Internet
- inexpensive way to link with vendors
Retailers likewise
recognize the need for supply-chain improvements. More
and more retailers are turning to the Internet, finding
it an inexpensive way to share information with vendor/business
partners.
Among those surveyed,
44 percent say they now use the Internet to link directly
with suppliers. This move towards Internet utilization
will only intensify, as will the move to integrated electronic
communications and on-line B2B (business-to-business)
exchanges. Newspaper headlines attest to this accelerating
trend of electronic exchanges. These developments hold
out special promise for companies with smaller stores.
For example, convenience
chains and mall operators which have been unable to rationalize
the high costs associated with installing dedicated lines,
will now be able to take advantage of these lower-cost
links, and may ultimately use them for everything from
transmitting sales and order data to relaying payroll
and other Human Resource related information.
9 Information
sharing - promoting joint responsibility and accountability
Sharing information
is another definite trend in the retail industry. This
year’s survey by KSA reveals that retailers’
long held reluctance to share internal information with
vendors is still pervasive. However, large retailers like
Carrefour, Wal-Mart, Kruger, and K Mart have started the
move towards sharing data such as sales forecasts and
margin figures.
“Sharing data
does not mean giving up competitive advantage,”
explains Steve Nevill, principal in KSA’s Merchandising
Services practice, noting that few retailers have the
strength to run the race alone. “Sharing data with
your partners allows for more ideas, analysis and leverage
to occur. It promotes a sense of responsibility and accountability,
which ultimately may be the biggest motivator for rallying
toward better results."
Furthermore, results
indicate those areas where retailers are most willing
to share information tend to center around unit sales,
inventory count, and revenue figures, with about half
of the survey group reporting they share this information
with suppliers.
10 Stricter
internal controls - rapidly becoming a competitive advantage
The Internet has also
given rise to the retail industry’s push for collaborative
planning, forecasting and replenishment (CPFR). Plus the
emergence of B2B exchanges offer retailers a growing number
of opportunities that will strengthen inventory management
controls. With too many stores, catalogs, and Web sites
competing for shopper money - and the economy showing
signs of slowing - these exchanges come at the right time.
CPFR is rapidly becoming
a competitive advantage for the larger retailers, and
small retailers should take notice. “There is a
big difference between the leaders in this area and others
just hanging back and waiting,” according to KSA’s
Nevill. “The leaders have been experimenting. They
are learning and they are seeing real results. I fear
this is one area where the rich will get richer at the
expense of the smaller retailers.
Moreover, these opportunities
bring with them certain technological challenges, including
finding ways to extract the right data out of information
systems. Even more critically, retailers need to be able
to rely on the data they do collect and as the survey
points out, the majority of chains have far to go on this
front especially as manual entry and human intervention
in semi-automated systems are widely prevalent practices
in most retail companies.
ABOUT THE AUTHOR
With over 30 years of experience in retailing, Tomas
"Tom" De Leon, Jr. shares with us his
sharp insights into worldwide retailing movements. De
Leon, who is currently the Program Director for the Ateneo
Graduate School of Business – Center for Continuing
Education and the Ateneo Bankers Association of the Philippines
(BAP) Institute of Banking, pioneered the development
of relevant, work-place based and applications oriented
training seminars geared specifically for the retail and
banking sector.
Among the programs
he initiated included: Retail Store Wars, Retail Executive
Development Program, Retail Supply Chain Management and
Effective Supervision of Retail Operations.
|