Posts Tagged ‘retail’

‘Twas the Season for Online Shopping

Friday, January 9th, 2009

vipaynichnew1thumbnail.jpg Recently, I opened up my community newspaper to learn that my favorite shoe store was going out of business—another victim of the economic meltdown. Another blow came a few days later when my husband and I drove to one of our favorite neighborhood restaurants only to be greeted by a sign on the door that read: Thank you for allowing us to serve you these past few years. Unfortunately, we have closed our doors.

Although for several months, we’ve all heard the news reports about companies and industries in dire straits, the reality is much more sobering when you literally see the signs in your own backyard. And while some companies are bracing themselves for rough seas ahead, it’s refreshing to hear about companies that have been able to prosper despite such difficult times.

Take, for example, the company featured on this month’s cover, Zappos.com. This online shoe store reached the $1 billion mark in sales for the year. How has this nine-year-old company been able to do it? According to CEO Tony Hsieh, by focusing on building an enjoyable corporate culture and enhancing the online customer experience—whether it’s through free shipping or complimentary upgrades.

However, Zappos isn’t the only e-tailer to pull out all the stops for customers. Retailers plan to make online shopping more appealing to Christmas shoppers. In fact, a 2008 eHoliday Study conducted by Shop.org shows that 78 percent of retailers plan to offer free shipping with conditions. What’s more, to attract holiday customers, they have invested in new site features to augment their purchasing experience. Such features include:

• 42.9 percent of retailers have added improved site search to help customers navigate sites more easily;

• 24.6 percent added product video; and

• 32.7 percent offered customer reviews.

These online retailers are well aware that tight budgets will force people to hold out for the best deals. Perks like free shipping with conditions is just a snippet of what e-tailers are doing to entice budget-focused shoppers. According to the Shop.org study:

• 27.1 percent of retailers have added and enhanced clearance sale pages;

• 31.3 percent added featured sale pages; and

• 25 percent of online retailers added a Facebook page.

Why do more shoppers prefer purchasing online rather than shopping at brick-and-mortar retailers this holiday season? The study reveals that 58 percent of consumers cite 24-hour shopping convenience as one of the primary reasons. Their desire not to battle crowds is another reason consumers give for their online shopping preference.

This year, brick-and mortars like Mervyns and Linens ’N Things have succumbed to the weakening economy. However, other retailers refuse to rely solely on in-store traffic to generate holiday sales. Retail giant Walmart, for instance, integrates its online and retail efforts with its Site-to-Store program, where customers can order their merchandise online and pick up their purchases at a nearby Walmart location. As an added incentive, the retailer offers free shipping. Other retailers like Toys “R” Us and Borders focus on coupon promos and online deals.

Of course, these are challenging times for our industry. But what companies like Zappos teach us is that it’s possible to overcome those obstacles if you remain consistent with your marketing message and stay focused on ways to best serve your customers.

Vi Paynich is Electronic Retailer magazine’s editor-in-chief.

To view the entire December issue’s interactive, online format, click here.

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Posted in Advertising, Branding, Electronic Retailer, Marketer, Online, Research, Retailer, Social Networks, Video | 2 Comments »

Four Ways Retailers Can Boost Cross-Sell Results

Friday, January 9th, 2009

dk-photo.jpg Many retailers have learned how to leverage their data to help identify opportunities to increase their share-of-wallet by cross-selling additional products and services to established customers. Yet many retailers remain disappointed with the results of their cross-selling efforts to deepen and broaden their relationships with established customers. Response rates have remained flat or actually declined. Average order sizes remain unchanged or are actually decreasing. Tinkering with the current approach will no longer provide incremental improvements — 2009 is the year to build a new foundation for your cross-selling strategy, based on four cornerstone concepts:

1. In-Market Timing
Many retailers who have developed an ability to anticipate when customers are interested in buying have done so by building a standalone model, and then face the logistical challenges of working with multiple models to account for both choice and timing in any customer’s purchase decision. Your analytics department or vendor needs to have the capability to take both of these dimensions into consideration in one integrated modeling framework.

How could your cross-selling results improve if you were able to not only anticipate what each customer or segment is interested in, but when their interest will be highest? And to eliminate individual customers or segments from further solicitations of the same or similar offer when they are no longer interested? And do both while also taking into account your competitions’ plans?

2. Repeat-Purchaser Focus
Every retailer has a percentage of single-transaction customers, but few retailers design and implement specific strategies to increase their number of repeat customers. Aside from the data management issue of identifying a first-time customer (not an insignificant issue in itself for many retailers), the other challenge is deciding what exactly to offer these customers to encourage a second purchase. Even with the limited data that you will have on file for these customers, an analysis can identify at either the individual or segment level the specific second-purchase decisions with the highest potential acceptance.

3. Cross-Channel Offer Affinity
Every retailer knows the importance of delivering consistent messaging across customer channels, and many are in the process of making significant strides in this area. Yet, despite widespread consensus that cross-channel integration is critical, many retailers struggle to find and deploy practical strategies to infuse more cross-channel intelligence into their marketing programs. In many cases, the concept of “offer affinity” affords retailers an immediate opportunity to provide meaningful communications to customers across channels.

“Offer affinity” is based on a marketing analysis that finds a pattern of one type of purchase naturally following another. To use a home improvement example, a purchase of deck lumber would have an intuitive follow-up sale of deck stain, but an analysis of transaction data could point to other “missed purchase categories” such as joist brackets, and flashing.

Finding these “potential pairings” is something that in-store merchandising display departments have studied and reacted to for years, but now that kind of intelligence can inform both offline and online customer communications.

4. Marketing Agility
A decade after the launch of marketing automation systems to execute and measure direct marketing strategies, many retailers remain locked into campaign-centric views of their marketing programs. The demands of today’s marketplace require that retailers be able to respond to smaller and smaller segments of customers with increasingly targeted and timely offers.

Your database marketing platform needs to provide a cross-channel marketing management solution that provides a high degree of customization at either the individual customer or segment level. Such a platform will allow you to transform the way you think about marketing, breaking out of the traditional campaign-centric view to truly deliver customer-centric marketing.

David King is CEO of Fulcrum.

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Posted in Direct Response, Marketer, Online, Research, Retailer, Support Services, Web Analytics | 2 Comments »

How Traffic Drivers, Profit Drivers and Loyalty Builders Work Together to Increase Profit Margins

Monday, December 22nd, 2008

pontusk_avail.jpg By drawing on the experience of traditional retail, and taking advantage of the unique opportunities presented by the Internet, e-retailers can look brightly at the future in spite of a gloomy economy.

Although Internet sales is one of the few retail channels that is actually growing, plenty of e-retailers are preparing to launch major Christmas sales despite the traditionally generous spirit of the season. The urge for posting flashing sales banners both here and there, of course, stems from the gloomy economic climate and grim prognosis for the future.

But in the face of an economic recession, it takes more than a traditional sale to continue to drive profits while still retaining current customers, as well as recruiting new ones. E-retailers have a unique advantage in the undertaking of this task, but to be successful they must learn from traditional strategies often applied by the brick-and-mortar grocery stores around the world. A typical example is when these stores divide their product ranges into the following categories: traffic drivers, profit drivers and loyalty builders. A traffic driver is a product that the store’s target audience needs to purchase often, and that it perceives as being expensive. Profit drivers are other products that are important to the target audience, but which they do not purchase as often and thus, are not as price sensitive towards. And finally, loyalty builders are the more luxury oriented consumption products.

The logic is simple. By offering a reduced price on the so-called traffic drivers, you can attract more customers to the store, and once they are there, they may as well pick up the profit drivers. During their visit, they will be exposed to the luxury goods—creating a positive experience and thus, urging the customer to revisit that particular store again in the future. This strategy allows the retailer to maximize customer acquisition, whilst only reducing the price of the traffic driving products.

E-retailers can also apply a more sophisticated version of this strategy. By allowing their most popular, top-selling products to act as traffic drivers by exposing them in sales campaigns, they can drive a maximum number of visitors to the site. This is where their advantage over the brick-and-mortar stores comes in. By using behavioral-based marketing, the e-retailer can control the extent to which the customer also picks up those important profit-driving products during his or her visit. By exposing the customer to products that one knows other visitors with similar behavior are interested in, and all the while applying business rules to regulate which products should be presented depending on profit margins, etc., the e-retailer can control exactly which products are exposed to each individual visitor—in real time.

Through the application of old and tested strategies combined with the latest technology, e-retailers can increase turnover and market share while not sacrificing any profit margins. And this during times when most physical stores are struggling with sales banners and red price tags.

Pontus Kristiansson is CEO and founder of Avail Intelligence.

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Posted in Marketer, Online, Research, Retailer, Support Services, Web Analytics | 3 Comments »

5 Reasons Retailers Replace Their Retail Management System

Tuesday, November 11th, 2008

don-formal.jpg As software selection advisors, my team has talked to thousands of retailers considering a major new software purchase. The vast majority of them are replacing an existing system—one that they’ve used for years. Why? Why replace what’s familiar? Why pay up for something entirely new when an upgrade is—on paper—less expensive? Why move away from a long-term vendor relationship? There are plenty of reasons. Here are the top five responses we hear when we ask, “What’s driving you to replace your existing system?”

1. Improve usability and adoption. For many businesses, the system that best matched their functional requirements turned out to be too difficult to use. In an environment where employee turnover is high, poor usability can make it very difficult to get new employees up-to-speed. By far the biggest challenge we hear from buyers is that their existing POS software system is non-intuitive; they are looking for a new system and their primary requirement is ease-of-use.

2. New store growth. It’s a big leap to go from managing one store to managing two, five, 10, 100 or more. This challenge is especially difficult if a retailer plans to manage their inventory and accounting for multiple stores in one single POS or inventory management software system. Often the simple, single-store system that was easy to get going is grossly insufficient for rapid new store growth.

3. Poor tech support. Frequently, buyers come to us when they’ve gotten too frustrated with the poor support they are getting from their existing vendor. Either the vendor was a “one-man shop” that couldn’t keep up, or the vendor “lost its personal touch” as it grew too big, too fast. This impetus for change is even more powerful when poor service is combined with increases in support fees.

4. Integrating multiple channels. Many retailers are moving to support multiple channels —retail stores, e-commerce websites, mail-order catalogs, etc. As they roll out new channels, they often implement separate, redundant software systems—one for each channel. We talk to a lot of buyers that are now looking for a new, all-in-one system for multichannel retailing.

5. Hardware failure. Many retailers have been on the same system for a decade or more. They may have remained patient with an old, DOS-based system, but their hardware eventually gave out. An upgrade to new hardware presents a logical opportunity to bring their software up to current standards, as well. Much of the time, they can’t even install a dated system on new hardware and are forced to move to new-generation software.

We’ve heard many other reasons for replacing existing systems, but these are the most common. They also present a good lesson for new retail organizations that want to invest ahead of rapid growth. Consider these challenges and invest in a retail management system that will support your expansion plans.

Don Fornes is CEO of Retail POS Software Advice.

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Posted in Online, Research, Retailer, Support Services | 2 Comments »