Tuesday, February 15, 2011 | Edited by Daniel Moores
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Retailers on Quest to Rekindle the Personal Touch of a Bygone Era In days of yore, retailers knew their customers. Sales clerks sent invitations to store events, called when items of interest arrived and had Rolodexes crammed with notes about shoppers' favorite brands and styles. That style of shopping -- an intimate experience, not an anonymous one -- has long been thought dead, driven to extinction by the invasion of the big-box retailer. But now retailers are hoping to recapture some of the old magic. They're doing so by updating and expanding loyalty programs, which once rewarded shoppers only for frequent purchasing, and by offering locally relevant marketing and merchandising. "We've got a highly educated consumer who is probably more demanding than she's been in the past," said Martine Reardon, VP-marketing at Macy's. "She wants to go to a retailer that understands her, is really relevant to the lifestyle she's living, and really does pay attention." My Macy's, now in its third year, seeks to be more relevant to consumers by stocking shelves with items popular in local markets -- Elvis Christmas ornaments in Memphis, Tenn., and electric pizzelle presses used to make the Italian cookie in Parma, Ohio, for example. The program also extends to marketing. Events celebrating the Kentucky Derby have been held in advance of the race at Louisville, Ky.-area stores. And big wins for local sports teams are recognized with ads in the hometown newspaper. This month, Macy's Star Beach Party program will launch in Chicago, targeting college students from 10 area campuses including Columbia College, Northwestern and Loyola. The program pairs texting and pop-up events to lure students shopping for spring break fashions and, eventually, interview suits, the retailer hopes. The program was conceived by a regional executive who saw an untapped audience of 65,000 college students, a Macy's spokeswoman said. Meanwhile, Food Lion has launched My Food Lion, inspired, in part, by My Macy's, said Cathy Green, president of the Food Lion family of banners, during a recent National Retail Federation conference. The program allows customers to create a profile personalized with relevant specials and recipes. Worth noting: My Macy's and My Food Lion are separate from those retailers' loyalty programs, Macy's Star Rewards and Food Lion's MVP Card. The former focuses on understanding the customer and delivering desirable products and information, Ms. Reardon said. The latter is meant to reward customers for frequent shopping. Retailers are also getting savvier about how they use customer information. PetSmart uses its database of email addresses to send out targeted emails with editorial content, as well as coupons. A recent note to reptile owners who typically buy crickets extolled the virtues of worms, included a link to information on reptiles and provided a $2 coupon for any live worm purchase. "Crickets are an important part of a reptile's diet -- but did you know that worms are an even better source of energy?" the email said. "Come on in and ask a store associate to help you design a diet that's just right for your reptile." Likewise, Sears Holdings has overhauled its loyalty program in the past two years, morphing it into Shop Your Way. The program, which rolled out nationwide in November 2009, now counts more than 50 million members. Shoppers earn 10 points for every $1 spent in store or online and get access to bonus offers and prizes, as well as perks, such as the ability to return items without receipts. The program is cost-effective and gives Kmart and Sears the opportunity to build a robust database of consumers. "The spectacular growth of Sears' Shop Your Way program is testimony to the ongoing power of a very simple, classic idea: rewarding loyalty based on customer behavior," said Lawrence Kimmel, CEO of the Direct Marketing Association. More robust databases and better targeted communications will go a long way toward helping retailers recapture the magic of retailing days past. But it's not easy or simple. In the fall, Macy's sent out a mailing with upward of 30,000 different versions. Using information gleaned from its database, the retailer varied the page count and the items promoted. The catalogs varied in size from 32 pages to 76 pages, featuring additional pages of shoes for footwear fanatics or children's clothing for moms. "What we tried to do was really customize (catalogs) to what the customer is really looking for and her past behavior shows she might want," Ms. Reardon said. "I still have circles under my eyes from it. It was pretty resource intensive. But we learned a lot, and we are going to do similar things in the future." (Source: Advertising Age, 02/14/11) |
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Outlet Stores: Do They Offer the Best Deals? It takes at least an hour for Renee Wyatt to drive from her Palm Beach County (Fla.) home to the Vero Fashion Outlets, so she makes the most of the trip. "I print out the map (of the shopping center) at home and highlight where I want to go, so I don't waste time," said Wyatt. "This is power shopping; I try not to bring kids, and I always stop by the management office to get the book of special offers." Outlet malls have long beguiled bargain hunters like Wyatt: They lure shoppers with the possibility of finding name-brand items for up to 65 percent off, beckoning consumers to make the drive to the out-of-the-way shopping center in hopes that they'll score a pair of Nike shoes for half price or a Coach handbag at a fraction of the retail cost. Indeed, there are some good deals to be had in outlet stores. But finding them may not be simple. "When the consumer goes to an outlet center -- to the Gap outlet or the Ann Taylor or the Coach outlet -- what they're expecting is a deal," said Howard Davidowitz, chairman of national retail consulting and investment banking firm Davidowitz & Associates Inc. "Many times, in a consumer's mind, they think they'll get the same merchandise when they go in a Coach outlet store as you'd find in the retail store, but that's usually not the case." Davidowitz said outlet shoppers dream of finding a $1,200 purse marked down to $300 -- and such deals occasionally do happen. But these days, most items found in outlet stores were made specifically for those stores. Lisa Quier Wagner, a partner at EWB Development LLC, the leasing and marketing arm of Vero Fashion Outlets, said that a number of outlet centers in recent years have run ad campaigns explaining the truths and myths of outlet shopping. "Twenty years ago, when I started in the business, outlets were for getting rid of excess goods," Wagner said. "Then retailers realized that the direct-to-consumer channel is lucrative to them, so they started making items specifically for outlets, geared toward the more moderate customer." Take the Coach outlet stores. In the third quarter of 2010 (which is the company's first fiscal quarter of 2011), 87 percent of the merchandise at Coach outlet stores was manufactured for the outlet. The rest was made up of items that came from the retail stores -- perhaps excess inventory, or returns, or items that were no longer in season. The same period a year ago, 76 percent of the outlet merchandise was outlet-specific. Luxury retail analyst David Wu of the Telsey Advisory Group said that the shift for many of the higher-end retailers was a conscious decision to protect their brand name. "Some companies are realizing that discounting does hurt the brand," Wu said. "They saw that consumers were bothered that they'd buy a Gucci bag or a Coach purse for full price and then see it marked down later." But at the same time, outlet stores provide a way to get the company's brand out to more consumers, Wu said. In general, items made for the outlets have a higher margin for retailers because they are made using cheaper materials or utilizing simpler designs or made in countries with cheaper labor, experts say. "It's impossible to offer something that's the same quality for a cheaper price," Davidowitz said. "But that doesn't mean it's not a good value. I'm not saying you're getting ripped off. If you buy something from Coach, they're going to make it carefully. But the outlet bag is just not the same quality, won't have the same details, as the one at the retail store for $1,200." In many cases, consumers will be hard-pressed to find much difference between outlet merchandise and items at the full-price store. Pat Slaven, a textiles expert for Consumer Reports, said often there are only small differences between items, such as the thickness of the fabric or the number of embellishments on a shirt. But while much of the merchandise is made for outlets, there are certainly deals on merchandise from the full-price stores to be had as well, whether it's an item that is no longer in season or style at the full-price retail store or an overrun of inventory. "These past few years, the consumer has been hurting very badly," Davidowitz said. "That motivation to get a deal has never been stronger." (Source: The Palm Beach Post, 02/04/11) |
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Study: Gens X, Y Rely On Research, Less On Loyalty Here's some advice to brands putting the onus on loyalty to drive sales: "Be afraid...be very afraid." AMP Agency, a Boston-based branding firm, has just completed a study of consumers, "Inside the Buy," that suggests that actually very few consumers between the ages of 25 and 49 are moved to purchase by habit, or sentimental considerations for a brand. The study, based on a Fall 2010 poll of 865 Gen X and Y consumers, looks at what happens in the "consideration phase" of the purchase path, where the Web and what AMP found to be a "new/modern path" to purchase hold sway. The quantitative and qualitative study also addressed a changing view of brand loyalty. The firm found that just 3% of consumers say they are loyal to a particular brand and never buy anything else. The study, which looks at five product categories -- baby products, consumer electronics, food and beverage, health and beauty, and fashion -- finds that the very idea of loyalty has changed for 97% of consumers. "New consumer behavior is redefining what we view as 'contemporary loyalty'," said Allison Marsh, VP, Consumer Insights at AMP Agency. "With more information, consumers have seized control and are more open to the wide choices in the marketplace." Forty-three percent of respondents polled by the study said they do some type of research before they buy. By product category, 64% of people AMP surveyed said they do research before buying electronics; 44% said they do research when buying baby products; 31% do so for health and beauty; and about a quarter said they do "some type of research" before making a decision in both the fashion and food and beverage categories. According to the "Inside the Buy" study, men spend more time doing pre-purchase research in areas pertaining to personal style and appearance. Forty-six percent of male respondents said they always research fashion purchases, while only 32% of females said as much. For the health and beauty category, 37% of male respondents said they always research products, while a quarter of female respondents said they did so. Ninety-four percent of consumers said online research positively influenced their decision to make a purchase, and nearly four in ten said they bought a product because of the research they found. Paradoxically, given the fire hose of content the Web disgorges, 30% of those polled said they cannot find enough of the information they are looking for online, and only 4% said they were overwhelmed by the amount of research available to them in a particular category. About half of consumers go to a brand's Web site for pre-purchase research, while 46% said they go to a retailer's Web site initially. Forty percent said they visit third-party review sites, and 38% said they go to social media Web sites. Almost three-quarters of respondents said their first choice is general consumer reviews, which is about twice the importance they put on expert reviews on product durability and functionality. In fact, half of respondents said online consumer reviews most influenced their purchase. Forty-one percent said feedback from a friend was important, and 37% were influenced by the number of positive reviews they read online. "By identifying the steps involved in the consideration process, we found that consumers are being strongly influenced by information and opinions shared online," said Marsh. (Source: Marketing Daily, 02/07/11) |
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