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.

Small innovations driving big profits

by Deepak Sharma on Wednesday, August 22, 2007

[Via Retail Traffic Court] David at Retail Traffic Court recently blogged about how Bath and Body Works have accumulated 10 million email addresses in less than 2 years. Each email id is worth $18 to B&BW.

To entice customers to give over their electronic addresses, Bath and Body Works offers free tubes of lip gloss. However, they don’t get it on the spot. The company takes a true multi-channel approach.

The gift comes as an offer in customers’ e-mail boxes that they must take back to the store to redeem, Beitler said.

“E-mail is significantly more valuable to us for a store customer than for a Web customer,” he added.

“When they’re in the store the first time, they make a $24 or $25 transaction,” he said. “When they come back to the store, what do they do? They make another $24 or $25 transaction.”

Truly a case of innovative thinking. This coupled with in-depth knowledge of consumer behavior and you have a winner.

Social Networking sites as CRM

by Deepak Sharma on Tuesday, August 21, 2007

Advertising Age is reporting how Marketers are using social networking sites like Facebook and MySpace as a customer-relationship-management tool. So far, it was limited to ads on these sites but now companies are creating campaigns and sub-communities within these sites.

Facebook claims the goal of its groups is for marketers to have these kinds of continuing relationships. Marketers can use a sponsored group to communicate with consumers via discussion threads and "wall" posts. Marketers pay to promote their group through sponsored stories on news feeds, which let others know about the group. For example, Champion formed a group earlier this year and is still participating in a message board. Ms. Williamson said she believes the Facebook groups are the closest a big network has come to helping brands create long-term interaction with consumers.

But hard as it might be for marketers to stomach, the most vibrant groups tend to sprout organically. Examples are the several devoted to Nikon cameras, where owners post photos they've taken, answer each other's questions about techniques and offer tips for getting the most out of the product.

That kind of affinity and attention is not something marketers can buy, warns Chad Stoller, executive director of emerging platforms at Organic. "Groups will form if there's interest; they will not form from an ad buy," he said. So how should a marketer react when groups form around their brands? "Often the first reaction is to spend against it," Mr. Stoller said. "The first reaction should be to listen to it and figure out how to make that group better."

Urban clothing store + Recording studio + Skateboard shop + Art gallery = New Age Retail Store

by Deepak Sharma on Saturday, August 18, 2007

This is what has happened in Columbus, Ohio. A new business called Industry Standard near OSU has done just that, it has combined clothing store with recording studio, skateboard shop, art galley and created a hangout with couches, turntables and video games. The store is using RFID to interact with the shoppers.

It's a pioneer for the in-store application of radio-frequency identification, or RFID, technology, that allows customers to communicate with store employees as they shop....

With RFID, a chip inserted in a product broadcasts a radio frequency to readers that can identify it. It's the same technology used to track cargo.

In Can's spin on the technology, RFID tags are applied to clothing and can be read by sensors in the store.

That means a store employee can wave a wand over a rack of clothes and take inventory in minutes instead of days. A cashier can ring up 20 T-shirts simultaneously or learn that a customer has a stolen hat stashed in his pocket, thanks to an RFID reader under the counter.

And a customer can step into a dressing room and see images and videos of outfit suggestions appear on a computer screen -- the RFID sensors know what she's trying on.

The costs of implementing RFID technology can add up for stores: about $5,000 for readers, $200 per dressing room and 25 cents per tag.

Indian Retail Mad Rush and the Problems

by Deepak Sharma on Wednesday, August 15, 2007

On the occasion of India's 60th Independence day, Economic Times yesterday had a story on India Retail on how almost all big Indian corporate houses (Tata, Birla, Reliance, Bharti etc) are storming retail space. But the ride has not been easy with problems being faced in supply chain and warehousing, high retail space rentals and red tape. The story also captures in short the history of Indian Retail.

Every large Indian corporate house is storming the retail space. If RPG was the first mover, the last two years have seen Reliance, Aditya Birla, Bharti, Godrej and ITC, to name a few, all throw their hats into the ring. The dominant format is the discounted food and grocery chains. Explains Govind Shrikhande, “Convenience is a big factor to the Indian consumers and catchment shopping will still take some time to get displaced. They’d rather go close to home than 20 minutes to a hypermarket.”

Retailers however face several roadblocks. An underdeveloped supply chain, lack of a strong cold chain, poor warehousing facilities and storage are just a few areas of concern, especially for perishable goods. So, retail chains in India have to start from scratch. “Typically, in the more organised markets, retailers prefer to outsource the supply chain to specialised companies. However, in case of India, they will have to develop the entire infrastructure on their own,” says Dhruv Parasher, CEO, Decube, a retail consultancy firm. In recent times, some companies have entered the logistics sector dedicated to retail chains. However, it’s not sufficient to address the massive demand-supply mismatch. “To attract players in the supply chain and logistics businesses, government will have to provide incentives,” says Delhi-based Tiger Logistics MD Harpreet Singh. His company is working to create a supply chain infrastructure with Reliance Retail.

Another big hurdle for retailers is the high real estate cost, which shows no sign of stabilising. In the developed economies, a hypermarket spends less than 5% of its revenue in real estate. Conversely, in India, a one-lakh sq ft hypermarket in the NCR would end up paying 10-12 % of its revenue on real estate costs alone. In case of smaller formats, the spend on real estate is as high as 25-30 %. The industry believes that the present real estate costs are a result of artificial scarcity, leading to widespread speculations . “These speculations can easily be addressed if a better due diligence is done while notifying master plans in various states. Also, states should abolish the Urban Land Ceiling and Regulations Act,” says Parsvnath Developers MD Pradeep Jain.

Taxes and licence requirements are other major issues that the retail sector has been complaining about. For instance, a hypermarket in Mumbai has to apply for 29 licenses and the process can take six months. And when the retailer opens a second store, he has to apply for the licenses all over again.

Interesting Retail Blogs

by Deepak Sharma on Sunday, August 12, 2007

Came across couple of interesting Retail blogs:

RetailDesignDiva - RetailDesignDiva is a retail design blog. Thanks to Heather Strang for pointing me to the blog.

Retail Contrarian - Retail Contrarian is a blog by Doug Fleener and Matt Norcia of Dynamic Experience Group, a retail consulting firm in Lexington, MA.

Customers Voice get a new platform in Web 2.0

by Deepak Sharma on Sunday, August 05, 2007

Web 2.0 has started playing a big part in Online Retail. Internet Retailer is reporting on how Web 2.0 concepts like blogs, forums, social networking are allowing Customers to speak about their experiences in a never before seen way.

It can take a while to ferret out useful customer feedback from user-generated content in Web 2.0 settings like online forums, blogs and social networks. But it can be worth the time and effort when that feedback can be transformed into strategies that make customers happy....

With Web 2.0 user-generated content, e-retailers have a new way of gaining insights into what customers want and don’t want, what they like and don’t like. Customers provide the answers without retailers having to ask a single question.

I have written the impact of Web 2.0 on Retail earlier in a post titled, Web 2.0 and Retail.

Loyalty Programs - Not that easy to manage and maintain

by Deepak Sharma on Saturday, August 04, 2007

Knowledge @ WPCarey has a good article on how it is not so easy to maintain Loyalty Programs. US citizens are now holding 1.3 billion loyalty program memberships today, up from 973 million in 2000 which roughly means dozen cards per household. Loyalty programs can be very successful in attracting and retaining users but their real strength lies in analyzing the customer's spending habit and utilizing the same to provide services which drive consumers to spend more. For example:

Your purchase is stored in a database which records everything you buy and have previously bought. With the resultant mountains of data that accrue over time, a company can bring data mining and analytics to bear to isolate trends and patterns. That data may be applied at a macro level where a store will, for example, see that people buying upscale bread also like fine cheeses and may, thus, conveniently place the two next to each other. On a micro level, stores send coupons to individuals for specific products based on their own personal shopping history.

In addition, tracking sales per individual lets a company see who's profitable and who isn't. Casino loyalty programs look for high-spending customers who are good losers; not surprisingly, more effort is put into attracting and retaining them versus gamblers who know when to hold and when to fold.

But Loyalty programs comes at a price. The Technology behind effectively running the same involves storing a lot of data and analyzing the same which is something not every retailer can afford. [Emphasis mine] 

Creating and administering the technology behind the loyalty program likely amounts to millions of dollars in costs which need to be offset by significant gains to justify the investment.

"In IT, we're always looking at whether the investment you're making in the technology is worth what you're getting out of it in the end," says Goul who notes that Albertsons will not suddenly be in the dark with respect to data gathering. It's true that abandoning the loyalty program precludes the ability to track individuals, but every time an item is scanned at the checkout and a receipt is created, it's logged into the system. It may not create as much data as the loyalty program but it still produces an awful lot.

To sum up, the article states the bottom line as:

  • Loyalty programs may seem to be just about saving a few cents, but for companies they are they key that lets them gather valuable data about customers' buying habits.
  • Implementing and running a loyalty program is largely about setting up hardware and software. However, deriving true value from it means that the larger organization must be involved and adapt to insights obtained from the program's data.
  • Even without individual loyalty programs, stores can draw on lots of data from transactions that still provide fertile ground for analysis.
  • Many loyalty programs don't give customers a real reason to be loyal because companies do not make prizes or rewards significant enough to keep customers' interest.
  • Unless a company truly commits to using and exploiting its loyalty program, it can be a costly and time-consuming waste of resources.

Retail Industry Transformations

by Deepak Sharma on Wednesday, August 01, 2007

From the cover story on changing face of retail (PDF, free registration required) in the latest issue of Chain Store Age.

Current discussion whirls around the rapid pace of social change. In response, retailers are creating new ways to present and position themselves. One-time brand definition is becoming a thing of the past. The new rule is adaptivity.