Retail Weekly Roundup 5

by Deepak Sharma on Sunday, December 30, 2007

1. Why we should get retail right

Productivity in the retail sector is critical for understanding the relative success rates of national economies.

For example, India’s antiquated retail sector has yielded bizarre market distortions. “In India, the price of ready-made shirts from domestic manufacturers is about 35% higher than the price of a tailor-made shirt,” Lewis says. “The manufacturing cost of the shirt is about the same as the tailor-made price. However, the manufactured shirt has to get to the consumer. In India, that’s a huge problem because of the undeveloped retail sector.”

Lewis points out that productivity gains in retailing have dynamic effects throughout a nation’s economy. For example, when most Americans and others think of the drivers of the US economic performance, they immediately think of successful tech firms such as Microsoft and Intel, or innovative financial services players such as Goldman Sachs. However, it is efficiency gains in the retailing sector that powered much of America’s economic performance in recent years.

“Evolving to a more productive retail format mix,” Lewis says, “has large spillover effects in improving the productivity of consumer goods manufacturing and wholesaling.” The effect is enormous. Improvement in US retailing “was the single largest contribution to productivity acceleration in the US economy in the late 1990s,” he says. It trumped that of even the much-heralded Silicon Valley.

How is this possible? Lewis points out that “large-scale retailers improve their efficiency in part by buying in bulk from efficient, large-scale manufacturers. Thus, world-class British supermarkets, Carrefour and Wal-Mart have worked with suppliers in many countries to increase their scale of operations…” These efforts have “improved productivity significantly in the manufacturing sector itself”. What’s more, Lewis continues, “world-class retailers have reached a scale that allows them to bypass the wholesale sector and buy directly from manufacturers. This...has put enormous pressure on wholesaling to improve its performance.” Thus, greater efficiency in retail yields greater efficiency and productivity in sectors such as manufacturing and wholesaling. These beneficial spillover effects can be further found in transportation, agriculture, textiles and more.

2. Holiday Online Receipts Are Strong, but Reflect a Decline in Rate of Growth

The latest mixed-bag of news for retailers hails from cyberspace: holiday e-commerce sales were robust, but showed their slowest-ever growth, industry analysts projected.

The sales growth of 19 percent, while enviable for traditional retailers, was down sharply from the 25 percent to 30 percent growth rates of recent years. Retail industry analysts said the deceleration underscored a tight economy, but also reflected changing consumer and retailing habits.

And it is consistent with a broader slowdown in the growth rates for Internet retailing — making the holidays of 2007 a vivid example of the changing growth curve for online sales.

When the receipts are tallied from this holiday, American consumers will have spent around $29.5 billion at Internet shops, according to projections published by comScore, a market research firm. “The growth rates for previous years were clearly much higher,” said Andrew Lipsman, spokesman for comScore. The research firm did not have growth rates before 2003, but Mr. Lipsman suspected that they were 25 percent or more.

3. RFID poised for the big time in 2008

Next year will witness the spread of RFID applications into familiar, everyday settings, while consumer electronics, wireless technologies and security requirements will continue to benefit from the integration of RFID.

4. How Wal-Mart stole Christmas

After years of being trumped by Target on holiday sales, giant retailer is poised to come out on top. Analysts point to more effective marketing and pricing.

Reliance Retail's RFID Plans

by Deepak Sharma on Wednesday, December 26, 2007

RFID Journal is reporting on Reliance Retail's RFID Plans.

Reliance Retail, one of India's largest retailers, has been testing RFID technology and is preparing applications for use at a large number of its hypermarkets and supermarkets, as well as its electronics and convenience stores. The company has already equipped these stores with data ports and wireless computer networks able to support RFID systems.

...

Reliance Retail has drawn up plans for using RFID to support its operations. The company has developed five RFID-deployment scenarios, including the tracking of reusable crates of fresh food; item- and case-level tracking of high-value goods; and pallet and case tagging of various goods.

Reliance has performed proof-of-concept tests using passive EPC Gen 2 UHF RFID tags to track crates of fresh foods and cases of high-value goods. The company managed to achieve above 90 percent read rates and found that RFID helped it reduce shipping and receiving errors while increasing productivity. For the test to track individual items and cases of high-value goods, Reliance Retail has recently conducted a pilot between one distribution center and one Reliance Digital store. This pilot is still under evaluation. Reliance is now working with various RFID hardware and tag suppliers to obtain improved read rates for the tracking of fresh-food crates, as well as planning a permanent rollout of other scenarios upon successful completion of the pilots.

With Reliance Retail's plans to have their own supply chains, Reliance could very well be the first retailer in India to implement RFID across stores and it's supply chain.

Technology helping Retailers

by Deepak Sharma on Tuesday, December 25, 2007

IHT has a great article on how Technology is helping retailers better customer service and thus in turn increase sales. It also touches on the delicate subject of Technology replacing jobs. Productivity in retail sector has increased faster than in any other industry.

An Associated Press analysis of Bureau of Labor Statistics' employment data found that department stores have slashed 247,100 jobs since June 2001, when employment in that sector peaked. The number of jobs at food and beverage stores has fallen by 118,800 since April 2000.

Technology that allows companies to produce more goods or provide service to their customers with fewer workers or with their current staff is a factor in some job losses, economists say. A second is consolidation when a company buys out a rival or merges with a competitor.

...

Productivity — the amount a worker produces for every hour on the job — has grown at a faster rate in the retail industry than in all industries across the economy. Had this not occurred, there now would be nearly 4.5 million more jobs in retailing, according to Mark Zandi, chief economist at Moody's Economy.com. "Arguably it has been hard on workers," Zandi says.

Yet companies say a reduced work force is not the main goal of technological innovations.

The article touches on some math involving Self-service checkouts:

The retail industry spent $380 million on installing new self-service checkout units in 2006 and is expected to rise to $457 million (€318 million) this year, says Greg Buzek, president of IHL Consulting Group, a research and consulting company that specializes in technology for the retail and hospitality industries.

Making the investment in self-checkouts may not necessarily yield a big payoff for the retailer.

The average self-service checkout machine costs $21,000 (€14,600) and has a typical life of five years, Buzek estimates.

In contrast, a regular cash register costs on average $4,000 (€2,800) and has a longer life — typically nine years, Buzek says. Often, the self-service checkout machines are clustered in a group of four at stores, with one store clerk designated to oversee the self-checkout squad, he says.

The average wage of a grocery store cashier is $19,060 (€13,250) a year, according to the Labor Department.

Tale of two Retailers

by Deepak Sharma

Weak economy spurred by Subprime crisis has a different meaning for Target and Wal-Mart. While Target is struggling with slipping sales, Wal-Mart has readjusted itself with it's even more discounted merchandise and has seen sales increase. In what is being dubbed as the "trading down within the store", customers are buying lower priced items with more discount.

Rosa Setkiewicz, 50, stopped at the Target in Jersey City, New Jersey, recently to stock up on Arm & Hammer baking soda, Clorox bleach and Downy laundry detergent — "things that are cheap," she said as she loaded the trunk of her Toyota Corolla. "I have cut back a lot on clothing and things that are not necessary."

Bill Dreher, an analyst at Deutsche Bank Securities, dubbed this phenomenon "trading down within the store."

Target executives acknowledge there is some truth to the theory. But the bigger issue, in their view, is that the number of customers walking into Target's stores has dropped. They see that as a sign not of any tactical failure on Target's part, but of rising doubts among consumers about the economy.

"I think people are being more conservative in an environment where they are uncertain," said Susan Kahn, vice president of communications at Target.

Wal-Mart also had not made things easier for Target.

Target also faces a tough adversary this year in Wal-Mart, which has staked its holiday season on heavily promoted discounts. The chain held early-morning, door-buster sales every weekend in November in an effort to steal the thunder from its rivals, which generally waited until the day after Thanksgiving to stage such sales.

Target countered with a display of merchandise priced at $1 in the lobbies of its stores, sending a strong low-price message as consumers walked in.

Nevertheless, Todd Slater, a retail analyst at Lazard, said that "Wal-Mart may be better positioned for an economic downturn than Target, because it is the price leader." He added that "Target is more the fashion leader; it's more upscale."

More:

Target Says December Sales May Fall, Missing Forecast

Last-Minute Buyers Give Retailers Relief

Indian Retail - RFID Offerings from HP

by Deepak Sharma on Saturday, December 22, 2007

The growth of Organized Retail sector in India is bringing new focus from global technology companies. Sometime back I had blogged about IBM's launch of customized Store Integration Framework (SIF) solution for Indian retailers. HP is now in the news for launching it's RFID offerings for Indian Retail.

Hewlett-Packard has launched radio frequency identification (RFID) products for the Indian retail market. Built on its internal RFID expertise (28 sites fully operational with RFID worldwide), HP has extended the RFID services to Indian customers as part of their TSG portfolio.
The new offerings designed specifically for the supply chain would assist retailers in reducing stock outages, asset shrinkage and enhancing supply chain visibility. Through RFID, retailers can experience improved supply chain efficiencies leading to greater accuracy of inventory tracking, faster through-put and reduced demands for labour-intensive stock checks.
RFID has matured in sophistication and is now increasingly used across a wide range of industries and applications as a critical technology tool to enhance business efficiency. RFID smart tags provide real-time data from the supply chain, into the stock room and out to the selling floor. Over the next few years, HP expects its usage to be even more pervasive as consumers increasingly recognise the value and convenience enabled by RFID, it will become a mainstream feature of tomorrow’s retail world.

I believe Indian Organized Retail Sector is a goldmine yet to be explored fully by global Retail Technology companies. We should be seeing more such news coming in the next few months.

"Check Out", The Wal-Mart Blog

by Deepak Sharma on Tuesday, December 18, 2007

Wow, Wal-Mart has started a new blog called Check Out. The blog is authored by Wal-Mart employees blogging on the topics of Gadgets,Games, Lawn & Garden, Movies and sustainability - almost as varied as the content of your shopping trolley. So far it looks to be a very decent effort. RSS Subscribed.

Recession?? Probably, Not yet.

by Deepak Sharma on Monday, December 17, 2007

With all the gloomy Sales forecasts/news and falling consumer confidence, you would tend to feel that Recession is around. But hopefully this will bring some cheer to you all. Bloomberg has a piece on Retail industry executives buying their companies shares (Insider trading).

Limited Brands Inc. Chief Executive Officer Leslie Wexner and eight other executives bought a record amount of stock last month after prices fell to a four-year low. Dillard's Inc. director Warren Stephens made the biggest insider purchase ever as shares of the Little Rock, Arkansas-based department store chain headed for the steepest decline since at least 1980.

Cambiar Investors LLC, Royce & Associates LLC and Becker Capital Management Inc. say insider buying foreshadows a rebound. The last four times executives added to their holdings, the Standard & Poor's Supercomposite Retailing Index rose an average 9.9 percent in the next three months, topping a 6.2 percent average rise in the S&P 500 Index. Retail company officials increased their investments by $346.4 million since the start of November, according to data compiled by Bloomberg and InsiderScore.com.

...

"Our insider sentiment reading in retail is the most bullish we've seen,'' said Ben Silverman, 32, the Princeton, New Jersey-based director of research at InsiderScore, which tracks insider transactions for more than 350 institutional investors. ``The signal that we're seeing from retail insiders is that we're not on the brink of that recession and maybe they really believe that spending by consumers will pick up.''

My take, the retail stocks have taken some beating in recent time and with current low prices, there will be some upside to them. So, in a way, there is value to the Retail stocks.

Small Stores: Smallness is their biggest strength

by Deepak Sharma

Small shops are using their smallness to gain business over big guys like Wal-Mart. NYTimes has a story (free registration reqd) on how small retail shops are using new marketing tactics like internet presence, advertising in newer mediums etc with a whole lot more focus on Customer service to gain customers.

Small retailers around the country are using a host of marketing tactics, from the usual extra emphasis on customer service to putting out free cider and cookies. But their most important step may be that they are trying to make the most of their inherent advantages over larger competitors.

...

In addition, store owners say they often hear directly from their customers about new products and then quickly see how the items sell. A year ago, Mr. Choron said, customers began telling him how much they liked an electronic dice game called LCR. So, he started stocking it. A week later, it sold out. He reordered, and it sold out again in a week. Now, he said, he keeps a steady supply of the game by the cash register. “You’ve got to pay attention to the feedback,” he said.

Small retailers also have an advantage over bigger competitors in other areas, particularly customer service. This year, said Mandy Putnam, vice president of TNS Retail Forward, a retail market research firm in Columbus, Ohio, “Stores are upping the ante with more personalized customer service, particularly if they’ve depended on that for sales in the past.”

And who wins amongst all this competition, customers. :)

Reliance Retail Formats

by Deepak Sharma on Thursday, December 13, 2007

How many formats should a Retailer have? While in the west, retailers have not more than 4-5 formats, organized retail players in India like Reliance Retail  have 8 and still growing. Reliance already had the following formats:

Reliance Fresh - Grocery (focue on Fresh fruits and vegetables, staples, groceries, fresh juice bars and dairy products)

Reliance Mart - HyperMarket

Reliance Footprint - Footware and handbag store

Reliance Digital - Consumer Electronics

Reliance Trendz - Apparel

Reliance Wellness - Wellness products

Reliance Jewel - Jewellery Store

Now Reliance has launched a specialty store called Reliance TimeOut which will stock books, music, stationery, toys and gifts. Apparently there are plans for major restructuring across these various Reliance retail formats.

It has been a year since Reliance Industries' retail plans were made public. It started with the Reliance Fresh stores in Hyderabad in November last year. Now, Reliance Industries is looking to restructure its retail business. We hear that there will be 26 distinct subsidiaries, going forward. Reliance Fresh is already being spun off into the independent firm Ranger Farm, and may be shifting its focus slowly but surely from fresh fruits and vegetables.

12 months after Reliance Retail unveiled its first store-Reliance Fresh in Hyderabad, the company is now looking at some heavy duty restructuring. While RIL officials refused to comment, CNBC-TV18 learns thatReliance Retail is gearing up to split its business into 26 independent subsidiaries, within the next 90 days. These subsidiaries will be identified on the basis of formats, services or product categories.

Each company will operate with a separate profit and loss account with an independent board. Sources say that there will be more than 10 CEOs, each heading between 1-4 entities.

I would throw this question to all of you. How many formats should a retailer have? What kind of strategy applies best in such a case?

Indian Organized Retail's Supply Chain problems

by Deepak Sharma on Wednesday, December 12, 2007

While the organised retail market in India will more than double in the next three years to touch 30 billion dollars from 14 billion dollars at present, the Indian Retailers are struggling with less than optimized Supply Chains. The supply chain in India is underdeveloped, so says the report titled, "Winning with Intelligent Supply Chains" by FICCI and Ernst & Young.

According to the report, which was released by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young, “the most significant challenge that impedes the development of an efficient and modern retail sector is an underdeveloped supply chain”. Commenting on traditional supply chain networks, it says that the chain, a partially informed push/ pipeline model with a unidirectional flow, is expected to transform into a fully informed network model with bi-directional flow of information.

The report also points out to the huge shortage of experts in this area, coupled with the fact that only 64 per cent of organisations have a full fledged independent department to manage the supply chain.

...

The report calls for informational and technological intervention to tackle the current bottlenecks by using supply chain technologies like Radio Frequency Identification, barcode scanners, Point Of Sales terminals, handheld devices and software packages. It reveals that 85 per cent companies use IT to capture and analyse real-time information for effective decision making.

The other challenges that the Retail Industry in India faces include:

- Inadequacies in infrastructure such as lack of high quality road networks, power shortages and insufficient storage spaces

- With availability of retail space serving as a key enabler, the current rise in property prices and rentals may render a few retail business models unviable

- The retail industry loses to the tune of US$120 to US$130 million every year in frauds, thefts and employee pilferage, shop lifting, vendor frauds or inaccurate supervision despite using standard and modern security features

- Multiple taxes at the federal and state level

- Lack of clear policies (especially on the entry of foreign retailers)

- The industry also faces a huge shortage of experts in areas such as supply chain and store management

- The most significant challenge that impedes the development of an efficient and modern retail sector is an underdeveloped supply chain

Best Retail Software Vendors in 2007

by Deepak Sharma on Tuesday, December 11, 2007

RIS News has released 2007 RIS Software LeaderBoard ranking of the top 45 application firms in retail. SAP, Oracle and Microsoft find themselves in the top ten with other software firms such as Tomax, Micros Retail and NCR.

SAP and Oracle finished in a virtual tie at the top of the overall LeaderBoard, which ranks application firms based on a satisfaction survey by retailers. The remaining firms in the top 10 are: Celerant, Micros Retail, ECRS, NCR, NSB, Microsoft, Epicor|CRS and Tomax.

New to the LeaderBoard this year are cross-tab breakouts that separate end-to-end providers from point solutions and billion-dollar giants from million-dollar specialists. It also separates voters by such segments as mid-tier, tier one, grocery, apparel/footwear and specialty retailing.

Heading the tier-one voter list are Oracle, SAP and Micros Retail. Among mid-tier voters, the top three are SAP, Oracle and Celerant.

In the broad-suite category, the top three are SAP, Oracle and Celerant, and in the targeted-solution category the top three are Reflexis, Cornell-Mayo and DemandTec.

Among specialty retail voters, Oracle and SAP are tied at the top, with Micros Retail coming in next. Grocery voters put SAP at the top followed by Oracle and Microsoft. Apparel/footwear voters selected SAP, Celerant and Oracle as the top three.

Since retailers seek application suites now more than ever, the Retail Concentration category is a breakout list of rising importance because it rewards broad-suite vendors by giving them one point for each module they offer in the retail vertical. Oracle and SAP topped this list in a tie. They were followed by Micros Retail and Tomax.

New Interesting Retail Blogs

by Deepak Sharma on Saturday, December 08, 2007

Sometime back I had pointed out few good retail blogs I came across. In this post I will point out few more interesting Retail blogs. There is so much learning to do by reading these blogs. I hope you all agree with me:

1. Retail, in the eyes of everyday customer

2. The Power of Retail - Blog by Shalini Bahadur, a retail analyst and researcher based out of India.

3. Retail Bridge - Blog with top news from the retail sector including the latest sales strategies, installation tools and methods, plus top training tips.

Hot 100 Retail Web Sites

by Deepak Sharma on Thursday, December 06, 2007

Internet Retailer has a feature article on Hot 100 Retail websites. The websites were rated using Gomez performance testing methodology on metrics such as Response Time, Availability and Consistency. Measurements were calculated 24 hours a day from October 29, 2007, through November 6, 2007.

Here`s the bottom line about being a market leader: It`s not just about the bottom line.Market leaders in e-commerce stand out in the crowd because, among other things, they are innovative and engaging, create striking and effective site designs, do something critical such as site search better than the rest, take risks on new concepts and technologies such as social networking and Ajax, set trends such as m-commerce rather than wait and see, and know their customers extraordinarily well, exceeding their desires and needs. These are among the qualities, which ultimately can lead to a healthy bottom line, that vaulted e-retailers into the Hot 100.

One good thing you can see out of this study is what technology/vendors are these Retailers using. For e.g. Ace Hardware uses GSI Commerce's Order Management software, Home Depot uses Escalate Inc's, AE.com and JCrew uses Art Technology Group Inc etc.

Retail Weekly Roundup 4

by Deepak Sharma on Sunday, December 02, 2007

1. This Software Makes Sure The Price Is Right

A central challenge for any seller is whether to boost profit by raising prices, or to make up for low prices with increased sales volumes.

Technology's bid to help with this challenge has created demand optimization software. Such programs help retailers and consumer goods makers set optimal prices for products. Such software also is used to calculate markdown prices to clear out older wares.

DemandTec DMAN of San Carlos, Calif., is among the companies showing growth in this rising niche.

2. One in five Australian retailers plan IT infrastructure overhaul

IT spending in Australia's retail industry will top AUD$1.54 billion by the end of 2007 with the market continuing to grow at a cumulative growth rate of nine per cent per annum through to 2010.

Springboard Research A/NZ country manager, Phil Hassey, said the market will reach AUD$1.96 billion by 2010.

Hassey said that after focusing on driving customer satisfaction, increasing retention, and expanding business, IT is the highest investment area for most large and medium-sized retailers. "Our data also shows that one in five Australian retail companies are on the verge of an IT infrastructure overhaul, and are in the process of replacing legacy systems with more modern and cutting-edge technology," he said.

3. Finding a job in retail may not be so simple

It's harder than you think to get hired these days.

This isn't about fancy jobs that require an advanced degree and offer solid benefits. Think of entry-level jobs at Whole Foods, Home Depot or Best Buy.

Ask Alex Frankel, 37, a Brown University graduate. Those three retail chains turned him down.

As surprising and demoralizing as that was, it was great fodder for his book Punching In: The Unauthorized Adventures of a Front-Line Employee.

Frankel went undercover to report on the corporate culture of some of the county's leading retailers. He picked jobs at places known for their highly controlled workplaces.

Virtual World & Retailer's Strategy

by Deepak Sharma

Real-lfe retailers are setting up virtual stores on 3D virtual worlds such as Second Life. Retailers like Amercian Apparel, Sears, Circuit City are already there. With around 11 million residents as of date and about 40000 users online at any given time, Second Life provides Retailers a platfrom to engage with their customers in a unique way.

According to a recent report by Gartner titled, "Predicts 2008: How Shoppers and Technology Will Change Retail", 20% of the world's largest retailers will launch a presence in virtual worlds or online games by 2010. This they will do to study, learn and anticipate the impact of virtual worlds on the retailers' overall businesses.

Commerce is not much of a factor so far but something that will evolve over time and provide multi-channeling options for retailers.

Companies like Brookstone have opened 3D stores (outside Second Life) and are selling real mechandise customers can buy.

The virtual store replicates the look and layout of a real store. Customers can move through the aisles and browse and zoom on products using a mouse and keyboard. Detailed information is available by stopping in front of an item.

See these videos to experience navigating through the Virtual stores.

Related Articles:

Awaiting Real Sales From Virtual Shoppers

Second Life for retail chains

Second Life Lessons

Black Friday brings cheer to Retailer's Holiday Plans

by Deepak Sharma on Monday, November 26, 2007

Reports have started trickling in reporting better Black Friday sales numbers this year as compared to the same period last year. Accroding to comScore Black Friday Online sales grew by 22% to $531 Million.

comScore, Inc. , a leader in measuring the digital world, today released an update of holiday season e-commerce spending covering the first 23 days (November 1 - 23) of the November - December 2007 holiday season. More than $9.3 billion has been spent online during the season-to-date, marking a 17- percent gain versus the corresponding days last year. Online retail spending was strong on both Thanksgiving Day (up 29 percent to $272 million) and "Black Friday" (up 22 percent to $531 million), outpacing the season-to-date growth rate.

    2007 Holiday Season To Date vs. Corresponding Days* in 2006
Non-Travel (Retail) Spending
Excludes Auctions and Large Corporate Purchases
Total U.S. - Home/Work/University Locations
Source: comScore, Inc.
Billions ($)
Holiday Season to Date 2006 2007 Pct Change
November 1 - 23 $7.98 $9.36 17%
Thanksgiving Day $0.21 $0.27 29%
"Black Friday" (November 23) $0.43 $0.53 22%

* Corresponding Shopping Days, Not Calendar Days

According to another report based on a survey conducted by NRF,


Retailers attracted 147 million shoppers over the three-day holiday weekend, up 4.8% from last year, according to a survey conducted by the National Retail Federation. Black Friday's results were especially impressive. About 14.3% of all Americans were out shopping before 4 a.m. on Black Friday, up from 12.4% in 2006, the federation estimates. And ShopperTrak RCT, which tracks the activity at more than 50 million retail outlets, estimates that Black Friday sales rose 8.3% from last year's level. "The Black Friday outpouring should have [retailers] breathing a sigh of relief," says Bill Martin, co-founder of ShopperTrak.


Now all eyes are on Cyber Monday.

Retail Weekly Roundup 3

by Deepak Sharma on Sunday, November 25, 2007

1. Product recommendation software to aid cross-selling offers

BeallsFlorida.com, the online arm of Beall’s Inc.’s Bealls Department Stores, has converted 52% more shoppers to buyers through its cross-selling merchandising offers with a new automated product recommendation application, the retailer says.

The Intelligent Offer product recommendation application from Coremetrics Inc. is designed to produce cross-selling offers based on an automated analysis of the products browsed and purchased in every visitor shopping session. It replaces a manual system at BeallsFlorida that presented cross-sell items based on “common sense” groupings of products, such as dishes from the same pattern or apparel items from the same line.

2. Retailers Off to a Bumpy Start Online on Black Friday

- Technical Quality at 30 Leading Web Sites Measured by Keynote Indicies

- One-Third of Retail Sites Measured Struggle with Pressures of High Holiday Traffic

- Industry-Wide Online Slow-Downs Impact Search and Check-Out Processes

- Keynote to Monitor Retail Sites Throughout Holiday Season

3. Wine.com Social Networking Site

Building on its premise that the more consumers know about wine the better, Wine.com has launched a community site designed to generate traffic as wine enthusiasts share information on their personal preferences. “The web is going social, and wine is a social category, so if you’re Wine.com you better have social community features,” says CEO Rich Bergsund.

...

The community site is starting out with features such as wish lists, “send to a friend” e-mails of wine reviews and selections, and the personal wine lists of community members. While checking out a member’s wine list, shoppers can click to buy any of the listed wines available on Wine.com.

Manage your Gift Cards

by Deepak Sharma on Saturday, November 24, 2007

In this holiday season, you may be getting Gift cards which you may never use or you may use it partially with some amount still remaining in the cards. According to this story on TechCrunch:

Gift cards are expected to be the most widely-given gift this year, with 69 percent of consumers planning to buy them according to one survey. The annual value of gift cards in the U.S. is estimated to reach $100 billion next year, and about 27 percent of people who get a gift card still have not redeemed it one year later. That came to $8 billion in unredeemed money in 2006.

A new startup called Leverage has a solution to this problem. Leverage allows registering all your Gift cards, manage balances and even earn interests on the balances. Among other things you can:

- Purchase gift cards from top retailers.

- Earn interest on gift cards you register with Leverage (PS: Some fine print reading involved here)

- Swap gift cards for free (Again, some fine print reading here too)

- Manage gift card balances, frequent flyer miles and loyalty programs

- Receive targeted offers and savings from retailers based on gift cards you have, as well as your loyalty program and calendar info. This is done by something Leverage is calling Transparent Targeting which they describe as follows:

When you log in to your Leverage account, you’ll be invited to view extremely targeted offers and savings from retailers in an inbox specifically made for this purpose. These promotional messages will also feature an explanation as to why the retailer feels their message specifically matches your interests.  The targeting only happens with anonymous factors like age, gender, location, personal interests, recent gift card transactions, loyalty program membership, and upcoming gift occasions when sending you these deals. In our next release, while exploring the offers specific to you, you will also have feedback mechanisms which you can use to fine tune all of the future offers to be more and more to your tastes. You will literally be able to turn the “volume” up and down (or even press mute) on a retailer by retailer basis. This is what we call transparent targeting, since the relationship between you and the retailer is more open.

And what does Leverage get in return? According to TechCrunch:

But its (Leverage) main source of income will be through lead generation and data analytics. Most retailers have no idea who ends up getting their gift cards. As more people sign up for Leverage, it can tell those retailers the demographics of the people who hold their cards in an aggregated, anonymous way

....

The real opportunity for Leverage, though, will be in ads targeted at people who already hold a cash incentive to shop at a particular store. For most people, a gift card is really just a coupon—53 percent end up spending more than the amount on the card. Leverage will know who holds cards for which retailers and will be able to send targeted messages to them on behalf of those retailers.

Happy Black Friday !!

by Deepak Sharma on Friday, November 23, 2007

Wish all the readers of this blog a Very Happy Black Friday. Hope you all get the best deals and that the day goes well for all the Retailers too !!

Retail Returns Management Systems

by Deepak Sharma on Wednesday, November 21, 2007

LPInformation Magazine November issue has a very informative article on Returns fraud and how Retailers are using Returns Management Systems to minimize the loss due to fraudulent returns. Going by statistics, Fraudulent returns total $9.6 billion a year by one estimate and around $17 billion by another. Measures being adopted by retailers include the following:

Laurie J. Sorensen, vice president of LP and shortage control for Macy’s Northwest, says company policy requires customers to provide proof of purchase in the form of a receipt or a customer return label (CRL) to receive cash or credit back. Otherwise, the system will only allow store credit in the form of an easy exchange card or merchandise-only certificate.
A CRL containing the original purchase information “is placed on the merchandise tag and scanned at point of sale,” Sorensen says. “When a customer returns an item without a receipt, we are able to scan the CRL and identify the original tender, which they will receive a refund to.”

...

Within its proprietary refund management systems, one major retailer applies an algorithm to specific receipts, creating a unique number associated with that receipt throughout its lifespan. Depending on the payment method the customer chooses, that number can often be tied back to individual customers.

...

Mike Keenan, director of LP for Hayward, Calif.-based Mervyns, recently completed the implementation of a returns management system. He was sold on the concept due to his experiences while working for another retailer.
“We reduced returns by approximately $20 million,” he says. “It drove the people who did nothing but fraudulent returns right out of our stores.”
Returns management systems vary, but basically use either the original sales transaction history (stored in a central database) or statistical modeling to determine whether a return is potentially fraudulent.

Integrated Solutions For Retailers Dec 2007 issue also has an editorial on Returns Management where it talks about two ways to tackle the menace.

Two popular approaches are software-driven analytics programs and item-level product tracking. Both approaches have merits, and depending on your merchandise mix, they can be used independently or in tandem.

An analytic software approach helps retailers maintain flexibility in their returns policies, applying different returns parameters to different customer profiles. The last thing you want your returns policy to do is make legitimate returns difficult for your best customers, which are often the customers who return the most.

Modern returns management software lets store associates authorize returns in real-time by screening for fraud through analysis of customer-specific return behavior. By cross-examining historical returns and customer-specific transaction data, analytical software helps retailers identify specific return patterns. This is a great management strategy that provides retail leadership with vivid insight into the successes and failures of its returns policies. Oracle, Newgistics, and others offer such solutions.

IBM targeting Indian Retailers

by Deepak Sharma on Tuesday, November 20, 2007

IBM today launched it's customized Store Integration Framework (SIF) solution targeted towards Indian retailers.

SIF includes three solutions such as 'IBM Digital Video Surveillance (DVS)', an integrated multi-channel retailing solution and 'IBM any place kiosk solution', which would help retailers address issues related to security, channel integration and customer management.
"With increasing competition, companies are actively looking for IT solutions that will allow them to focus on strategic and innovative business models, IBM India South Asia Director (Solutions) KS Raghunandan said.

Targeting India, a booming economy with tremendous retail industry growth, IBM seems to be doing the right thing. I don't know any other such offerings from other Vendors for Indian Retail Industry. Let me know if you know of any such offering from any other company.

Wal-Mart's "Side" effects

by Deepak Sharma

Looks like Wal-Mart's entry into India will hotten up Real Estate market apart from the Retail Space. According to J C Williams Group, a Retail marketing and research company, shops near Wal-Mart benefit from the crowd that is attracted to Wal-Mart. However to take the maximum benefit of Wal-Mart's proximity, retailers need to follow some dos and don'ts.

"Our case study shows that a large number of shoppers come to Wal-Mart stores as they offer goods at lowest prices. However, the nearby shops benefit from the crowd that is attracted by Wal-Mart," retail marketing and research company, J C Williams Group's Senior Partner, John Torella said on the sidelines of a retail conference here on Monday.

However, he set a list of dos and don'ts like the nearby retailers should try to stock brands different from those of Wal-Mart or create their own private brands. They should try and become category-dominant, he said.

The nearby stores must try and change their service timings. They could either open or close later than Wal-Mart, he added.

They must try and equal the returns which Wal-Mart offered to its customers, he said, adding they should also keep a customer data base. "They should also unleash marketing strategies come out with ads and flyers," he said.

Adding experience to the business is important, he said.

"The other retailers must make sure that their store environment is exceptional," he said, adding the retailers should be quick to adopt new technologies."

Click to Call

by Deepak Sharma on Monday, November 19, 2007

Last week, eStara, the leading provider of proactive conversion solutions for enhancing online sales and support initiatives, announced the findings of a commissioned study conducted by Forrester Consulting to determine the costs, benefits, risks and ROI affiliated with implementing eStara Click to Call technology in a retail environment. The results of the report for the retail portion of the study found:

- A three-year risk-adjusted Click to Call retailer ROI of 143 percent

- Click to Call increased online revenues by more than $2.5 million over three year period

- Retailers experienced payback in a period of between seven and 14 months

- Average conversion rate of Click to Call users was significantly higher than non-users

- Prospects using Click to Call as the primary means of communication were better informed, and asked more detailed questions in comparison to toll-free callers

- Companies that deployed Click to Call reduced their operational costs significantly through a reduction in the average volume of non- transactional calls and improvement in duration of customer calls

Click to call is a very innovative way for a Retailer to connect to its customers.

Retail Weekly Roundup 2

by Deepak Sharma on Sunday, November 18, 2007

1. Retailers easy to hack

Half of more than 3,000 retail stores that a wireless security company secretly monitored at major shopping areas in the U.S. and Europe use wireless data systems vulnerable to hacking, the company said Thursday.

The data that stores routinely transmit on wireless networks include credit card and Social Security numbers and other sensitive customer information.

AirDefense Inc., an Atlanta-based maker of security products for wireless data systems, found that about 25 percent of the stores' 4,748 wireless access points were exchanging data with no encryption at all to foil electronic eavesdroppers.

Another 25 percent were using an outdated encryption method called Wireless Equivalent Privacy that is easily cracked by thieves using widely available tools.

The remaining half of the access points — the connections between wireless devices and computer networks — were using newer encryption methods that are considered far harder to crack.

2. Lessons from Low-Shrink Retailers - Nine Ways to Save $18 billion

In the generally unyielding area of retail loss prevention, a few U.S. corporations have been highly successful in staunching the pervasive problem of shrinkage—the $42-billion-a-year problem that refuses to go away. This article looks at five of these companies and highlights nine key approaches they have adopted that could potentially save U.S. retailing $18 billion a year.

...

Nine Keys to Lower Shrinkage

1. Establish senior management commitment to loss prevention

2. Ensure organizational ownership of shrink control

3. Embed loss prevention throughout the organization

4. Provide strong leadership and develop a multifunctional team

5. Use barometer or data-driven management

6. Make innovation and experimentation a priority

7. Talk shrink continuously to build awareness

8. Ensure process and procedural compliance

9. Empower store staff to take responsibility for shrink

3. CNET Study: Technology Influencers and Consumer Electronics Retail

According to the survey, the average technology influencer spends approximately 8 hours researching a product, versus the average US adult who spends 3.5 hours. Among those technology influencers who have purchased online, they convey that the main benefits of online shopping include easy price comparisons (91 percent), a greater variety of products (86 percent) and lower prices (79 percent). While they report finding retail stores lacking in the variety of products and product information, one of the most compelling aspects of brick and mortar is the ability to fulfill the need for instant gratification. For consumer electronic retailers and manufacturers, the study provides insights into areas where they can improve overall customer satisfaction and experience.

Retail Industry Gadgets

by Deepak Sharma on Friday, November 16, 2007

Google UK in partnership with Retail Reserarch companies, trade organisations and media titles, has created Retail Industry Google Gadgets. Among others, the partners include, Retail Bulletin, Retail Week, Comscore, Hitwise and the IAB. The Gadgets are free to use on your iGoogle Homepage and adds on as a tab to iGoogle. The iGoogle Page looks as shown below once you have added the Gadgets.



From Google UK:

Google’s partnership with prominent research companies, trade organisations and media titles brings fresh insights to help the Retail marketing community connect with British shoppers.

Google UK Retail Industry gadgets are mini-applications offering a wealth of free information to Retail professionals. Together with our partners, we propose a range of news resources, industry data indicators and inspiring rich media content. Google UK Retail Industry gadgets help you connect with your consumers and provide inspiring new ideas!

Retail Weekly Roundup 1

by Deepak Sharma on Sunday, November 11, 2007

Starting this week I have started publishing Weekly Roundup posts. In this post I will try and put together all the interesting posts, news articles, research articles that I come across during the week.

1. Are Retail Stocks Bargains?

"A NUMBER OF VALUATION METRICS are signaling that retail shares are attractive. Multi-line retailers in the S&P 1500 sport P/Es based on future earnings that are 0.9 times the broader index's, notes Brian Rauscher, director of portfolio strategy at Brown Brothers Harriman. After the dot-com bubble burst in 2000, retailers sold off until their multiples were 0.7 times that of the broader index. Typically, they have peaked when multiples reach 1.2 times that of the S&P 1500 . . .

[Bill Nygren] believes that the shares are more attractive than other stocks, including many in the materials and technology sectors, whose still-lofty prices reflect little risk that the economy will stop growing. Retail stocks would outperform in a recession, he maintains, and could rally strongly if the economy keeps growing."

Related: Retail stocks to watch this holiday season

2. Alternative Payment Options may mean more conversions

Investigating some of the latest alternative payment options and integrating them in to your site can help entice that segment of online shoppers not comfortable with traditional methods to make the plunge. The good news is that analysts say the market is maturing to the point where employing alternative payment methods is far simpler to do than it was a few years ago, and is a relatively easy way to boost conversion rates.

3. Wireless Trends in Retail

Article showcasing Trends in usage of Wireless technologies by Retailers

4. Retailers/Suppliers going green (or atleast trying to) [Via NRF]

Target Will Reduce PVC Use

Kohl's to pursue 'green' certifications for stores

For Suppliers, the Pressure Is On

Facebook Retail

by Deepak Sharma on Saturday, November 10, 2007

Facebook Retail, OK, that's a somewhat misleading (and populist) title for this post. Facebook is not entering Retail Space nor does it intend to (as far as I know). But Facebook provides a great platform for Retailers. Many like Wal-Mart and Target are already there engaging with the users and few have started putting up their shops on Facebook. For e.g. Zazzle is one such company which has launched an on-demand retail application on Facebook Platform.

The Zazzle Merch Store application lets Facebook users and commercial brands worldwide sell products with their own unique designs from their profiles and Facebook Pages. Each user can design their own products on Zazzle by simply uploading images, text, or designs, making them instantly available for sale in their Merch Store. Designs can be placed upon a wide variety of products including t-shirts, posters, cards, and fashion apparel. For example, users can design and sell any of the edun LIVE customizable fashion blank t-shirts that are socially conscious and ethically sourced available at Zazzle. In addition, through Zazzle's "Name Your Royalty" feature, users can name the price of their products and how much money they make through Zazzle's on-demand retail platform. There are no set-up fees and no inventory to stock. Users can also display Merch Stores they like, and even make money by listing merchandise from their favorite Zazzle artists and brands such as edun LIVE directly on their profiles.

According to HitWise Research, In August 2007, over 1,900 retailers received traffic from Facebook in UK.

Last month, over 1,900 retailers received traffic from Facebook. Our data shows the site is an increasingly important source of traffic for online retailers like Amazon, ASOS, Ebay and Play.

Facebook attracts an older (a third of its users are aged over 35) and more affluent audience than the other major social networks. Wherever consumers congregate they inevitably talk about brands, and Facebook is no exception. Companies can't have their own page on Facebook, but communities can be, and often are, created around brands.

With 52 Million users and an ever increasing user base of 200,000 users per day, every retailer should be preparing their Facebook strategy. Also, Facebook recently launched Facebook Ads, an ad system that enables people to provide trusted referrals to their friends and helps businesses to spread information through the social graph and communicate with their customers in completely new ways.

Facebook Ads includes three parts: a way for businesses to build pages on Facebook to connect with its audience; an ad system that facilitates the spread of brand messages virally through Facebook Social Ads(TM); and an interface to gather insights into people's activity on Facebook that marketers care about. On other websites, Facebook Beacon provides a way for users to choose to share their activities with their friends on Facebook. Landmark partners are implementing the fullest set of offerings from Facebook Ads.

"We have consistently explored new ways to reach our target audience with a compelling brand experience," said Carol Kruse, vice president, global interactive marketing, The Coca-Cola Company. "With Facebook Ads, our brands can become a part of the way users communicate and interact on Facebook."

The Coca-Cola Company will feature its Sprite brand on a new Facebook Page and will invite users to add an application to their account called "Sprite Sips." People will be able to create, configure and interact with an animated Sprite Sips character. For consumers in the United States, the experience can be enhanced by entering a PIN code found under the cap of every 20 oz. bottle of Sprite to unlock special features and accessories. The Sprite Sips character provides a means for interacting with friends on Facebook. In addition, Sprite will create a new Facebook Page for Sprite Sips and will run a series of Social Ads that leverage Facebook's natural viral communications to spread the application across its user base.

I would assume we should soon see Retailers diverting some dollars from Google/Yahoo/Microsoft ads to Facebook Ads. Social Networking sites like Facebook provides a great platform for businesses to get closer to their customers, so to say, in a more social manner.

Happy Diwali !!

by Deepak Sharma on Friday, November 09, 2007

Wish all the readers of my blog a Very Happy and Prosperous Diwali !!

Biometric system to reduce shrinkage

by Deepak Sharma on Thursday, November 08, 2007

SC Magazine has a story on how a retailer is reducing shrinkage by the use of Biometric System from Calif.-based DigitalPersona.

Holt Renfrew, one of Canada's premier high-end fashion and lifestyle shopping retailers, has deployed a fingerprint-based biometrics point-of-sale (POS) system that tracks sales associates' transactions at cash registers.
Deployed in 2001, in its first three months the technology paid for itself in loss prevention, says Hodkin.
And no mistake about it, eliminating shrinkage is a big deal to retailers. The number of dishonest retail employees caught stealing, which runs around 68,994, and the $49.9 million recovered in 2005, was not trivial, according to the recent Retail Theft Survey conducted by Jack L. Hayes International, a consulting firm specializing in loss prevention and inventory-shrinkage control. Their research revealed that the average dishonest retail employee caught stealing cost an employer $724.15 in 2005. This equals almost six times the amount taken by shoplifters, which comes in around $126.87, Hayes International stats showed.

Shrinkage is caused mainly by Employee theft and shoplifting with employee theft accounting for 48.5% of total shrinkage. While the story talked about the direct losses due to employee thefts, there are many indirect costs also associated with Shrinkage. Some of these are, costs to have security guards, security systems like cameras, RFID tags etc.

Gauging Retail Success during Holidays difficult

by Deepak Sharma on Wednesday, November 07, 2007

With the advent of Multi-Channel Retailing and online sales becoming a big component of retailers revenues, Analysts are finding it difficult to gauge Retail Success or failure during Holiday period.

Current retail measurements are outdated, experts say, and investors now need to take a varied approach to making informed decisions about which retailers will see the fattest profits.

What was once a more cut-and-dried formula has in recent years become far more complicated, as consumers gravitate online and buy gift cards, and traditional shopping days lose their importance.

Same-store, or "comp," sales, which have been a heavily relied upon statistic, measure sales at stores open at least a year. But neither online sales nor the bulk of holiday gift cards shows up in same-store sales data for November and December.

While I never gave it a thought, looks like in view of multiple channels that Retailers have started using, the "Comps" as the article confirms has really become a not so useful metric. There is a scope for some study to factor in the effect of Online Sales to the entire sales of the retailers.

As Sucharita Mulpuru, multichannel retail analyst at Forrester, sees it, today's retail measuring sticks don't always consider the whole picture, "and the whole picture is a pretty complex picture.

"In general, retail metrics are pretty outdated and comp sales are one of the most outdated," Mulpuru said. "Stores are absolutely being cannibalized by the Web. It's really a naive and outdated metric that has outlived its use."

The stakes are high in accurately predicting U.S. retail health during the holidays, which can contribute as much as 40 percent of yearly profits for retailers. That is especially true this year, when fears over consumer spending are rife amid high gasoline prices, a housing slowdown and a credit crunch.

Grocery Industry found lacking in Building Loyal Customers

by Deepak Sharma on Monday, November 05, 2007

According to a new IBM Research study titled, "Why Advocacy Matter to Grocers", Grocers are failing to build loyal customers in US. The study analyzes the factors driving customer advocacy and recommends grocers to better differentiate themselves in an increasingly competitive marketplace.

From the abstract of the report:



It could be said that the retail food industry and its customers have a lot to be optimistic about. Customers have more choices: more products, more ways to buy groceries and more convenience; and the industry has experienced solid, consistent growth over the past decade. Most of this growth, however, has come at the expense of traditional supermarkets as they watch their customers go to supercenters, wholesale clubs and specialty and boutique food stores. Worse, customers of traditional supermarkets, on average, have a negative attitude about their grocers. According to our new consumer survey about the retail food industry, 73 percent of customers feel either antagonistic or have no loyalty to their store. That leaves only one in four as a customer advocate – a truly loyal customer who would recommend his grocer to others, stick with the store despite competitive offers, and purchase from that store regularly.

This paper discusses the attitudes and behaviors that turn customers into advocates as well as what grocers can do to improve the level of advocacy among their customer populations. The perspectives here are based on our provocative 2007 IBM Institute for Business Value Customer-focused Grocer Study, which provides a new approach to understanding customer attitudes based on input from over 6,000 consumers.


Some important facts from the study include:

Advocacy Pays Off



Advocates are more likely to choose their grocer for large shopping trips – 14 percent
more advocates than antagonists spend more than US$100 per week with their primary grocer. Advocates are also more loyal. Nineteen percent more advocates give the majority of their business to their chosen grocer (see Figure below). Conversely, more than twice as many antagonists (14 percent) as advocates (6 percent) decreased the amount they purchased from their primary grocer over a two-year period.


Advocates vary by Grocery Category



Across grocery categories, supercenters fared the worst, with only one in five customers being advocates (see Figure below). The low score may be the result of the customer experience being sacrificed to focus on lower prices. Interestingly, wholesale and warehouse clubs had much higher advocacy rates despite their similar practices of focusing largely on price..


What that means is that big retailers are not doing well maintaining a loyal customer base.

The Key attributes that drive success is almost same for Advocates and Antagonists


Generally, grocery customers concur on areas that are most important to them. This means the attributes important to advocates are the same ones that are important to apathetics and antagonists. All three groups strongly agree that the essential attribute for a grocer is quality; others include selection, convenience, employees, availability and social responsibility. In fact, the relative ranking of nearly all 15 attributes are the same across the three groups.

The study ends with identifying the factors that allow Grocers to be more customer-focused. These includes:
  • Understand customer needs and expectations from the outside in: Place high priority on having deep insights into shopping preferences and needs to create a satisfying shopping experience for core customer segments across all channels and shopping venues.

  • Use customer insights to drive business operations: Drive these insights across the business to optimize all key decision making, including buying merchandise, pricing and promoting products and services, serving customers, marketing and communicating to customers.

  • Break traditional design constraints: Design processes based on how customers interact with the grocer, not how the grocer wishes to interact with customers. Incorporate relationship and communication skills in the learning and development of staff and leaders.

  • Adopt a transformational change mindset: Embrace the notion of becoming customerfocused. Measure what’s important to the customer and share results companywide, restructuring as needed to align management and incentives to embrace customer knowledge and reward advocacy.

  • Prioritize investments based on what really counts: Prioritize investments based on criteria that define a successful shopping experience for the company’s best customers.

Retail IT Career Focus

by Deepak Sharma on Sunday, November 04, 2007

ComputerWeekly has an article with focus on careers in Retail IT. Retailers are moving from Legacy systems to newer technologies with Multi-channel Retailing taking prominence.

The days when retail relied exclusively on legacy IT are gone, and the sector offers opportunities to spearhead roll-outs of cutting-edge technology

Retail has traditionally been a relatively unattractive sector for IT professionals, with low investment in technology.

"Some retailers are still running AS/400-based systems developed 15 years ago," says Iain Mc­Keand, head of the regional CIO practice at Harvey Nash, who spends much of his time recruiting for senior roles in the retail sector.

But things are changing. "Retailers are realising they need to raise spending on IT from less than 1% of turnover to between 1% and 2%.

"Those legacy systems may have been robust in the past, but they cannot cope with supporting the move to multiple channels," says McKeand.

Some new facts from Retail Recruitment side of view:

1. Whereas Vadher has used open source systems, Jane Binner, an associate director with recruiters Computer People, says that the retail sector runs mainly on Microsoft technologies such as ASP, C# and in some cases Visual Basic.

2. Breaking into retail can be tricky because retailers prefer to hire IT staff with retail experience.

"They can identify with the issues customers and store managers have. They understand what competitors are doing, and where the sector as a whole is going in the next six months," Binner says.

3. ...at many retailers, new recruits spend some of their induction period working in stores, either behind the counter or in the stockroom. Some retailers go further and will ask IT candidates, particularly for senior roles, to work in store as part of the selection process, with the evaluation of the store manager performing part of the assessment.

"That reflects the importance placed in good interpersonal and stakeholder skills," McKeand says.

4. Hours can also be long. "Retail inevitably demands working outside normal nine-to-five hours, especially if the retailer is a seven-day operation," McKeand says.

Vadher says that there are often extra seasonal pressures. "Christmas is the hardest part of the year and is quite stressful. We get a lot of stick from the rest of the business at any time of year when there are IT problems," he says.

5. Salaries in the retail sector also tend to be lower than some equally high pressure sectors such as finance, although McKeand says salaries are still attractive.

Cool way to learn Retail concepts and Retail Technology

by Deepak Sharma on Monday, October 29, 2007

A company called Retail Hero recently released an online flash game to teach Retail and Retail Technology concepts. I tried the same (did not play all levels though) and it looks to be quite good, especially for beginners in retail space.

Retail Hero recently released a very special online game for retailers. The interactive game is designed to give retailers a better understanding of the foundations of retail management from the ground up. Starting out with a simple hot dog stand, the game teaches the principles of how adding technology can help to succeed in the retail business.

The game has five levels starting the player out as a hot dog vendor and gradually working up to a pawn shop retailer, then a grocery store, and onwards until you own a national franchise. As your store grows you have more opportunity to purchase technology (such as a POS system, barcode scanners, pin-pad's, weigh scales etc) all of which help to reduce your shrinkage and increase your revenues. But just as in real life there are obstacles to overcome. You might be selected for a random tax audit or you could be sued for selling a counterfeit item, all of which affect your bottom line. Also, you can borrow money and invest it in the technology that will help your retail business to succeed.

The colorful graphics and real-life sound effects all add to the authenticity of the game, which has been received enthusiastically by the retail sector. The only drawback to the game is that retail staff might become less productive if they have Internet access at the till.

The game is free to play and is available only from Retail Hero. So what are you waiting for? To find out if you have what it takes to succeed in the retail industry follow the link below and start playing! http://www.retailhero.com/retail_champion.aspx

Wal-Mart wants to keep it a surprise

by Deepak Sharma on Saturday, October 27, 2007

Wal-Mart has sent legal notices to websites who leak prices or flyers about the Black Friday sales.

Wal-Mart Stores Inc. has threatened legal action against Web sites that leak prices for or flyers about its post-Thanksgiving sales in advance, a practice at dozens of large and small Web sites that collect information on deals.

Retail chains typically start advertising in newspapers and elsewhere a few days before Thanksgiving with special deals for Black Friday, the day after Thanksgiving and one of the busiest shopping days of the year. Premature release can give competitors a jump up on the prices and dampen marketing campaigns.

This year for the first time, Wal-Mart has sent legal notices to at least three sites that have obtained Black Friday ads in advance and posted them days or weeks ahead. The letters cite the company's rights under trade-secret and copyright laws. Typically, retailers wait until information has been posted to take action.

This will surely take away fun searching for Wal-Mart offers and one will have to do with rumors this time.

Email Marketing Metrics

by Deepak Sharma on Thursday, October 18, 2007

MarketingSherpa is reporting six actions that can help increase the number of open & click-through rates of Email campaigns and newsletters. The findings are from MailerMailer's new Email Marketing Metrics Report, in which they analyzed nearly 270 million opt-in email newsletters and campaigns sent by a sample of over 3,000 MailerMailer customers in the first half of 2007.

The report provides some good insight into Open & Click Rates by Industry, Open & click rates by day, Open rates by Subject Line Length and open rates by day of the week emails were sent. Retail Industry is doing pretty well in second place by click rates.


Lots to get and improve by getting the report. Highly recommended.

L. L. Bean's really really Free Shipping

by Deepak Sharma on Monday, October 15, 2007

Reality check (emphasis mine).

EVEN in a country where Christmas trees start appearing in October, L. L. Bean may have set a record for beginning the holiday marketing blitz early by starting a free shipping promotion last month.

But the promotion also set the bar higher than many competing online retailers might have liked.

Bean’s free-shipping offer comes with no minimum purchase requirements. That is in stark contrast to the strings-attached shipping offers used by more than 80 percent of online merchants last year, which left some consumers wondering about the exact meaning of “free.”

Nothing Says ‘Buy’ Like ‘Free Shipping’ - New York Times

PIM in context of multi-channel strategy of Retailers

by Deepak Sharma on Sunday, October 14, 2007

Dominic Citino of Microsoft has an refreshing blog called Retail Rumblings on Retail Technology topics. In his latest blog post he deconstructs PIM needs in the context of multi-channel strategy of Retailers. He writes (emphasis mine),

We need to deconstruct PIM a bit to understand why retailers are finding it so critical to their multi-channel capabilities.  PIM, as a concept, seeks to extract item management from the application environment.  Go back in time to the era of the merchandising system/ERP boom.  Retailers were buying or building big merchandising applications and/or ERPs focused on providing 'foundation data' to run their enterprises.  These enterprises were almost always focused on the store and warehouse environment.  Every merchandising application has some form of an 'item master'.  This data store typically comes with a big list of fields and in some cases some basic hierarchies.  Retailers typically use some basic editor screens to manage and manipulate this data along with any automated data feeds that they have.  The data in the item master is the core of a retailer's foundation data. 

As application environments became more complex, retailers needed to disseminate this item data to many other systems and tools.  Worse yet, the functional needs of each system often varied greatly.  For example, a supply chain execution system, like a WMS, needs a vast array of handling rules and dimensions that merchandising applications are often blind to.  So the retailer had to decide to build these new fields into the merchandising application (and the ability to maintenance them) or build application-specific item attributes that sit in the application that needed them.  Multiply this scenario exponentially across application environments and functional areas and retailers ended up with a mess. 

The final nail in the coffin of the application-centric item data store was the emergence of multi-channel retailing.  The ability of retailers to syndicate item information in a channel-specific manner was very low with core merchandising applications.  Each channel may require different versions of item information.  For example, the Web may require rich product descriptions and images, while the logistics applications require dimensions and other physical data.  A shopping affiliate partner may require an XML feed, limited to certain fields that they support. 

While Dominic nailed the PIM + Multi-channeling, PIM also needs to be looked upon as an enabler to data synchronization and to improving supply chain collaboration.

According to a recent report from AMR Research, A Sell-Side Product Information Management Vendor Landscape (Robert Bois, Eric Newmark and Jim Murphy, 3/16/05), "Companies that react now and build a pragmatic PIM system will dramatically increase their agility for deploying future product-related initiatives such as dynamic catalog generation, multichannel product syndication, or more effective print catalog creation. . . As e-commerce standards continue to evolve, and the balance of power between buyers and sellers oscillates, the agile company with a sound PIM strategy will enjoy a significant competitive advantage."

Pasted from <http://www.internetretailer.com/internet/marketing-conference/99882-webmethods-extends-webmethods-fabric-product-information-management.html>

Retail + Retail Technology Search Engine Update

by Deepak Sharma on Sunday, October 07, 2007

As I posted few weeks back, I created a Google based search engine just to search Retail & Retail Technology Websites. Over the weekend I updated the search engine to add 7 more websites to it taking the total to 50 Retail websites the search engine will search on. Give it a whirl and let me know how it works out. Also, if there is a website that you want me to add to the Search Engine, please let me know.

You can access the search engine at http://google.com/coop/cse?cx=010830981795875810288%3Ajr5id6_irso

Good luck selling toys this holiday season

by Deepak Sharma on Saturday, October 06, 2007

USA Today is reporting how even after multiple toys recall, you may find it difficult to buy US made toys. Reasons being 80% toys sold in US are made in China, most of the toy recalls in last 20 years have been because of design problems by US toy makers and US toys being very old-fashioned.

After recent high-profile recalls of some Barbie, Polly Pocket and Thomas & Friends products, you've vowed not to buy Chinese-made toys this Christmas.

Good luck.

Even though it's shaping up to be the "anti-China Christmas," your kid's stocking likely will be stuffed with Chinese-made toys — unless you put oranges in it. That's because 80% of all toys sold in the USA are made in China. Some internal toy-industry estimates show only about 10% are actually made here.

More important, there's mounting evidence that avoiding Chinese-made toys may not be worth it. New research shows that most of the toy recalls in the last 20 years were due to design problems by the U.S. toymakers, not manufacturing problems that were the fault of Chinese or other foreign plants. U.S. toymakers also are far from immune to safety problems and may have at least as high a percentage of recalls as China when the USA's small market share is considered.

And if you do go the U.S.-made route, be ready for limited choices and, perhaps, a tough sell to the kids. Most U.S.-made toys are wooden, old-fashioned "nostalgia" toys, such as blocks or puzzles, that may not hold the interest of kids older than toddlers. There's Slinky, the twisty-wire-walking toy from the 1950s, and some plastic toys like K'Nex construction sets.

All these reasons will make it difficult for US Retailers to sell toys this season. With around $22.3 billion at stakes, it remains to be seen how Retailers fare on this front this holiday season.

Retail sales in the U.S. toy industry declined less than four percent in 2005 to just over $21.3 billion compared to $22.1 billion generated the prior year, according to The NPD Group.

Taken from <http://retailindustry.about.com/od/seg_toys/a/toy_sales.htm>

 

U.S. toy sales made a slight comeback in 2006 and are poised for a sharper rise this year, according to data released on Tuesday by market research firm NPD Group.

U.S. toy sales crept up to $22.3 billion in 2006 from $22.2 billion in 2005, helped in part by a 22 percent increase in the youth electronics category.

Taken from <http://uk.reuters.com/article/governmentFilingsNews/idUKN0623443620070206>

Related:

What toys do the experts plan on buying?

Retail Design Solutions in Indian Retail

by Deepak Sharma on Monday, October 01, 2007

The Retail Boom in India is giving push to many different businesses, one of them being the Design Solutions Firms like Co-Design, Idiom among others. Yesterday, Economic Times carried an article on how these firms are engaged in designing Retail Spaces using emerging techniques like Interaction design.

The Rivet in Bangalore's Leela Palace Hotel is not your usual Levi's brand store. Step in and you are sure to be taken in by the 34-feet-long Heritage Wall - a visual and virtual walk through a hundred years of Levi's heritage and corresponding world history. With touch-sensor links depicting individual decades from the 1850s to the 2000s, the installation is a virtual scrapbook on Levi's past.
The Rivet is the iconic denim jeans maker's first heritage store in South-east Asia. And the man who created this installation is Rajesh Dahiya, founder of Co-Design.
Dahiya specialises in interaction design, an emerging tool that's catching the fancy of retailers these days. Simply put, it's about exploring new ways of enhancing the experience of interacting with other individuals, with products and with the environment by blending traditional design techniques, an understanding of human behaviour and modern technology.
"The user-centric nature of interaction design makes this new field important for retail development. An interaction designer has a strong understanding of the customer, the client's needs and the latest technology," says Dahiya.
Among the scores of retail designers who are sprouting across the country, Dahiya's work symbolises the change that's sweeping the Indian retail landscape. Retail design has come to mean more than wall graphics, in-store displays and signages. With availability of technology tools, designers are now helping marketers and retailers create unique experiences that connect with customers on a deeper, emotional level. Ergo, plenty of small design firms are gearing up to deal with this growing opportunity.

New Findings on US Shoppers

by Deepak Sharma on Friday, September 28, 2007

Some retailers, manufacturers and research company Nielsen is testing a new system in US called, Pioneering Research for an In-Store Metric, or P.R.I.S.M. system which measures store traffic using scanners in the aisles and researchers. Some new facts are coming to the fore by using this system like,

People who walk through the salty snacks aisle of a store are more likely to buy something than those who go past the dairy case, and consumers buy more in general when they shop with their kids.

Among other findings from the project are that shoppers are exposed to an average of about 3,500 pieces of marketing stimuli in grocery stores, including displays, packages, televisions and other items; more than 5,000 stimuli at mass merchandisers like Wal-Mart Stores Inc (WMT.N); and about 2,300 at drug stores.

Some more findings include:

Some of the findings are intuitive, Wishart said. For instance, only 13 percent of food shopping trips include kids, but shoppers buy more items when kids are with them.

But surprisingly, the items that had more sales when children were around included soup, water, canned vegetables and hair care items, Wishart said.

And even more surprisingly, the presence of children had little impact on candy sales.

Also, the middle of the day tends to have a higher percentage of people in stores who are not buying anything.

In food stores, 4.5 percent of all purchases happen around 2 p.m., but 7 percent of the store's traffic is seen then, he said.

The produce aisle tends to attract more traffic, while there are "some parts of the store that are virtual wastelands and are not visited at all," Wishart said. Those parts vary by store type and format.

New system looks at US shoppers differently

Multi-Channel Retailing success stories continue

by Deepak Sharma on Tuesday, September 25, 2007

Another success story of Multi-channel Retailing.

Offline retailers are increasingly offering a way for consumers to shop online but pick up the goods in stores, allowing them to avoid shipping costs and choose from a wider selection of items than their local stores can stock. Because customers tend to bolster these purchases with others once they get into the store, retailers are profiting handsomely.

Take Wal-Mart, for instance. In recent weeks, the company, the largest retailer, completed a national introduction of its Site to Store service — in which consumers buy items from the Web site, then have the items delivered, at no charge, to their local Wal-Mart stores where they can pick them up. Items arrive within days, though the system is not yet set up to tell customers when something they want is already in stock at a local store.

According to Raul Vazquez, Walmart.com’s chief executive, the initiative has surpassed the company’s expectations, with about a third of all online sales occurring through this program. “It’s gone incredibly well,” Mr. Vazquez said. “None of us expected to see it reach this percentage of sales at this point.”

Multi-channeling like what Wal-Mart is doing allows users to choose from a wide variety of Products which store may not necessarily carry. Also, this reduces the shipping and carrying cost for the retailers. Another side benefit of this, Customers are spending again when they visit the store to pick up the products.

Sixty percent of customers who order on Walmart.com and pick up items in the local store purchase an additional $60 worth of goods at the store, he said.

It is not yet clear whether customers are merely buying goods they would have bought anyway at the stores. However, in eliminating shipping charges, the Site to Store program is erasing a hurdle cited by many consumers who browse, but do not buy, online. Walmart.com’s customers have avoided a total of $10 million in shipping charges through this program since it was introduced this spring.

Such programs also eliminate other hurdles to online buying. Among those consumers who have avoided online purchases, 42 percent said they prefer to see the item before buying. Analysts said that especially for purchases like apparel and furniture, customers who cannot closely inspect an item before purchasing are less willing to buy.

Shop.org Summit 2007 keynote

by Deepak Sharma on Friday, September 21, 2007

Just finished reading the Shop.org Summit 2007 keynote by Donna Hoffman from the Sloan Center for Internet Retailing at the University of California, Riverside. The keynote titled, “The Evolution of Customer Experience: 10 Trends You Can’t Afford to Miss,” addresses the upcoming Web 3.0 and what it means to retailers.

“If Web 2.0 was about the consumer having control, then Web 3.0 is about augmenting that control with artificial intelligence,” she said.

In her talk, she stressed the top online consumer habits and what they mean for retailers today and in the future. Hoffman suggested social networking sites, virtual worlds and other types of interactive consumer-generated media as locations to look for consumer behavior.

Hoffman further spoke,

“Social shopping sites have the potential to make online shopping much more engaging,” she said. “Consumers are spending much more time on these sites.”

Move over, search engine optimization; and get ready, social networking optimization, says Hoffman. Retailers will have to prepare for how their sites link to widgets, like eBay has done. The online retail giant lets customers shop from their MySpace pages.

I have talked about Social Networking Sites and retailers earlier also, and to that post, Nick Burcher left a link to his blog post titled, 5 Great examples of retailers using Facebook where he discusses how Retailers are using Social Networking sites like Facebook. Social Networking sites provide a great and inexpensive vehicle to create communities of loyal visitors, that is if done well.

SOA bridging Retail Enterprise Silos

by Deepak Sharma on Tuesday, September 18, 2007

In the latest issue of Integrated Solutions For Retailers, there is a nice article by Tomax CEO, Eric Olafson. The article is about how Retail Enterprises silos, the "us vs them" mentality, exists as a friction against efforts to connect strategy with in-store execution. Technology while being a solution to this issue becomes a problem too.

In search of the elusive ‘best of breed,’ retailers implement point solutions within narrowly defined process and procedural boundaries. Meanwhile, software vendors spin out new, denser versions of these applications, resulting in a cottage industry called application integration. 

Worse still, each point solution requires nearly the same data, a cancer that exists across all retail IT – the burgeoning complexity of disparate solutions and underlying data integration issues that more or less brings IT progress to a coagulated halt.

Retailers are taking these issues in their stride and embracing technologies like SOA, workflows, open standards which help bridge the divide.

Happily, we are observing an industry trend to embrace technology to transcend silos. The emergence of SOA (service-oriented architecture), workflow, open standards, and source technologies are enabling new solutions and approaches that are process-driven, lightweight, faster to implement, and flexible. These same technologies drive new delivery mechanisms, giving rise, for example, to the adoption of software as a service (SaaS), where the solutions providers deliver and manage solutions faster and more economically than the retailer could on their own.

Another important trend is data centralization.  The cost of dividing and duplicating data in support of multiple applications occupies a great percentage of IT budgets. Now, a single version of the retailer’s information can support multiple applications, reporting instruments, and real-time event-driving workflow management. The cost reductions associated are massive.

On a related note, read this more elaborate article on the same topic by Tomax CEO, Eric Olafson.

Making the Leap: Driving Process and Change in Retail

Wal-Mart's New Slogan

by Deepak Sharma on Thursday, September 13, 2007

Wal-Mart is rolling out a new advertising campaign with the slogan "Save Money. Live Better" replacing "Always low prices". This is first slogan change for Wal-Mart after 19 years. This probably comes after new research which Wal-Mart commissioned from Global Insight showed that as of 2006, the retailer saved American families $2,500 each year, up 7.3 percent from $2,329 in 2004.

From MSNBC coverage:

The retailer also said new research it commissioned from Global Insight showed that as of 2006, the retailer saved American families $2,500 each year, up 7.3 percent from $2,329 in 2004.

Global Insight said in its study that the expansion of Wal-Mart from 1985 to 2006 lead to a 3.0 percent decline in overall consumer prices for all items, as measured by the Consumer Price Index, which includes prices for goods and services.

The research firm said its updated study concluded that the reduction in price levels due to Wal-Mart’s presence translated into savings for consumers of $287 billion in 2006, which is $957 per person or $2,500 per household.

Retail & Retail Technology Search Engine

by Deepak Sharma on Tuesday, September 11, 2007

Using Google Coop, I have created a Custom Search Engine for Retail & Retail Technology. You can access the same at the following URL.

http://google.com/coop/cse?cx=010830981795875810288%3Ajr5id6_irso

This search Engine will allow you to search Retail and Retail Technology websites and blogs like www.smartbrief.com, www.retailforward.com, www.storefrontbacktalk.com, retaildesigndiva.blogs.com, www.shop.org etc. So far there are 35 websites and blogs the search engine uses, kindly let me know (using Comments) if you want any more websites to be added to this list.

Online Fashion Shopping Clubs

by Deepak Sharma on Sunday, August 26, 2007

[Via Alarm:Clock] Exclusive (invite-only) Internet shopping clubs.

We have been reporting on the rise of online shopping clubs in Europe on our sister site. An example is VC-backed Buy VIP.

Now an a:c mole tips us off to a to-be-launched shopping club out of NYC called FirstLook (aka Gilt) which is focused on online membership-only sample sales of high end fashion items. Its sample sales last 24 hours and feature luxury goods that is says list for around 70% off. Like the European sites, it aims for air of velvet ropes with an invite only policy. Only members can buy and to become a member you must be cleared by another member.