Retail Weekly Roundup (1-July-2012)

by Deepak Sharma on Saturday, June 30, 2012

2012 Future of Food Retailing Report (Needs registration)

With the U.S. economy experiencing slow growth, persistent unemployment, and stagnant household incomes, consumers are moving toward extremes. Cost-conscious shoppers continue to seek extreme value and acceptable quality or better at low prices. Other shoppers less affected by the downturn have returned to upper-tier food retailers. Retailers who cater to the middle are finding their positions more challenging to maintain.  With the most recent bout of food inflation seeming to moderate, the pressure on their sales and profits is likely to continue.

This year’s edition of The Future of Food Retailing Report highlights market share figures for grocery and consumables by store format, illustrates which formats are thriving and look to continue growth in today’s challenging economy, and forecasts how these key formats will perform over the next five years, i.e., by 2016.

PODCAST: John Orr, Trends in Human Capital Management for Retailers

On this two-part podcast, we talked about trends in human capital management and what retailers need as it relates to human capital management.

On part one of the podcast, we focused on compliance among labor laws and visibility of the business. On part two, we addressed the need for speed as a big trend in retailer human capital management.

Retailers are under attack from many angles. There is scarce talent, they’re in a high turnover industry, they’re being legislated left and right, whether it’s gift card legislation in NJ, or California labor laws and class-action lawsuits. We discussed the challenges retailers face navigating through this landscape.

Concerning the challenge of visibility, more and more retailers are expressing the need for better visibility at the store level and above store. Legacy applications, however, have fallen very short in giving retailers access to the information they need. Most retailers are fraught with manual processes, inefficiencies and spreadsheets. The reporting from these systems is not timely enough for the executives to be proactive and make the decisions they need to do on a day-to-day basis. Retailers need solutions that provide intuitive real-time information, and should not be held hostage to legacy systems and interfaces and processes.

How deep are your pockets?

The internet, by allowing anonymous browsing and rapid price-comparing, was supposed to mean low, and equal, prices for all. Now, however, online retailers are being offered software that helps them detect shoppers who can afford to pay more or are in a hurry to buy, so as to present pricier options to them or simply charge more for the same stuff.

Technology Grows in Importance for Retailers, New CompTIA Research Study Reveals

Seventy-two percent of retailers surveyed rate technology as important to their business, CompTIA’s Retail Sector Technology Adoption Trends Study reveals. That figure is projected to increase to 83 percent by 2014.

A net 63 percent of retailers expect to increase IT spending in 2012 with the remaining 37 percent planning to cut back or hold the line. Large retailers expect to boost IT spending the most – 4.8 percent, on average. For all firms, the planned average increase is 4.2 percent.

Competing With Amazon on Amazon

Thousands of small merchants depend on Inc. to reach customers who otherwise wouldn't know they exist. A few of them complain, though, that Amazon sometimes eats their lunch.

According to some small retailers, the Seattle-based giant appears to be increasingly using its Marketplace—where third-party retailers sell their wares on the site—as a vast laboratory to spot new products to sell, test sales of potential new goods, and exert more control over pricing.

Retail Weekly Roundup (23-June-2012)

by Deepak Sharma on Saturday, June 23, 2012

Retailers using pent-up cash; 58% plan to increase capital spending, with IT No. 1 priority

While waiting for the recovery to take the hold, 58% plan to increase capital spending over the next year. The highest priority investment area is information technology – including data analytics and digital marketing channels – cited by 51% of the executives in the KPMG survey. Other significant areas of investment for retailers are new products or services (43%), geographic expansion (33%), and advertising and marketing (24%).

When asked about digital marketing channels, retail executives in the 2012 KPMG retail survey indicate that online shopping (59%), social media platforms (58%), and email campaigns (49%) are having the most significant impact on their businesses. Additionally, executive indicate that the incorporation of mobile technology is also having a significant impact, specifically mobile shopping (36%), mobile promotions (28%), and mobile payments (21%).

Executives also say that the use of data analytics is playing a larger role in their strategic decision making – including areas such as customer insight, brand and product management, pricing decisions and market expansion.

Why Loyalty Programs Can Be Bad for Business

In my work with companies on pricing strategies, it's common for executives to feel compelled to offer loyal customers something for free. My immediate question is: "Why?" Giving something away for free as a gesture of thanks has become almost reflexive in business. But when you examine the strategic value and underlying costs of these programs, I've found that loyalty discounts are rarely necessary to close a deal, nor are they always highly valued by customers.

Why Sephora Is Betting Big on Digital Shopping

Sephora is one of the brands that’s leading the way in shaping digital experiences for its customers. The company recently invested in an entirely new shopping experience that integrates mobile, social and in-store activity. On this episode of Revolution, Julie Bornstein, SVP Digital at Sephora, shares with us the importance of delivering a holistic digital and “IRL” experience, while also enhancing the individual path each customer takes to engage with the brand and their favorite products.

Brazilian fashion retailer displays Facebook ‘likes’ for items in its real-world stores


Through its new “Fashion Like” initiative, C&A has posted photos of a number of the clothing items it sells on a dedicated Facebook page, where it invites customers to “like” the ones that appeal to them. Special hooks on the racks in its bricks-and-mortar store, meanwhile, can then display those votes in real time, giving in-store shoppers a clear indication of each item’s online popularity. The video below (in Portuguese) outlines the premise in more detail:

Home Depot Rolls Out New Mobile Devices for Workers

Home Depot has started to roll out a scaled down, second generation mobile device for its sales associates, allowing more workers to use wireless technology to assist customers, CIO Matt Carey told CIO Journal. The 25,000 device roll-out is intended to make it possible for more store workers to help customers locate items and give information on products, even in areas for which they don’t have specialized expertise. It’s also an example of how Home Depot is attempting to use technology to increase the amount customers spend on each trip to the store, as well as sales to new customers, an area of focus as the chain has slowed the opening of new stores.

The device, called First Phone Junior, is a scaled-down version of the Motorola phone the company put in the hands of some associates two years ago, which allowed employees to better manage inventory, assist customers and speed checkout lines.

Overstored: How Retailers Can Retain a Profitable Physical Store Network in the Face of Growing Migration to Digital Channels

While the long-predicted demise of the bricks-and-mortar store has been greatly exaggerated, there is no doubt that customers are migrating to digital channels in growing numbers. Accenture looks at the issues, and identifies three steps that retailers can take to rethink the way they attract, serve and retain customers, then allocate capital and resources accordingly.

IBM Survey Reveals Marketers Face Tech Dilemma in Reaching the Connected Consumer

IBM's new survey of the marketing industry finds that chief marketing officers (CMO) and chief information officers (CIO) must join forces in order to connect with today's consumer across new channels including mobile devices and social networks. Fully 60 percent of marketers point to their lack of alignment with the company's IT department as the biggest obstacle to reaching today's consumers.

Retail Weekly Roundup

by Deepak Sharma on Saturday, June 16, 2012

Here’s what I am reading right now.

Retailers feast on free Facebook tools, shun ads

Krishan Agarwal, president of online luxury watch vendor, told a roomful of attentive Internet retailers last week how Facebook had helped his company generate about 25 percent more sales in two years.

Then he dropped a bombshell: Melrose spent less than $1,500 on Facebook ads during that time. Everything else the company did with Facebook was free.

Minimum Presentation Reduction: Inventory Optimization in the Retail Sector

Minimum Presentation Reduction is an inventory optimization technique that allows retailers to realize substantial reduction in the presentation quantities of SKUs by optimizing the Planogram Quantity per Facing (PQPFs) defined for them in their associated planograms. With this inventory optimization technique, retailers can reduce inventory costs and increase margins and total sales.

Walmart, Procter & Gamble drive mobile shopping with QR codes

Walmart and Procter & Gamble are placing QR codes on bus shelters and trucks to encourage on-the-go consumers to scan and instantly buy products from brands such as Tide, Pampers and Gillette.

Shopper Sentiment: How Consumers Feel About Shopping In-Store, Online, and via Mobile

Which do US consumers prefer: In-store, online, or mobile purchases? Among U.S. consumers surveyed by Nielsen earlier this year, the answer is a resounding, “that depends…”

Online purchasing was rated the “Overall favorite” by 59 percent of those surveyed, as well as the “Easiest” (68%) and “Most convenient” (68%). But people trust traditional stores the most when making purchases: Bricks-and-mortar stores won the highest marks for “Most reliable” (69%) and “Safest” (77%).

As the newest channel, Mobile has a long way to go before it gains broad acceptance. It was in third place across all measures except for two: It was a distant second to Online for “Most convenient” (38%) and “Easiest (27%).

A Closer Look at Mobile Enablement in Retail

The retailers that are really driving these initiatives forward have made mobility a strategic initiative to drive customer engagement. They are looking to mobility to enable new business processes across the organization, from engaging the customer, to empowering associates, to enabling management to be more responsive to business and customer needs.

JCPenney says NO to “No Sales” Promise

by Deepak Sharma on Saturday, June 09, 2012

Look at the bright side, it took all of one quarter for JCPenney to revert back.

Penney tries to clarify message on pricing change

J.C. Penney Co Inc is bringing back the word "sale" in its advertising in hopes of stemming a sharp slide in business.

The department store operator has been trying to wean shoppers off the long-used hundreds of sales events and coupons -- as part of a strategic overhaul by Chief Executive Ron Johnson. The chain blames the way it has communicated the strategy for contributing to a steep drop in sales in the first quarter.

Johnson said he recognized that shoppers did not understand the advertising of the new pricing model.

"It's just been kind of confusing," he said Tuesday at a Piper Jaffray investor conference in New York that was also webcast.

The new strategy includes some items on sale for an entire month rather than the shorter-term sales events of past.

But the retailer has avoided using the word "sale," instead calling the events "month-long values." That didn't work.

Apple turns over its inventory once every five days

by Deepak Sharma on Monday, June 04, 2012

Wow! Apple Turns Over Its Inventory Once Every 5 *Days*

Apple turns over its inventory once every five days.

That's part of why a new report from the technology research firm, Gartner, ranked Apple's supply chain the best in the world. And it's pretty amazing when you think about it. This is a company that sells hundreds of millions of hardware gadgets all over the world and yet it doesn't actually need to stockpile its goods.

The only company on Gartner's list of 25 companies that turns over its product faster is McDonald's, which is not exactly in the electronics business. Dell and Samsung rank two and three in Apple's category, turning over their inventory roughly once every 10 and 21 days respectively.

We calculated these times from the report's "Inventory Turn" metric, which estimates the number of times a company's inventory is sold in a given time period. Apple's number is 74, according to Gartner (or 76, according to Forbes). From there, it's a common practice to divide by 365 to "estimate the number of days [of] sales sitting in inventory."

Fascinatingly, if you read about that inventory turn metric, you will find things like this: "Although results vary by industry, typical manufacturing companies may have 6-8 inventory turns per year. High volume/low margin companies (like grocery stores) may have 12 or more inventory turns per year or more."

So a typical company in manufacturing might do 8 inventory turns. Samsung does 17. Dell, which practically invented hardcore electronics supply chain management, does 36. Apple is doing 74!