Archive for July, 2013

The secret of Trader Joe’s success?

Interesting discussion at RetailWire, in which panelists sorted through some data about Trader Joe’s and what drives its customer loyalty. There are a lot of attributes to consider, but I think the answer is pretty short and sweet:

I can’t explain the “weighted averages” that led to the survey conclusions, but I do feel that Trader Joe’s secret is not just about accurate pricing and fast checkout. It really comes down to the small formats, well-edited assortments and value pricing of unique private-brand products. Not all that different from what drives TJ’s sister company Aldi, when you think about it.

Starbucks partners with Danone

A quick comment (from RetailWire) about the announced plan for Danone to sell a new Greek yogurt product in Starbucks stores. Most panelists agreed with me that this is hardly “outside the box” for Starbucks, but a solid idea:

Starbucks already proved it could expand beyond coffee into successful extensions like tea, Frappucinos and more. Selling a co-branded Greek yogurt to the customer already walking into the store for beverages or baked goods isn’t a reach at all. I’ll start to worry if Starbucks decides to sell totally unrelated categories, but so far they have been disciplined about their product extensions.

New growth plan for the Mall of America

A timely discussion last Monday about expansion plans at the Mall of America, outside Minneapolis. (Timely because I was headed to the mall on the same day.) The plan is to expand dramatically by adding a “luxury” wing, and the question before RetailWire panelists is whether the MOA is following a theme-park strategy by drawing shoppers. Here’s my take:

The MOA (which I happen to be visiting today) has long had an “attraction” strategy, going back to its theme park in the middle, amusements like an aquarium, and a vast array of shops and restaurants pulling tourists and shoppers from all over the world.

The latest plan is interesting because the Mall began as too upscale for the market and changed its tenant mix at least 15 years ago before hitting its stride. The new plan is a logical evolution, especially since the MOA in its current incarnation runs the risk of becoming stale.

The “app store” changes everything

It’s the five-year anniversary of Apple’s launch of the “App Store” on its smartphones. There’s universal agreement among RetailWire panelists that this has had dramatic effects on consumers’ (and marketers’) behavior. I zero in on two specific points:

I see two big effects on retail: First, e-commerce sites for brick-and-mortar retailers need to strive for the sort of design simplicity and ease of use typical of a smartphone app. Second (and more important), the “app” explosion continues to empower the consumer in his or her relationship with the omnichannel retailer. Especially on the issue of price transparency, the smartphone has been a game-changer.

Walmart and the “Twinkie defense”?

Today’s RetailWire discussion was triggered by the weekend news about Hostess relaunching Twinkies, and Walmart apparently breaking the “embargo.” (I know…there are more important topics in the world.) The question is whether large CPG companies favor large retailers, and the answer (shared by other panelists) is a clear “yes”:

I’m shocked — shocked! — at the idea that CPG manufacturers and other large vendors provide preferential treatment to their biggest retail customers. These can range from early launch dates to exclusive product designs to co-branded marketing plans. Industry consolidation (on both sides of the business) has only made this trend more apparent. The onus falls largely on smaller retailers to work proactively with their vendors on product development and other two-way benefits, or to develop deeper relationships with CPG companies that may not be “household names.”

Review sites: Retailers, ignore at your peril

From a recent RetailWire discussion about review sites, the topic centered on whether retailers (as opposed to service providers) will be impacted by online postings at sites like Yelp, Google+ and so forth. Here’s my comment on the subject:

It’s hard to ignore the impact of review sites (Yelp, TripAdvisor and others) on consumer preferences for hotels, restaurants and other service providers. And virtually every business that you can find on Google Maps has Zagat or other user ratings attached to it. This may be a relatively new phenomenon for traditional brick-and-mortar retail stores, but they had better be prepared for it because the growth and impact of these sites will be dramatic in the next few years.

After Apple: Will e-book prices fall again?

In a widely publicized case, Apple was ruled to have colluded with e-book publishers on retail prices. The question under discussion today at RetailWire: Will this cause a massive change in e-book pricing, for the benefit of the consumer? I don’t think so, at least not as long as Amazon drives the overall tone of the marketplace:

I don’t see a big change in e-book pricing resulting from this ruling. A recent news story documented the diminishing discounts being offered by Amazon, and anybody who buys books on their Kindles can attest to this. There may be more deep discounting of a handful of best-sellers, but overall Amazon continues to gain pricing power especially with B&N pulling back from the e-reader market.

Best Buy joins the “omnichannel” parade

Best Buy is following the lead of retailers like Macy’s and Nordstrom, by fulfilling web orders from its brick-and-mortar stores. This is a rapidly growing tactic, and a smart one. Here’s my comment from this week’s RetailWire panel discussion:

Every retailer seems to be struggling with the same issue right now: How to make its brick-and-mortar inventory more productive as a fulfillment tool. Best Buy is following the lead of some smart retailers who are finding tactical solutions to out-of-stocks at their e-commerce distribution centers. It’s one more step on the continued evolution to “omnichannel,” since the customer is already way ahead of most retailers.

Back to School: Time for annual hand-wringing?

It seems like the topic of early seasonal setups becomes an easy target every year on RetailWire. The latest subject is Back-to-school, and stores’ tendency to set up shops right around July 4th. I’m more positive than most on the reasons for the tactic:

Schools that start in early August in the South have a different mindset than schools in the Northeast and elsewhere that begin after Labor Day. And BTS is rightfully treated as a two-month shopping season, not a sudden rush for school supplies at the very end. The “college dorm” business has also changed the nature of BTS timing.

Most importantly, retailers recognize that they can’t sell true fall apparel until the temperature changes, not just the calendar. Most store have figured out the importance of delivering “transitional” assortments of shorts, tees and polos at this time of year.

Loyalty: It’s not just about the “deal”

This week at RetailWire, contributor Bernice Hurst analyzed reasons why food retailers are losing “loyalty” customers while general merchandisers are gaining. For me, it comes down to retailers’ tendency to equate loyalty with “deals”:

Here’s the most revealing part of Bernice’s article: “Revitalized engagement includes Safeway giving members discounts plus coupons based on past purchases, and Fred Meyer sending coupons based on expenditure.” Perhaps the problem with declining enrollment in grocery “loyalty programs” is that they are purely price-driven. They may be more targeted and data-driven based on purchase history, but they are not likely to engender the kind of customer commitment driven by service, assortments or other relationship-building strategies.