Tomorrow’s retail world sees devices and smart tagging systems

29.10.2013

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Tomorrow’s retail world sees devices and smart tagging systems

VisionID’s ‘store of the future’ showcase put retailers in consumers’ shoes and took them through a shop floor equipped with personal shopping devices, smart tagging systems and e-ink employee badges capable of communicating using Voice over Internet Protocol (VoIP).

The showcase took place at Citywest Hotel in Co Dublin recently, and VisionID, a Tipperary-headquartered company, specialises in providing technological solutions for the retail and manufacturing sector. These days, in competing with online sales, retailers need more than just an everyday barcode scanner.

‘Showrooming’ is a chief concern of modern-day retailers. “The bricks-and-mortar retailers, if you want to call them that, have done all the hard work. They’ve done the validation of the product with you, but then you’re going off and buying it somewhere else because it’s cheaper,” said Robert Jones, managing director of VisionID.

Among customers in US stores during the 2012 holiday shopping season, 64pc of Generation Y shoppers and 52pc of Generation X shoppers used their mobile phones to comparison shop, according to a Motorola Solutions survey. In Ireland, a study conducted earlier this year by Accenture and UCD Smurfit School revealed that 82pc of Irish consumers use the internet to comparison shop.

‘Scan and scram’

Retailers have become despondent in the face of this level of competition, with 83pc surveyed by Motorola Solutions in 2011 saying they believed customers can easily find better deals elsewhere.

To counter this ‘scan and scram’ shopping habit, Jones suggested that retailers open up guest Wi-Fi in-store. While this will increase customers’ opportunity to research products online, it also gives retailers the chance to encourage an in-store transaction by offering a discount or money-off coupon to customers who log on.

“At the end of the day, you have to make it compelling for somebody not to go on to Amazon,” said Jones.

Offering free internet access to customers who can then search for cheaper deals on products online requires a certain level of trust from retailers. So does self-scan technology, which has been adopted by Superquinn. Working with VisionID, Jones said the Irish supermarket chain is one of the first companies in Europe to roll out this personal shopping solution, and have upgraded to the next generation of handheld scanners since. This technology has also been deployed on a pilot basis in the Ballincollig, Co Cork, store of Superquinn owners Musgrave Group.

“Giving a loyal shopper their own handheld to scan as they shop gives the shopper a lot of control, which they like,” said Jones. Surprisingly, Jones said shoppers who can see their total spend as they go are likely to spend more than those who have to wait until they get to the till to find out.

“If people know what they’re spending they’ll actually spend more because they’re in control of it,” he said.

Not only does self-scanning technology drive bigger basket sizes, it also makes the shopping experience more efficient. Customers don’t have to queue at the check-out to receive their bill, and items can be bagged as they make their way through the store. At the end of their shop, all they have to do is hand over the (personal shopping device), pay, and leave. “It’s a very progressive, easy transaction,” said Jones.

Mobile point-of-sale option

Another option for faster in-store transactions is mobile point-of-sale, which allows staff to scan products and take payment on the shop floor, using contactless card payments in some cases. Jones calls this ‘the Apple Store effect’ as it is a technique seen in action in the iconic brand’s stores. “It’s very engaging,” he said. “You’re not stuck in a queue, you just transact with the person, they process your order there and then and you walk out the door. It’s compelling enough, from a shopper point of view,” he added.

And that’s not where comparisons to the Cupertino, California, tech giant ends for Jones. In discussing radio-frequency identification (RFID) technology, he predicted a boom in popularity similar to one key iconic product. “There wasn’t much going on in MP3 players until Apple came out with the iPod and then the market just exploded. I think the same is going to happen to RFID,” he said.

RFID uses radio-frequency electromagnetic fields for the wireless and contactless transfer of data. Tags as small as a grain of rice can be embedded in products and, unlike barcodes, don’t have to be visible to be read.

Dr Pat Doody champions this technology as chair of RFID in Europe, a not-for-profit organisation that evolved from a European Commission-funded project. This organisation brings together all of the stakeholders in RFID from across Europe to promote the technology and develop public policy around it.

For Doody, who also lectures in IT Tralee and has a PhD in mathematics, it was the numbers that aroused his interest in RFID. Using RFID to tag and track items allows retailers to conduct inventory checks in as little as 30 minutes, allowing for closer, more efficient monitoring of stock levels and also more granular detail on where items can be found and what items are performing well, sales-wise. Basically, there are opportunities here for a deeper level of analytics often reserved for online business.

Knowing what’s in stock and being readily able to assist customers can reap financial benefits. Motorola Solutions’ survey found that, during the 2011 holiday shopping season, one-third of US store visits ended with on average $125 unspent each time due to missed opportunities, driven by stock shortages, lack of assistance and inefficient payment approaches.

RFID is already quite common in our daily lives – access fobs, card keys and pet micro-chips often contain RFID tags. It has been deployed in contactless payments technology, but the key growth area for RFID, according to Jones, is asset tracking. Be it a crate in the warehouse, a high-value item on the shop floor, or a blouse on the rail, RFID tags can be used to track it.

Marks & Spencer’s use of RFID tags

One household name, in particular, is making great use of RFID tags. “Marks & Spencer are tagging everything,” said Doody. RFID in Europe has spoken at length with the supermarket chain and label-maker Avery Dennison about the benefits of implementing this tagging system store-wide. Doody said Marks & Spencer’s decision to roll out RFID throughout its supply chain is a testament to the advantages outweighing the initial cost.

By EU law, retailers that use RFID tags for consumer goods must make this clear with a sign informing customers in-store. The challenge for someone like Marks & Spencer is, they don’t want the consumer coming in, seeing this, and being in any way intimidated by it, said Doody.

In an effort to dispel any myths surrounding RFID, Marks & Spencer and Avery Dennison funded the development of RFID&U, a website controlled by RFID in Europe that, Doody said, has been created “to get what is the true message of RFID across, without scaremongering.”

Doody said there is no reason for customers to be concerned about how RFID tagging and tracking could impinge on their right to privacy. Under EU recommendation, a privacy impact assessment (PIA) has to be carried out before this technology can be implemented to ensure it will not impact on customers’ privacy.

“If you buy something with an RFID tag in it, you have to ensure that there’s no way that anyone outside the store can read that tag with information that can be linked to that person, their purchase or anything like that,” said Doody. He added that while the unique number on a tag may be readable to others outside the retail environment, this information is meaningless without the correlated data from the store’s filing system.

“The link between the tag and someone’s personal information is just not there. There’s nothing to fear,” he said.

The implementation of RFID in the retail environment brings with it many opportunities, and it can also drive further development in other areas. For example, if retailers are more aware of stock levels, they may increase the frequency at which they place orders with suppliers, and this can highlight issues in the supply chain. “RFID is a disruptive technology – when you put it in, sometimes you find out more than you bargained for, in a good and a bad way,” said Doody.

NFC payment image via Shutterstock

QVC's Manual for Survival in the Amazon Era

By Megan McArdle - Oct 30, 2013

Yesterday, I remarked in passing that what Amazon.com has done to QVC Inc. was a fascinating topic for a separate post. Well, at least a few of you seem to be fascinated, so here goes.

About 10 years ago, when I got interested in QVC, it frequently had the best prices around for appliances and electronics (two categories that are easy to comparison-shop). QVC had massive scale compared with other retailers; it could move tens of thousands of units of a product over the course of a day. That kept average costs low, which meant that its prices were very competitive, even if you accounted for shipping. I kept track of its “Today’s Special Value,” or TSV, which is what QVC called its loss leaders, and occasionally I bought something that was dramatically cheaper than where I could find it elsewhere. For example, I got KitchenAid’s top hand mixer with extra accessories for $10 to $20 less than I could find it anywhere else.

I’m told by those who worked with companies that dealt with QVC that often these loss leaders were sold by the manufacturer at close to, or even below, cost, because they viewed it as advertising. QVC was the best place -- almost the only cost-effective place -- to sell a product like a Vitamix blender that requires extensive demonstration to explain why you should be willing to pay $500 for a blender.

Amazon has turned products like these into commodities. Here you have a reputable retailer that will sell very close to cost and ship it to you for free, as long as you pay $75 for a membership. QVC could not afford to match this; it's basically a mature business, not a fast-growing tech company that people hope will eventually earn monopoly-level profits. So it has had to get very creative to keep its revenue growing. 

How have they done it? Curation, cultivating personalities, demonstration and differentiation.

You don’t have to figure out which of 90,000 vacuum cleaners you want; QVC has a few, and you choose the one that best fits your needs. Its buyers will weed out the true dogs, especially if people complain. QVC is especially good at curation with jewelry.

When it comes to the second strategy, home shopping networks have always cultivated what psychologists call “parasocial relationships”: the illusion that you are having a social experience with someone on television. That is, for example, why there is almost always a QVC host and a product representative on the screen; it creates the feeling of a conversation in which you are being included. When I toured QVC’s headquarters, a lot of the people on the tour had amazing, encyclopedic knowledge of all the hosts, past and present. “She talks about them like they’re her friends,” said one exasperated granddaughter.

But home shopping networks have never wanted the hosts to get too big. The hosts are decently paid -- low six figures on average, from what I was able to gather -- and they tend to live in small towns where that goes a long way. But the home shopping networks have deliberately discouraged them from getting too big, because that gives them negotiating power over the networks. There has been some suggestion that hosts who got too popular were often fired before their popularity got big enough to let them make big financial demands. (I’m talking here about presenters, not celebrities such as Joan Rivers or Isaac Mizrahi, who presumably extract all they can get.)

That has now obviously changed. QVC’s biggest host is David Venable, who basically owns the kitchen category. His predecessor was allegedly fired (allowing David to take over). Venable, on the other hand, has been allowed -- maybe even encouraged -- to expand. His kitchen show grew from a couple of hours on Sunday to three or four or five hours, plus more time on Wednesday night. He has written a cookbook that is sold through regular bookstores. Now, I don’t know what the financial arrangements are on that cookbook -- QVC probably gets a big cut. But the point is, the network has encouraged him to take the spotlight in a way that didn’t used to happen. He’s not alone, either; QVC is building up some of its longest-running hosts with regular shows. QVC is less and less supposed to be something that you watch incidentally, when you have spare time; it’s supposed to be scheduled viewing with your favorite hosts. It's even experimenting with advance production on one of the home-goods shows.

This is all bolstered with social media -- it now has producers and staffers assigned to tweet and chat with viewers in real time on Facebook during these shows. All of the hosts have blogs, which they’re expected to update regularly. Recent posts include one host sharing everything about taking a pregnancy test and another talking about a good friend’s recovery from cancer treatment.

The result is fantastic brand loyalty: People buy from QVC because they feel a personal affinity with the hosts. It’s tempting to think this is abusive, because boy, are those hosts good at selling. But going on a tour with some of their most fanatic fans made me see it differently. Those people weren’t unaware that they were being sold; they liked it. They trusted the hosts not to lie to them (one of Venable's greatest assets is his theatrical, but apparently genuine, love of anything sweet or cheesy or otherwise bad for you). But they aren’t under any illusions about what they’re being paid for.

And, in fact, those hosts do provide some value that is still hard to get elsewhere (though not as much as it was): They demonstrate products that might be hard to understand, and they ask the obvious questions. Now, product demos can be a bit silly (I would love to meet the engineer who comes up with weird ways to demo vacuum cleaners). But it’s genuinely useful to see how a kitchen appliance works; without that demonstration, you might not be willing to order it. That’s why QVC does so many deals with companies like Vitamix.

The fourth strategy that QVC is leaning hard on is differentiation. This takes two forms: private-label and exclusive product lines, which are ever proliferating, and developing bundles to sell commodity products at noncommodity prices. For example, it recently had an iPad TSV. IPads are a commodity; QVC doesn’t get a better price than any other retailer. So it packaged them with a bunch of aftermarket products such as cases and headphones that probably didn’t cost much to direct-order from China, but it allowed QVC to claim to be offering a bargain. As their TSVs have gotten less and less competitive with Amazon, more and more of these bundles are appearing.

From all this, you may infer that I watch too much QVC. To which I plead guilty -- I’ve long been obsessed with sales techniques and merchandising, and QVC is pretty much the best in the business. But it’s also a case study in how you can manage to survive in the Amazon era: by looking hard at your product mix, developing deeper relationships with your customers, and focusing on areas -- such as product demos and exclusive product lines -- that Amazon still finds it hard to match.

Halloween Candy Goes Gourmet

New Sweets Test Boundaries; D'Anjou Pear, Açai or Beef Jerky?

By 

CECILIE ROHWEDDER

Oct. 30, 2013 7:13 p.m. ET

Is chocolate better with bacon?

F. Martin Ramin/The Wall Street Journal, Styling by Anne Cardenas

That's what candy companies are betting on, as they put adventurous new flavors into chocolate and confections to satisfy the increasingly sophisticated sweet tooth of their young customers.

Long limited to small manufacturers and specialty stores, novelty candy is now whetting mass-market appetites as well. Target sold out of Pumpkin Spice M&Ms, a new flavor made exclusively for the discount retailer, a week ahead of Halloween. The retailer said the product sold faster than expected.

"People's palates are changing," says Paul Minger, category manager for confections at drugstore chain Walgreen Co. "Whether in food, confectionery or beverage, they want to be challenged with new flavors.…It's important to be on the cutting edge of that."

Walgreens put Wild Ophelia chocolate bars with funky flavor combinations—beef jerky, BBQ potato chip, New Orleans chili and peanut butter and banana—into 5,000 of its stores in September. Made by Vosges Haut-Chocolat Ltd., a Chicago-based company, the Wild Ophelia brand was launched last year to take unconventional chocolate from its artisanal niche to the mass market.

At Walgreens, the brand is sharing space with old favorites, such as Hershey's Kisses and Milky Way bars, but also foreign fare like Panda blueberry licorice from Finland and Ritter Sport chocolate from Germany. Walgreens' own brand, Good & Delish, also includes uncommon varieties, such as Cashew Crisps made with milk chocolate and salty cashew nuts. After Halloween, Target will offer another M&M exclusive, white chocolate peppermint. "Pumpkin is big in general right now," says Rachael Vegas, Target's vice president for grocery.

Ms. Vegas predicts bacon and coconut will also be popular flavors over the holiday. Wal-Mart Stores Inc. will sell its own range of gingerbread M&Ms, to follow the orange M&Ms it sold exclusively for the holidays last year. Mars Inc., the maker of M&Ms, declined to comment.

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This Halloween, Americans are expected to spend $2.08 billion on candy, according to the National Retail Federation. Trendy candy is vying for space in the treat bag, even though trick-or-treaters can still expect more standard fare. Halloween represents the biggest candy-buying period of the year, and 74% of U.S. households plan to hand out candy this year, according to the National Confectioners Association. Retailers say they divide autumn in two—early fall, when consumers get in the mood for the new season and fill their candy bowls at home with new and increasingly, interesting, products—and Halloween, where quantity still rules over quality and creativity.

Americans spent $23 billion on candy this year through Oct. 6, according to Information Resources Inc., a Chicago-based market research firm. (The figure doesn't include specialty stores.) Sales of all candy excluding gum grew by about 4% over the same period last year, driven by higher prices, wider distribution and new products, including those with exotic flavors.

Once-upscale varieties, such as dark chocolate and salted caramel, now have permanent places in U.S. candy aisles. Jelly Belly Candy Co. makes 133 kinds of jelly beans, up from 50 in the 1990s. Some varieties, such as the year-old Tabasco flavor, are aimed at adults, but there are also unusual varieties for kids, such as juicy pear and chocolate pudding. Others were inspired by foreign countries. The chili-mango flavor, for instance, was initially developed for the South American market but now also sells in the U.S., says Rob Swaigen, Jelly Belly's vice president for marketing.

Candy companies are capitalizing on the growing spirit of adventure. German sweets maker Haribo introduced Ginger-Lemon gummy candy in the U.S. last year. For this fall, Hershey Co. updated its Jolly Rancher caramel lollipops by infusing them with an apple flavor. In January, Hershey plans to introduce its first new brand in 30 years: a caramel cream confectionery called Lancaster that will come in three flavors, including a combination of vanilla and raspberry. The company says its Brookside brand, which pairs dark chocolate with exotic fruit juices, such as açai and goji, is gaining market share in large retail chains and is now rolling out in convenience stores.

As candy-makers push flavor boundaries, industry experts say they must ensure that products are actually tasty. "Unlike when we were growing up, companies can't just call it watermelon if it doesn't taste like watermelon," says Bruce Good, vice president at Good Marketing, a consulting and new product development firm in Cleveland.

Torie Burke, co-founder of Torie & Howard, a producer of organic hard candy in New Milford, Conn., says she and her partner, Howard Slatkin, tested 40 flavor combinations, including tomato and basil, and strawberry and black pepper, before settling on four. Ms. Burke said she was surprised that kids like the brand's D'Anjou Pear & Cinnamon flavor, which is less sweet than other hard candy. The product was inspired by a pear tart Mr. Slatkin used to bake, but it took a year of testing to balance the flavors of ripe pear, slightly sweet syrup and Ceylon cinnamon.

"A lot of candy is way too sweet," says Ian Thomas Brackney, a 12-year-old from Chicago, who is a fan of Butterfinger and 3 Musketeers bars, but generally prefers what he calls "adult candy." He liked the Torie & Howard's pear and cinnamon candy, which his mom, Dianne, recently brought home from Whole Foods.

Max Rains, a sixth-grader from Chicago, is an adventurous eater. He likes artichokes, sushi and dark chocolate. His latest discovery is white chocolate with lemon zest and pink peppercorns, made by Vosges.

"I wasn't sure I'd like that, but it was really good," says Max, who is 11 and plans to dress up as Abraham Lincoln on Halloween.

Novelty items don't necessarily displace other brands on store shelves because the merchandise mix tends to change fairly frequently anyway, candy makers say. They sell, for example, seasonal and limited-edition products, as well as products tied to a movie or other big event. For inspiration, they are studying foods such as potato chips, which now come in flavors from Parmesan to vindaloo, and in healthier offshoots, such as kale and parsnip chips. One food trend currently hitting candy is comfort food: the Peanut Butter & Jelly Sandwich chocolate bar made by American Gourmet Group, and Pigs N' Taters—a mix of milk chocolate, potato chips and bacon by Denver-based Hammond's Candies.

Unreal Brands Inc. has launched a series of candy products with less sugar than those of larger competitors. F. Martin Ramin/The Wall Street Journal, Styling by Anne Cardenas

As palates mature, industry executives say, Americans crave higher-quality ingredients than those that give junk food its nickname. Nicky Bronner, a 16-year-old high-school junior from Brookline, Mass., was outraged four years ago when his dad, Michael, took away half of his Halloween candy because he found it too unhealthy. With his father and a partner, Adam Melonas, he founded Unreal Brands Inc., a company that makes chocolates with natural ingredients and less sugar than in other candy bars.

"I can't eat conventional candy anymore," he says.

Sesame Characters to push P

Families and children could soon see Big Bird popping up on displays of broccoli, or Ernie next to a basket of apples.

In a two-year arrangement announced Wednesday by First Lady Michelle Obama and the Partnership for a Healthier America (an outgrowth of First Lady's Let's Move initiative to reduce childhood obesity), Sesame Street agreed to waive its license fee, allowing the growers, suppliers and retailers of the Produce Marketing Association to use Bert and Ernie and the rest of the gang to promote healthy produce.

As the First Lady explained, it's all about making veggies and fruit more palatable to kids. She referenced a recent study that showed that when given a choice between eating an apple and a cookie, kids obviously chose the cookie. But when an Elmo sticker was on the apple, nearly double the number of kids made the healthier choice, according to the Cornell University study.

“Just imagine what will happen when we take our kids to the grocery store, and they see Elmo and Rosita and the other Sesame Street Muppets they love up and down the produce aisle,” Obama said. “Imagine what it will be like to have our kids begging us to buy them fruits and vegetables instead of cookies, candy and chips.”

Produce marketers see the deal as closing the gap with the marketing clout of the big food companies. "Other food marketers, companies who have seemingly endless budgets enabling them to position and sell their products, especially to kids, are steep competition," said Jan DeLyser, vp of marketing for the California Avocado Commission and immediate past chairman of PMA's board of directors. "I'm thrilled to be a part of a program that will give the produce industry additional marketing opportunities for our naturally healthful products."

The deal is part of a new push by Obama to enlist private companies to voluntarily join in her effort to fight childhood obesity. In September, Obama held a summit on food marketing to children, urging companies to do more to market healthier foods to kids. 

McDonalds coffe in food retail stores

By 

ANNIE GASPARRO

Oct. 30, 2013 7:21 p.m. ET

McDonald's Corp. MCD +0.42% is partnering with Kraft Foods Group Inc. KRFT -2.96% to sell McCafe packaged coffee in U.S. grocery stores in various test markets, Kraft Chief Executive Tony Vernon said Wednesday.

The coffee will be sold next year in whole-bean, ground and single-cup formats for use in brewers such as Green Mountain Coffee Roasters Inc. GMCR +0.17% 's Keurig machines, Mr. Vernon said on a conference call. Kraft wouldn't name the markets involved in the test.

McDonald's has been selling its McCafe beverages in its restaurants for several years, an effort to compete with big java-selling chains such as Starbucks Corp. SBUX +0.17% andDunkin' Brands Group Inc. DNKN -0.55% The move has been one of McDonald's more successful initiatives in recent years.

The burger giant also has offered packaged coffee in Canadian grocery stores for about a year, and, also a year ago, applied for a trademark for the use of the McDonald's name on packaged coffee in the U.S., hinting that this expansion was in the works.

A spokeswoman for McDonald's said it regularly conducts product tests to gather market feedback. "We are building on the momentum of our McCafe beverages in our restaurants by expanding these options...to grocery stores and other retail locations," she said.

Kraft's coffee business, which took a hit a few years ago when its partnership with Starbucks fell apart, includes national brands Maxwell House and Gevalia.

Mr. Vernon said that he doesn't expect the new McCafe line to steal sales of its current brands, because it will be a step above its Maxwell House line, while falling below its premium Gevalia brand.

The McCafe single-serve coffee pods will likely pose as competition to Dunkin' Donuts, whose K-Cups are made by Green Mountain, and other similarly-priced, well-known brands.

Women’s strong emotional connection to smartphones requires unique approach:

Women’s strong emotional connection to smartphones requires unique approach: Time Inc.

By Chantal Tode

October 31, 2013

WOmen have strong emotional connection to their smartphones

Women more so than men have a strong emotional attachment to their smartphones and tablets, suggesting marketers need to position their messages differently for mobile than other media channels, according to a new report from Time Inc. and Nuance Digital Marketing.

The study, “Women + Mobile: The Unbreakable Bond,” found that 87 percent of women say they cannot imagine their lives without their phone. A key takeaway from the report is that women want to hear from advertisers with messages that are relevant to their purchase although 91 percent do not want mobile ads that are intrusive.“We were surprised to see how emotionally connected women were to their phones,” said Karen Kovacs, publisher of Time Inc.'s People magazine, New York. “It really provided not only a tool to get things done but it also enabled her to stay connected. “And they really talked about the phone with a very personal and emotional connection, almost a human connection to their phone,” she said. “It is the device that gives them bursts of joy or happiness or a way to stay connected to things that matter to her."

Gender differencesTime Inc. found several key differences in the way men and women feel about and engage with their smartphones and tablets. For example, 60 percent of women say their smartphone is the most important device in their lives compared with 43 percent of men. Additionally, 78 percent of women say their phone is the first thing they look at in the morning, 73 percent say it is the last thing they look at before going to bed and 98 percent say their phone is with them wherever they go. Other key findings about the emotional connection that women have to their phones include that 64 percent say they are addicted to their smartphones compared to 58 percent of men.

Now timeSmartphones are also helping women turn passive time into active time, with 88 percent saying smartphones give them something to do during the 92 minutes a day of empty time they have when they are waiting on line at the bank or for an appointment or sitting in the car waiting for the kids to get out of school. Women will often fill this time with mobile activities that provide emotional pleasure, with 72 percent engaging with social media via their smartphones during this time compared with 64 percent of men, 88 percent text messaging compared to 80 percent for men and 55 percent shopping compared to 46 percent of men. “What we heard across the board, was that there really is no more downtime,” Ms. Kovacs said. “We labeled it ‘now time’ because women are saying, 'What can I do right now in these pockets of time.'”

Path to purchaseThe report also found key differences in how men and women use smartphones for shopping. For men, shopping on a smartphone is very task-oriented, with 58 percent using their mobile devices to find a nearby store, 50 percent to conduct a search and 41 percent to find a nearby store. Men are also more likely to scan QR codes, with 50 percent of men doing so compared to only 38 percent of women. When it comes to shopping, women are more likely to leverage smartphones throughout every stage of the shopping journey to help them make smarter purchasing decisions. For example, during the discovery stage 32 percent of women use their smartphones to make and save product wish lists compared to 26 percent of men.

In the planning stage, 23 percent of women collect discount coupons compared to 14 percent of men while 46 percent of women make shopping lists compared to 38 percent of men. At purchase, 17 percent of women check in on apps such as foursquare to get discounts compared to 14 percent of men. Post-purchase, 52 percent of women share photos of their new products compared to 35 percent of men. Additionally, nearly half of all women would rather use their smartphone to get additional information than ask a sales associate in-store.

Marketing implicationsFrom an advertising perspective, the findings suggest smartphones and tablets have opened up an opportunity for marketers to reach women during these moments of found time. To do this successfully, marketers need to pay attention to how women want to be communicated with on smartphones, with 41 percent of women saying they are more welcoming to ads that let them control the experience, 52 percent are more interested in ads that are relevant to the content they are immersed in, 52 percent would notice ads that have colorful and bright visuals and 41 percent want ads that provide offers based on location. “Just being really mindful of when and where and how you are speaking to her because of the relationship women have with these devices,” said Jackie Stasi, founder of Nuance Digital Marketing, Los Angeles. “It is very different than other mediums, which are more of a one-way conversation,” she said. “These devices play a really different role in her life so how you speak to her on them really makes a difference in how resonant your message is going to be.”

Is Twitter Better Than Facebook for Targeting Teens?

Is Twitter Better Than Facebook for Targeting Teens?

Oct 28, 2013

Teens feel Twitter is “most important” social network

Social media usage is maturing, and as more networks emerge and gain popularity, advertisers and marketers are constantly on the lookout for the “next big thing.” One of the most common ways marketers identify up-and-coming social networks is by looking to a highly social demographic—and one that is highly digital-savvy: teens.

A September 2013 study from Piper Jaffray suggests that the social network landscape is shifting. The firm queried 8,650 US teens with an average age of 16.2 years, and found that for the first time, social network users in this age group said that Twitter was the “most important” social network to them.

Twitter’s ascension is notable because it supplanted Facebook, but similarly notable is that Twitter actually lost ground year over year. Conversely, both Instagram and the “other”category increased more than 10 percentage points year over year—and the percentage of teens that found other social networks most important increased from 4% in spring 2013 to 17% for the September survey. In other words, these results say less about Facebook vs. Twitter than they do about curious teens seeking new, potentially exciting social circles in which their parents are not present.

There’s no mistaking that Facebook usage is declining among teens. According to RBC Capital Markets, 41% of Facebook users ages 16 to 18 spent less time on the site in the previous year, and 35% said they expected to use it less in the upcoming year. These trends, however, are not much different among Facebook users 18 to 29—less than one-quarter used Facebook more often last year, and about one-third decreased usage.

Whatever the “next big thing” may be, it’s important for marketers not to lose sight of what will continue to be the “big(gest) thing.” Among teen internet users, Facebook is still by far the leader in terms of social media penetration. According to eMarketer, the percentage of internet users ages 12 to 17 (and 18 to 24) using Facebook will remain flat from now until 2017, and during that period, the percentage of internet users in these age groups using Twitter will increase steadily. However, in 2017, 95% of internet users ages 12 to 24 will still be using Facebook, while at that time, only about one-quarter of internet users ages 12 to 17 and less than 35% of internet users ages 18 to 24 will be using Twitter.

Sears weighs spinning off Lands' End to shareholders

Move would be good for Dodgeville apparel business, analysts say

By Paul Gores of the Journal Sentinel

Oct. 29, 2013

Lands' End, long known for its classic clothing styles, may be reviving a classic look at the corporate level as well — a stand-alone Wisconsin company instead of a unit of mega-retailer Sears Holdings Inc.
Sears, which purchased the Dodgeville catalog and online apparel business in 2002 for $1.9 billion in cash, said in a statement Tuesday it is considering separating Lands' End and Sears auto centers from its holdings — part of a strategy to focus on its other businesses. Sears runs 2,500 Sears and Kmart retail stores.
"We are evaluating separating both our Lands' End business and Sears Auto Center business," Hoffman Estates, Ill.-based Sears Holdings said. "We believe separating the management of these two businesses from Sears Holdings would allow them to pursue their own strategic opportunities, optimize their capital structures, attract talent, and allocate capital in a more focused manner while bringing our business unit structure to life outside of the Sears Holdings portfolio."

Sears continued: "Regarding Lands' End, we believe that Lands' End is an iconic brand with the potential to become a more global brand, and we presently anticipate that any separation, if pursued, would not be structured as a sale but rather through a transaction that would allow existing shareholders the opportunity to benefit from the significant potential for value creation over the long term."Analysts said that however the separation is structured — as a spinoff, partial spinoff or another method — it looks like good news for Lands' End. "The bottom line is that it is still a very powerful brand name," said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm in New York City. He added: "I think as a separate company — any way they can get out of the Sears orbit — will be good for Lands' End and good for their future."Lands' End has about 4,500 employees in the United States, most of them at its Dodgeville headquarters.

'Survival mode'

When Sears bought Lands' End 11 years ago, Sears executives said they were looking at the acquisition as a way to lure its upper middle-class hardlines customers — the people who come to the store for a hammer or a refrigerator — into the apparel department. Sears said its lower-income shoppers had been buying in all departments of the store, but the wealthier ones came in only for tools and appliances. Sears opened Lands' End shops inside its stores, giving Lands' End a distribution point besides catalogs, online and outlet stores. About 300 Sears stores have Lands' End shops.

But Sears has struggled financially amid tougher competition from brick-and-mortar stores such as Walmart and Home Depot, along with online retailers. Sears has had declining sales since 2005, when hedge fund billionare Edward Lampert merged Kmart and Sears. Lampert still controls Sears Holdings. Last year, Sears announced plans to restore profitability by cutting costs, reducing inventory, selling off some assets and spinning off others. Among stores set to close: Kmarts in Brookfield and Fort Atkinson and a Sears location in Racine.
Sears reduced net debt by $400 million and generated $1.8 billion in cash from the asset sales in the latest fiscal year. Sears also has been building a loyalty program called Shop Your Way, which accounts for 65% of its sales and has tens of millions of active customers. However, it continues to lose money. Sears Holdings lost $930 million in its 2012 fiscal year. Sears said Tuesday that comparable store sales — sales at stores open at least a year — dropped 3.7% in the 12-week period ending Oct. 26 at its Sears and Kmart stores in the U.S. Sears is set to release its third-quarter financial results on Nov. 21. "Sears is a train wreck, and I think they're in survival mode," Davidowitz said.

'A decent brand'

Morningstar Inc. research analyst Paul Swinand said Lands' End is thought to be one of the best parts of Sears Holdings. "It's still a decent brand. It's still fairly separate from Sears," Swinand said.
Swinand said it isn't clear whether Sears is planning a straight spinoff to shareholders or some other type of separation. Bob Berglin, executive director of the Dodgeville Area Chamber of Commerce, is among those who would be happy to see Lands' End as a stand-alone company again. "I think it will be positive news if it does happen," he said.

Sears spokesman Howard Riefs said Tuesday there is no timetable for a potential split-off for Lands' End.
Two years ago, Sears spun off its Orchard Supply Hardware business, but, loaded with debt, Orchard filed for Chapter 11 bankruptcy this year and was taken over by Lowe's Companies Inc. Sears also announced Tuesday that Sears Canada, in which it holds a 51% stake, would sell five store leases, including its flagship downtown Toronto store, to Cadillac Fairview Corp. for about $383 million.
After the news Tuesday, shares of Sears closed up $6.53 at $62.09.

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Kroger Knows Your Shopping Patterns Better Than You Do

Kroger, the Cincinnati-based grocery store chain, calls the 11 million pieces of direct mail it sends to customers each quarter “snowflakes”  — because if any two are the same, it is a fluke. The redemption rate is over 70 percent within six weeks of the mailing.

Kroger is the nation’s largest traditional grocery chain with more than 2,400 stores and $80.8 billion in sales last year, second only to Wal-Mart in grocery sales. It was named “Retailer of the Year” by Progressive Grocer magazine. “They have made significant investments in a best-in-class loyalty program, strong private label, and reinvested in their stores and technology,” Neil Stern at McMillanDoolittle said of the award, as reported by Progressive Grocer.

Working with dunnhumby, the customer data specialist which so impressed the UK’s Tesco that the grocer bought the firm, Kroger tracks each customer as an individual.

Those quarterly mailers contain 12 coupons specific to an individual household and are carefully designed. The upper left may offer a slightly esoteric product like a special cheese, while Tide may be lower on the flyer and the last two coupons might be experiments, such as adjacent products — a purchaser of baby food who doesn’t buy diapers might see an offer for diapers, for example. Eighty percent of dunnhumby’s effort is focused on what it knows about a customer and 20 percent is focused on discovery.

“It’s a massive problem for the industry,” said Stuart Aitken, CEO of dunnhumby USA, “not having exposure you are never going to know if customers might be interested.” The variety of coupons is part of dunnbumby’s discovery effort.

“We see in the next six weeks [after a mailing] 71 percent of households will redeem at least one coupon in the store, Nishat Mehta, executive vice president of global partnerships for dunnhumby, said. The coupons have generated $10 billion in revenue for Kroger.

Aitken said much of Kroger’s revenue growth came from understanding individual customers and not relying on demographics.

Speaking at the Money2020 conference in Las Vegas, Aitken said “Demographics tell you nothing, yet too many companies are focused on them. Just because I am the same age as you, live next door and have 2.2 children doesn’t mean we have the same preferences.”

So dunnhumby creates a DNA on each customer, rather than cramming customers into segments, to see what drives their behavior — do they have kids, do they skew toward healthy or fun, do they like organic or convenience, and where are they price sensitive — across all products or only on some.

“We tell our retailing customers there is no silver bullet. Take data from customers and look at the decisions the business is making and look at their impact on the consumer.” The company will work with only one company in any category and Kroger is the only US grocery chain using its data. dunnhumby also works with Macy’s and Dick’s Sporting Goods.

Every single shopping experience is different, Aitken added. Understand how the customer travels across the store and see how to make the experience frictionless, convenient and emotional.

Milk, for example. dunnhumby tells its grocery store clients to organize it for customer convenience by fat content and size of package, so all the one percent half gallons are together and customers can buy on price or easily move to a different brands if their favorite is out of stock.

“It is more expensive for the retailer,” said Mehta, “but you can’t just let the manufacturer stock it the way they want. This helps a customer find the product or find an adjacent product.” That style of stocking carries throughout the store where one product can easily substitute for another.

Understanding loyalty is key to making good decisions for customers. Mehta says if a grocery  store doesn’t have his flavor of Chobani Greek yogurt it is apt to lose his total sale. Kosher butter may be a low revenue producer, but for some customers, its absence means they will take their business to another store.

Kroger uses the coupon dispenser company, Catalina, for point-of-sale coupons, but with a twist dunnhumby insists on — unlike other grocery stores which will offer a Pepsi coupon to a Coke buyer, dunnhumby doesn’t try to convert customers. It may offer an adjacent products, but both in the store and in its mailers, if offers coupons for  product the customers already likes.

Another difference is that typical Catalina generates its offers based on the shopping basket at that moment.

“We make decisions not based on what you bought today but what you have bought over the last two years,” Mehta said. “We can recommend a product you buy every four months. You don’t have to know, but we know.” Ninety-seven percent of Kroger transactions use loyalty cards. This gives the chain an edge over Wal-mart which stresses everyday low pricing and doesn’t offer a loyalty cards which can favor one customer over another.

“If Pepsi sends coupons to Coke households, the redemption rate is very low,” said Mehta. “We have struggled over this with manufacturers (who pay for the coupons). They ask why they should send coupons to households that already buy their products. That has forced us to be very data-heavy and analytical, so we tracked 100,000 households we sent coupons to and looked at their purchases over the next 16 and 26 weeks.” It showed a sales lift among shoppers loyal to a brand when they had an offer from the brand.

Switcher campaigns are always the worst performing he added, and contrary to conventional wisdom, households will buy more of their favorites, such as Coke products, or a new Coke product, if offered an incentive.

“We regularly find there is headroom in every household.”

Both Tesco and Kroger offer financial products and dunnhumby is active in building loyalty and tracking customer preferences in their finance operations as well.

In the UK, it uses Tesco shopping data to target Tesco banking customers.

“Grocery spend informs us on a customer’s propensity to spend and on the customer’s affluence. If you buy brand name rather than private label, or like fancy cheeses, we have a pretty good sense you are a good target for high end banking products.” For now the offers are kept separate but the company is looking at ways to offer grocery incentives for banking customers.

dunnhumby is also active with ISIS  the mobile payment alliance of AT&T, Verizon and T-Mobile that is running trials in Salt Lake City and Austen. Both Kroger and Macy’s are participating, he said. “These mobile phones won’t just be replacements for credit cards, but they will be a communication mechanism. You will understand how a customer chooses to spend money and you can deliver coupons to the mobile app.”