Tuesday, March 20, 2012 | Edited by Daniel Moores
||Retailers Look to the Department Store for Salvation
Shoppers Still Attracted by Brick-and-Mortar Experience
Whatever happened to the department store?
When they emerged in the late 1800s, department stores had everything from tea rooms to art galleries to live music, all housed in architectural splendor. For most of the 20th-century, department stores reigned as the epicenter of commerce and a hub of social activity. They were where people shopped for everything from electronics and home goods to clothes and appliances.
Then shoppers' focus shifted from downtown areas to the suburbs. Teenagers emerged as a new, powerful purchasing force. Department stores slowly relinquished their dominance to specialty stores that catered to niche consumers with specific tastes. The final insult was the Internet. The web gave shoppers the ability to easily compare prices, igniting a price war that put department stores at a further disadvantage.
Today, department stores are a shadow of their former selves and have shed many specialized services, such as gift wrapping and tailoring, while winnowing their product selection. Each is now known for just one or two merchandise categories, if it's lucky: Sears is synonymous with tools and appliances, while Macy's and Kohl's dominate in fashion and home goods.
Department stores accounted for 10% of total retail sales in the mid-1980s, 8% in 1990, 5% in 2000 and 2.4% in 2009, according to Craig Johnson, president at Customer Growth Partners, a consulting and research firm. As of 2011, department-store spending accounted for just 2.6% of total retail.
"Department stores gave up space without a fight to specialty retailers and the web," said Rahul Sharma, retail analyst and managing director at Neev Capital.
But it looks like some of the fight is coming back as department stores dust off old concepts and realize the power of their physical locations.
JC Penney, which has been one of the most pressured in the space, is undertaking a massive initiative to revamp its stores. By 2015 all locations will include more than 100 shop in shops, and a "town center" will replace old-fashioned jewelry counters.
"If we want to transform the department store we have to understand what happened. These stores were (a) pillar of the community. When we want a great product today, we go to a specialty store -- we might go to J. Crew, we might go to H&M, Uniqlo," said JC Penney's new CEO, Ron Johnson, at the unveiling of the retailer's strategic shakeup.
The 110-year-old department store has already seen success with shop in shops. Its Sephora mini-shops average sales of $600 per square foot, compared with $200 per square foot for the rest of the store.
"In the golden age of department stores, America's families came for more than just to shop," Mr. Johnson said. "They were able to have fun experiences and were offered a range of useful services. We are going to revive that excitement and convenience at JC Penney."
Target, often labeled a discount department store, is embracing a similar strategy. In May, it will unveil "The Shops," which will feature products from a rotation of independent boutiques in stores. "The Shops" will extend to the company's website and social-media outlets where consumers can learn more about the boutique owners via videos.
"Many retailers are coming to the realization that there's not much square-footage growth left. They can't continue to grow earnings or improve same-store-sales just by opening new stores," said Paul Lejuez, retail analyst at Nomura. "One way to (grow) is to revamp stores to drive traffic. Retailers have cash preservation from the recession. Store remodels were put on hold and now retailers are playing catch up."
Retailers have spent the past several years investing in e-commerce, mobile shopping and social outreach, but by incorporating all those elements into a compelling store environment, they may have finally found a way to reclaim shoppers forfeited to Amazon.
"Stores have a ploy they haven't really been taking advantage of -- customers can actually touch and feel the product and purchase it right away," Mr. Sharma said. "There's the ability for shoppers to buy something online and pick it up in the store. Retailers never made that big a deal about this or emphasized it enough. Department stores in particular have been remiss."
Macy's is now touting seamless integration of its "omni-channel" initiatives, bringing online shopping offline. One example is "Beauty Spots," now in test phase. The concept, located in the cosmetics department, allows shoppers to access information about a range of products without having to jump between brand counters. A sales associate is on-hand to deliver the products for purchase.
"By doing this, shoppers can actually see the product in person, but the process of finding that product is much like how you would shop online," explained Jim Sluzewski, a Macy's spokesman.
The idea of combining the ease of online shopping with the brick-and-mortar experience isn't lost on pure Internet players. Giants such as Amazon, eBay, Google and LivingSocial are all looking into the potential of physical stores.
Google is reportedly opening a store at its European headquarters, in Dublin. Amazon may be looking into its first physical location in Seattle. During the holiday season, eBay rolled out pop-ups in New York, San Francisco and London. And LivingSocial recently opened a 28,000-square-foot store that includes a test kitchen for classes, space for dance studios and craft workshops, and a bar suitable for mixology classes or tastings.
(Source: Advertising Age, 03/19/12)
||Customization, Healthful Foods Top 2012 Restaurant Trends
Healthful menu items, local foods and customization will be key sales drivers for restaurant operators in 2012, according to a forecast released last week by Chicago-based market research firm Mintel.
Mintel made predictions on menu and operations trends:
QSRs to lead industry sales growth
- Since consumers are more interested in where food comes from, restaurants will focus on American regionalism.
Among geographic claims on restaurant menus, however, "New York-style" showed up the most last year, followed by "Texas." For the first time, "Philly-style" surpassed "New England" in menu mentions.
- Menu labeling will lead more operators to offer "double-sided menus," offering something for everyone in terms of both nutrition and price. Customization will continue to drive consumer satisfaction, as guests are offered more opportunity to control their selections. The barbell approach to pricing will morph into a more consumer-focused tiered pricing approach, Mintel said.
- With an emphasis on fresh, unprocessed food, restaurants will offer and promote more "handmade-just-for-you" items.
- As restaurant chains grow globally, they will also develop more expertise in international flavors and methods, allowing for the import of ideas. McDonald's Chicken McBites came from Australia, for example, and both McDonald's and KFC are using self-serve kiosks in Europe. KFC is also offering espresso and Lavazza brand coffee in the United Kingdom.
- Steak and Caesar salad remain the top menu offerings, and they are still growing in popularity. Among burgers, cheeseburgers are climbing; sushi is losing ground to salmon; and quick-service operators are enhancing their breakfast sandwich lineups.
- What do customers want? About half of respondents said they'd like to see lower prices, and 29 percent want smaller portions, followed closely by the 28 percent who want more healthful menu options. The descriptors "fresh" and "made from scratch" were also of interest to the majority of restaurant goers, but the term "artisan" does not resonate. Only 28 percent said they were interested in the latter.
Sales growth in the foodservice industry will increase 2.8 percent this year to $416.4 billion, with limited-service restaurants leading the charge, Mintel said.
Adjusting for inflation, the increase will be nearer to 1.5 percent.
This year, limited-service restaurants are expected to see sales rise 4.1 percent to $219.1 billion, or a 2.8 percent inflation-adjusted increase.
Full-service restaurant sales are expected to increase 1.5 percent -- or an inflation-adjusted 0.2 percent -- bringing that segment to $197.2 billion, Mintel said.
In 2011, the overall foodservice industry grew 1.4 percent to $404.9 billion, or a decline of 0.2 percent when adjusting for inflation.
Limited-service segment sales rose 3.4 percent last year, or 1.8 percent with inflation. Full-service restaurants saw sales decline last year 0.7 percent, or a decline of 2.2 percent with inflation.
Although the economy remains challenging, the report noted improving unemployment trends, as well as increased disposable personal income levels and a more optimistic consumer sentiment.
And although menu-labeling laws are expected to come into play for restaurants in 2012, many chains have already developed more healthful options that aim to appeal to increasingly health conscious consumers, the report found.
Mintel surveys indicate that 41 percent of restaurant goers said menu labeling would not impact how they dine out, while 33 percent said they will order menu items that are more healthful overall and have fewer calories.
Looking at January, a survey by Mintel found that 65 percent of respondents who visited a restaurant that month said they plan to spend the same amount at restaurants in 2012 as they did last year.
About 12 percent said they plan to spend more, while 23 percent said they plan to spend less.
Still, 63 percent of respondents said it's too expensive for them to dine out regularly.
Of the 12 percent who said they will spend more, 59 percent said they would spend more at casual dining restaurants, followed closely, at 57 percent, by family dining.
(Source: Nation's Restaurant News, 03/13/12)
||The Millennials Check In
The hotel industry, struggling to recover from the depths of the recession, has begun to contemplate a group of travelers it sees as crucial to its economic growth -- those in their 20s to mid-30s who are obsessed with technology, social media and design.
Many hotel owners and operators are remodeling existing hotels or introducing new ones that offer free hotelwide Wi-Fi connections; large, welcoming lobbies with plush, comfortable furnishings; state-of-the-art fitness areas; in-room power consoles to plug in iPads, laptops and other devices; and stylish bars that spill into the lobby.
Some are also scheduling nightly social events, like happy hours and free wine tastings, aimed at luring the iPhone-toting generation to their hotels.
"All of the major brands -- Hilton, Starwood, Marriott, InterContinental -- have developed hip products that are targeted at the younger traveler," said Chris Klauda, a vice president at D. K. Shifflet & Associates, a travel and hospitality market research company.
Travel spending by these younger travelers rose 20 percent in 2010, making them the fastest-growing age segment, according to American Express Business Insights, though they still lag the baby boom generation in overall spending.
Hotels that ignore these younger travelers, said Mark Woodworth, president of Colliers PKF Hospitality Research, will be at "a very severe competitive disadvantage."
About a decade ago, the hotel industry was concentrating much of its effort on luring people who are now mostly in their 50s and 60s. The changes involved higher-quality beds, brighter lighting and bigger work spaces. And those travelers were loyal to brands that offered reliable, comfortable services.
Today, the Millennials, or Generation Y, seem to be seeking the opposite: the innovative and the off-the-wall attract their attention and their wallets.
"Interesting is more important than comfort," said Bjorn Hanson, divisional dean of the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University. "It's the reverse for baby boomers."
Mr. Hanson said wall-to-wall -- and free -- Wi-Fi service was not only demanded but expected. "High-speed Internet is almost like air to Millennials," he added, with most considering it as essential as beds and towels.
Hotel owners are also installing power consoles in rooms and public areas so that charging all those cellphones and laptops is easy and accessible.
"Gen Y'ers don't want to have to unplug lamps or crawl under the bed to get their laptops and P.D.A.'s plugged in," Ms. Klauda said.
The Plaza Hotel in New York has gone one step further, placing iPads in every hotel room. Guests can use the device to control the lighting, adjust the air-conditioning, order room service and read the morning paper.
Marketing and communicating through social networks are also important among hoteliers. When young travelers have a problem at a hotel, they are less inclined to complain to the hotel manager, as their predecessors generally do; they go online and post on Twitter about it. In early 2010, Starwood Hotels and Resorts Worldwide responded by setting up a team of about 20 people whose sole job is to monitor and respond to online complaints and comments.
Probably the biggest physical change has been to the hotels' lobbies. Executives are retrofitting lobbies with comfortable sofas and Art Deco furnishings.
"If Millennials are wearing shorts, a T-shirt, a baseball cap and athletic shoes, a lobby that has mahogany paneling, English hunting scenes and Oriental rugs doesn't connect as well," Mr. Hanson said.
Young travelers also tend to spend far more time socializing and working in the lobby than they spend in their hotel rooms. "We coined the phrase 'isolated togetherness,' because if you watch them in the lobby, a lot of them are texting -- but they're texting each other in the lobby," Ms. Klauda said.
Older travelers, on the other hand, often prefer solitude at the end of the day. They "like the face-to-face interaction during the day, but at the end of the day, we're done -- bring us our room service and leave us alone," said David Loeb, a senior research analyst at Robert W. Baird & Company, a wealth management firm.
Younger travelers also tend to visit three or four different restaurants and bars a night, so some hotels are opening up multiple bars and lounges with different themes at different times of the day to keep them in the hotel. Many also offer free daily events, including tea tastings, yoga sessions and wine tastings, said Raj Chandnani, vice president for strategy at WATG, an architectural design firm for the lodging industry.
The hotelier Ian Schrager, a founder of the Studio 54 nightclub, was a pioneer in creating designer hotels with hip nightclubs, like the Paramount, Royalton and Hudson hotels in Manhattan in the 1980s and '90s.
Starwood followed with its W hotels in the late 1990s and the debut of its Aloft brand in 2005. Other major brands have since jumped in, among them the InterContinental Hotels Group's Indigo brand, Hyatt Hotels Corporation's Andaz and Hyatt Place brands, and Marriott International's concept to turn its lobbies into so-called great rooms.
Gerard Greene, a former hotel analyst, said he felt so strongly about the need for designer hotels at affordable prices that he quit his job, sold his home in London and used cash from the sale to finance his dream.
Now, 10 years later, his brand, Yotel, has four hotels, including one in Midtown Manhattan that some guests have described as futuristic. That hotel has an airportlike check-in kiosk (there is no registration desk); social public spaces; Wi-Fi access, power consoles and entertainment systems that devices can plug into; giant Monsoon shower heads; and compact 200-square-foot rooms, which were inspired by airline cabins, that have floor-to-ceiling windows.
Yotel's other hotels are at the Gatwick and Heathrow airports in London and at Schiphol Airport in Amsterdam, and it is planning on new ones in Miami, San Francisco, Paris, Hong Kong and New York, at Kennedy Airport.
But could all of this be a passing fad that will fade as the travelers get older?
Mr. Greene said he was not concerned, comparing it with the Apple phenomenon.
"Younger people were the first to adopt the iPods, iPads and so forth, and now my mom has an iPhone, as do many older people," he said. "But the people who got it first were the younger people."
Similarly, he said he believed that older travelers would follow the young in hotel trends.
"My sense is most people think there's been a change," said John Fox, a senior vice president at PKF Consulting, "and it's a permanent change."
(Source: The New York Times, 03/12/12)
Daily Sales Tip: Shifting the Focus of Your Stories
Some sales professionals prepare for a sales meeting by getting all their facts in order -- their i's dotted and their t's crossed. In the process, they forget to talk to prospects in the most basic way that humans talk. They forget to tell stories.
It's a good idea to tie your stories into the benefits your product delivers. Part of the power of using personal stories in your presentations is that they reduce the information overload caused by a recitation of benefits and features. A good story captures the minds of prospects and takes them on a journey.
Some salespeople tell stories that focus on their companies, their products and how they will save their prospects time and money. The central character in those stories is their company and the product or service being sold.
These salespeople believe that if their prospects know as much about their company and its solutions as they do, they will buy. The problem with this type of story is that it's the same one being told by competitors.
Instead of telling your own corporate story, you need to tell prospects their story -- the one in which they achieve success.
It's a better idea to make the central character in your story your prospect. Your job is to take the story you tell and make it a story about your prospect that makes him or her feel that moving forward with your solution is the surest and safest way to go.
Source: Adapted from Conversations That Win the Complex Sale, by Erik Peterson and Tim Riesterer