Archive for September, 2014

What does Gen Y expect from its advertisers?

A recent RetailWire discussion centered on Millennials and their “cynical” view of marketing in general. I’m not certain whether it’s fair to call it cynicism — since a lot of Gen Y opinions are wrapped in idealism, too — but it’s clear from the data that younger consumers view brands with a jaundiced eye. Here’s my opinion:

I believe that Millennials are more media-savvy than their parents and grandparents, and more likely to form collective opinions through social networking, review sites and other word-of-mouth. There is plenty of data to support this, not just the numbers reported in the article. While there has always been a degree of cynicism about marketing in popular culture, it is probably reaching an apex with Gen Y.

As to “trustworthiness,” I think that is the most critical value across all generations, not just among Millennials. The idea may have multiple definitions, however, ranging from the perception of value (a combination of price and quality) to the desire to deal with companies with a social conscience.

Target Canada: The low-price leader?

While Target continues to work on improvements to its results in Canada, it was interesting to read about a market-basket analysis showing sharper pricing vs. Walmart than most people might realize. Here’s a recent comment from RetailWire on the subject:

Short-term, it’s an important tactic for Target to advertise its price advantage vs. Walmart, especially when using the REDCard. But this works only as long as Walmart chooses not to respond. History suggests that Walmart will not sit still for very long being beaten on price by somebody else.

Long-term, Target has a branding story to tell that helps differentiate itself from Walmart. It has the same challenge in the U.S. right now, and the new CEO recognizes that less focus on food and consumables will shift the spotlight toward Target’s core strengths. But before any of these steps can be put in place — short-term or long-term — the execution of in-stock rates must continue to improve.

Tesco deals with an accounting issue

Tesco, the giant UK-based food retailer, reported a large accounting error that cost several of its executives their jobs. The question posed at RetailWire was whether this sort of event (shifting vendor income from quarter to quarter) is more commonplace than it seems. Here’s my take:

It’s startling that a large, high-profile public company like Tesco would mismanage its quarterly accounting to this degree. I don’t know whether the underlying regulatory policies in the U.K. make it easy or difficult for this to happen, compared to the U.S. where there has been close scrutiny of quarterly reporting for at least a decade. Call me naive, but it’s still surprising today that any company with presumably tight internal controls — and the oversight of an outside auditor — would try to manipulate its way around standard accounting practices, whether it’s in the retail business or not.

No surprise: Customers favor e-commerce with a local footprint

RetailWire panelists recently discussed a study that revealed consumer preferences about where to conduct their e-commerce business. It’s not an earth-shaking discovery to learn that shoppers are more trusting of sites where they have experience in the retailers’ brick-and-mortar stores. Here’s my brief comment:

While it’s helpful for retailers to develop e-commerce sales in markets where they don’t have physical stores, the results of this study shouldn’t come as a surprise. Familiarity with a local brick-and-mortar store (or even a local branch of a national chain) is likely to give the e-shopper confidence in the merchandise content and store experience, along with a way to deal more easily with returns. The rapid growth of BOPIS (“Buy online, pickup in store”) and related omnichannel initiatives will continue to drive this trend.

Bad timing? Amazon expands its tablet assortment

Amazon recently announced an expanded offering of tablets, in addition to its well-developed e-reader business. On a recent RetailWire post, I question the timing of Amazon’s continued push into maturing hardware categories outside of its “sweet spot”:

The line between tablets and smartphones is getting blurrier every day, hence the term “phrablet.” The size difference between the largest smartphones (like the Samsung Galaxy and the new iPhone 6+) and the smallest tablets (like the iPad mini) is causing the tablet market to mature, especially if a consumer doesn’t want to pay extra for connectivity other than wifi.

I don’t know how much market share is held by Amazon but it’s diving deeper into a low-growth category. (And the Fire Phone experience ought to be humbling, assuming Amazon is capable of humility.) I understand that Amazon needed to expand beyond the e-reader category as its footprint grew way beyond books, but I’m not sure a “me too” product will meet its goals.

Whole Foods develops a loyalty program

From a recent RetailWire discussion, here’s a comment about the news that Whole Foods is testing a loyalty program. My point is that Whole Foods has a terrific opportunity to redefine “loyalty” for many others in the retail industry:

Too many retailers equate “loyalty programs” with price offerings, overlapping discounts, and so forth. There is very little brand-building (or imagination) involved here. In the case of Whole Foods, it seems like a natural candidate to leverage the pre-existing brand loyalty of its customers, who do not equate “value” with the lowest price. Using data collection to discern shopping patterns and preferences will allow Whole Foods to provide targeted messaging to its most committed “foodie” customers without having to lean too heavily on pricing messages.

Omnichannel: Macy’s means business

As part of Macy’s recent quarterly update, it ran though a list of iniatives all intended to drive its omnichannel initiative. Without getting into the weeds on this blog post, it’s clear that Macy’s is far ahead of its competition in building a sustainable strategy. Here’s my recent comment on RetailWire:

While Macy’s has a challenge making their customers aware of all of these initiatives, it’s a high-grade problem to have. Their competitors are talking the talk about localized assortments, BOPIS, and so forth while Macy’s is walking the walk. Assuming they get the merchandise content right, these are sales drivers for years to come.