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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.

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.”

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.

The Mobile Experience: Why it Works Better With Stores

Mobile is important, but so are stores––and ideally, they work together 

What goes around comes around, and in a funny twist of fate, mobile devices are driving shoppers in-store now more than ever. According to research based on Google data, searches related to mobile shopping increased 120 percent in the last year alone.

 

Needless to say, this explosive growth has propelled retailers to hone in on their customer-facing mobile experience, from inspiration to first-time to purchases to repeat business. Mobile is particularly valuable to retailers because it offers a higher degree of customization––that is, it’s easier to know exactly who’s shopping, what they’re looking for, where they are geographically, and more.

 

After discovering that a full three-quarters of its customer base begins the path to purchase online, retail powerhouse Target now refers to mobile as the “front door to the store.” Additionally, they learned, one-third of its customers who click on a mobile search ad end up visiting a Target store. Similarly, telecommunications giant Sprint found that a quarter of people who click on their mobile search ads go to a Sprint store.

 

Perhaps not intuitively, mobile has also matched consumers with locally specific information––and according to Google search data, people are looking for resources “near me” 2.4 times more than this time last year. A 2015 Google report suggests that 50 percent of people who search locally on their phones go to the store with a day, and 18 percent of the searches result in a purchase.

 

Whether an item is stocked in a local store is another reason customers visit––or avoid––the brick-and-mortar. A quarter of those surveyed say they tend to not make a store trip when they’re not sure if the desired item will be there. This underscores the importance of ads or mobile sites that can deliver real-time inventory data. Using Google’s local inventory ads––a tool that supplies consumers with inventory information related to online searches––Sears Hometown and Outlet Stores reported a 122 percent increase in store visits. This drove $8 of in-store sales for every dollar put into the tool.

 

Not only do mobile devices get consumers into stores, they also serve as “assistants” to customers who are already there. Over 80 percent of shoppers reported using their smartphones to research purchases they were considering. Additionally, almost a quarter of shoppers say they’ve changed their minds about a product after consulting their smartphones––while in line to buy the product!

 

If you can’t beat ‘em, join ‘em, which is why beauty retailer Sephora encourages shoppers to scan products into the brand’s mobile app to see customer ratings, reviews and other relevant factors.

 

Customers who shop both physically and digitally present the most value to a retailer––in fact, they spend 250 percent more with a single brand, according to MasterCard. So, while a strong mobile presence is necessary, and a strong store presentation is necessary, both elements must work in tandem to create a rich, cohesive, nearly seamless experience that connects with shoppers––and gets them to buy.

The Fight Against Ad Fraud

Illicit activity is costing the industry billions each year––and a new study suggests real action needs to happen

Roughly $8.2 billion each year: that’s how much is being spent by the nation’s marketing and media industry to combat ad fraud, suggests the Interactive Advertising Bureau’s first official study on the issue.

According to the report, conducted for the bureau by Ernst & Young, over half of the money spent each year is a result of combating non-human traffic, or false advertising impressions that advertisers pay for, but that don’t provide genuine contact with real consumers. Non-human traffic is the largest reason behind money lost to ad fraud, with about $4.2 billion spent annually, the IAB said. Most of the losses––72 percent––occur on desktop campaigns, and 28 percent happen on mobile.

Advertisers spend roughly $169 million combating invalid traffic, while infringed content––such as pirated movies, TV, content and music––accounts for approximately $2.4 billion. Though the IAB couldn’t provide an estimate of how many people would actually pay for the content they pirated, it did say that eradicating piracy entirely would drum up $456 million in advertising via legal content, with another $2 billion generated for the music, TV and movie industry. Somewhere around $48 million is lost to subscribers who share their passwords with others who don’t pay for a subscription.

According to the IAB, in the next several years, more people will consume pirated content via digital means if no real action is taken to combat it. Roughly $1.1 billion is lost each year to activity spurred by malvertising. One application of malvertising is when users are redirected to sites they didn’t intend to visit, sometimes leading to downloads they didn’t want. This contributes to the formation of bot nets that allow for traffic fraud and spyware. That $1.1 billion also includes $781 million lost when consumers install software that blocks ads.

The cost involved with researching, fixing and documenting malvertising comes to about $204 million, according to the IAB. Comparatively, $17 million is spent combating it each year. Preventative measures can include thoroughly identifying new business partners and relationships using measures such as address information, tax IDs and background checks. For the advertising industry, the hope is that this new study will act as a catalyst to take meaningful action to correct illicit activities and create a global solution.

Temporary Permanence: How Pop-Up Retail is Gaining Ground

From one-day store displays to tweet-for-cash rewards, some merchants are approaching retail in unexpected ways 

When an industry is worth $80 billion, you wouldn’t assume it’s commonly referred to as “temporary.” But the temporary retail model –– often referred to as pop-up retail –– is looking like it’s here to stay.

Once considered a passing trend, temporary retail has gained traction and popularity over the last several years, and it’s now considered a global mainstay of cutting-edge marketing. As consumerist culture continues to change quickly (thanks to digital retail, social media and other technological advances), brands are relying on the unexpected to capture consumers’ attention by disrupting their shopping experience.

Creative displays, quick setups and flash discounts offer retailers avenues to experiment that are less risky than making permanent, widespread changes. They can test a new product, for example, or see how customers respond to a shift in stores’ visual merchandising.

Another way that brands are exploring new ground is by blending offline and online retail experiences. Touch screens in brick-and-mortars let consumers digitally shop while physically in the store. Opt-in text messages sent to in-store customers give the scoop on deals, offers and one-day sales.

Some retailers are even entertaining cash or material rewards for consumer-generated promotional tweets. Marc Jacobs, for example, introduced the Daisy Marc Jacobs Pop-Up Tweet Shop last year, in which customers could pay for products and fragrance samples using “social currency” –– tweets and posts on Facebook and Instagram about the brand and store.

Though pop-up retail is rooted in change, some brands are toying with “temporary permanence” by dramatically changing the in-store appearance –– from merchandise to fixtures –– every 30 to 90 days. From a workload perspective, the practice is daunting, but it can allow retailers to get a better feel for what attracts new consumers and what the current market is looking for.

This more fluid, less committed approach to traditional retail isn’t something just small retailers and digital-only merchants are pursuing. Well-respected, multi-channel brands like Kate Spade, Nordstrom and Apple are finding ways to create “shops within shops” that serve up customized marketing with the goal of retaining customer loyalty.

Over 50 and Spending Strong: A Valuable Demographic

Though millennials are the most coveted segment, retailers shouldn’t overlook the 50-plus crowd

For all the buzz surrounding how aggressively advertisers are pursuing their most-coveted market, millennials, one might be surprised to learn that for the first time in history, consumers over the age of 50 comprise the majority of all consumer spending. According to recent information released by the U.S. Consumer Expenditure Survey, the over-50 set accounts for 51 percent of spending.

Though 2015 marks the year that millennials became the largest adult demographic, consumers over 50 control 70 percent of the country’s wealth. During the holiday season, this means they’ll likely spend more than their kids. The study found that the over-50 segment is responsible for about 57 percent of “big ticket” purchases and gifts, such as new cars.

Consumers older than 50 also––perhaps not surprisingly––account for most of the country’s spending on health and insurance, 63 and 68 percent respectively.

While it might be tempting to assume that the over-50 crowd tends to be less technologically inclined, the report suggests that this isn’t the case at all. The demographic is increasingly relying on mobile, including social media––research shows that more than 15 percent of them spend 11 or more hours a week on Facebook. It’s also estimated that consumers older than 55 are among the most rapidly growing segment to use mobile devices. Additionally, according to the AARP, 40 percent of that organization’s site traffic is derived from mobile.

Unlike many millennials, adults older than 50 are also still immersed in print, and they spend considerable time going to movies and watching TV. For advertisers, this means that reaching this demographic isn’t difficult, as they’re actively involved with several forms of media.

The messaging within the media is also reflecting a changing demographic. Although the average 50-plus consumer is still value-oriented––regularly searching for discounts, deals and seasonal sales––they’re also engaged in life, they’re staying physically active, and they generally maintain a positive outlook about aging.

Despite the emerging trend toward mobile, the over-50 demographic hasn’t abandoned the brick-and-mortar shopping experience. Offline retail accounts for more than 90 percent of the country’s commerce, and even behemoth online brands such as Amazon are considering establishing a transactional presence in the physical world. Adults older than 50 still enjoy the in-person shopping experience, as evidenced by Walmart, who gained 5.7 million customers over 50 in the past three years alone. This represents eight times the growth of the retailer’s younger customers.