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RelevanceReport 5.30.14

Walmart Pay, Macy’s Jeff Gennette, Amazon Prime Day: the BloomReach Relevance Report

Got through that week by the skin of our teeth. You, too? Sit back and enjoy the BloomReach Relevance Report.

Walmart Pay: It’s everywhere

Walmart Store front

Wal-Mart has rolled its mobile payment system out to all its stores, which is a little like instituting a policy across a small country. Bloomberg reports that you’re now free to blow your paycheck through Walmart Pay at all 4,600 Wal-Marts in the land.

We report on all this because mobile payments are kind of fascinating when you think about it. We mean, how hard is it to swipe a credit card? Probably not as hard as fumbling with a mobile phone at check out and lining up your bar code with a bar code reader etc.

Then again, think of all the ways retailers could make mobile payment systems worthwhile. What if you could travel through the store, scanning items you put in your cart and check yourself out? Nice.

Or think about the possibility of combining promotions, automatically downloaded coupons and loyalty programs all in one spot. Scan the products you want to buy, the machine factors in discounts, coupons, accrued loyalty points and bingo — it checks you out when you’re ready.

As Bloomberg points out, Starbucks already has integrated its loyalty program into its app. And it allows customers to order ahead and pick up their drinks at the barista bar, which is close to our self-checkout ideal.

And you know what? Starbucks is on to something. Mobile Payment Week and others report that 24 percent of Starbucks sales in the second quarter came through mobile payments, making it a mobile payment champ.

Mobile payments, of course, is a big win for retailers, even if it’s catching on slowly. It provides retailers with another big bucket of consumer behavior data — and consumer behavior data in stores, which has been much harder to capture than online data.

Chances are, then, that we are at the very beginning of what will become a big deal. Stay alert.

Will Macy’s CEO-to-be Jeff Gennette find he’s in the real estate business?

Yes, Jeff Gennette, we realize you haven’t been officially sworn in as CEO of Macy’s, but what have you done for us lately? Veteran retail-watcher Shelly Banjo has a to-do list for the future leader, most of it having to do with real estate moves.

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Now, the BRRR has always seen struggling enterprises selling off their real estate as the equivalent of the down-and-out family burning the living room furniture to stay warm in winter. When it’s gone; it’s gone.

(Maybe it just brings back bad memories of our former industry, in which hedge funds and others bought up newspapers, cashed in on prime real estate and ran the journalism into the ground.)

Gennette might want to listen to Banjo’s tune. Some of the smart money is already counting him out, based on the notion that it’s going to take bold moves to save Macy’s and bold moves tend not to come from people who’ve been with a company for 33 years.

But Banjo has the numbers to back up her advice. She cites arguments from shareholders who say Macy’s property is worth $21 billion, while its business is worth only $17 billion.

Brick-and-mortar sales, meanwhile, are not pulling their weight. Those sales are down, while e-commerce sales are growing. And surprisingly, she reports on Bloomberg’s website, Macy’s has more stores today than it did in 2005, despite a series of plans to close stores.

Beyond all that, Banjo rightly points out that Macy’s doesn’t need to completely sell off stores — or even a portion of stores. Instead, it can form partnerships with mall operators, pull in some cash for the value its partners get and continue to partially own its stores, or select stores.

Makes a lot of sense. Now it’s a question if long-time-Macy’s-guy Gennette is a sentimental softy, like the BRRR, or whether he can pull the trigger.

At least unlike newspapers, Macy’s has a reasonable path to come out on the other side, if it can nail its e-commerce business.

But with augmented reality, why fix up the room at all?

Grand reopening of Lowe's Sanford Store #3608 in Sanford, North Carolina September 8, 2011...Photo by: Patrick Schneider Photo.com

 

Want to talk about augmented and virtual reality and retail? Didn’t think so. Sure, the topic has that feel of something the cool kids want to talk about just to be cool.

But you can start to see where the idea might get off the ground when you look at what home-improvement giant Lowe’s is doing with the technology.

Fast Company reports that the retailer is coming out with a system that will let shoppers see what rooms would look like with new floors, new appliances and other new doohickies. Better than all of that, the application will actually measure a room or a counter space or that impossible little corner where you have to put your new fridge.

Do you know how hard it is to get those measurements right — and how easy it is to order a fridge that will never, ever fit in that space? Of course you do. Lowe’s is promising that they won’t even show you online appliances that won’t fit in the space you identified.

What’s key to all this is that Lowe’s has come up with something that is immediately and understandably useful to consumers. That’s when retail innovation gets exciting.

One undercurrent of the Fast Company story is the idea of: Who would expect Lowe’s to come up with such cutting-edge stuff? And it’s a clever and understandable approach — seeing as it’s fair to think of Lowe’s as a store packed with old school tools and materials.

But Lowe’s has been out there on retail innovation for years. A couple of years ago, Ad Age took a look at the earlier days of Lowe’s augmented reality initiative. The story traced how Lowe’s was working with science fiction writers to come up with scenarios in which consumers could peer into the future of their home remodels.

From the outside looking in, Lowe’s lab in San Francisco looks like one of the more intriguing of the many retail innovation labs that have cropped up in and around Silicon Valley. It’s going to take leaders who are neither afraid to fail nor call on science-fiction writers to move retail forward.

Otherwise, all the breathless talk about the future of retail will be just that.

Amazon is opening hundreds of stores, or some, or a few, OK, at least two

Amazon Box

Hey Amazon is apparently opening a bookstore in New York, which would be the online super store’s first physical book store. Well, first physical bookstore on the East Coast, as reported by the New York Post.

OK, well, actually, it’s Amazon’s second physical store in New York City, except its first store in New York City never opened. Oh, it’s so confusing when worlds — online and brick-and-mortar — collide.

But one thing is for sure: When Amazon is involved, the world is interested. Remember the hubbub when news broke that Amazon was opening that Manhattan store near the Empire State Building? It was to be Amazon’s own “Miracle on 34th Street.”

And then, of course, there was last fall’s announcement that Amazon was opening an honest-to-goodness bookstore in a Seattle mall. The store’s name? Amazon Books.

And the news three months later, based on what appeared to be a mall executive’s slip-up, that the company would be opening hundreds of more stores across the country.

We get it. We do. Amazon, the online giant, opening brick-and-mortar stores has a certain “Man Bites Dog” quality to it. And whenever Amazon does anything, it sends ripples through retail and sometimes the economy. The place is like its own country and what it does affects people’s lives.

Amazon, for its part, still hasn’t said exactly what it’s up to. But we’ll no doubt hear about every twist and turn.

So, stay tuned.

No experience beats a doughnut experience

Randy's Donuts

Given the small number of data points involved, there might be a hole in our theory, but we’re thinking the San Francisco Bay Area doughnut wars might come down consumers’ craving for a memorable experience when they engage in retail.

Maybe you think we obsess about this customer experience thing — and OK, maybe we do. But it’s big. Marketing Daily reports that two-thirds of chief marketing officers are now responsible for customer experience, elevating it to the C-suite. And face it: Customer experience is a way forward for brick-and-mortar stores worried about falling foot traffic and wondering about the future.

Not the only way forward, of course, and not always the No. 1 priority. Customers still want convenience, selection, low prices, free delivery, ample parking. You know, everything. But providing a special feel or product or both is definitely a way to get customers to keep showing up.

So back to the doughnuts. (Don’t mind if we do.) The Mercury News story explores the ground war over doughnut shops in the Bay Area. Dunkin Donuts, a rarity in the region, is apparently making a push into the territory. Krispy Kreme, which moved in years ago, has apparently had its ups and downs.

Why the KK struggle? Possibly because of a thriving culture of family-owned, decades-old corner doughnut shops. (They’re not all on the corner, but we kind of like the imagery.) The old doughnut shops are places where everybody knows your name; where the same folks serve up your doughnuts day after day; where owners and employees watch over the years as children grow up and bring their children in.

Dunkin Donuts, Krispy Kreme and the like are cookie-cutter, if you’ll pardon the mixed sweet-treat metaphor. Tasty and convenient (and many swear by Dunkin’s coffee — see fourth item), but corporate.

To further our argument, that experience matters, we turn to Julie Clark, of Stan’s Donut Shop in Santa Clara, Calif.

“Finding old-school businesses — mom-and-pop shops — people like discovering that,” she told the Mercury News. “I think at times people want something a little less cookie-cutter … that has a little more character.”

And that’s the hole truth.

Do we get Prime Day off?

Prime Day Logo

If this keeps up, pretty soon we’ll be buying each other Prime Day Hallmark cards — on Amazon, of course.

Yeah, Prime Day is nearly upon us and with its approach comes some surprising news from CNBC. it turns out that Prime Day is a big day not only for Amazon, which launched it a year ago to honor itself on its birthday. CNBC reports that the top 25 U.S. retailers saw a bump on the big day in 2015.

In fact, Prime Day 2015 was the fourth biggest online sales day of the year, right behind Black Friday, Cyber Monday and Thanksgiving. In all 179 million visitors shopped on the sites of the country’s top 25 retailers, CNBC says.

Prime Day was engineered to build Amazon’s already huge Prime membership. Amazon offers deals, huge deals, on all kinds of stuff (including some that apparently nobody wants) in rapid-fire succession all day — but only to Prime members. A sort of feeding frenzy develops, complete with game plans, ala Black Friday.

And it works. Amazon had its biggest day in history, up until that point last Prime Day. Shoppers ordered nearly 400 items per second, Amazon reported. And it’s hard to image the promotion didn’t attract some new Prime members. (Amazon is not real chatty about the number of Prime members it adds, subtracts or has.)

What can we say? We’ll start with happy Prime Day.

Quote of the week

“Nothing can kill a brand faster than ill-conceived discounting. It’s problematic on a number of fronts. You either train your loyal customers to cherry-pick products on sale or, worse, lead them to believe that you’re not competitively priced day-to-day, leaving the door open to competitors.” — retail futurist Doug Stephens to Retail Drive, regarding the dangers of competing only on price.

Photo of Walmart and Amazon box by Mike Cassidy. Photo ofJeff Gennette courtesy of Macy’s. Photo of Lowe’s store courtesy of Lowe’s. Amazon Prime logo courtesy of Amazon. Photo of Randy’s Donuts by John Mueller and newspapers by Jon S. published under Creative Commons license.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

Logan Square

Are retailers ready to hang with the cool kids?

Big retailers that are wondering where their customers are going might want to start looking on the “cool streets” emerging in cities across the country.

You know, cool streets. The up-and-coming or already established hipster neighborhoods identified by Cushman & Wakefield as the once-on-the-fringe commercial districts that have the potential to power brick-and-mortar retail’s future.

The “Cool Streets” report by the global commercial real estate giant is fun, in the same way any list of the best this or that is fun. But it’s deeper than that. Once you’ve looked to see whether the hood that’s home to your favorite taqueria is on the list, consider the bigger picture.

Retail is changing at an ever-increasing clip. Brick-and-mortar department stores are looking for answers. Big chains are closing stores and reshuffling their real estate line-ups to take advantage of their most prosperous locations. Everybody is working on ways to make the most of shifting consumer habits that mean shoppers move fluidly among devices and between devices and physical stores.

Cool streets, according to Cushman & Wakefield, are a piece of the puzzle. The report identifies 100 in all and conducts a deep dive on the top 15. These neighborhoods — Sunset Park in Brooklyn, Logan Square in Chicago, Roosevelt Row in Phoenix, Silver Lake in Los Angeles, Los Gatos, near San Jose, Calif. — are populated by millennials and by independent retailers, or trend-setters or small chains that are focused on customer experience as much as customer transactions.

So, what do the storefronts in this trendy-for-not-being-trendy neighborhoods look like? The report points to examples like Warby Parker, Shinola and Whole Foods 365 stores.Shinola StoreWarby Parker, of course, is an online-first company that started experimenting with physical stores and found customers developed an almost-Apple-Store-like affection for the look and feel of the stores. Whole Foods 365 is all about smaller footprints, lower prices (lower than its full-on Whole Foods stores) and appealing to urban millennials.

That said, 365s will be big on experience, Cushman & Wakefield points out, featuring frequently changing in-store pop-ups selling everything from vinyl records to tattoos.

And Shinola? Well, it’s a place that sells watches, leather goods, journals and, uh, bikes. Yeah, bikes. Totally about the experience, the report says.

“But Shinola is definitely not just a watch or a bicycle or a leather goods store. Shinola is a lifestyle store for millennials,” the report says.

It goes on to explain that millennials are big experiencers, spending 15 percent more of their disposable income on experiences than did the generations that came before them.

Experiences, such as?

Well, eating stuff, apparently. It seems the way to a millennial’s wallet is through his or her stomach. Cushman & Wakefield says that restaurants outnumbered other retailers by a 2-1 ratio in the 100 neighborhoods upon which it bestowed the cool label.

And while millennials are all the rage, in some ways they just reflect the population at large. (Sorry, millennials.) Consumers, overall, appear to be shifting their spending toward experiences. The Cool Streets report says that restaurant spending now accounts for 12 percent of retail spending, the highest it’s been since the U.S. Commerce Department started keeping track 30 years ago. That’s up from an average just below 10 percent from 1992 to 2010, the report says.

The Cushman & Wakefield findings present something of a corollary to a study by Deloitte Digital analyst Kasey Lobaugh that I wrote about in May. Lobaugh’s Retail Volatility Index found that since a 12-month period Deloitte studied in 2009-2010, the nation’s biggest 25 retailers lost .9 percent of their market share — a figure representing $41 billion in 2015.

And no, Lobaugh explained, that was not spending that necessarily moved online from brick-and-mortar stores. That was money that moved to smaller competitors, he said, startups and upstarts, some moving to the U.S. after success elsewhere.

The Deloitte report did not include an exhaustive list of the start-ups, mid-market players and previously foreign retailers that are doing the disrupting, it did describe some of the features attributed to stores like Warby Parker and Shinola. The Retail Volatility Index refers to the assault as “death by a thousand cuts.” It continues:

“These ‘cuts’ include a variety of challenges including those from smaller players with different business models to single-category players who offer a greater depth of offerings when compared to more horizontal players….”

If you think of Shinola as having a different business model (eclectic inventory, assembled in Detroit) and Warby Parker as a single-category player (eyeglasses), it’s not a giant leap to assume that at least some of those putting a dent in the big players’ sales are lining the cool streets that Cushman & Wakefield has identified. And Lobaugh’s observations align with Cushman & Wakefield in another way, too.

Logan Square

In his May presentation, Lobaugh noted that the retailers most vulnerable to losing share to upstarts are those that provide commodity goods or a lackluster customer experience. Those providing a ho-hum experience with goods anyone can buy anywhere are in the most trouble, of course.

Cushman & Wakefield reached a similar conclusion while looking at big legacy chains that feel constrained by the pressures of being publicly traded and that can be slow to embrace change:

“Too often, the result of these limitations is retailers with shelves full of homogenous goods in increasingly empty homogenous stores situated in dying homogenous malls. The irony in all of this is that by being too conservative while navigating this new challenging landscape of omnichannel retail, brick-and-mortar retailers may actually inadvertently drive their customers online by simply being boring.”

So, what’s next? “Cool Streets” lays out a future in which some struggling apparel retailers could make the move from the mall to a cool street near you (or near your cool friends, if you’re not yourself cool). Cushman & Wakefield’s scenario goes like this:

Investors pressure big mall retailers to close low-revenue locations in second- and third-tier malls and “right size” for an e-commerce world. First-tier mall owners see the trend and jack up rents for retailers who are keeping their best performing stores open.

“This situation may force many traditional mall tenants to rethink their real estate strategies and begin looking for creative alternatives. Cool streets will be one of them,” the report concludes.

It’s hard to imagine that big department stores leaving malls for hipster neighborhoods will become a big trend, but maybe I’m not cool enough to see it.

Either way, another consequence of the cool street phenomenon covered by Cushman & Wakefield seems inevitable. Neighborhoods will become too cool for their own good. This, of course, has already happened (think Williamsburg in Brooklyn, among others), as the report points out.

Cushman & Wakefield describes it as a cycle. Somewhat sketchy neighborhood sees real estate prices fall, which attracts dreamers, speculators and under-capitalized businesses. Momentum builds. Hipsters and adventurous residents move in. Restaurants flourish. Retail follows. Rents rise. Neighborhood goes mainstream. Gentrification complicates life for the pioneers.

In the end, it might be what progress looks like. It might also be what sustainable urban revitalization looks like, which is a good thing.

Photo of Shinola’s Tribeca story by Design Milk and Logan Square by get directly down published under Creative Commons license.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

RelevanceReport 5.30.14

July 4th spending, Prime Day, Kohl’s future-seeking: The BloomReach Relevance Report

Has it really been 240 years since the United States had its own Brexit? And they said it wouldn’t last. Why not celebrate with the BloomReach Relevance Report?

Let the Fourth free you from your cash

July Fourth fireworks

Whatever you think of the propriety of it all, celebrating the red, white and blue has long come with a healthy dash of green — as in spending.

Sure there is spending on the traditions. For the Fourth of July there are the hot dogs, buns (not-dogs for the not-dog crowd) streamers, flags, safe-and-sane fireworks (dangerous and insane fireworks for the dangerous-and-insane-fireworks crowd).

That Desert Sun story points out that Americans will spend $1 billion on beer alone. A cool billion on cold ones: That’s a party. (Though, this Main St. story raises questions about how much of that beer will be brewed in the United States.)

That said, spending on traditional holiday items on the Fourth is only the half of it — not even, actually. The big money is in the holiday sales. It’s the American way. There are sales on Martin Luther King Jr.’s Birthday, Presidents’ Day, Memorial Day, Labor Day, Columbus Day, Veteran’s Day and Thanksgiving.

It’s a Salesabration.

And the Fourth is no different. You can get a red-white-and-blue deal on cars, trucks, mattresses, refrigerators, televisions, you name it.

The average Independence Day spending, per family, on picnics and barbecues will be about the same this year as it was last year, but retailers will still see more cash. More people are celebrating in the United States this year, the National Retail Federation says.

Forbes says some particularly good deals are to be had on clothing, particularly teen, fast-fashion because sales have been slow.  And bargain hunters should benefit from retailers’ need to clear out summer stuff to make way for back-to-school products. (Sorry kids.)

It’s time, apparently, to enjoy summer while you can.

Happy Fourth.

Prime day coming back

AmazonBox

And speaking of holidays, Prime Day is back, the Associated Press reports.

Prime Day. Yes, it’s a holiday! You know, the celebration of all things good about Amazon. For those of you marking calendars, Prime Day falls on July 12 this year because, well, because Amazon says so.

There are ancient traditions, dating back to last year, the first Prime Day. No, it has nothing to do with complex math problems yielding numbers divisible only by 1 and themselves (whole-number-wise). Instead, it’s about deals, deals deals, coming at you fast and furious, as long as you’re an Amazon Prime member.

It’s the biggest holiday of them all in the USA (United States of Amazon). This year, Jeff Bezos is promising over 100,000 deals, as many as one every five minutes, starting at midnight PDT.

(It seems Walmart wants in on the holiday fun. Retail Dive reports it’s gone nationwide with a free trial of two-day shipping. So, Happy ShippingDay, too.)

And while Amazon sees Prime Day as Black Friday and Cyber Monday all in one (wait, let us catch our breath), it should be noted that not everyone is a fan. Mashable last year even had the temerity to look a gift horse in the mouth. (Wait. Is it a gift if you have to pay for it?) Let’s say bargain horse. Look a bargain horse in the mouth.

And even the staid Associated Press (in the story above) referred to prime day as a “sales gimmick.” Harumph. I suppose National Grandparents Day is just a “sales gimmick,” too.

OK, the idea is to get millions of people to sign up for Prime, because only about 50 million have signed up so far, according to an analyst quoted by the AP. And once they signup, they will obsessively buy stuff from Amazon and join the millions who come home daily to boxes of stuff that they forgot they ever ordered.

But gimmick?

We’ll have you know that last Prime Day, also known as the first Prime Day, was the Amazon’s biggest international sales day ever, according to Amazon itself, which also released the top selling items in various countries — in case you wanted to peer into the psyche of places like Canada, which went with headphones, diapers and slow cookers.

Slap on some vinyl and your headphones to drown out the shrieks from the baby you just changed, fire up the slow-cooking poutine, kick back for about eight hours and dig in, eh?

However you decide to celebrate Prime Day, we hope you enjoy.

Retail’s new marquee stores

Urban Outiftters Rialto

Now playing at a theater near you: retail. Well, a theater near you, if you happen to live in Los Angeles, where “near” is kind of relative.

The Los Angeles Times has a nifty story about retailers, like Urban Outfitters, moving into grand old movie palaces in the city’s Broadway Theater District, home to a dozen old theaters in various states of repair and ill-repair.

Urban Outfitters moved into the 1917 Rialto Theatre in 2013, the Times says, and COS, an H&M brand, is moving into the Olympic Theatre in 2017.

And sure, we’d rather see old theaters used as theaters, because they’re just plain neat. But having stores move into the old movie houses is a good thing. Urban Outfitters fixed up the Rialto’s big marquee and the Times says COS will do the same at the Olympic.

The stores also refurbish the buildings, which sound like they were in pretty sad shape.

The retail revival is also apparently pumping up the neighborhood. The theater district is in downtown LA, a place that despite its downtown designation, was once a place that nobody wanted to go.

But an outfit called Downtown LA Rising says things are looking up in the city core and projects like the theater-to-store efforts help with all that.

For retailers, opening up in a cool, old building, is another example of brick-and-mortar seeking to provide an experience beyond just buying stuff. As a University of California, Santa Barbara, professor told the Times, for many, the old theaters are packed with memories.

(A little side note: You might recall that retail photographer Mike Mozart told us not long ago that his all-time favorite store, out of thousands, was a Walgreen’s in West Hartford, Conn., that had done the hermit crab thing in a old theater.)

Just wandering around an old place can be enjoyable. And if you happen upon a pair of destructed cargo pants, more power to you.

Kohl’s getting in touch with its inner innovator

Kohl's Allentown
It’s been pretty well established (OK, by us, anyway) that
retailers need to embrace innovation and a fail-fast mentality in order to survive the wild ride that digital commerce has injected into the industry.

Phil Wahba, writing in Fortune, takes us on a pretty good tour of what that means by telling the story through Kohl’s. Like other retailers, the Wisconsin-based company has opened a significant lab in Silicon Valley.

The challenge of getting with it is a big one for retailers, in part because it encompasses at least two big initiatives: Building consumer-ready technology that shoppers will use in the store to make shopping more efficient, more fun and more profitable (for Kohl’s) and designing a series of back-end systems that do the heavy lifting.

There are the in-store systems, like point of sale and various inventory trackers. And there is the e-commerce side with the need to personalize websites and apps, make search better, provide clear analysis of data that can be easily acted upon. And there is tying all those systems together.

It is no wonder that Kohl’s has opened, according to Fortune, a research and development center that employs 200 in Silicon Valley. The race has been on for some time and it is only going to accelerate.

In the end, if all goes well, consumers will be the winners.

Quote of the week

“E-commerce is a great fit for Pinterest because people often use it to find and pin products they are interested in buying. Other social properties have similar ambitions for ‘shop now’ buttons, but they don’t seem to have developed a lot of traction.”eMarketer analyst Debra Aho Williamson to The Mercury News regarding Pinterest’s move into visual search, which allows users to snap a picture of an item and find it, or something similar, on the site.

Photo of fireworks by m01229, the Rialto Urban Outfitters store by Roberta Romero and newspapers by Jon S. published under Creative Commons license. Amazon boxes and Kohl’s store by Mike Cassidy.

 Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

 

 

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Are you learning from your customers who don’t convert?

So, how’s this for an idea: Maybe your best customers are the customers who don’t buy from you.

Wait. Wait. Don’t laugh so hard that coffee shoots out your nose. I’ve thought this out, really. (Better yet, I talked to some people who actually know what they’re talking about.)

First, I’m not saying your best customers are the customers who never buy from you. Those would be your worst customers. (You’re welcome.) What I mean is, say you run an e-commerce operation. What’s your conversion rate? Two percent? Maybe three? Do you ignore the 98 percent of visitors who don’t convert?

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Of course not. Those 98 percent (for argument’s sake) are a gold mine of information, a virtual focus group, telling you things about themselves and your sites that you’d never figure out without them.

“You can follow user paths and look at analytics and see where customers are, where they’re engaging, how they’re engaging, how long they’re on your site, how many pages they visit, where they tend to leave,” says Brian Beck, senior vice president of strategy at retail consultancy Guidance. “Studying those things closely, can lead to actionable steps to improve engagement with them, which ultimately can lead to better conversion.”

And the key to building a better conversion rate in the long-term? A better customer experience, says Jay McCarthy, of UK-based Qubit, which uses data to build customer experiences for online enterprises.

“The idea, over time, is we learn about your affinities, your preferences, your behavior and then we can tailor the experience to match this data that we’ve collected over time about you. So they’ll be more relevant to you.” McCarthy, Qubit’s vice president of product marketing, says. “A lot of these customers that you’re bringing on (to your site) don’t convert immediately. They are nurtured over time and then they become, hopefully, loyal customers who have lifetime customer satisfaction and lifetime value to you.”

The truth is that the non-converters — the 98 percent who visit a site, but don’t convert — are simply not converting on that particular visit. Some of them never intended to convert on that particular visit.

Maybe they’re keeping up with the latest trends so they’re ready to buy when, well, they’re ready to buy. Maybe they like your brand or a brand that you carry and they’re checking in. Maybe they’re comparing prices or seeking inspiration for a piece of furniture or a special outfit or something fun to wear on a vacation coming up in a couple of months. (Consider the recent Wall Street Journal story about the amount of time some women research purses before buying, which prompted this radio interview with the story’s author.) Or maybe they’re shopping online and buying in a store.

None of which is to say that conversions are not important. That’s what it’s all about. It’s what retail executives and managers measure themselves and subordinates on. It’s how people make bonuses. It’s the R in ROI. And certainly what a customer actually does buy and how he or she came about buying it is valuable information.

But McCarthy and other experts urge retailers to take the long view.

You spend a lot of money trying to get people to come to your site, or to one of your marketing campaigns, and yet, the vast majority, maybe 90 percent of your money is spent on acquisition and only 10 percent on retention and lifetime-value-kind-of-work,” he says.

Beck says that, of course, there is nothing wrong with paying close attention to conversions, but in the current digital world, it’s not enough.

“I would say online conversion, as a singular metric, is useful, but if you are anyone except a pure-play online retailer, you have to think differently about conversion,” he says. Conversion is “part of it, but it’s got to be about your overall conversion, particularly if you’ve got 300, 400, 500 stores.”

In fact, Rick Kenney, Demandware’s head of consumer insights, has gone so far as to suggest that conversion rate be scrapped in favor of an orders per shopper metric.

Perhaps not surprisingly, the mobile revolution has fed into this need for retailers to be more thoughtful, more nuanced, when they measure success. Mobile has changed everything. Today, a consumer might visit a site four or five times in a day, while researching a product, never intending to buy on his or her phone.

And then, boom, he or she buys on the laptop at home. Or, boom, he or she shows up in your store to buy the product they’ve been browsing on the small screen.

The trick in all this for a digital retailer is not only knowing that not every visitor is looking to convert, but also knowing what each individual is after on any given visit and then offering the content that meets that need.

It’s a matter of creating human-aided, data-driven systems that know when to send an email, when to offer a promotion, what particular products to show, which products to group together on a page, what product recommendations or related searches to show to each individual visitor.

“That’s the holy grail that everyone talks about — the whole personalization thing,” Beck says. “It’s about addressing the customer need at each touchpoint at the right time. And that’s hard to do.”

Many retailers have a ways to go in learning from their non-converters, Beck and McCarthy agree. But both say there is good news for retailers, too, as big data technology continues its gallop into the future.

“For retailers, web merchants, there are tools that are becoming more and more available, commonly,” Beck says. “It’s becoming democratized in some ways. It’s becoming more accessible from a cost standpoint.”

For instance, Beck mentioned BloomReach’s technology, which helps site merchandisers understand how customers discover certain products and shows whether merchandisers have properly displayed, described and presented those products.

Water Shoes

Say, for instance, a retailer saw a significant number of shoppers who searched for “water shoes,” but did not convert on a page that showed them all kinds of boots and footwear designed to keep feet dry in wet weather.

And say a significant subset of those frustrated searchers stuck with it and ended up buying or adding to their carts waterproof sandals and outdoor shoes that were made to wear into water to protect a swimmer or wader’s feet from rocks and such. A retailer would know to expand its website’s thesaurus so that “water shoes” would be associated with “sports sandals” and “river sandals” and more shoppers would find what they wanted.

More retailers are concluding that those tools, like Compass Merchandising, can help them leverage the information they receive from visitors who don’t initially convert — leverage it to ensure that they eventually do.

You can create lifetime value to your company that is five-fold or 10-fold what maybe that fleeting kind of transaction might be,” McCarthy says.

Which stands to reason, given that those non-converters are your best customers. You may now resume drinking coffee.

Photo of window shoppers by Audio-Technica published under Creative Commons license. Photo of water shoes by Mike Cassidy.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

 

 

RelevanceReport 5.30.14

Terry Lundgren, the UK, being mean — all out: The BloomReach Relevance Report

It’s summer. Longer days. More time to read the BloomReach Relevance Report. That is how it works, right?

Macy’s Terry Lundgren has had enough

Lundgren and Chenault

The news that Macy’s CEO Terry Lundgren is stepping aside is hardly a shocker. The ginormous department store chain has been scuffling and scraping lately, trying to move same-store sales in the right direction.

We saw Lundgren at the National Retail Federation’s Big Show in January and while he provided an engaging and entertaining on-stage interview with American Express CEO Kenneth Chenault, there was a certain undercurrent of weariness in his comments about Macy’s miserable holiday season sales.

Onward and upward. Lundgren will stay on as chairman of Macy’s and long-time Macy’s man, Jeff Gennette, will step into the CEO role. The moves take effect early next year and for Gennette it must be a bit like being named captain of the Titanic.

So, what does he do? Retail analyst Mary Epner (who worked as both a buyer and vice president at Macy’s) threw out a few ideas in a video interview with Reuters. First, she said, Macy’s needs to get the right products in its stores.

And the retailer needs to become more innovative and embrace more risk.

“They haven’t embraced a lot of newness,” she said.

Next, she talked about what many have talked about: Macy’s owns a ton of very valuable real estate — landmark stores in New York, Chicago and San Francisco, for instance. And a ton of other real estate — 800-some stores in all when you count all the Macy’s brand. Why not sell some of that off?

Epner’s argument? Macy’s does not need all those locations. And this is where her take got really interesting. Epner said that if you add up Macy’s digital business and the business it does at its flagship Macy’s and Bloomingdale’s in Manhattan, you’re looking at 35 to 40 percent of the company’s revenue. Yowzers.

As for Gennette and his prospects for turning the giant company around? Epner says there is good news and bad news. The good news? He’s a 33-year Macy’s veteran. The bad news? He’s a 33-year Macy’s veteran.

Other fun facts about Jeff Gennette, courtesy of the Wall Street Journal

Scrabble Board

Macy’s CEO-elect Jeff Gennette might end up wishing he were teaching English back in El Cajon, Calif., rather than leading the nation’s largest department store chain once he actually settles into the corner office.

Then again, he’s got a merchandiser’s soul and if Mary Epner is right (see above), Macy’s could use a whole lot of merchandising to turn things around.

But we digress. It’s what we do.

The point of all this is to rattle off a few fun facts about Gennette that we doggedly unearthed by reading the Wall Street Journal. So here goes:

  • He was an English major at Stanford University. In the WSJ piece he (no doubt inadvertently) skewered his alma mater, which has a bit of an elitist rep, with this line: “I didn’t know what topsiders were until I went to Stanford.” If the shoe fits.
  • He’s a voracious reader, which seems a good thing. How voracious? The guy is currently gobbling down “Jude the Obscure.” Yes, “Jude the Obscure,” which has “obscure” in its title for a reason.
  • He’s a Scrabble master, playing two computerized games a day, set to “expert level.”
  • And, in fact, he won’t regret not teaching English, no matter how rough things get at Macy’s. “Teachers aren’t paid well,” he told the Journal.

Brexit vote will affect retailers

Brexit campaign sign

The vote is cast and the answer is in to the question: How will Britain’s vote to leave the European Union affect retailers.

Who knows?

OK, it’s a lot to ask to have a cogent answer when an economic earthquake hits overnight. And let’s face it, there is a lot to pick through in terms of diplomatic relations, the world economy, the social meaning of the vote, the future of the globe etc.

One short-term answer is clear: Like many sectors, UK retail stocks got clobbered.

The Retail Gazette took its best shot at higher altitude answers with a story that quoted several analysts, most saying they’d need to give things some time to come up with an intelligent prognostication. But they added that leaving the UK could hurt investment and will hurt the ability to hire workers from other EU countries to work in stores.

Others made the point that UK shoppers, spooked by a possible recession, might tighten spending.

Or maybe spending will increase, when you throw in international bargain hunters looking to take advantage of the tanking pound.

One thing the Gazette didn’t touch on (being based in the UK and all) is that the opposite of the bargain-hunting theory will be in play in the United States. Maybe you’ve read that U.S. department stores (like Macy’s) have been struggling lately.

Among the many factors that Macy’s itself put forth was a decline in spending by international tourists, who had in the past made stores like the Herald Square outpost a sight to see and a place to spend.

We don’t know how much of that tourist-fueled spending came from Great Britain, but given the dollar’s strong showing against the pound in the aftermath of Brexit, you can pretty much count that out.

For now, keep calm and carry on.

Instagram account hits Target’s bullseye

Retailers spend millions and millions of dollars and thousands upon thousands of hours working to get their marketing message just right. And then there are social media sites like @TargetDoesItAgain.

You can’t pay for messaging like that — and Target doesn’t. As Racked points out, shopping buddies Jen Coleman and Laura Wiertzema started the Instagram accounting of their Target runs for fun. But like so many social media forays, it snowballed.

Yeah, snowballed into half a million followers. And, of course, as Racked says, there are other such accounts. @TargetDoesItAgain basically is a real-time report on what Coleman and Wiertzema who live in different states, are browsing and buying at Target.

And the BRRR thought we had it going on when we posted a photo of Bullseye, the Target mascot strategically placed to encourage selfies. (We left ourselves out, lucky for you.)

Bullseye the dogYeah, encourage selfies. It’s genius, really. As prolific retail photographer Mike Mozart explained when we talked to him earlier this year: Things have changed. Where retailers once forbade photos in their aisles, now they encourage it — for the very reason that a social media sensation could erupt.

Smart retailers, which is most of them, understand the world is changing rapidly. They take the chance — letting go of completely managing their message — and wait for the reward — social media propers.

Social currency is much more valuable, after all, than the carefully crafted messages produced by all those millions of dollars and human hours.

Or don’t say anything at all — wait, that’s not nice

Of course, social media is fraught with peril. Wait? What? You already knew that?

Marketing Daily reports that Instagram has more than 82 million posts with the hashtag #OOTD. What do you mean you don’t know what that is? We didn’t either, until MD explained it’s “outfit of the day” and it’s what people tag posts with when they’re showing off fashion they think is especially cool.

Thing is, not everyone thinks all of the 82 million outfits are especially cool and, as is the custom on social media, they unleash a torrent of hurtful and hateful criticism of the clothes and the bodies they are on.

Now, as Marketing Daily reports, Amazon is working to get us to all hold hands and be nice to each other. (Can they deliver the change same-day?) OK, sorry about the snarky tone. The message is a great one: “Say Something Nice.” Amazon is getting the word out via YouTube video.

(And, no, when it comes to say something nice, “Well, it doesn’t suck,” doesn’t count.)

The video features fashion blogger-types urging people not to slay each other on social media when discussing fashion choices and body types. The video itself does not feature body types of the sort that anyone would feel at all self-conscious about, which is an interesting choice.

Oh. Snark again. Sorry. Again the video is pretty cool. The fashionistas admit that they’ve been as guilty as anyone when it comes to being mean online. And they each pledge to say something nice.

It’s not clear whether the pledge extends to not saying something mean. But, hey, it’s a start.

Anything called a “volatility index” can’t be good

Kasey Lobaugh copy

We’ve talked about the retail volatility index crafted by Kasey Lobaugh and company over at Deloitte Consulting, but the index is back in the news, thanks to Marketing Daily. So, why not go over it again?

The index shatters a fairly common notion about where all the retail money is going. The popular narrative of brick-and-mortar vs. e-commerce isn’t the right framework, Lobaugh tells Sarah Mahoney of Marketing Daily.

In fact, many of the biggest retailers with physical stores are doing just fine in e-commerce, outperforming the growth in the sector overall. No, the money they’re seeing disappear is going to smaller upstarts who are swimming around like a bunch of piranha, as former White Sox manager Ozzie Guillen famously dubbed members of the Minnesota Twins for their scrappy style.

Where the money is going is definitely interesting, but even more interesting is what retailers need to do about it, according to Lobaugh. The way to win, he says, is to compete on customer experience and on selling unique products.

One or the other is good. Both is better.

Quote of the week

“Two of our biggest stores are in Dallas NorthPark and Houston Galleria, where the economy and our customers’ business interests are heavily dependent on the oil and gas industry.” — Neiman CEO Karen Katz to analysts, according to the New York Post, partially explaining the company’s poor third-quarter showing.

Photo of Terry Lundgren and Kenneth I. Chenault courtesy of NRF. Photos of Bullseye and Kasey Lobaugh by Mike Cassidy. Photos of Scrabble board by David Martyn Hunt, campaign sign by David Holt and newspapers by Jon S., published under Creative Commons license.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

scott-silverman-1

E-commerce answers are the main course at Scott Silverman dinners

Think of a Silverman dinner as an advanced course on retail, complete with fancy appetizers, impressive entrees, paired wine, a few laughs, some civil disagreements and a better than fair chance of ending the night with a full stomach and a full brain.

At the center of the events is Scott Silverman, something of a retail whisperer, who hosts as many as three dozen dinners a year, on average, that draw generally no more than a dozen e-commerce executives from some of the country’s best-known retail companies.

Scott Silverman

“It’s an industry that moves really fast. It’s easy to make mistakes,” Silverman says of retail, which he’s been watching since his decade as executive director of Shop.org, starting in the late 1990s. Shop.org is the digital division of the National Retail Federation (NRF). “My experience at Shop.org was a foundation for the value of people getting together and also seeing that in this industry, in particular, there is a higher level of willingness to speak and to share with each other — with the knowledge that people are going to share back with you.”

Also at the table is a retail technology vendor, usually a software-as-a-service provider, that pays for dinner and Silverman’s networking services and joins the conversation. But these dinners are not sales sessions. They maintain a salon vibe —  a room of experts learning from each other.

Howard Blumenthal, who oversees e-commerce growth and omnichannel experience at Advance Auto Parts, says the Silverman dinners are a chance to supplement the knowledge that a retailer can pick up at the massive national trade shows aimed at the industry — but on a much smaller, more intimate scale.

“These are local essentially,” says Blumenthal, who works in San Francisco and attended a March dinner at the Absinthe Brasserie & Bar in that city. “It’s a low-key event that allows people who live near each other to actually mingle and talk about topics with their peers.”

Indeed, Silverman’s dinner circuit recently has included San Francisco, Los Angeles, New York, Boston, Minneapolis, Columbus, Seattle and Dallas. The get-togethers have given him a unique vantage point for understanding the challenges that internet retailers face and the opportunities they are chasing.

Silverman leads the conversation, starting out with an ice-breaker and then moving into a few key topics that retailers are focused on. And the retailers talk, generally warming up to each other fairly quickly and showing a willingness to dispense wisdom even among those who might be competing for consumer’s finite retail dollars.

So, what are the big topics?

“It’s evolved over time as our industry faces new and different challenges,” Silverman says of the dinner conversation. “Today, interest in mobile is very high as the percentage of customers that are interacting with retailers on a mobile device keeps increasing.”

Which Silverman says is ratcheting up the pressure on retailers, because it’s expensive to build a mobile experience, while also building a desktop experience. Omnichannel, or linking together different shopping and sales channels, is a big issue for store-based retailers, he says.

“One topic that has an impact on everybody is customer acquisition —  and also competing with Amazon.”

Talk about an appetite suppressant. Silverman says that Amazon could indeed pose an existential threat, depending on the retailer.

“It’s a really big question,” Silverman says regarding survival in the age of Amazon. “They have so much scale.”

He said there are brands that sell directly — Lululemon and Under Armour, for example. They will keep selling to consumers, whether Amazon also sells their products or not, Silverman says.

“The retailers that are selling the same products as Amazon is where it’s hardest,” he says. “And there you’re seeing them find ways to differentiate themselves by using their deep product expertise.”

Think of Williams-Sonoma, he says, and the sort of expertise a store salesperson can bring to the subject of cookware or kitchen gadgets. At that point, it comes down to how loyal a customer is once he or she has taken advantage of the in-store knowledge.

“OK, they get all their information from the specialist and then they go, ‘Well, here is Amazon. And they can get it to me in one day and they’re not going to charge me for shipping. And their prices are about the same. It’s so easy. So how much market share can you prevent from going to Amazon?”

Gourmet tables

Silverman is passionate about retail. It’s not one thing, but it starts with the people.

“I always found it to be an industry where there were more, kind of, down-to-earth people,” he says.

And then there is the strategic thinking required in a world where a retailer might have millions of customers and one of his or her goals is to develop a relationship with those customers. And there is the growing role of the technology that’s involved and the way it’s evolved.

Yes, Silverman has had his chance to put his mark on the industry that he loves. When he was executive director of Shop.org in 2005, he and Ellen Davis, a public relations person for the National Retail Federation, came up with the term “Cyber Monday.”

The label was the online corollary to “Black Friday,” the day after Thanksgiving and the biggest brick-and-mortar shopping day of the year. Cyber Monday falls on the Monday after Thanksgiving and ranks among the biggest holiday shopping days online.

“This is one of my favorite things to talk about,” Silverman says.

He explained that Shop.org did a lot of research about holiday spending, both to provide insights to members and to get the attention of media outlets, which love producing stories about holiday shopping trends.

“We had been doing this study for a number of years leading up to the holiday season,” he says, “and we saw data showing a big bump in online shopping the Monday after Thanksgiving. At the time, one of the big reasons for it was that the high-speed internet connections were at people’s offices and not necessarily in their homes.”  

The phrase led to an online deals site, that led to a revenue stream, but not one that the Shop.org team wanted to keep for themselves. And so, they established a scholarship meant to honor a late colleague while providing financial help for students studying in fields associated with digital retail.

The idea for Silverman dinners also grew out of ideas building on ideas. The gatherings, which Silverman calls “E-commerce Leaders Dinners,” were inspired by another NRF colleague, Cathy Hotka, who brings together retail CIOs for similar dinners, but with different topics and retail titles.

At Shop.org, Silverman managed dinners for its members that invited 40 to 50 e-commerce professionals. The events involved four or five tables of eight, or so, each — each table engaged in its own conversation. Silverman wondered how it would work if he better curated the crowd, going for a smaller group of general manager and executive-level professionals, all sitting at one table.

The dinners were born.

“I think Scott really relishes that role in trying to bring conversations together and connect people,” Blumenthal says.

And why not? Good food. Lively conversation. And the chance to help people in a dynamic industry help each other succeed.

Photo of Scott Silverman by BloomReach, restaurant by PortoBay Hotels & Resorts published under Creative Commons License.

Mike Cassidy is BloomReach storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

Under Armour shoes

Tinkering with automated product rankings can lead to a really bad day

 

by Mike Cassidy and Romil Shah

As the retail industry is upended by changing consumer habits and rapidly evolving technology, the life of a digital merchandiser has changed in ways that were practically unimaginable even a decade ago.  

And that’s good news, right?

Of course it is. Think about it: Never before have site merchandisers had the kinds of powerful, data-fueled tools that allow them to apply science to their vast knowledge of the art of picking products, building brands and telegraphing trends.

But with great tools comes great responsibility.

The era of big data and the tools to immediately analyze and act on it has created the need to master the balance of human experience, intuition and inspiration with machines’ ability to analyze information at an incredible scale in order to amplify human expertise.

What are we talking about? Think about real life. When things are going well, it’s human nature to want to double-down on that and make things even better — and merchandisers, of course, are human.

Under Armour shoes

So, say one particular pair of Under Armour shoes abruptly begins to sell at a dizzying rate. The temptation, of course, is to pop the top on your data-driven recommendation engine and tinker with a way to boost more Under Armour products to the top of your page. Hoodies, shorts, backpacks.

After all, the brand is on fire.

Boosting the brand is a natural impulse, but in some cases it’s the wrong one.

The truth is, that when it comes to a commerce website, like the human body, there are symptoms and there is the disease. There are the outward signs and the internal cause. Those Under Armour shoes? The UA Curry Two? They happen to be the shoes worn by Golden State Warriors point guard Stephen Curry, the superstar team leader of an NBA franchise that recently completed an unprecedented winning regular season and fell one game short of a second consecutive NBA championship.

The increased sales have very little to do with brand and everything to do with who the shoe fits. It may not be the sort of backstory that spills over to Under Armour backpacks or hoodies for that matter. So, a heavy handed boost of all Under Armour products may simply annoy a Nike sneakerhead who is looking for a pair of KDs (which your customer data should have told you since he’s been gobbling up every pair of KDs he can for years).

The hypothetical scenario is not only an illustration of the power of celebrity. It is also a cautionary tale of what can happen when digital merchandisers impulsively give in to the temptation to fiddle with machine-learning systems that were carefully crafted to optimize performance.

And boosting brands is just the beginning. There are plenty of other ways the impulse to manually “fix” an e-commerce site can lead to unintended consequences.

Say you sell a watch from a well-known, top brand and therefore you make the decision to boost it to a top spot on the category page. After all, last year’s similar model was a hot seller.

But the surprise is that it is simply not selling. It turns out early customers are not pleased with changes the watchmaker made to the latest iteration of its product. The reviews on the site are brutal. The aggregate customer rating is dismal.

That leads to a situation where the watch is doing well in terms of customer engagement. After all, it’s a new watch from a top brand. There might even have been publicity before its release. It’s possible fans have been waiting for the watch to hit the market. And so, they click. But then they see the reviews and they don’t buy.

You might be tempted to bury the watch and replace it with a product that is converting at a higher rate. More conversions equal more revenue. But rather than manually taking charge, which would mean constantly monitoring and moving the products on that page, would you be better off letting algorithms do more of the work?

After all, your carefully crafted algorithm will note the watch’s poor performance, which will cause it to fall lower in the site’s product rankings.

That is not to say that overruling an algorithm is never called for. It is just to say that such changes should be carefully deliberated and considered in the broader context of the whole site and your overall goals.

Site merchandisers today, for instance, rightfully see themselves as responsible for managing the digital experience — the entire experience. They know that the way in which consumers experience their brands can be as important, or even more important, than increasing the sales of a product.

As one who manages the digital experience, you pride yourself on creating a feel, an emotion, an aesthetic. It’s what attracts new customers and keeps other customers coming back. And it’s not something algorithms are good at. Consider a recommendation engine: All the data in the world might tell you that a significant percentage of men, say 15 percent, who buy a particular designer-label shirt also tend to buy a plush bathrobe.

bathrobe brigade

But to say to a customer (through your digital site), “Hey, you just bought that nice shirt, you might also want to buy this comfy bathrobe,” is simply a discombobulating experience. There is no art there. That’s the time when a skilled merchandiser might want to overrule an algorithm to offer a high-performing sport coat or tie as a complement to the shirt.

The key is to know when to make a move, so that the best-laid plan doesn’t backfire. It starts with taking a holistic view and appreciating the relationship between human and machine.

As a site merchandiser, you and your team decide how to optimize your site. You consider goals and come up with your priorities. Maybe it’s conversion or user engagement. Whatever your priorities, you design your algorithm to optimize for them.

Every change you want to make should correlate with those underlying goals. Left to its own devices, a well-crafted algorithm will learn and consistently work toward achieving your priorities. If you tinker with it in pursuit of some goal beyond your core priorities, you will undoubtedly create unintended consequences and your automated system will suddenly be working at cross-purposes.

In the end, it is counterproductive to isolate one data point or one search query and, based on that, make changes to the work that algorithms are carrying out automatically. A retailer might have more than a million products on its site. Shoppers searching for items have a nearly boundless variety of ways of describing them. How many queries can you reasonably improve by tinkering with the algorithm?

Again, that’s not to say that merchandisers and site optimizers don’t need tools and visibility into the algorithms that drive their site. They do! But those tools should be designed to optimize or strategically tweak a product or category. Those changes should drive specific outcomes in the customer experience with no unintended consequences. Unless those product and site experts both fully understand the mathematics in an algorithm and have the ability to test their algorithm tweaks, the risk is just too great.

And speaking of testing, whether your algorithms are built in-house or by a trusted vendor, testing any changes to that algorithm is critical. Your quants or the vendors likely spend a great deal of time measuring the impact of every tweak they make (or at least, they damn well better be!). You can’t tweak and test properly unless you have the right data, testing platform and statistically significant sample to pull it off with confidence. If you don’t have those things, yet still want to fiddle with weights and goals, it’s a “be careful what you wish for” situation.

The impulse to jump in and make a change based on insufficient data points is understandable, but dangerous. It’s the kind of thing that leads to the sort of logic at the core of that old joke:  My company is losing 10 cents on every widget we sell. Don’t worry, though, we’ll make it up on volume.

When it comes to tinkering with with your automated ranking weights, don’t be one of those trying to make it up on volume.

Photo of Under Armour shoes by Sandy Dover Creative and men in bathrobes by Paul Downey published under Creative Commons license.

Mike Cassidy is BloomReach’s storyteller. Romil Shah is an engineering manager at BloomReach.

 

newspapers

The Walmart experience; Wayfair’s song and dance; techno malls: The BloomReach Relevance Report

Hey, summer is almost here. What do you mean you’ve been reveling in summer’s vibe for weeks now? No worries. Just enjoy this pre-solstice edition of the BloomReach Relevance Report.

Wal-Mart sees better customer experience as salvation

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Wal-Mart Stores continues to double-down on customer experience, something maybe you’ve heard us prattle on about before. The latest move? Shift employees from backroom jobs to jobs that connect directly with customers.

Customer service. What a novel thought.

The Wall Street Journal notes that the program is a pilot — Wal-Mart is trying the idea in the western United States. The particulars: The retail giant will move about three employee positions per store from the back of the house to online delivery departments and pharmacies, for instance.

This shift obviously won’t be seamless for the workers themselves, some who will take pay cuts and some who will leave the company rather than be reassigned. But the idea is to make Walmart a more pleasant place to shop (or pick up online orders).

The jobs done by the backroom crew — managing invoices and counting cash — will be turned over respectively to Wal-Mart headquarters in Arkansas and a machine, the news reports say. The machine — and we particularly like this — is called “a cash recycler.”  We sure wish we had a cash recycler.

Making a trip to a brick-and-mortar store more interesting, enjoyable and efficient is one way traditional retailers are trying to differentiate themselves from Amazon, which, for all practical purposes, doesn’t have brick-and-mortar outlets.

The challenge, of course, for retailers with a substantial physical presence is that they must not only differentiate themselves from Amazon but also compete head-to-head. Consumers are no longer a monolithic market that shops the same way. Even individual consumers gyrate among shopping on a desktop, shopping on a smartphone or a tablet and shopping in the store.

Online shoppers want websites and apps that quickly present them with what they’re looking for. They want fast delivery (the cheaper the better) or easy in-store pickup. And they want easy and free returns.

A Retail Dive summary of Wal-Mart’s customer experience move pointed to a company blog post that fairly well summarized the company’s overall customer experience strategy.

A couple of interesting notes from the post: Wal-Mart is turning to data to determine how to deploy workers, another sign that in-store data is every bit as important as the truckloads of data that retailers gather to improve their e-commerce operations.

Interesting point No. 2: Walmarts actually have a place called “action alley,” which is where greeters apparently had been working before the move back to the front of the store. To wit: “Last year, we launched a pilot program that in many stores, moved our greeters from action alley back to the front door…” the Wal-Mart post says.

Sounds exciting.

Wayfair turns to a big song and dance routine

So, a good week for Wayfair, which was named Internet Retailer of the Year by (you guessed it) Internet Retailer. The IR story notes that Wayfair, a home furnishings seller,  increased its online sales by 71 percent in 2015 and boosted its number of shoppers from 3.2 million to 5.4 million.

Not bad. (Full disclosure: Wayfair is a BloomReach customer.)

But it turns out the company is in no mood to simply take a victory lap and rest on its impressive wins. Instead, the Boston-based retailer, launched an advertising campaign that relies on the singing and dancing talents of its employees and calls on fans to submit their own audition videos, Marketing Daily reports.

What would a video be without the making of the video, video?

The company, which includes the Joss & Main, AllModern, Birch Lane and DwellStudio brands, also rolled out an augmented reality initiative aimed at helping customers visualize how furniture pieces would look in their homes.

Sure, you can wonder whether augmented reality is a big play. And yes, the commercial and contest might sound a little hokey, but it’s telling. The move — particularly the advertising campaign and contest — shows how seriously retailers are taking the potential power of combining commerce and content.

And the ad itself:

Remember that idea of differentiation we mentioned above? What Wayfair is doing is creating a community around its brand. Think about it: Wayfair deals in (mostly) furniture. In general, it’s not the sort of purchase that will have consumers buying from the site on an incredibly frequent basis.

But that doesn’t mean customers can’t be engaged in other ways. And then, when it’s time to buy more furniture, where are they going to go?

Besides, singing and dancing is fun. Why not have some fun?

Facebook friends local brick-and-mortar retailers

Facebook Sign

The mobile wave rolls on and smart retailers are working hard to figure out how to take advantage both online and in their stores.

Among the signs of the tremendous mobile traction is Facebook’s recent launch of a feature that could help drive shoppers to physical stores.

We’ve chronicled Facebook’s enthusiasm for e-commerce in the past. But Mobile Marketing Daily this week wrote about Facebook ads that are “location aware.” In other words, they point Facebook users to the closest stores and include buttons beckoning users to get store directions, the MMD story says.  

Sure, sounds a little elementary, but Mobile Marketing says the feature is probably better than the store locators many retailers have on their own sites. And wait — there’s more.

Mobile Marketing says Facebook is also working on an API to track offline conversions — something that those in the know get very excited about. Any number of retailers are scrambling to find ways to track in-store the kind of metrics they track online and Facebook is indicating their API could be one way.

A spokeswoman for Facebook told Mobile Marketing that mobile ads, obviously, should drive shoppers to the advertisers store. But they should also “measure the amount of store visits and in-store sales following their Facebook mobile ad campaign.”

And it appears that consumers are warming to the idea of sharing information in order to make their mobile experience better — or at least profitable when they are shopping in physical stores.

Mobile ShopTalk says 61 percent of consumers surveyed told those conducting the annual “Future of Retail” study that they’d be OK with stores tracking them while they shopped if they received coupons and discounts in return.

Nearly half said they’d agree to tracking if they gained loyalty rewards by doing so; and a third said they’d be cool with tracking, if it meant faster checkout.

Let’s just say the mobile explosion isn’t simmering down any time soon.

Malls are finally joining the retail tech party

shopping mall

Speaking of stepping up the in-store data game, it seems that shopping malls are making a move to build better data in order to help struggling retailers and to justify the rents they charge tenants.

The Wall Street Journal recently wrote about how the mega-mall companies in the United States are turning to technology to help shoppers find stores, parking places and bargains. (The WSJ story requires a subscription, but here’s a nice recap from Retail Dive.)

The mapping stuff seems like low-hanging fruit, which we say because we like saying “low-hanging fruit.” Low hanging fruit.

More interesting is the work that some tech companies are doing to provide insights into shoppers’ behavior when they are in the mall. Again, retailers want to be able to tap into in-store (or mall) data similar to the information that e-commerce operations have access to.

For instance, e-commerce retailers now have tools that can trace a customer’s shopping excursion. They can see where shoppers get hung up when they use a search term, but don’t find what they’re looking for. Wouldn’t it be cool if retailers or malls could better understand how shoppers move through a mall.

Do significant numbers who visit store A then move on to store B? Are there ways those stores might team up? Or conversely, are there products that store A should be stocking to keep consumers in their store, rather than having them flee to store B?

(In the video below, David Morin of Prism talks about the importance of in-store data.)

The Journal story has it’s own example. It notes that Apple Stores, with their tremendous foot traffic are often able to get a deal on mall rent, given that they attract customers to the mall. But what if those who visit an Apple Store at a mall, just visit the Apple Store? Maybe that rent break isn’t justified.

In some ways we’re still in the early days of data — both online and in stores — but there is no question retailers and malls alike are feverishly working to come up with better data and better ways to use it.

The holy grail, of course, is not just having rich and actionable in-store data, but combining that data with rich and actionable online data. The day is coming and retailers and malls who figure it out first are going to have an incredible advantage over those who come in second.

Quote of the week

“You can’t do fitness online,” John Sumas, COO of Village Super Market Inc., told The Wall Street Journal regarding the yoga, barre and Zumba classes at its grocery stores. “Getting a significant amount of people to show up to a building is a value in itself.”

Walmart photo by Mike Cassidy. Facebook sign photo courtesy of Facebook. Mall photo by Walter Lim and newspapers by Jon S. published under Creative Commons license.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

Scott Silverman

Video: What do retailers mean by “mobile first?”

The world is going mobile and “mobile first” is a rallying cry in e-commerce. But just what do most retailers mean by “mobile first?”

Retail expert Scott Silverman says that retailers have some big decision coming up about how to split their resources between desktop sales and mobile.

In this edition of BloomReach University, Video Campus, find out what Silverman sees ahead when it comes to mobile.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

newspapers

Mary Meeker, Alexa and Walmart’s smiley guy: The BloomReach Relevance Report

Almost summertime and the the living is almost easy. Take a load off and read the BloomReach Relevance Report.

Amazon and Alexa look to conquer the world

PR_AlexaFamily_V01

If you’re looking for the next frontier that Amazon intends to conquer, consider CEO Jeff Bezos’ chat this week about artificial intelligence at Re/code’s Code Conference.

He said his company, which you might say is a pretty big player in e-commerce, web services, the publishing industry and the delivery business, has 1,000 people working on its Echo product, which its friends call Alexa.

Yeah, 1,000 people, as in a small town.

You know Alexa, right? It’s the being inside the Echo that keeps your shopping list, tells you the weather, plays your music, challenges you to Jeopardy and basically has you wondering why you need actual people in your life.

Re/code itself reported that Bezos said Amazon had been quietly working on this Echo thing for four years and that we’re all seeing just the tip of the iceberg at this point. Search Marketing Daily detailed how Bezos called this the first inning in the artificial intelligence/natural language processing game — and in fact it may be the first inning with only the first player up to bat.

He said that in the coming decades, artificial intelligence, natural language processing and machine learning were going to change the world in ways we can hardly imagine.

For a look at how such smart agents could help big companies’ bottom lines, check out this piece in the MIT Technology Review.

While Echo is still a somewhat new product, Amazon and machine learning, artificial intelligence and natural language processing no doubt go way back. The three broad engines of innovation are key components of progressive e-commerce operations and Amazon has undoubtedly  deeply familiarized itself with them while building up its e-commerce business.

Speaking of robotics-type stuff, which we were, kind of, it’s become old hat to talk about robots in retail. There is the OSHbot working at a Silicon Valley hardware store. There are chatbots. There are concierge-like robots roaming the halls of hotels. There are digital programs that will help you find the article of clothing that meets your personal style profile.

But you don’t hear a lot about robots working security. The San Jose Mercury News reports that space-capsule-shaped K5 is walking, or rolling, the beat at the Stanford Shopping Center, out near the university bearing the same name (minus the shopping-center part).

 

 

The machine, built by Knightscope of Mountain View, California, has been deployed in a “handful” of places the Mercury News reports.

And why not?

The sight of a robot rolling around the mall is the ideal symbol of the human and machine partnership that is growing in importance in retail and e-commerce. As the Mercury points out, the K5 isn’t meant to handle all security functions at the mall. Instead it supplements the human security force, which relies on its cameras and microphones to pick up on signs of trouble. It also has the potential to act as a deterrent to those with bad intentions, Knightscope’s CEO told the Mercury.

And hey, the thing is only paid $7 an hour, according to the Mercury, though you apparently have to deploy them two-at-a-time. A bargain, nonetheless

Spooning on a dollop of Ikea innovation

Ikea

 

The newest Ikea pop-up shop is something like what retail is going to look like in the future. OK, maybe not the whole tapping-the-wooden-spoon thing, but there are certain elements in the Toronto shop that just make sense.

The store carries only 50 items that shoppers signal they want to buy by tapping a wooden spoon on the shelf on which the items are sitting, Internet Retailer reports. When they get to the checkout, they tap the spoon again and, after making any edits to their order, an Ikea worker hauls the stuff out from the back.

The store specializes in kitchen products, hence the spoon thing, and relies on RFID to make the magic happen. The store has a display offering kitchen cabinets and appliances, Internet Retailer says, and it allows visitors to shop via virtual reality, using Google Cardboard viewers.

Now, we’re not saying that this is exactly what stores of the future are going to look like, but there is pretty wide agreement that the big, traditional stores of today are not going to be the look in coming decades. The future of retail was a big topic at the recent ShopTalk 2016, for instance.

Retail experiments have been popping up (yes, we went there) for some years. Consider venerable online retailer ModCloth’s latest experiment: Taking pop-ups to a new city each month. Next stop: Washington D.C., where the women’s clothier will open a temporary showroom featuring blazers, dresses, swimsuits and bridal gowns, Washington’s Top News reports.

The idea is to browse, shop and order at the pop-up and wait for the items to be delivered. The store offers more than just a chance to browse, though. WTOP says the stores also offer one-hour sessions with a stylist.

The pop-up efforts appear to be a sign that retailers know there is an answer out there, but that they’re not entirely sure what that answer is. Look for more, and presumably more creative, experiments to come.

As retail moves into the future, online and offline will be blended more than ever and shoppers will expect the kind of convenience and personalized service and recommendations that the online world is beginning to provide more and more.  

Experiments like Ikea’s wooden spoon and ModCloth’s foray into bridal wear and the physical world are just two signs that the evolution is continuing.

Pay as you go

shopping apps

As mobile traffic to digital commerce sites shows no sign of slowing down, conversions — or actual sales on mobile devices — continue to lag stubbornly.

No doubt, the difficulty of tiny keyboards and small screens contribute to the sluggish conversion growth. But mobile also suffers from a disadvantage when it comes time to pay for a purchase. Typing in credit card numbers, security codes and zip codes on a smartphone can be a marathon exercise in frustration.

But it turns out, the Pittsburgh Post Gazette reports, that consumers’ security worries represent a big blocker to mobile commerce when it comes to using smartphones to pay. The PPG cites a study by The Pew Charitable Trusts that found that consumers of all ages worry about identity theft and raids on their accounts that could result from using mobile devices to buy stuff.

Though the Gazette says Pew reported that the concerns “cuts across generations,” there is clearly an age divide on the mobile payment habit. The story says Pew found that millennials and Gen X consumers make up 72 percent of mobile payment users.

Pew says it’s up to banks and mobile payment providers to explain the safety features of their systems and to put consumers’ minds at ease.

That said, it wouldn’t be a crazy argument to make to suggest that consumers will become more comfortable with mobile payments over time. The more positive experiences consumers have making smaller — and initially infrequent — purchases on mobile, the more likely they are to use their devices again and more frequently.

And it’s wise to remember that the mobile payment industry and e-commerce retailers are not standing still. Any number of competitors are offering and working on system to streamline the payment process online, which will no doubt help with mobile momentum.

Of course, a bad experience or widespread security failure could set back the mobile conversion movement.

Mary Meeker has spoken

Mary Meeker deck

You could think of it as the “Old Farmer’s Almanac” of the tech world: Every year venture capitalist Mary Meeker comes out with her report on internet trends and let’s just say she doesn’t kid around.

Two hundred thirteen slides laying out where we all are headed in terms of technology and connectivity. Given that she works for Kleiner, Perkins, Caufield, Byer, one of the most storied firms in Silicon Valley, people and businesses pay attention.

The picture for retail: Mobile is where it’s at, but not necessarily where retailers are spending, Meeker concludes, according to Retail Dive. Meeker focuses a lot on advertising, Retail Dive says, pointing out that consumers spend 22 percent of their time on mobile devices, while advertisers spend only 12 percent of their ad budgets on mobile.

Presumably the 22 percent figure refers to the portion of media-consumption time consumers spend on mobile. (Oh, and, one small correction to the Retail Dive piece: Connect was held in Rancho Palos Verdes, which is in Southern California, not Silicon Valley.)

You can read USA Today’s coverage here.

Another big takeaway? E-commerce is growing fast. OK, maybe you knew that, but Meeker points out, via Retail Dive, that digital commerce sales have grown from 2 percent of the retail biz in 2000 to 10 percent last year.

Another fun fact: Companies are making it to $100 million in online sales faster than they once did. Meeker’s report says that it took Nike 14 years to hit the big figure in e-commerce, while Lululemon took only nine years (through sheer determination?) and Under Armour only eight. (They really stepped it up.)

But Meeker pointed out that the United States has nothing on China when it comes to an e-commerce habit.

Meeker also mentioned one of our favorite subjects: The ways in which text messaging has the potential to propel mobile in a big way. We, of course, think she’s right.

Meeker also touched on the importance of customer experience, pointing out that retailers that were once online only are wading into brick and mortar. Meeker points to Warby Parker, which Retail Dive reports has higher sales per square foot than Tiffany’s, which sells really small and really expensive stuff.

RD notes that, like Apple, Warby Parker creates a retail space where people can noodle around with products (we guess you can noodle with eyeglasses) without feeling pressure to buy. It’s all part of what we were talking about earlier. You know, retailers experimenting and such.

One thing is for certain: We’re in for some fun times as retail finds its way.

Quote of the week

“As retail evolves,” he said, “there are elements that are timeless. Today, as much as ever, our customers need us as their advocate for low prices. Smiley represents that commitment.” — Wal-Mart Stores’ Chief Marketing Officer Tony Rogers to Advertising Age on raising the profile of the retailers iconic smiley face.

Photo of Alexa courtesy of Amazon; photo of Ikea store courtesy of Ikea, screenshot of Mary Meeker’s title slide courtesy of KPCB. iPhone photo by Jason Howie and newspapers by Jon S. published under Creative Commons license.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

Scott Silverman

Video: Breaking down data silos

It’s hard to have a conversation about e-commerce today without someone bringing up the image of breaking down silos — meaning working to bring data together into a form that many teams can act on immediately.

Scott Silverman, of Scott Silverman Associates, says that digital reality, so easily talked about, seems distant to many retailers today.

In this latest installment of BloomReach University, Video Campus, retail expert Silverman talks about the challenges retailers face in breaking down silos and offers some thoughts about the way forward.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

newspapers

Betting on mobile; Walmart’s food stamps; bye buy button: The BloomReach Relevance Report

As we head into a three-day weekend during which reflection on the sacrifice so many have made will be center stage, we’d be pleased if you’d take a few minutes to read the BloomReach Relevance Report.

Casinos are betting big on omnichannel

PlanetHollywood

Who knew? Omnichannel is now a hot topic in the gambling world. Well, somebody knew, but now you know, because the Associated Press recently reported that marrying the brick-and-mortar and digital worlds of gambling was in the conversation at the East Coast Gaming Congress & iGaming Institute in Atlantic City.

In fact, wouldn’t “The Omnichannel” be a great name for a hotel & casino? We digress.

Casinos, the story explained, are discovering what a number of retailers have found: The real story isn’t brick-and-mortar (and a little gold leaf, in this case) vs. online, but brick-and-mortar plus online. The way the AP put it, casinos are realizing that online play is not “cannibalizing their existing brick-and-mortar casinos, but rather bringing in new customers.”

There’s a lot at stake. The AP said internet gambling brought in $160.7 million dollars in the three states (New Jersey, Delaware and Nevada) that allow it. Which is both interesting and confusing, because isn’t the whole idea of the internet that we don’t have to be in any particular place to get done what we want to get done?

Anyway, the AP story went on to quote a casino executive:

“We’re seeing huge growth in mobile phone and tablet play,” said Luisa Woods, executive director of Internet marketing for Atlantic City’s Tropicana casino. “And we’re seeing huge cross-flows between players who visit the casino and then go home and continue to play online.”

Now we can debate whether that’s a good thing or a bad thing. The BRRR doesn’t judge, but we will say we often believed that the only way to win at a casino is to have someone forcibly drag you out of the building when you’re ahead at the Blackjack table. Just saying.

The timing is interesting in that the discussion might be moving (mercifully) from the importance of omnichannel to the importance of customer experience (omnichannel being a part of that.)

Now that we think of it, though, casinos are on it when it comes to customer experience. Think of all those free drinks (OK, maybe nothing is really free) and the posh penthouses that the high-rollers experience on the Jersey shore and the Las Vegas strip.

Who says brick-and-mortar is dead?

Kasey Lobaugh copy

Hey, guess what? Retail stores are not going away.

Always good to know that the place where more than 90 percent of retail sales happen is not about to vanish overnight. It’s something you hear a lot. Jerry Storch, CEO of Lord & Taylor and Saks Fifth Avenue parent Hudson’s Bay Co., made the point at Shoptalk 2016 last week.

“For most people going to the mall and going shopping, remains our national pastime,” he said during a presentation that included a strong argument that fulfilling online orders was not necessarily cheaper than selling to customers in brick-and-mortar stores.

But Storch’s main point was that the choice is not brick-and-mortar or online. Retailers need to do both. The fairly well-accepted idea is a variation of another intriguing point made at Shoptalk 2016.

Deloitte Digital’s Kasey Lobaugh, who’s devised a Retail Volatility Index, explained to attendees that in-store declines reported by big retailers can’t be framed as a brick-and-mortar vs. e-commerce story. Instead, he demonstrated, the loss of market share experienced by some of the country’s biggest retailers was actually being redistributed to upstart retailers.

The trend calls for new ways of thinking for established retailers in particular. Lobaugh talked about differentiation, which was another hot topic at Shoptalk. The buzz phrase was “customer experience.”

Lobaugh’s version of differentiation looked at two characteristics  — differentiation of product and differentiation of customer experience. Successful retailers, he argued, will be those that offer products of type or quality that you won’t find elsewhere and/or customer experiences that are unique — in a good way.

It all seems reasonable, right? Brick-and-mortar retail isn’t going away, though some brick-and-mortar retailers surely are. It’s just that brick-and-mortar will become something different from what it is today.

Public assistance puts its stamp on Wal-Mart Stores’ success

Walmart

We think we’re pretty smart here at the BRRR. Perhaps you’ve noticed our self-satisfied strut.

But it turns out there is stuff we never thought of. Shocking, we know. Anyway, Shelly Banjo (one of our favorite retailer writer names), has a fascinating piece that looks at how food stamps have been a key arrow in the quiver for Wal-Mart Stores as it battles Amazon. (Today’s tip: When it comes to Amazon, don’t bring an arrow to a howitzer fight.)

The Bloomberg story explains that the feds pretty much require that food stamps be used in person, something highly impractical when it comes to ordering groceries on Amazon.

Banjo does a nice job of laying out the stakes: Last year, nearly 50 million people spent $70 billion in food stamps. More than half of Wal-Mart’s revenue (56 percent) comes from groceries. Nearly half (47 percent) of food-stamp spending last year was at big-box stores, which includes Wal-Mart. (The government doesn’t break the spending down by specific retailer.)

Anyway, all this has come up because there is a movement afoot to allow food stamps to be used online. Put another way: There is a movement afoot to allow food stamps to be used on Amazon.com. Wal-Mart has lobbyists and Amazon has lobbyists, so this could go on for a while.

Meantime, the Twittersphere via Gawker points out the company store nature of Wal-Mart by referencing a political advocacy group’s report  that says many of the food stamps are redeemed by Wal-Mart workers.

We haven’t seen a lot of coverage of this issue, so it may be some time before the fur starts flying publicly, but if it does, you can be pretty sure it will get ugly fast, as the Restoring Liberty blog demonstrates. Those who divide the country into “makers” and “takers” aren’t going cotton to the idea of delivering food to those who buy it with taxpayer money.

Button, button: Who’s got the button?

Facebook's Feller

Facebook’s Feller

Twitter’s buy-button social commerce experiment appears to be winding down. Buzzfeed and others report that Twitter has dismantled its commerce team and suspended work on its buy button.  

Remember when buy buttons were all the rage? Those were the days.

Like so many things in the ever-evolving world of retail, it would be a mistake to draw a big conclusion for a little move. What we mean is: Twitter turning it’s back on buy buttons is hardly the death knell for shopping on social sites.

It could be that a buy button in mid-Twitter-stream just isn’t the way to do it. You might remember that Facebook was a button fan, too, before it wasn’t. But it’s not as if Facebook, for instance, has given up on e-commerce. In fact, it’s making some intriguing moves.

It’s quite possible that Facebook has figured out that selling stuff in users’ news feeds isn’t the way to go. People hit Facebook to touch base with or even get into deep conversations with friends and acquaintances. Pushing a product with a buy button in that forum is the equivalent to having some barker pushing 30 percent off Crocs striding up to you and a buddy as you’re sharing a cup of coffee.

Instead, Facebook is working on more intriguing e-commerce plays that are separate from the news feed. There’s the Shop addition to Pages, which allows business to sell directly from their Facebook pages. It’s developing a shopping platform on its Messenger service, using chatbots to help consumers with purchases. And it is offering retailers the chance to create rich digital commerce experiences within the messaging format, as Frerk-Malte Feller recently demonstrated at Shoptalk.  

It’s good to remember that it’s early days in the marriage of social network platforms and e-commerce. The more they take aim at making it easier to buy on mobile devices, the more traction these early initiatives will get.

So even if we’re saying goodbye to Twitter buttons, it’s highly unlikely we’re saying goodbye to the notion of mixing shopping and social media.

Quote of the week

“Our iconic KCD brands are beloved by the American consumer and we believe that we can realize significant growth by further expanding the presence of these brands outside of Sears and Kmart,” the Sears statement regarding Kenmore, Craftsman and Diehard brands that sparked rumors the brands might be sold or at least licensed to others.

Photo of newspapers on blog main page by Jon S published under Creative Commons license. Other photos by Mike Cassidy.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

 

 

Frerk-Malte Feller

Three hot topics from Shoptalk that point to retail’s future

Here’s the only rock-solid prediction you’ll read in this whole piece: After any big retail show, like last week’s Shoptalk 2016, a spate of stories predicting the future of retail will appear.

There. Got one right.

Seriously, retail is in the midst of dramatic disruption, fueled by technology, data and competition from entrepreneurs who are turning to lean startup ideas to launch companies that appeal to an ever-more-diverse and demanding customer base.

When thinking about what retail will look like in the coming years, it helps to think about how quickly the industry has changed in the years just passed.

“It’s only been 20 years ago, that the only way that you could actually buy a product, is that you walked into a store, talked to one of the shop representatives, and picked it up,” Facebook’s Frerk-Malte Feller said during a Shoptalk presentation of Messenger’s latest e-commerce capabilities.

Frerk-Malte Feller

Frerk-Malte Feller

With that in mind, here are three trends, much discussed at Shoptalk, that are very likely to change the way retailers sell and consumers buy in the relatively near future.

Obsession with customer experience: While not exactly new, the idea of building a fantastic customer experience came up again and again at Shoptalk’s inaugural show in Las Vegas.

Magento CEO Mark Lavelle said it would be difficult to overestimate the importance of experience.

“If you’re a retailer or brand, or manufacturer, or any kind of service business and you’re not really thinking about how you differentiate your experience, using all the available things you have, you’re not going to survive,” Lavelle said during a panel talking about the future of e-commerce.

The talk about experiences comes with a new urgency and new tools.

One key for retailers will be achieving genuine personalization — providing individual shoppers with the sense that you know him or her and that you know what it is that he or she wants at any given moment.

Rebuilding consumers’ experience on smartphones will also be huge.

Shoppers are rapidly turning to phones as a key way to look for and research products, but actually buying items on phones is still lagging behind. Look for experiments — retailers throwing things against the wall to see what works — and a willingness to build in features that don’t lead directly to conversions, but might instead inspire return visits and loyalty.

HotelTonight’s Amanda Richardson talked about the success that the room-finding app has had with a concierge-like texting service. And Home Depot’s Paul Gaffney reported on a paint-color finder that the home improvement store has added to its mobile arsenal.

He said the retailer hadn’t yet determined how to tie paint sales back to the app, but that he knows that customers genuinely enjoy the feature, which allows customers to see on their phones how a room would look in a given color.

And retailers are not working strictly on online experiences. Whole Foods Market’sGabrielle Rosi decried the way modern life has eliminated the places and rituals that bring communities together. She said Whole Foods has opened a number of cafes and taverns in its stores, looking to create spaces where people can hang out together.

“In San Jose, California, we did our own brewery,” she said. “We hired a really amazing guy, named Guy, from the Russian River Brewing Company, to produce some really amazing beers for us. You sit in this bar on the second floor of this amazing LEED certified building and you can look over the train tracks and see the SAP Center, where all the big stars and the (NHL) Sharks play.”

Mobile commerce shake-up: The growth of smartphones as a shopping tool has been nothing short of staggering. The problem for retailers has been that the growth has been largely about shopping — and not so much about buying.

Demandware’s Rick Kenney gave me a preview of the company’s upcoming quarterly Shopping Index. He said that by the end of next year, 60 percent of the world’s e-commerce traffic will be coming from smartphones. And by March 2017, 40 percent of purchases will happen on a smartphone.

In short, something has to give. Feller, Facebook’s director of product management for Messenger, gave a peek at what that something might look like. He demonstrated an API that is creating a fledgling commerce platform on Messenger. It’s slick, providing retailers with the ability to provide carousels of products that users can scroll through.

The system handles the entire shopping excursion, from hunting for a product, to purchasing, to customer service, to receiving a receipt, all in the chat environment of Messenger. And most importantly, the purchase can be done with one-touch, presumably after a credit card or other payment method has been linked to the shopper’s Messenger account.

The demo had me thinking about China and how far ahead of the U.S. China is when it comes to mobile commerce. eMarketer recently cited research that said mobile commerce makes up almost two-thirds of all e-commerce in China and that by 2019, nearly three-quarters of e-commerce sales in China would be conducted on mobile devices.

The reason? E-commerce in China is dominated by two massive retailers and the mobile-first population relies primarily on chat services, similar to Messenger, as the platform for buying.

“We’re very excited about this journey, where we are heading,” Feller told the retailers gathered at Shoptalk. “We feel this arc, starting with the conversations that are so crucial for an ongoing customer relationship, can offer a great platform that, in our view, has a chance to really be the next paradigm of how your customers interact with you day to day.”

That’s not to say Messenger is going to be the product to transform mobile commerce, but you can bet big change is coming. If it’s not a new platform that will make buying on smartphones easier, then it will be new, or wider, deployment of existing products — such as mobile wallets and similar payment systems.

The rate of conversion on mobile has been increasing, Kenney says, and he expects that trajectory to continue.

“If we see Apple Pay actually become part of the mobile web, instead of just mobile applications, if we see higher adoption of other wallet-type technologies, PayPal included, certainly in that, too, that can actually accelerate and drive that order share higher on phone.”

Various delivery speeds for different products and customers: Amazon’s worldwide vice president of Prime Now scared the hell out of her e-commerce competitors with a brief talk about how the Seattle behemoth designed a service that promises one-hour delivery of online orders.

Her key anecdote? A YouTube video chronicling the story of a guy who woke up one morning hungry for waffles. He ordered a waffle maker, waffle mix and syrup on Prime Now. It arrived in 24 minutes — and 39 minutes after he ordered, he was sitting down to a hot waffle with syrup.

“The stuff that people want fast, is the stuff of everyday life,” Amazon’s Stephenie Landry explained. “Bottled water, household paper, tissues, orange juice, ice cream, eggs.”

Oh, and in Portland they want organic carrots, Amazon data shows. It’s vegan pizza in Seattle; paper towels in New York. And in San Francisco? Cottonelle Ultra-Comfort Care Toilet Paper.

And certainly the Amazon story is a window into the expectations and impatience that consumers today have. But maybe not everyone needs his or her vegan pizza in an hour, or even two. Or maybe there are products other than, say, toilet paper, that someone could wait a few days for.

Bonobos founder Andy Dunn made the latter point in a morning presentation with Re/code’s Jason Del Ray. Dunn explained that Bonobos had branched out from its original mission as an online-only retailer. It’s now opened stores, which it calls Guideshops.

The shops are places where customers can stop in and try on clothes and find out what items actually look and feel like. If they like what they look at and feel, they place an order, which is later delivered to their homes.

“Everything I’ve ever been told in the industry about instant gratification is not necessarily true,” Dunn said. “The insight was that they didn’t necessarily care if we sent them home with the product they purchased.”

Yes, food or a personal hygiene item, that might be something a customer wants, or needs, right away. But a shirt? You don’t eat a shirt, Dunn said.

Today the market for speedy delivery sorts itself out. If you want fast delivery, even of a shirt, you join Amazon Prime. If you can wait for your clothes, you shop at Bonobos. Or maybe you order your waffles from Amazon and your pants from Bonobos.

But no doubt in the future, it will be much more common for individual retailers to offer more tiers of delivery, for a price. Consumers will simply expect it.

Photo of  Frerk-Malte Feller by Mike Cassidy.

This piece originally appeared on Huffington Post. Mike Cassidy is BloomReach’s storyteller. Reach him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

Shoptalk sign

“More mobile” has replaced “new mobile” in the e-commerce world

Forget about what’s new with mobile commerce. Now is the time to talk about what’s more with mobile commerce.

There are only so many ways to say that mobile is eating the world, as venture capitalist Marc Andreessen might say. (Here’s Andreessen’s take on software eating the world in a subscription-required Wall Street Journal piece. This Wired story mentions it, if you skip to 2009.)

But the speed with which mobile is becoming the digital commerce platform is stunning, no matter how often we’ve heard about the intense focus and frustration that the channel attracts and provides.   

“The topic that has to be a part of any analysis of the market right now is mobile,” Rick Kenney, Demandware’s head of consumer insights, told me. “It gets almost tiresome to talk about, but it is the most transformative thing to happen to retail since it went digital.”

Shoptalk sign

The world of more mobile was widely discussed at Shoptalk.

I met up with Kenney last week at Shoptalk in Las Vegas, where the agenda was peppered with sessions on designing for mobile, searching on mobile, paying on mobile, harnessing mobile as part of a multi-channel strategy and more.

Mobile is the conversation in commerce. The smartphone is the undisputed shopping engine. It is how consumers hunt and gather and increasingly how they buy — though desktop is still the king of conversion. That said, mobile is on a roll that shows no sign of letting up. Conversions are increasing dramatically. The mobile movement is gathering velocity so quickly that it is hard to keep up.

How much velocity? I sat down with Kenney during a quiet moment at the big retail trade show to get his latest reading. He shared some of the findings in the e-commerce platform provider’s upcoming quarterly Shopping Index, which analyzes the e-commerce market and consumer behavior based on 400 million shoppers worldwide.

Five ways to prepare for the mobile storm

    Rick Kenney, Demandware’s head of consumer insights, says smartphone use, both for shopping and buying, is galloping ahead. By the end of 2016 retailers will see more conversions happening on smartphones than on any other device. So, what should retailers do to prepare. Kenney suggests:

  • Start now. Decisions made today prepare an organization for conditions a year from now. “If you’re waiting for the actual shift to happen, then you’re already going to be a year behind.”
  • Fix your site search. Recommendations yielded from your onsite search bar need to be more accurate than ever. Instead of displaying eight results on the screen, as a desktop web page might, mobile will display two products. They must be extremely relevant.
  • Mobile allows for a lot of scrolling through product descriptions, features, reviews etc. Make sure there is an “add to cart” button at the bottom of the scroll.
  • Checkout and payment has to be incredibly easy. Think one-touch-type technology. Don’t make shoppers enter all their credit and personal information every time. And make it clear with an express checkout logo (PayPal Express Checkout, for instance) that paying for a product won’t be torture.
  • Provide a wish list feature and give shoppers the option of keeping that wish list and bringing it into the physical store, if they want to.

“Q1 was the first full quarter where, globally, phones drove more traffic than any other device,” he said. “It happened a couple of days, a couple of periods, during in the holiday season and before, but globally, mobile first is here. And if you’re not there yet, the shopper is, putting more visits on this small device than they are on other devices.”

Kenney said Demandware expects that by the end of next year, 60 percent of e-commerce traffic will come from smartphones. As much as 40 percent of the world’s digital purchases will be happening on mobile by March 2017. (Mobile means smartphones, Kenney explained, as tablets are quickly falling out of favor as devices on which to buy.) And he said a metric the company uses to rate how well mobile traffic converts is also on the rise — doubling in the past three years.

“We’re predicting that by the end of 2017 mobile will drive more orders, meaning shoppers will place more orders on phones, than any other device.”

And, Kenney noted, a number of innovations and improvements in the mobile world will only accelerate conversion-rate increases. Increasingly, retailers and others will be improving site search on mobile, already a key to purchases on desktop websites by digital retailers’ best customers.

“I think we’ll see some very big changes to site search,” he said of mobile sites. “The results on mobile have to be better than ever.”

And improvements and expansion of mobile payment options are bound to take some of the frustration out of completing a purchase on a phone, Kenney added.

“If payment actually does improve on the mobile device, if we see, for instance, Apple Pay actually become part of the mobile web instead of just mobile applications. If we see higher adoption of other wallet technologies, PayPal included certainly in that too, that can actually accelerate and drive that order share higher on the phone.”

The rapid evolution of consumer habits has all sorts of ramifications, which was evident from the shop talk retailers were engaged in at Shoptalk. First off, Kenney says the mobile revolution calls for new ways to measure success.

Conversion rate, for instance, has become less meaningful, Kenney argued. Think about it: If the rate is calculated by dividing the number of visits ending in conversion by the total number of visits, the mobile explosion is watering down the figure. (As are bots.) In the mobile era, visits are skyrocketing.

Shoppers visit sites while standing in the supermarket line. They leave the site when it’s their turn to check out in the real world. They visit again to continue their shopping excursion while waiting for the train, then exit when the train comes. They get home and visit again to buy. Or they visit again and then head for the desktop in the den to finish their transaction.

Rick-Kenney1-167x167For his part, Kenney prefers to track “orders per shopper,” a statistic that reflects customer retention. The more orders, the more valuable that customer is and the more successful your strategy is.

The growing dominance of mobile clearly has retailers thinking differently about the role of mobile in all sorts of ways. During a panel discussion called “Creating and Managing Omnichannel Customer Experiences,” Banana Republic’s Aimee Lapic explained that 80 percent of the store’s purchases are influenced by mobile, but that actual mobile purchases are “a small, small fraction” of all purchases. That’s generally the case for all retailers.

And so, she says, it’s important to think of mobile in terms beyond conversion by adding features like fit guides and well-told stories that will interest consumers.

“It’s really important to be not just putting the resources and the time and the energy against actual conversion,” she said. Which is not to say that conversions aren’t both important and desirable, she added.

Paul Gaffney, Home Depot’s senior vice president for IT, put it another way when discussing mobile apps on another panel.

“Does the app have to be all about conversion? No,” he said. “But should it be about outcomes that matter? Yes.”

It can be tricky to measure success when you’re dealing with metrics other than conversion, Gaffney acknowledged, but he added: “You can connect your effort to an outcome measure that matters, even if it’s a step away.”

For example, Gaffney said, Home Depot has an app that lets customers see what various colors of paint would look like on a particular wall.

“We have this app that millions of people use on a regular basis,” he said. “We actually don’t know if it’s sold any paint, but we know that people enjoy it.”

That sounds like a success. But Gaffney said the next step is to “figure out a way to assess, are we selling any paint because people like using this tool?”

HotelTonight is on more solid ground in evaluating a feature that allows those who book certain rooms through the app to get concierge-like suggestions on restaurants etc. from a real, live human.

“We’ve already seen a 30-percent conversion on bookings that have this available,” said Amanda Richardson, HotelTonight’s vice president of product. “And our repeat rate is up 25 percent in this cohort.”

Though the feature has been a big success in the conversion department, interestingly, the original motivation for adding it to the app was to better customers’ experience using HotelTonight.  

And while Home Depot is big enough and HotelTonight is specialized enough that mobile apps make sense. There are plenty of improvements that others can make to mobile websites. (See accompanying box.)

That said, it’s clear that Home Depot and HotelTonight are going with a strategy of more features. And why not, given that we have moved past new mobile and are now firmly ensconced in the era of more mobile.

Photo of Rick Kenney courtesy of Demandware. Shoptalk photo by Mike Cassidy.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

 

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Earnings up; earnings down and a chicken-slinging robot: The BloomReach Relevance Report

Hey, it’s Friday. Thank god or whatever deity you’re into. Then take a read of the BloomReach Relevance Report.

Wal-Mart Stores and Target break retail losing streak

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After a week in which many retailers had to watch out for falling (share) prices after disappointing Wall Street, Wal-Mart Stores turned things around, reporting that same-store sales grew in the first quarter. And rival Target also hit its revenue-per-share target and saw stronger same-store growth than Wal-Mart.

Needless to say the news was greeted warmly from Wal-Mart to Wall Street and Minneapolis to Main Street. The Bentonville behemoth’s shares headed up. After a significant jump on Thursday, when the earnings were reported, shares continued to rise on Friday.

Target’s stock did not fare as well, presumably because the Minnesota-based retailer missed its revenue projections. For an alternative explanation, Breitbart says Target’s fortunes rise and fall depending on who’s allowed to use what bathroom. (By the way, Target executives say the toilet flap has had no effect on sales, the above Minneapolis Tribune story reports.)

Overall, Target’s same store sales were up 1.2 percent, below its projection of 1.6 percent growth. Online sales rose 23 percent.

The Wall Street journal noted that Wal-Mart Stores was able to beat analysts’ expectations by better controlling inventory and because wages for its low-income customers are on the rise. The Journal also noted that the 1-percent increase in same-store sales was likely affected by Wal-Mart’s decision to spend more to improve its in-store experience, including by paying its workers more.

Wal-Mart itself said that its focus on no-frills (rather than fashion-forward) clothes also insulated it from the apparel-sales slowdown that appeared to adversely affect chains like Macy’s, Nordstrom and Kohl’s.

The Business Insider, among others, pointed out a couple of weak spots for Wal-Mart: a decline in grocery sales, which the retailer attributed to deflation in food prices, and the slowing growth in e-commerce.

In fact, the Journal says, e-commerce growth hit 7 percent in the first quarter, down from 17 percent in the same quarter a year ago. Wal-Mart executives acknowledged that it’s taken time to get the e-commerce business headed in the right direction and they promised future growth.

Still, given the retail earnings news of the last week, the BRRR is sure Wal-Mart will take it.

Then there is the Gap

Banana Republic

When Gap bean-counters applied GAP to the retailer’s earnings, they found a gap of about $150 million in revenue from the year-earlier quarter.

Sorry. Couldn’t resist.

Anyway, despite the sorry earnings report, the struggling retailer met Wall Street’s expectations and even saw its shares rise for a time on the good, or not bad, news.

Despite investors’ enthusiasm, the picture isn’t very pretty in Gapland. The company is the parent of Old Navy and Banana Republic, both of which are doing worse than the Gap itself.

CNBC reports that the Gap saw a 5-percent decline in same-store sales for the quarter. Old Navy dropped 6 percent and Banana Republic slipped 11 percent. All of which means there are going to be fewer of those stores than there once were. In all, the company will close 75 stores worldwide, CNBC reports.

So, is it the end of the world or not?

Kasey Lobaugh2

What’s going on? Retail is in a death spiral. Unless it’s not. Macy’s and Nordstrom are down. Wal-Mart Stores is up. So is Target, but not enough. E-commerce continues to grow rapidly. Bob Bryan, over at Business Insider, thinks he’s got it figured out.

When big retailers have a bad day (or quarter) it gets a lot of coverage. In order for that to make a difference it would have to also be true that when a retailer has a good day (or quarter) it doesn’t get as much coverage, which we’re not sure is the case.

At any rate, Bryan’s most convincing bit of evidence that things might not be as bad as they seem is his note that the Census Bureau’s retail sales figures came in stronger than expected, an indication that consumer spending is strong.

There is a little bit of comparing apples and oranges going on here, as the Census figures, showing a 1.3-percent increase, were for April and the retail earnings covered the first quarter, which is not April. But the numbers (the latest figures) do provide some reason for encouragement.

The Business Insider story about the increase also noted that the rebound from March, when sales were down nearly half a percent, was due to car sales and higher gas prices.

Whatever the case, the BRRR heard an intriguing explanation for the retail downturn — or at least the downturn among big retailers. Kasey Lobaugh of Deloitte Digital argued at Shoptalk this week that retail is in a period of high volatility, in which the top 25 retailers are having their lunch handed to them by smaller players.

It has to do with what the biggies are selling, how they are selling it and the role of technology in lowering the barriers of entry to the retail industry. Lobaugh’s presentation did contain some answers for retailers: It’s time to pay attention to differentiating yourself on customer experience or quality of product or both.

OK, now get to work.

Do robots have fingers to lick?

You’ll have to go to China to try it, but Kentucky Fried Chicken has opened a restaurant staffed by robots. No fast-food workers. No white-suited colonel. No people, just pear-shaped robots who take your order and your money, Digital Trends reports.

Presumably, not having pesky employees will be a money-saver for the restaurant, called Original+, which Digital Trends helpfully points out is pronounced, “Original plus.” But we see another advantage to having robot servers.

How to put this? The BRRR does enjoy an occasional bucket of chicken. All that crispy/juicy goodness. But we don’t necessarily feel good about ourselves when we do. We mean, it’s sort of heart-attack-in-a-bucket, right?

Anyway, with no human counter help, we’d be able to cooly stroll into KFC and place our decadent order without any one, well any human, being the wiser.

Now that that’s out of the way, let’s get to the real reason we’re writing about this. The Digital Trends story pointed out that the Du-Mi-robot-staffed Original+ is not the first restaurant to go the automation route. (We mean, come on: There were automats in the United States in the early 20th century.) DT, however, cited McDonald’s Create Your Taste program.

And as you might have guessed, we couldn’t resist the opportunity to post this video again. Thanks Digital Trends!

Quote of the week

“You’re crazy if you compete against Amazon. Recognize that they’re bigger, stronger, faster, their playing their sports, on their field with their referees and their fans. It’s pretty hard to imagine that you can win in that setting,” Scott Thompson, CEO of ShopRunner, explaining at Shoptalk that his company focuses on products not available through Amazon.

Banana Republic photo by Mike Mozart and newspapers photo by Jon. S. published under Creative Commons license. Other photos by Mike Cassidy.

Lobaugh with chart

A reason for retail sales declines that you hadn’t thought of

It was one of those headlines that caused me to do a double take: “Bay Area Shopping Malls Enjoy Low Vacancy Rates.”

Granted, the story looked at only one region, one buoyed by the tech economy, but after a week of reading about the miserable earnings of big retailers, the last thing I expected to see was a news story about malls that are full to the brim and raising rents.

Kasey Lobaugh

And then at Shoptalk today, I ran into Kasey Lobaugh who was giving a presentation on his Retail Volatility Index, which is as scary as it sounds. Lobaugh has a different — and data-driven — way of looking at the disruption that is rocking the retail industry.

Lobaugh and his co-workers at Deloitte Digital have devised an index that, in a sense, measures retail disruption. (Page 5 of this Deloitte report talks about the index.) He doesn’t talk about how much retail revenue is going away or how much is moving online. Instead, his Retail Volatility Index looks at how much of the market share held by the top 25 retailers is being snatched by start-up and upstarts in the retail business.

Short story: Between 2009 and 2014, the top 25 retailers in the United States have lost 1.3 percent of their market share — or  $48 billion — to a growing number of smaller competitors, Lobaugh said. Not only that, but he said, the pace at which that disruption is occurring has increased every year since 2009. (He said he’ll release an updated report in June.)

“We are now on a path that is fundamentally different than what we’ve seen in the last 100 years,” Lobaugh said during his presentation in Las Vegas.

That different path might go a ways toward explaining why some retailers seem baffled at the decline in same store sales that they are seeing.

Kohl’s CEO Kevin Mansell said on an analyst call last week that he didn’t know whether Kohl’s 3.9-percent drop in same-store sales was due to operational issues that the retailer could address or due to large economic or consumer behavior issues, The Wall Street Journal reported.

“I think we’re still grappling a little bit with that,” the Journal quoted Mansell as saying. “We’re definitely not in a position that we’re putting a stake in the ground and saying, hey, this is the one big driver.”

Lobaugh’s answer to the question, “what the hell is going on,” as he puts it, isn’t about Amazon. (He noted Amazon is in that group of 25 that is losing share.) His story isn’t about e-commerce in general killing brick and mortar.

“There is actually a whole crop of retailers that are brick-and-mortar, as well,” he said, “who have come into the market and are also stealing share.”

The story Lobaugh tells isn’t about the warm winter slowing clothing sales. It’s not about the decline in tourist dollars spent in U.S. stores. It’s not just about consumers shifting spending from stuff to experiences, though that’s playing a role, he says.

Lobaugh’s story is about technology, but even there he adds a twist. It’s not just the old story about how everything is changing because consumers who tote smartphones everywhere and shop online at will are newly empowered. Technology is disruptive in other, less-talked-about ways, Lobaugh says.

Today an entrepreneur can get an online store “up and running within an hour with nothing more than a credit card.”

In large part because of the cloud, the store founder can hire out his or her call center, fulfillment services and digital infrastructure.

“The barriers to entry are down,” he said. Competition is coming at established retailers from all sides — fast-fashion, European retailers opening U.S. stores, online, offline. The battle, he said, has changed from one between the behemoths to “death by a thousand paper cuts.”

“Your competitor is no longer the big guy, who was across the street, who you focused on for the past 50 years,” Lobaugh said. “You don’t know who your competitor is.”

But there is a hope, or at least a way forward. Crunch the data a bit and another trend peeks through. Lobaugh and his team plotted retailers along two continua, which analysts tend to do. The vertical scale accounts for the degree of product differentiation a retailer offered. The horizontal axis represented the degree of experience differentiation a retailer offered.

Retail volatility

Not surprisingly, retailers that ranked high both on providing a differentiated product line — think products you can’t get anywhere else  — and a differentiated experience — think the Apple Store — were faring the best in this era of disruption. Those on the opposite ends of the scales were most vulnerable.

Specifically, Lobaugh said, the high performers were seeing comparable store sales rise 6.5 percent (based on 2014 data), while those on the low end were suffering through a comparable store sales decline of .5 percent.

“If you want to compete in that bottom quadrant (low product and experience differentiation), fine,” he said. “That means you have to compete cheapest, fastest, easiest. Alternatively, you have to think about how you shift your strategy and think about how you win in this kind of environment.”

So, back to that San Jose Mercury News story. It went on to quote a commercial broker explaining that the high mall occupancy wasn’t due to the expansion of major retailers. Instead, the space was being gobbled up by restaurants and “personal service retailers,” which plays to the point made by Lobaugh and others that consumers are shifting toward experiences.

The story also quoted mall operators talking about new and coming tenants, such as Lululemon and Pink — two outlets that attract die-hard fans and could reasonably be placed in Lobaugh’s quadrant of the high on experience and product differentiation.

All of which is a reminder that it is sometimes it’s not enough to talk about whether retail is growing or shrinking. It is often just as important to talk about what kind of retail is shrinking or growing — and even more important to talk about why.

Photos of Kasey Lobaugh and his graphic by Mike Cassidy.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

 

Mark Lavelle

The future of retail is going to be great — or not

I’ve been to Shoptalk and I’ve seen the future of retail.

In the future of retail we are going to be talking to robots in stores, getting e-commerce deliveries almost before we order them, talking to robots online, trying on clothes without getting off the couch, going to the store as much to hang out and have a beer as to pick up a gallon of milk and receiving instant personalized recommendations every time we search for a product online.

Or not.

In the future of retail we will never go to a brick-and-mortar store. Or we’ll go to brick-and-mortar stores more than ever.

So, what is the future of retail? It’s a trick question.

Mark Lavelle

For two days, the 3,000-plus attendees at Shoptalk have been talking, debating, speculating and predicting where retail is headed in the future. The industry, which is a key economic driver in the United States, is undergoing radical disruption.

Consumers, armed with smartphones and conditioned by search engines that seem to know exactly what they want, are empowered like never before. A recent series of earning reports tells the story of a move away from traditional department stores to online shopping.  

But nothing seems set in stone and everyone seems to wonder what’s next. A safe bet: The disruption will continue. Some choices are false choices and retailers may be saying yes to multiple strategies. Sure, we’ll talk to robots online, but people will be available, too.

And I cheated. Some of the future scenarios at the beginning of this post are things that are already happening in some form or another. All that to say that it’s not like flipping a switch. Our retail future will evolve, different retailers will have different priorities. Some advances will undoubtedly take longer than we might imagine.

Mark Lavelle, CEO of Magento Commerce, summed up the challenges nicely in a session aptly called “Executive Perspectives: The Future of E-Commerce.” He was talking particularly about the demands of Gen Z, but he could easily have been speaking about consumers as a whole.

“You’re going to have to really, again, keep up with that expectation of an ever-increasing experience that delights you,” he said. “Something new all the time. Certainly digital first. And it’s going to be a challenge. But I think in a way, we’re getting ready for what’s happening in commerce right now.”

No doubt, the thinking, the innovating, the strategizing, the keeping up, will all be clearly focused on the customer experience. The idea of speeding up delivery or giving consumers more ways to pick up packages or have them delivered; the work on making it easier to search and buy on smartphones; all of it is aimed at improving the customer experience, and as a result, increasing revenue and presumably profit.

All good, but a number of speakers pointed out that often there are steps along the way and it’s best for retailers to take the steps they can now, rather than set their sights on building the ideal customer experience all at once, which might take years and many millions.

Raj De Datta, who is the CEO of BloomReach, raised the point in the context of  a panel discussion on new approaches to personalization. While in theory it might seem ideal to build a system that collects in one spot data from the retailer, from the retailer’s partners and from enterprises that monitor consumer behavior and spending, that would indeed fall into the years-long and many millions category.

The better approach would be to build a data foundation in tandem with applications that provide an immediate return on investment.

PersonalizationPanel

“It turns out that you actually don’t need a tenth of that data to have those apps deliver an interesting, personalized experience,” De Datta said of the data required for the ideal, all-at-once system.

The panelists at the session, “New Approaches to Personalization,” also took the opportunity to provide predictions for the future of personalization.

Michael Klein of Adobe, was firmly in the talking to robots camp.

“Conversational commerce is here to stay,” he said in response to a question calling for predictions. He mentioned Facebook Messenger’s work with chatbots and Amazon’s Echo.

“The fact that I can now communicate with a device. I can build my shopping list verbally and have that on-the-go when I walk into the store — I think conversational commerce is going to be a big piece of retail as we move forward,” Klein said.

For his part, De Datta predicted the rise of the merchandiser.

“The merchandiser is coming back,” he said. “This last 15 or 20 years has been the era of internet marketing. And the next 10 or 15 years, data science is going to do the algorithmic optimization of sites and acquisition campaigns and so on. So, to stand out, the new merchandiser is going to be a data optimizer. You’re going to take large sets of data and couple that with gut, feel and intuition, combine those things together and create unbelievably valuable experiences for customers.”

The panel appeared to be in agreement on the notion that these are very early days in the field of personalization. And there is no doubt that retailers are determined to do personalization right.

All of which means this will be worth watching. The fun is only beginning.

Photos by Mike Cassidy.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

 

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Ron Johnson finds the great American failure story — Shoptalk

If you’re interested in hanging out at the intersection of innovation and retail, you could do worse than checking in with Ron Johnson, a man who no doubt would rather be known for his work on the Apple Store than his work at JCPenney.

During a morning fireside chat at Shoptalk, Johnson talked about a lot — his one-year-old company, his belief in “personal commerce” as a new platform and “the magic of experience.” But it was when the conversation came around to JCPenney, arguably not the sexiest topic, that Johnson was at his most revealing.

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But really, it was JCPenney and his struggles there that make Johnson one of the most compelling stories in retail. He’s now on to his next, new thing, a company called Enjoy, that he says brings the brick-and-mortar notion of customer service to the e-commerce wheelhouse of convenience and logistics.

But back to JCPenney.

“It turned out it was a really bad decision for everybody,” Johnson said of his decision to step down as Apple’s retail head to become the CEO of the struggling department store. “I was a round thing in a square peg. I’m a creative, innovative, look-forward, change-the-world kind of thinker. And that isn’t who Penneys was. So to go insert yourself in a place that’s really at odds with your DNA; that’s not a good idea.”

Johnson’s take, clearly, was that JCPenney was not ready to make the changes it needed to make to complete his vision of a hipper, more relevant JCPenney. Whether his analysis is correct, or not, his discussion of it is a Silicon Valley-centric way to look at failure. You learn and you move on.

I’ve written more than once about retailers’ need to act more like startup companies — to innovate and iterate fast. To keep the ideas that work and shake off failure, after learning the lessons that failure provides.

I was generally talking about trying new technology and innovations, but Johnson’s story, of trying new strategies and even trying new jobs, provides a high-profile chance to explore the value of failure.

First his plan: Johnson came into JCPenney in 2011 with a goal of attracting more younger shoppers to the somewhat dowdy retail chain. His idea was to offer more exciting products and to stop the practice of offering the kind of deep discounts on clothing that appealed to bargain hunters.

Short story: It was a disaster.

But on stage at Shoptalk, Johnson indicated that it wasn’t really the plan that was the problem. In fact, he said, given time, it most likely would have succeeded. The problem was that Johnson did not align his mission with the team he had in place.

“I was told people wanted change,  but the truth is nobody wanted to change,” he said of his new co-workers, while channeling their attitude. “They were on top of the world. Why did they need to change?”

At that point, Johnson said, a CEO can ease into transformation or try to jump start it. He went with the jump start.

“Truth be told, we went way too fast,” he said. Employees weren’t ready. Customers weren’t ready. Board members weren’t ready.

And, maybe to his credit, he wasn’t ready to replace employees resistant to change with those who would embrace it.

“I didn’t want to change people’s lives who had worked there forever.”

And so, what did he learn from the JCPenney debacle?

“Nothing good ever happened overnight,” he said.

Even the Apple Store, which is frequently listed as one of the highest-revenue retailers on a square-foot basis, was no overnight success. The idea was initially ridiculed. And, Johnson said, the early stores were not profitable for years.

JcPenney

And while Johnson didn’t say so, it appeared he learned another lesson from his JCPenney experience: Life allows second, third, and maybe fourth, acts.

He launched Enjoy a year ago. It’s gotten a lot of buzz and, more importantly, a lot of venture funding.

“If you’re an investor, you want somebody who’s failed, because they don’t like the taste of it,” Johnson said. Investors factored in his successes when looking at all that went wrong at JCPenney, he said.

“I wouldn’t recommend that you go out and fail and then raise money,” he joked.

He is now running a company with a new idea — one that might catch on or might not. He’s doing it at a time when retail is experiencing tremendous disruption that can be both invigorating and terrifying.

The Shoptalk agenda itself is one gauge of just how topsy-turvy the retail world is. Speakers and attendees are talking about new ways for faster delivery, new ways to order online, new subscription models, new payment methods. And in steps Johnson, with a new way to please customers.

Failing is never easy. It’s no fun. And Johnson said he found it very humbling. But, he added, his failure also led him to Enjoy.

“And if I hadn’t done that, I don’t think I’d be doing what I’m doing now,” Johnson told the gathered crowd. “I love what I’m doing now.”

And why not? It’s a chance to be known not as the guy who failed at JCPenney, but as the guy who launched Enjoy.

Photo of Johnson being interviewed by CNBC’s Courtney Reagan by Mike Cassidy. Photo of JCPenney store by Mike Mozart published under Creative Commons license

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com. Follow him on Twitter at @mikecassidy.

 

Shoptalk sign

Why customer experience has dethroned omnichannel at Shoptalk

I’m just going to call it: This is the year and Shoptalk 2016 is the place where omnichannel dies.

Oh, there will be plenty of talk about “omnichannel” during the three-day retail conference that kicked off Monday in Las Vegas. And the concept, maybe mantra, of “getting the customer what he or she wants, when he or she wants it, where he or she wants it,”  isn’t going away. And it shouldn’t.

But what retail is all about in 2016 is “customer experience,” in particular, bringing all aspects of a retailer’s organization together to build and manage that experience in the digital world we live in.

In an information era, in which it is increasingly difficult to beat the competition on price; and in a time when e-commerce sites are approaching the limit on how fast they can get a package to a consumer’s home, experience is one of the few places where a retailer can standout.

“It’s funny that you mention the word experience, because that’s exactly how we envision building Dollar Shave Club over the next four years,” Michael Dubin, CEO of the men’s grooming products provider, said in response to a question at a Shoptalk fireside chat Monday. “Now you have to build an experience. You have to evoke emotion.”

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In fact, at times it seemed you could nearly hear the word “experience” echoing through the sprawling Aria Hotel & Casino convention center. Ron Johnson, who’s credited with leading the Apple Store effort and who stumbled at JCPenney, said in a presentation that his newest venture, Enjoy, is all about creating personal commerce through “the magic of experience.”

Customers who order electronics through Enjoy have their products delivered by an expert who spends an hour helping the buyer get acquainted with his or her new gadget.

“They’ll spend an hour with you, not just setting it up, but creating an experience that will make you fall in love with that product,” Johnson said.

Kevin Ertell, Sur La Table’s senior vice president of digital, was asked during a different panel discussion whether it would make sense to limit the products the retailer shows on its mobile site to make the site more user friendly. Not really, he said. The vast majority of customers don’t buy on a given visit. They come to the site to research kitchen and dining tools.

“The issue with mobile or the web site, or anything,” he said, “is much more about the experience, and how do you make it easier for the customer to shop or to do whatever they’re doing.”

And so it went from session to session; “experience” was on many lips. Admittedly, making sure customers have a memorable experience does sound a little fluffy. But the reason retailers are embracing experience has as much to do with dollars and cents as it does with warm and fuzzy.

Consumers, armed with smartphones and a market that the web has made more transparent than ever before, hold more power than they ever have. If retailers want to survive and grow, they have to come up with something that sets them apart from the competition.

“Experience is the thing you have to pick,” Ben Lerer, chairman of men’s clothing e-tailer JackThreads, told me in an interview Monday. “It’s certainly what we picked for a new kind of customer who decides for themselves what brand they want to spend time with.”

JackThreads recently decided to give up a flash-sale discount model for a model that allows free and easy returns and doesn’t charge a customer until he’s settled on what he will keep.

A different kind of experience, if you will.

Now, we can argue about whether trading one buzz word, “omnichannel,” for another, “experience,” is really progress. Let’s save that for later. The point is, the world of buying stuff has gotten so complicated and has begun shifting so quickly and so wildly that even the idea of being all things to all consumers all the time, isn’t big enough to capture what’s happening.

The notion of “experience” isn’t new, but the empowered mobile consumer means it needs to be thought about in a deeper way. For instance, the idea of providing a better experience sounds great. So, why isn’t everybody doing it?

It turns out that, despite all the talk about putting the customer first, some retailers are not organized in a way that makes that easy to do, especially across channels and platforms.

Banana Republic

When Aimee Lapic, who is chief marketing officer and online general manager at Banana Republic, arrived at the company about a year and a half ago, she said she was faced with three separate teams, all working on customer experience. There was marketing, which worked on marketing for brick-and-mortar stores. There was an e-commerce team that worked on the web sites and there was a second marketing team that worked on digital marketing, online marketing email and site marketing.

She went to work to bring them all together into “one organization, really focused on customer segment, regardless of channel, regardless of geography and changed all the creative processes, so they would be one process.”

While there is still work to be done, the change has resulted in better sales when it comes to Banana Republic’s best customers, Lapic said during a panel, “Creating and Managing Omnichannel Customer Experiences.”

A similar idea has been put forth by others, including Joelle Kaufman, BloomReach’s head of marketing and partnerships, who has called for establishing “digital experience managers” or teams.

The manager or team would oversee and understand all the buckets of data from marketing, from merchandising, from e-commerce sites and physical stores. The role would serve as a key linchpin in building a sense and feeling for consumers that sets a retailer apart.

Most importantly, a digital experience manager could patch the short-circuits that a recent Forrester survey commissioned by BloomReach uncovered. In particular, only 37 percent of onsite merchandisers believe they have access to the data they need to improve their customers’ shopping excursions.

On the digital marketing side of things, only 36 percent of marketers think that the deep knowledge that site merchandisers have about products should be combined with what the marketers know about consumers, Forrester found. The marketers simply don’t believe that merchandisers have the data that can help them gain new customers or encourage repeat visits.

In other words, marketers don’t think merchandisers can help build the sort of customer experience that 2016 demands.

It may in fact be that omnichannel is dead. (Though don’t count on it. It’s a hard word to slay.) But, in any case, as we move into the era of customer experience, don’t think that means that things are going to get any easier.

Photo of Shoptalk stage and Ron Johnson talking with Courtney Reagan by Mike Cassidy. Photo of Banana Republic by Mike Mozart published under Creative Commons license.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

shoptalk screen shot

What the speed of retail means for Shoptalk

Note: This story originally appeared on Huffington Post.

Thousands of retail professionals will gather the third week of May at a big retail trade show in Las Vegas to meet and greet, take stock and talk shop.

Again.

The inaugural edition of Shoptalk is the latest big-name, big-time retail conference to join a list that includes the National Retail Federation’s Big Show, the Shop.orgDigital Summit, the Internet Retailers Conference and Exhibit (IRCE), the Shop.orgDigital Experience Workshop and eTail East, eTail West, eTail Canada, which runs concurrently with Shoptalk 2016.

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It’s enough to make one wonder: Does the retail world really need another presentation-packed show featuring a cavernous hall full of vendors hoping to connect with retailers who are searching for an edge in an increasingly brutal business?

The answer, judging from Shoptalk funding, its expected attendance, its star-studded (in a retail sense) speaker lineup and its sleek and well-managed marketing effort is, yes.

The pace of change in retail, it seems, is approaching escape velocity — the speed at which it becomes nearly impossible for a human being to keep up with new products, new ideas, new entrants, new sources of funding and new paths through the crowded field to keep up, get ahead or break through.

“I do think, given the fluidity and the speed with which the market is moving, that there really is, I don’t want to say insatiable, but there is a very strong appetite, for more and more learning and sharing among all the participants in the market, just because there is so much going on,” says Sam Shrauger, senior vice president of digital solutions for Visa, which is a sponsor of Shoptalk.

The market appears to be embracing the chance to gather together. Shoptalk organizers say on their website that they’ve sold out the 3,000-plus admission tickets they had planned to issue. (In the run-up to the show, the organizers were not available to speak with me.)

They’ve lined up luminaries like Ron Johnson, the father of the Apple store and the evil stepmother who led JCPenney on a downward path to a serious rough spot. Startup delivery upstart Jet will be there. So will 1,600-pound gorilla Amazon. And buzzy companies like Birchbox, Bonobos, Airbnb, Adore Me and Rebecca Minkoff will be there, too. And perhaps most importantly, more than 100 venture capitalists, according to Shoptalk organizers.

Or maybe most importantly, Lionel Richie, because what’s a big show without a celebrity speaker?

“We know the founders of Shoptalk fairly well,” Shrauger says, “and their ability to attract and create a good dialogue that is relevant to this time and place in retail, we think is really strong and compelling. So that’s one of the big reasons that we were attracted to it. And given that it’s an inaugural conference, and given the roster of participants that they have, they’ve done a great job already of curating a pretty powerful agenda and group of participants.”

True, the value that attendees, who are paying $3,500 for a Shoptalk ticket, find in the big retail shows is no different from the value that doctors, lawyers, code writers, energy industry folks, academics, manufacturers and others find in their distinct conferences. The shows are a place for new ideas, networking, taking stock, recruiting, job hunting, getting a bead on the competition and making the acquaintance of potential partners.

But the need to do all those things in retail has accelerated geometrically in the digital age — creating, for instance, omnichannel, or the notion that retailers need to provide a seamless shopping experience across all digital devices and physical stores.

“There is a lot of change going on across the board,” says Howard Blumenthal, director of e-business product management, e-commerce growth and omnichannel experience at Advance Auto Parts. “Retailers are actually getting that they actually have to do omnichannel, not just talk about it. These things are very jarring for organizational structures.”

Blumenthal, who traces his retail career to a five-store music chain he started at 14, has been going to retail trade show for years. He says he sees something different in Shoptalk, which is being launched by the team that runs ‘Money 20/20’, a show focused on retail payment.

Some of the big shows, he says, seem to feature the same speakers and cover the same ground. But as the retail industry careens forward through rapid change and disruption, there are new players offering potential solutions.

“Part of what’s refreshing here, is that what they’ve tried to do, what they’ve very clearly tried to do, is broaden the approach,” Blumenthal says of Shoptalk. “If you’re really looking at more of an omnichannel environment, there are the investors, there are the startups. There are all these other groups that now play a role. And I think this is one of the first shows to try to bring more of that together.”

Mark Walker, CEO of JackThreads, a venture-backed online men’s clothier, agrees that the mix of people planning to attend Shoptalk is a major draw.

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“I’m all about adjacency,” says Walker, a 20-year retail veteran. “It’s knowing who are the other people who are going to be there — who are the other people speaking and who are the other people who are going to be listening.”

Walker will participate in a panel discussion at Shoptalk. And, yes, he’s excited to have a chance to get the word out about his company. But the panel will account for 40 minutes of his multi-day stay in Las Vegas.

“I don’t speak until Tuesday afternoon,” says Walker, who’s arriving in Las Vegas on Monday. “We’ve got meetings scheduled all afternoon Monday and all morning Tuesday.”

He’ll talk to journalists, venture capitalists, bankers and other retailers. Yes, even potential competitors, because you never know when a competitor could become a partner or might have an idea to share or could become a sounding board. Yes, really.

“I think there used to be kind of the old, kind-of-Apple approach, where everybody thought that they had the secret sauce and everything had to be locked in a box, and you couldn’t talk about it,” he said. “Because people were like, ‘If I share the idea, then somebody else is going to take the idea.’ I think people have realized that this whole business operates so fast, that even if you openly launch something, there are going to be early adopters who are going to take the idea and build on it anyway.”

That sort of connecting and sharing is hard to do in the hurly-burly of running a business day-to-day. Not to mention the logistics of finding a time to get together, or even to talk by phone.

“It’s just the chance to exchange ideas and meet people you don’t know, but you know about,” says George Arison, the founder of Shift Technologies, which acts as an agent between used car buyers and sellers. “It’s really convenient to have everyone in one place and to have a chance to talk together. Who knows what might come out of that?”

Who knows?

And who knew? There is room for another — and apparently more — big conferences and trade shows that bring those in the retail industry together. In fact, it turns out, that even in the age of digital disruption, it is best to get together face-to-face to talk about how to survive it.

Photos: Screen shots of eTail West and Shoptalk.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

Scott Silverman

Video: Where to find retail’s future leaders

No surprise that the face of retail is changing as the industry undergoes dramatic disruption. As data — and more sophisticated gathering and analysis of data — becomes increasingly important in the retail world, organizations are going to look to e-commerce experts to lead the way.
 


 
In our latest edition of BloomReach University, Video Campus, retail expert and advisor Scott Silverman talks about how the evolution of retail and e-commerce is changing the kinds of tools retail organizations look for in their leaders.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com. Follow him on Twitter at @mikecassidy.

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Mother’s Day tips; fast fashion and Amazon’s relentless march: The BloomReach Relevance Report

Happy Mother’s Day — less 41 cents

The value of motherhood has dropped 41 cents in the last year.

Really people? This is motherhood.

Mother and son

Alas, Internet Retailer reports that consumers buying gifts for moms in 2016 will spend an average of $172.22, compared to $172.63 last year. (Unwilling to take the total blame, IR says it based its conclusion on a National Retail Federation report.) Fortunately, our mothers love us no matter what, because, well, they’re our mothers.

Now that we’re past the unpleasantries, there is other news in the report. More people are shopping for mom online, in part because more people are shopping online, period. The IR piece says more than 27 percent of the 7,000 surveyed by NRF intend to buy something online for Mother’s Day. Last year only 25 percent bought online for the big day.

The number of conversions on smartphones is also expected to rise — 15.5 percent in 2016, compared to 13.7 percent in 2015. Please tell us you’re not snagging some gift on the way to mom’s for the Mother’s Day dinner that she is making.

And it gets worse. We recently spotted some research for RetailMeNot that said that 33 percent of mothers in Canada end up buying their own Mother’s Day gifts. We’re sure it’s different here in the U.S. OK, we’re not sure of that at all.

And in case you’re wondering what mom does and doesn’t want (though we’re sure you’re not wondering, because we’re sure you already have that gift purchased and wrapped), we’ve got research on that, too.

Cash-back and promotions site Ebates said the least desired Mother’s Day gift is a gym membership, according to a news release from the site. You think? Who wouldn’t want to be lovingly told that it’s time to get up, get moving and shape up? Anway, 94 percent of moms said a gym membership was not for them.

What do they want? Ebates says 63 percent of mothers said they most wanted quality time with their families, which just proves what good liars moms are. The study found that 33 percent want flowers and 28 percent want chocolates, the same percentage who said they wanted a day at a spa — which is not a gym. Please look it up if you’re confused.

The Ebates survey also provides some cover on the mom-getting-her-own-gift thing. The company prefers to look at the percentage of moms who “pick out their own Mother’s Day gifts,” which 42 percent of mothers do at least some of the time, according to the survey, which was conducted in the United States.

You know “pick out.” It’s not like they’re actually buying their own gifts. If they were, we’re guessing the average spending wouldn’t be down 41 cents. But that’s just a guess.

Think fast: retailers getting creamed by fast-fashion trend

Muji2 San Joe

Fast fashion is continuing to sprint through the retail landscape dispensing disruption wherever it goes. First comes the news that Aeropostale has filed for Chapter 11 bankruptcy in part because it was unable to keep up with teens’ preference for cheaper clothes that they wear for a bit and then move on.

The New York Business Journal explains that pressure from the FF retailers like Uniqlo and H&M has been proving too much for Aeropostale, which teens see as so 2005. But the bankruptcy is part of a bigger story the NYBJ says.

The generation of teens shopping today, see shopping in a whole different way. How they shop, what they buy, when they shop, belongs to them. They’ll call the shots. And one thing they favor is having a “different look.”

Teens no longer want to wear what all the cool kids are wearing, because the cool kids are wearing fashions that one one else is wearing. Get it? Us neither.

Anyway, the Business Journal explains that the rapidly changing habits of consumers, and especially the consumers who are the future of retail, will mean for some fairly uncomfortable times for retailers in coming years and decades.

Ken Collis, CEO of TLK Fusion, a company that helps brands promote themselves, tells the NYBJ that within 10 years, 50 percent of brick-and-mortar stores will have closed.

Hoping to avoid getting crushed under the huge shifts in retail, The Limited, another store under assault from fast fashion, is adopting a strategy of “if you can’t beat them, join them,” The Columbus Dispatch reports. The Columbus retailer is opening stores within six of its stores to feature lower-priced clothes designed with fast fashion in mind, the newspaper reports.

The stores, called Backroom at the Limited, will bring the fast-fashion concept to an older audience, according to analysts quoted in Dispatch story. The Limited executives would rather not position their move as a response to fast-fashion, telling the Dispatch that the Backroom is all about being “a value offering in a much more conveniently accessible location.”  

Whatever The Limited folks want to call their strategy, if it’s successful, it’s one we might see more of among retailers who cater to those older than millennials.

Five ways to think about six things you can do to improve customer experience

Bullseye the dog

The BRRR has been a big of a nag on this idea that in the Amazon era, shopping has to be more than a transaction. Retailers need to throw in some kind of experience or some other reason that consumers will want to stick with your particular store.

(Hey, we nag because we love.) Now comes the National Retail Federation with a piece on Medium that actually provides some practical advice on how to go beyond being a seller of goods to being, yes, an experience.

The NRF piece on Medium goes through six things retailers can do (because every blog headline needs to contain a number and every post needs to be a list).

The advice is along the lines of “don’t try to be everything to everybody,” which is good, because in the Amazon era it makes sense to try to exhibit deep expertise in a few narrow areas. The NRF also recommends building unique partnerships, being transparent about product sourcing, adding touches of fun that aren’t exclusively about buying that store’s stuff.

Warby Parker, for instance, built a summer road trip kit last year. Users could download bingo cards, Spotify playlists and other car-trip-friendly items, the story says.

The NRF also recommended one of our favorites: Make your store photo friendly and encourage customers to take photos and upload them to social media. It reminded us of our recent talk with retail shutterbug Mike Mozart, who’s taken thousands of photos of (and in) stores.

His first tip to retailers looking to enhance the in-store experience: Be photo friendly.

Website Retail Customer Experience is on the experience story, too, as you might suspect from the name of the publication. The RCE points out that the changes in retail and customer habits is being reflected in the look of stores. For instance: Dude, where’s the cash register?

The story points out that consumers have been conditioned by online shopping. It doesn’t make sense any more to have to go to a specific spot in a store in order to pay for a purchase. In fact, online shopping is moving brick-and-mortar in a number of new directions

Retail Customer Experience points to a store called B8ta, which relies heavily on real-time in-store data and analytics. The story says that B8ta sends data to the manufacturers of its products, who can then make changes in everything from price to features.

RCE says B8ta refers to itself as “the first brick-and-mortar retailer architected to help you discover, experience and buy the latest tech and IoT products.”

We like what B8ta is doing.

Using “architect” as a verb? Not so much.

Amazon air expands on its way to global domination

AmazonBox

Writing Amazon stories has almost become a game of “can you top this.” Every bit of news out of the Seattle “Everything Store,” seems more fantastic than the last.

Now comes news that the company is doubling its air fleet in the form of leasing 20 more 767s, this time from Atlas Air, according to the Wall Street Journal. (Here’s a Retail Dive summary that doesn’t require a subscription.) Amazon previously lined up 20 767s from Air Transport Services Group a couple of months ago.

The speculation is that Amazon wants to eventually build it’s own delivery system, cutting out the need to deal with UPS, FedEx and the U.S. Postal Service, though the company itself isn’t saying that.

But like most Amazon stories, this one has buried in it an eye-popping statistic. These figures are sometimes presented in a matter-of-fact way because, well, it’s Amazon. In this Amazon goes airborne story, the eye-popper is this: “Half of all U.S. households are now Amazon Prime members.”

Think about that. And then think about the findings in a Survata survey commissioned by BloomReach: 44 percent of consumers begin their online shopping search on Amazon. Throw in that Amazon dominated Cyber Monday shopping, snagging nearly 36 percent of all Cyber Monday sales.

So half of U.S. households are Prime members, Amazon holds a commanding lead as the place to start an online shopping search, Amazon saw 36 percent of all online Cyber Monday sales and it’s building an air force.

The word “dominate” comes to mind.

Quote of the week

“With sluggish consumer spending and the cold recent months, retailers will undoubtedly be feeling that everything is against them,” — Sophie Michael, head of retail at BDO to the This is Money website regarding slow brick-and-mortar sales in Britain.  

Mother and son photo by Asim Chaudhuri and newspapers photo by Jon S. published under Creative Commons license. Other photos by Mike Cassidy.

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Video: How to future proof your e-commerce operation

It’s not news that successful retailers can no longer keep separate systems for online data and in-store data.  But, says Sean Cook, formerly of Aptos, just how to combine that data successfully is easier said then done.
 

 
In our latest installment of BloomReach University, Video Campus, Cook talks about turning to the cloud to “future proof” your retail business; to be ready for the next big thing in retail data — even if nobody knows exactly what that’ s going to be.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

St. Louis Cathedral, New Orleans

BloomReach Relevance Report: Collision 2016 edition

The BRRR just flew back from the Collision tech conference in New Orleans and boy are our arms tired. Hey, it’s the BloomReach Relevance Report. What did you expect in the way of humor?

St. Louis Cathedral in the French Quarter

St. Louis Cathedral in New Orleans’ French Quarter

It was no accident that the Collision folks chose New Orleans for the third Collision. The show goes for eclectic and there are few more eclectic cities in the the United States than New Orleans, with it’s elegant southern charm juxtaposed with its off-the-hook Bourbon Street party scene. This was a conference that had impresarios of the NFL (Brett Favre) and SEO (Rand Fishkin). It included presentations on stage by PJ Morton, keyboardist of Maroon 5 (seen below with Chris Kaskie of Pitchfork) and Brad Smith, CEO of Intuit.

PJ Morton of Maroon 5 talks with Chris Kaskie of Pitchfork

No, it’s not Shop.org or NRF’s Big Show and it isn’t laden with retail-specific panels or discussions. But there was plenty for retailers to learn at Collision and we’ll run some of those down in words and pictures. There was plenty of wisdom dispensed from the marketing stage.

Rand Fishkin of Moz

Rand Fishkin of Moz

Neil Vogel, CEO of About.com, talked about the pioneering internet site’s recent radical reinvention.  The site, a mishmash of advice and answers to questions, launched nearly 20 years ago, when the internet was a very different place. Vogel said that in 2016, the idea of a one-stop site is not nearly as appealing as a strong vertical — for instance a site that is all about health.

“You can’t be everything to everyone,” Vogel said. “You don’t want diabetes advice from the same place you learn to stain floors,” he said. And so he announced that About.com was launching a stand-alone health site, pretty much at that very moment.

Neil Vogel of About.com

Neil Vogel

Of course, he got wild applause from those at packed into the Market Stage area.

“Don’t clap,” he said. “It’s wasting energy. Take out your phones and start clicking on stuff.”

He was joking. Kind of. Not really.

Traffic is king and IAC, About.com’s parent, is hoping this new strategy gets more. It wasn’t an easy move for an outfit that had been doing the same thing, pretty much the same way, for a long time. Vogel described it as, “forcing a huge cultural change, something that has been essentially the same thing for 20 years.”

The lesson for retaliers? Don’t be held back by legacy. The BRRR had a chance to moderate a couple of panels at Collision, including one with Vincent Yang of EverString and Matthew O’Grady of Nielsen Catalina Solutions and another with Dan Wagner of Civis Anayltics.

Among the many things that came up in both discussions about data with the analytics experts is how emotion can get in the way of embracing data. Nobody was suggesting that anyone should simply turn blindly to data, but there is a danger in clinging to the past. It can be hard, emotionally, if an executive perceives that he or she is giving up control of decisions to a machine run by data scientists. That observation applies to retail executives, too, who at times resist the power of machines, because they relied on gut for so long. The answer is to balance the two  — the art and the science.

Panelists at Collision left little doubt that the winners of the of the coming decade will be those who best manage, analyze and act on the right data. Vitaly Gordon, a data scientist with Salesforce, told attendees that data science is important.

More Collision coverage

It’s the electricity of our time,” he said, explaining that soon data science will be so ubiquitous that people won’t give it a second thought. It will just flow — and it will contribute to great things.

“Every time  you create a product like GPS, an intelligent tool that gives advice that is personalized, you make the world a better place,” he said.

Another lesson came not from any stage, but from the overall vibe and mission of Collision. Sure, the organizers are looking to make a profit, but they are also looking to provide a chance for startup entrepreneurs to network with each other, as well as investors, while working to get the attention of a journalist corps that also attends.

Collision speaker mingle before dinner at the Board of Trade

Collision speaker mingle before dinner at the Board of Trade

There are no doubt somber, sober even, networking encounters, but the organizers seem intent on lubricating the socializing with nightly pub crawls and dinners featuring open bars. The gatherings and meet-ups are a reminder that there is wisdom in the crowd. Like leaders in any industry, retail executives can be hesitant to share ideas around solutions to common problems.

A relatively calm Bourbon Street before dark

A relatively calm Bourbon Street before dark

But with Amazon’s dominance it is time to share best practices without giving away the secret sauce that one retailer might believe provides an edge over the competition.

Startups symbolize the future, which came come at you in a blur

Startups symbolize the future, which came come at you in a blur

And maybe the most significant lesson could be seen in the more than 600 startups that attended Collision as exhibitors. The sheer number was a symbol of the future; a sign that change is coming, that those who will come out on the other side are often those who are ready to take risks and try something new.

Canal Street streetcar

Streetcars move down the Canal Street Line.

The past can be comfortable, easy, beautiful even. And sometimes the old ways will suffice. But it is much more likely that something you don’t even see coming will threaten your business. Unless, of course, you’re the one who nobody seems coming.

Photos by Mike Cassidy

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

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The retail future is now: The BloomReach Relevance Report

The week is done. Need a quick hit of the BloomReach Relevance Report? This week is for you. Short and sweet.

The future of retail is now and later

MujiSanJose

One of the most fun things about the world of retail is how it constantly changes. Come on. It is fun, right? We’ve watched the shift to online, the stampede to mobile, the rise of click-and-collect and the movement to provide in-store experiences that go beyond a simple transaction.

But there is still big stuff coming. Mobile Commerce Daily is reporting that at least one industry expert is warning that retailers might not know what’s about to hit them when it comes to virtual reality. From the MCD story:

“‘Few people in the retail industry understand how the world has changed as technology driven innovation accelerates,” said Gary Hawkins, CEO of the Center for Advancing Retail & Technology. “Change happens increasingly fast, especially with technologies like AR and VR which are great examples of how consumer technology adoption forces retail to adjust and adopt.’”

Hawkins, commenting on a report “Retail Innovation: U.S. Retail Technology Insights and Analysis,” says that many retailers are having a hard enough time catching up with consumers who have turned to mobile as their all-purpose get-stuff-done device. Their scramble on the mobile front is leaving little time to prepare for a world in which consumers are going to expect to be able to slap on a headset and virtually stroll the aisles from the comfort of their couch.

And the future won’t stop at virtual reality. eWeek is reporting that within three years, 10 billion articles of clothing will be able to connect with your smartphone so that brands and retailers can get to know your preferences and provide personalized product recommendations as you shop.

The brave new world will be the result of a team effort between RFID label company Avery Dennison and Internet of Things platform company Evrything. (They put the “e” in e-commerce. Well, they put the “e” somewhere, because it’s not in Evrything.)

eWeek notes the technology will also allow retailers to track products’ “history” (presumably performance), monitor loyalty programs and authenticate designer labels to stymie counterfeiting among other things.

All this on top of last week’s announcement that Facebook was moving into the chatbot business, a business that has some serious e-commerce implications. Opinions vary on just how big a deal chatbots will become, with some (that would be us) saying it’s a portion of the wave of the future and others saying the chatbot thing is overhyped.

Dig in a little bit and you’ll see the two side are not that far apart. Most agree chatbots are not there yet, which for some means they’re a failure and for others means they’re a work in progress.

In the end, the one thing everyone in retail can count on is constant change.

When it comes to data, retailers are dancing in the dark

silos

As the e-commerce future bears down on us, many retailers are struggling with the e-commerce present. Face it, “omnichannel” has been a topic of conversation for long enough that the word is kind of tired. (We never liked it.) And yet, Retail Dive reports that the vast majority of retailers feel less sure of their omnichannel efforts today than they did a year ago.

The big problem, RD reports, is that retailers don’t have a clear view of customer behavior and intent across the different platforms on which they sell. In fact, 67 percent said they don’t have the cross-device customer analytics that they need to do the job right.

Retailers surveyed by Periscope, a McKinsey division, cited some other challenges, all of which, frankly, seem related to the first. Retailers told Periscope that they’re also hindered because various departments in their organizations live in their own silos, meaning all the right people aren’t talking to each other and that all the needed data is not universally available to to those who need it. Beyond that, 45 percent each said that their data is of poor quality and that they can’t identify customers across shopping excursions.

Not good.

Samsung’s store where you can’t buy anything

IMG_8261

Did we say something about how retailers are gravitating toward stores that offer an experience beyond simple transactions? Of course we did. And now we read that Samsung has taken the notion to an extreme.

Forbes reports that the massive electronics company has opened a store in Manhattan’s Meatpacking District where you can’t buy a thing. Nada. Your money is no good there. Literally.

The “store,” which Forbes describes as “massive,” is called Samsung 837 and is something of a digital playground, according to Samsung. The outlet features a huge screen for selfie viewing and a number of other interactive exhibits.

The BRRR’s favorite: the Social Galaxy, which Forbes describes as a tunnel lined with screens and mirrors that project all your Instagram photos and text all around. The creative director, Kenzo Digital, is quoted describing the galaxy in terms you rarely hear used to describe a store:

“The Social Galaxy experience is a really great way to inject an element of narrative magical realism into the space. Visitors enter a hyper-immersive infinitely reflected tunnel of their own Instagram account, effectively meeting their digital alter ego in dramatic fashion.”

Mind blown.

Samsung 837 is definitely where retail is headed. In some ways it builds a community loyal to its brand. Target has done something similar with its Open House in San Francisco, though it arguably has a stronger tie to commerce given that it features actual products.

And all kinds of retailers have taken a step in the experience direction. The Forbes piece on Samsung 837 argues that sporting goods stores are at the vanguard of this experience-based retailing. We don’t know if that’s the case, but it’s true that some, like Bass Pro Shops, go all out on the experience front.

The San Jose Mercury News described the new Bass opening in town as a “retail theme park,” complete with bowling alley, restaurant and bar and a 11,000-gallon aquarium.

No doubt we’ll see more of these stores-as-experience crop up in the coming months and years. Whether they will go as far as Samsung will likely have a lot to do with what sort of goods a retailer is selling. Electronics lend themselves to a playground of buzzy exhibits. You can always buy your goods online.

Clothing and accessories probably call for having the actual products on-site, though the presentation certainly leaves matters open to a lot of creativity.

Quote of the week

“It’s a fun way to interact and not directly tied to selling shoes. It’s really about creating a unique experience associated with Nordstrom,” Bryan Galipeau, Nordstrom’s director of social media, to Fortune, regarding  the retailer’s Snapchat campaign pitting colleges against each other in a contest to win shoes.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.

Photo of clothes display and Bullseye by Mike Cassidy. Photo of silos by Matt Batchelor and newspapers by Jon S. published under Creative Commons license.