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The Local Connection: How Independent Retailers are Joining Forces to Flourish

For some small business, local relationships are key.

 

Traditionally, independent retailers have sought out their locations quite deliberately––an up-and-coming neighborhood or a particularly hot development, for example. However, things are changing, and unexpected sites (think abandoned buildings and the like) are turning out to be the winning ticket for like-minded business owners aiming to sell the idea of craftsmanship through their goods.

 

Take Boxpark in Shoreditch, London, for instance. Coined the “pop-up mall” for the people, Boxpark is made up of 61 shipping containers. The concept was founded in 2011 by CEO Roger Wade, and it allows independent retailers and artists to set up shop with relatively low lease expenses. The beautiful thing here is variety, underscored by the fact that even mega retailers have dropped by with “installations.” Gap experimented at Boxpark with an edited assortment called “Black is a Color.” For larger retailers, Boxpark is perhaps less about sales and more about brand exposure in a more artistic light.

 

A second London example is We Built This City, located in Carnaby. The shop showcases a curated selection of over 250 artists every month from area neighborhoods. The idea is to market souvenirs for tourists that depict a more accurate, genuine and artistic representation of the city, versus the cheaply made, mass-produced mugs, magnets and other paraphernalia so often found throughout London.

 

Another example is Strange Invisible Perfume in Venice Beach, California. Small and independently owned, this botanical perfumery is located right next to Le Labo, a major competitor, which might seem counterproductive. As it turns out, the two businesses have worked together to become a one-stop perfume destination for customers. The retailers also share similar brand beliefs and principles, which center on a bohemian, holistic perspective that weaves in an Old World dedication to their craft.

 

Lastly is Lacausa in Silverlake, Los Angeles. The name itself has a double meaning: their origin of LA (Los Angeles), CA (California), and USA (United Staes of America). In Spanish, the name means “the cause,” which references owner Rebecca Grenell’s mission to produce garments only under ethical environments in an LA factory and warehouse.

 

As these shops and collectives highlight, for many customers, the local connection is key. From featuring independent artists to developing products with local tie-ins, native relationships are a valuable commodity.

Snapchat: How Retailers Can Capitalize on the Craze

Branded filters cost a pretty penny, but the potential for exposure is huge.

 

Snapchat filters are not-so-slowly becoming the way Millennials prefer to communicate (at least, for fun). While older generations might find the filters silly, some retailers are capitalizing on their potential––that is, the fact that so many Millennials are exposed to them on a daily basis.

 

Snapchat filters use special effects to turn selfies (both still and video) into an animated image of the user’s choosing, such as a cat, a dog or a cowboy. The “snaps” disappear in 24 hours. Several celebrities––particularly those admired by Millennials––are avid Snapchat users, and whether they know it or not, many act as advertisers for brands via the products visible in their Snapchats.

 

So, what’s involved for a brand to deliberately capitalize on Snapchat’s momentum? Basically, three things: investment, strategy and archives. Let’s take a look:

 

1. Investment. Sponsored Snapchat filters are supposedly worth around $750,000 per filter for holidays. Weekday filters are around $500,000. You might be wondering which brands would ever invest that kind of capital for a simple filter. Fox Studios did for “The Peanuts Movie” around the Halloween time period, as did Gatorade during the Super Bowl.

 

2. Strategy. Remember that snaps go away in 24 hours, which understandably undermines the huge price tag. It’s a huge reason that the branded filter has to be done right. Think humor, impact and the capability to create buzz, but without being over-the-top or too “in your face.” The filter should relate to the brand without being overtly focused on the product. A toothpaste brand, for instance, could produce a filter where users brush their teeth to a sparkling sheen. The goal is to make users forget the content is branded at all––in other words, a seamless experience.

 

3. Preservation. In just 24 hours after it’s posted, a Snapchat photo or video is gone. But your branded content can be preserved via a compilation video of various users interacting with the filter. If it’s good enough (and funny enough), the compilation video will be shared on other social media platforms, even further expanding exposure.

 

Last May, Snapchat co-founder and CEO Evan Spiegel estimated the company’s daily active users at 100 million. More than 65 million of them, he said, send photos or videos to friends daily. Millennials absolutely love their Snapchat, and though it’s not an easy task for brands to take advantage of this particular medium, the dividends could be huge.

Grocery Shopping with Millennials

The largest generational is challenging the food industry with their take on grocery shopping.

 

A trip to the grocery is store is something many Millennials grew up doing with their parents, but it looks like tradition hasn’t won them over. According to recent research from Mintel, almost 40 percent of Millennials are opting to purchase groceries online, compared to a mere 8 percent of non-Millennials who do the same thing. The information, shared in Mintel’s report “The Millennial Impact: Food Shopping Decisions,” underscores the notion that this demographic expects products when they want, wherever they are.

 

Considering that Millennials are the largest generation (and that their spending power keeps growing), the ways in which they shop for food will extend to the food industry as well as incoming generations.

 

Where do brick-and-mortars fit in? The study suggests that Millennials tend to make a trip to the store for specialty foods, such as Trader Joe’s or Whole Foods. A full 52 percent said they don’t find conventional grocery stores as attractive an option as their speciality counterparts, which Millennials view as more authentic and more varied in ethnic choices.

 

Additionally, 47 percent of older Millennials (ages 29-38) say they tend not to trust larger food manufacturers, who often supply conventional grocery stores. Similarly, about 63 percent prefer smaller, as-needed trips to the store more often rather than stock-up sessions intended to last a long period of time.

 

The fact that many Millennials prefer to live in urban areas also affects their tendency to shop smaller, since storage space in their homes is likely at a premium. Being a health-conscious demographic, Millennials also would rather buy fresh food when they need it, rather than something they may or may not need that’s been processed to maintain shelf life.

 

It would follow, then, that the fresh sections of the grocery store are typically where most Millennials can be found while shopping. Just over 60 percent of older Millennials focus on fresh food, followed by 48 percent of the younger group. As a whole, this generation is also more likely to try new cuisines, which helps save money by reducing restaurant meals. They’re also strongly attuned to food lifestyle choices such as vegan or paleo.

 

Perhaps predictably, mobile also plays a role. Many Millennials are using their devices in-store to jot down shopping lists (about 67 percent), research products (about 63 percent, and to consult recipes (about 57 percent, which represents a potential opportunity for branded products). Older Millennials also turn to rewards and loyalty programs and might opt for a store with more meaningful benefits. Almost 60 percent say they only shop at grocers who feature these programs.

 

The future of the food industry in relation to Millennials remains to be seen, but additional opportunities are plenty, from apps and coupons to shopping lists and scannable labels––all of which would likely resonate with this powerful demographic.

Social Media: Marketing Godsend or Just More Noise?

The future for social media and marketing is optimistic, but doubts remain

 

For marketers, social media could almost feel like a godsend. Consumers across all demographics have embraced Facebook, Snapchat, Twitter and a multitude of other platforms. Social media offers a unique, personalized, “friendlier” way to reach consumers––but does it actually work? Does it convert to sales? The general consensus is rosy, but not without critique.

 

Optimism comes into play when one considers how ubiquitous smartphones have become. More than 70 percent of women over the age of 18 have a smartphone, according to a recent report by Blackhawk Engagement Solutions. The primary use? Social media. As for dollars, more than $12 billion of the $69 billion spent in e-commerce during the 2015 holiday season was transacted via smartphones. That’s almost 60 percent more than those figures in 2014’s holiday season.

 

Impressive numbers, but in reality, social media’s influence whittles down to very little, says Jason Goldberg, SVP of commerce and content practice at Razorfish. A “buy” button embedded on Pinterest sites for major brands likely generates somewhere around 10 units of sales, he said. Engagement rates are similar for Snapchat and Twitter.

 

Point being, social media simply isn’t a huge driver when it comes to conversion––at least, not generally speaking. Some niche markets have seen success thanks to buyable pins on Pinterest, such as Madesmith, an online handmade goods marketplace, and Daily Chic, an online apparel retailer.

 

Part of the issue––aside from social media predominantly being a means of socializing––is that shopping on mobile typically isn’t as easy as on desktop. Consumers generally feel comfortable browsing, researching and comparing price points on mobile, but when it comes time to buy, they prefer the desktop experience.

 

However, that doesn’t undermine the power of social media to increase brand awareness among consumers, as well as market to them in a more personalized way. Rodney Mason, GVP of marketing at Blackhawk Engagement Solutions, predicts 2016 will be a big year for social media––that is, if brands can get on board and shift their thinking to align more closely with the mindset of the average consumer, who is firmly planted in the social media landscape.

 

According to a study by Blackhawk, 55 percent of consumers lean on social media to become educated on products, sales and marketplace happenings. Social media also allows consumers to have “conversations” with brands, as demonstrated by Babies “R” Us’ #BabysFirstKiss campaign, which encouraged consumers to post photos of a New Year’s kiss with their babies. This allowed users a chance to share part of their lives––a main draw of of social in the first place––while also getting the word out about Babies “R” Us.

 

Capitalizing on user-generated content is one way brands can continue the conversation on social media and generate content that resonates with other consumers. Another way is customer service, which also works to humanize a brand.

 

It seems we’re at the beginning of how social media plays with marketing, and 2016 will be a formative year.

How Target is Making Changes––and Making Strides

From groceries to inventory, the brand’s work is paying off, its CEO says

 

In a market where customers care about a customized experience from start to finish, mega-power retailer Target is proving they know what they’re doing. According to CEO Brian Cornell, traffic to the brand has been increasing for five straight quarters, and 2015 signaled a new dedication to the customer experience. It seems 2016 will work to further that progress, from taking a new look at loyalty programs to driving home more personalized assortments.

 

For Target executives, guaranteeing a positive customer experience starts on the ground: ensuring that inventory is stocked both in stores and online, which begins with working toward a sustainable supply chain system. To that end, the brand plans to put $1.8 billion this year into supply network and technology upgrades, followed by an additional $2.5 billion in 2017, according to a report by ABC News.

 

The work seems to be working. Target’s out-of-stock stats were 40 percent lower in 2015 over 2014, said Cornell. Additionally, Arthur Valdez, previously with Amazon, joined the Target team as EVP and chief supply chain and logistics officer. Several other high-level staffing changes have taken place since Cornell assumed the reigns in 2014. The brand’s Canadian operations were also shut down.

 

A renewed emphasis has been set on Target’s grocery business, the goal being to increase customer perception that the food is fresh and varied. This effort has led to grocery sales growing faster than the brand’s overall business during the last six months of 2015. The work will continue as Target teams up with IDEO and MIT Media Lab to come up with new ways to address the grocery sector.

 

Growth is a key element in Target’s current dialogue, as well. Two new brands will debut this year, based on customer feedback regarding products that support style, parenting and wellness. The Finnish brand Marimekko also partnered with Target for a limited-time assortment of approximately 200 items for an average price below $50.

 

The changes in assortment also mean that some offerings will be going away across all categories––primarily those that don’t sell well.

 

Ultimately, Cornell feels the decisive steps the brand is taking are making a difference.

 

“Guests are telling us with their feet and their clicks that we’re focusing on the right things,” he said in an interview featured on Target’s corporate site. “Our efforts around the fundamentals are improving operational performance and delivering the right foundation for future growth. And we’re just getting started.”

Ad Spend in China Increasingly Goes Digital

Cheryl LeeTraditional marketing formats are getting fewer dollars while the online space sees significant growth

 

Five short years ago, digital advertising in China was responsible for just 14.8 percent of total ad spend. This year, that number is predicted to jump to 49.7 percent, according to a study from GroupM.

 

If that seems like a lot, it’s because it is––at least, compared to ad budgets worldwide, which are forecasted by GroupM to allocate 31 percent to the online space. The reason for China’s seeming leap ahead is that advertisers there are seeing the fast pace at which consumers have welcomed the digital experience, from mobile phones to social media to streaming content.

 

The study from GroupM also suggests that even amid worries about the economy slowing down, consumer confidence is solid. In 2015, overall ad spending was up almost 8 percent in China, and it’s expected to rise between 9.1 and 9.3 percent to a total of $85.7 billion.

 

Another figure that’s up? Digital spending, which is predicted to grow 30 percent this year––a big leap, but still less than last year, when it grew 35.9 percent. Mobile online advertising, the study said, is growing almost twice as fast as overall online spending.

 

With all the frenzy for internet marketing, budgets for traditional-format spending are down. The spend for newspaper marketing, for example, fell to 30.5 percent last year and is expected to plummet 30 percent this year. Spending on TV ads is predicted to drop 4.5 percent this year, which is a .5 percent increase in drop from last year.

 

Five years ago, TV ad spend was almost 57 percent. Now, it comes in at only 35.7 percent––a huge decline that can partially be attributed to a new TV regulations, something not unfamiliar in China. By contrast, streaming platforms have been less tightly controlled, drawing more people to engage with digital content. In the past few years, though, restrictions have begun to surface in the online space too, including controls on foreign content as well as web shows containing certain subject matter.

 

Even so, big growth is still expected in online video––most likely because Chinese ad buys for television are so high. A recent analysis from ZenithOptimedia reported that pre-roll spending would increase 35 percent each year over the next two years.

A Glimpse into Women’s Shopping: 7 Lessons to Learn

Griszka NiewiadomskiLike millennials, female shoppers are a valuable segment to retailers. How can brands earn their loyalty? 

 

Though generalizations can be perilous––particularly those concerning gender––it’s safe to say that a peek into a woman’s shopping cart can provide an informative glimpse into who she is and what she’s influenced by. The insight extends beyond the individual herself. What a woman purchases can also provide clues about the people in her life, such as her family, children and professional colleagues. Here are seven things to be learned from a woman’s shopping journey.

 

1. Loyalty is a two-way street. Loyalty programs and incentives give customers a reason to return while also helping the retailer better understand and tailor experiences to specific shopper preferences. Social media also plays a role. Tesco, for instance, increased its presence on Twitter to invite one-on-one interactions, which include dialogue with customers about product questions, issues, challenges and requests. This personalized communication has helped the brand overcome the perception that it’s just another faceless retailer.

 

2. A little treat is a nice surprise. According to an analysis by Baymard Institute, the average rate of shopping cart abandonment is 68.6 percent. The primary reason? Unexpected costs. Email reminders to “check your cart” give customers a nudge, but a more effective approach is to offer something that helps make up for the costs that caused purchase hesitation in the first place––think free samples, or a small percentage off the order total with a deadline.

 

3. Optimize mobile. A study by Forbes suggests that nearly nine in 10 smartphone shoppers reported a negative experience with mobile shopping. The biggest problems are difficulty navigating, inconvenient checkout, multiple steps to purchase and buttons that aren’t user-friendly. Some retailers, such as Nordstrom, have addressed these issues by implementing “one-click” purchasing in their mobile apps. Additionally, the primary functionalities are made prominent and clear.

 

4. Saying “thank you” goes a long way. A survey by CreditCards.com reports that three out of four adults tends to make impulse purchases, with women being more likely (52 percent of women versus 46 percent of men). Tongue-in-cheek post-purchase messaging might help alleviate the “fear” of an impulse purchase, such as a direct statement that references a promise safeguarding against buyer’s remorse. Giving a purchase attention, such as a dedicated “thank you” email follow-up, might also reassure customers that they made a good decision.

 

5. It’s not just about her. Not only do women influence the majority of purchases in a household, they execute most of the purchases themselves. They buy for husbands, children, colleagues and friends, from birthday presents to baby shower gifts. So, not all messaging should be targeted at the female customer herself. Product suggestions should keep in mind the breadth of who a woman buys for.

 

6. Eliminate product-search frustration. According to a study by Aisle411, approximately 13 percent of customers leave a store without the item they were looking for. Employees need to ask every customer if they found what they were shopping for, and it can’t just be lip service. If the customer searched in vain, a system should be in place to record requested inventory and alert customers when it arrives.

 

7. Leave them with a small surprise. A good customer experience is worth its weight in gold. For a woman with a busy life––family, kids, career, etc.––shopping isn’t always enjoyable; in fact, sometimes it’s just another item on the to-do list. It’s the retailer’s job to make shopping fun (or at least, pleasant), and a little something extra can do the trick. It doesn’t have to be a huge undertaking––think small gestures like free samples at the store or a nice note during online checkout.

The Great Challenge of the Omnichannel Experience

Charlie Balch

The true meaning of “omnichannel” is a daunting proposition for many brands––so what’s the solution?

 

When it comes to the omnichannel experience, some might assume that retailers are the ones in control. But in reality, consumers are calling most of the shots, and brands primarily take a reactionary stance.

 

In the typical corporate discourse, the word “omnichannel” has become synonymous with selling merchandise through multiple channels––online, brick-and-mortar, print, etc. Really, though, omnichannel refers to the way consumers’ shopping and purchase behaviors have changed, placing the central focus back on the customer, who can now shop anywhere, and anytime. This has become the norm, and thus the expected way of doing business (at least, from a  consumer’s perspective).

 

No matter where a shopper is physically––on the sofa, in the store, at a baseball game––they can access a purchasing path right from their smartphone. They’re not very interested in which channel they’re shopping from, and in a sense, this leads them to expect a seamless experience among all the various channels. This introduces a tall order for most retailers, and the question becomes, “Where should we invest the most effort?” versus “How can we accomplish it all?”

 

There’s debate surrounding when exactly the omnichannel force began to take hold, but many believe it was around 2008 or 2010, when a number of trends surfaced to create something of a perfect storm. Smartphones and mobile devices became ubiquitous. The capabilities of e-commerce sharply improved, particularly via shipping (better lead times, and often free). Social media ramped up, increasing “word of mouth” product information-sharing (including price comparisons). Strategies such as “click and connect” gave customers more purchasing choices, and products and services became more easily customized to optimize the customer experience.

 

Long ago, a small, local market was able to serve customers in a holistic fashion. This is a much bigger challenge for so-called omnichannel retailers, yet the consumer demands remain. All the benefit is with the consumer, and all the hard work is with the retailer. It’s a huge challenge for any brand to excel in every one of these areas, and some of these goals simply aren’t a reasonable reality for many retailers. Virtual inventory systems, for instance, are a huge and expensive undertaking, as are initiatives such as universal free shipping.

 

So, what’s the answer? Retailers might be wise to pick and choose the omnichannel areas they focus on and invest in. By editing the ever-growing list of consumer expectations, brands can create a solid experience that defines them––rather the customer doing it for them.

Why Technology Isn’t Everything: Creating Meaningful Customer Relationships

Valeer Vandenbosch

In an omnichannel world, engaging with customers in a genuine way matters more than ever

Despite the rapid advancements in retail technology over the past several years, it might be easy to overlook the simple, tried-and-true fact that customers are people, and relationships with them matter––sometimes even more than the technology.

 

Today’s retailers are intensely focused on the omnichannel experience, the multiple channels of the shopping experience, and the technological details of completing a transaction. These are important things, no question, but Pareto’s rule of 80/20 is most certainly still relevant to the retail market: 20 percent of customer relationships drive 80 percent of the profit. Why? Because positive customer relationships breed brand loyalty and repeat business. In other words, if they can count on you, you can count on them.

 

The omnichannel model is arguably focused on numbers, not people. After all, with the “shop anywhere” mentality of most of today’s consumers, every sale counts, which is why so many retailers are looking to automate sales transaction and streamline other interactions with customers. But there’s a difference between consumers and customers. The former simply makes purchases and doesn’t contribute meaningful to a retailer. The latter, however, is an integral piece to instilling long-term value, romance and profitability to a brand.

 

In his book, “The Endangered Customer,” Richard Shapiro outlines eight essential “checklist” steps for attracting customers. They are:

 

1. Make me feel welcome (hope)

2. Give me your full attention (control)

3. Answer more than my question (connect)

4. Know your stuff (trust)

5. Don’t tell me no (frustration)

6. Invite me to return (feel wanted)

7. Show me I matter (caring)

8. Surprise me in good ways (feel special)

 

These principles start with employees on the floor. Apple is a good example. Associates are trained on the technology, of course, but there’s also a focus on creating relationships with customers. Talent is important, but engagement matters too. In fact, it’s largely what builds the “soul” of brands––the emotions that customers associate with the brands themselves.

 

Back when mass marketing and big-box stores were at their prime, the goal was to constantly maintain prices that were lower than competitors. This led retailers (Walmart, for example) to streamline everything from logistics to store operations, resulting in a lean staff––and less people on the floor to connect with customers.

 

The modern equivalent of that scenario is brick-and-mortar brands competing with the ecommerce giants. One way they’ve tried to stay ahead is the “buy online, pickup in store” strategy, in which customers have the online advantage of fast purchase and same-day receipt combined with the physical store advantage of seeing the product in person.

 

The idea is great, in theory. But the technology required to enable a fully reliable “buy online, pickup in store” model requires enormous investment––one that most retailers haven’t made (and aren’t ready to make). This past holiday season, faulty systems left many “buy online, pickup in store” customers frustrated, standing in line, with no associate who knew where their items were (or if they were in the store at all). This is a good example of how rushing to implement technology as a solution can actually work to sabotage the brand.

 

In the end, customers are people who want help when they need it and who want meaningful interactions with a brand––through every step of the purchasing process.