HBR: Shoppers Need a Reason to Go to Your Store — Other Than Buying Stuff

Does your store make small pickups a convenience? Should our building supply stores provide a compelling or memorable physical experience? How do you balance between time-well-saved and time-well-spent for your customers? Below is a blog from the Harvard Business Review by B. Joseph Pine II:

Shoppers Need a Reason to Go to Your Store — Other Than Buying Stuff

The holiday season, which is by far the most important time of year for retailers, highlights the increasingly intense battle between physical stores and online websites. Given the large number of casualties this year — witness the bankruptcy filings of such venerable institutions as Toys ‘R Us, The Limited, H.H. Gregg, Gander Mountain, Payless Shoes, and RadioShack, to name but a few — retailers must finally wake up to the core terrain over which they’re fighting: customers’ time.

Online retailers offer consumers time well saved. People can find what they want, when they want it, with incredible ease and convenience, and with the physical good shipped directly to their homes in a matter of days (and increasingly, in large cities, hours). As often as not, they don’t even have to pay shipping costs, and returns are a relative breeze. While the U.S. Census Bureau puts e-commerce’s share of the U.S. retail market at less than 10% as of the first quarter of 2017, online sales are growing at almost 10% per year. Should that trend continue — and it appears to be accelerating slightly — online retailing will account for nearly 20% of the total in 2025, over 30% in 2030, and about 50% in 2035.

To address this threat, one path physical retailers can take, of course, is to compete by going online themselves and even using their physical stores as a pickup spot — a strategy that many bricks-and-mortar retailers have taken. (One retailer I know saw a 35% bump in sales when it gave customers the option of picking up merchandise in its stores that they had bought online.)

But that alone will not save many retailers’ physical stores. They have to provide a compelling reason for consumers to visit them that online retailers can’t match. The best way is to compete on the basis of time well spent — to offer an experience so engaging that customers cannot help but spend time with you! And the more time they spend with you, the more money they will spend.

Consider what I think is the best new retail format in ages: Eataly. This Milan-based retailer (which so far has 13 stores in Italy, five in the United States, and five others in other countries) manages to combine all things Italian cooking into one amazingly engaging space: a café, one or more restaurants, a cooking school, and — especially — rows and rows of Italian groceries, kitchenware, and small appliances for sale. Consumers often spend hours there, and then memorialize their visit with photos posted to their Instagram feed or other social media outlets.

Many retailers (even banks) incorporate cafés to engage the senses and encourage consumers to linger, such as Restoration Hardware’s new 70,000-square-foot place in Chicago, which features a courtyard café, an espresso bar, and a wine room. Others, such as cosmetics retailers Lush and SABON, focus on getting consumers to experience their goods in the store, knowing that will increase the chances they will make a purchase.

Another approach is to focus on the story of each product, as happens in L’Occitane en Provence when customers encounter associates. Yet another way to offer time well spent is to stage special events, which even Walmart is doing this holiday season: It’s hosting 20,000 parties across its 4,700 stores, knowing that’s something Amazon cannot do. The Christmas season, of course, furnishes the perfect time-tested tactic that has worked for decades for department stores: Santa Villages and other Christmas extravaganzas for which people gladly pay to give their kids a festive experience.

Interestingly, many of the most engaging retail experiences have come from manufacturers. There’s American Girl Places, which immerses girls in its doll’s stories; Nespresso Boutiques, which lets people experience its espresso machines before they buy them; LEGO Stores, which feature play and building; and, of course, Apple Stores, where every product is live and workshops offer skills, “geniuses” offer support, and sessions offer inspiration. (Even Starbucks started out as a manufacturer before Howard Schultz turned it into an experience stager.) And recognizing the demand-generating power of physical engagement, numerous online retailers have opened up their own bricks-and-mortar stores; examples include Warby Parker stores, Bonobos Guideshops (bought by Walmart), and mass customizer Indochino Showrooms.

Those that are best at staging experiences have even figured out that when consumers truly value the time well spent they encounter in these places, the retailer can charge for that time via an admission or membership fee. Billed as the world’s most beautiful bookstore, Livraria Lello, in Porto Portugal, charges an admission fee of €3 just to enter the store — and then consumers get that money back if they make a purchase. Universal CityWalk in Hollywood charges from $5 to $50 (depending on location and time of day) per vehicle — not for parking per se but specifically to send the signal that it is a retail place worth experiencing.

Generally, though, retailers charge for particular experiences within their stores and do not charge for admission to their stores. American Girl charges for its café experience, a photo shoot and magazine cover, and even a doll hair salon experience (not to mention birthday parties that can run into the thousands of dollars). Recreational Equipment Inc. (REI) charges customers $20 to $40 to tackle the 60-foot climbing walls and structures it has in its flagship stores, offering instruction and also essentially getting customers to pay to try out its mountain-climbing equipment. And the Mall of America charges for the various rides in its Nickelodeon Universe theme park in the middle of the mall.

Wingtip, a men’s store in San Francisco, doesn’t charge for the retail experience — as engaging as it is, with superb merchandising of clothing, including a bespoke experience, plus wine and spirits, cigars, and a barbershop fulfilling its theme of “Solutions for the Modern Gentleman”; instead it created the Wingtip Club in the top two stories of its building for which it charges membership fees. The club is a refuge from the bustle of the city, with a lounge, bar, game room, whiskey corner, and golf simulator; members spend hours at a time there. The price of a membership is a $3,000 initiation fee and then $200 per month for unlimited access. All members (men and women) receive a 10% discount on merchandise.

There will always be physical stores for pickup convenience and the commoditized or very inexpensive merchandise like Dollar Tree stores sell. But providing a compelling or memorable physical experience is a different strategy that can work. Physical retailers must choose between time-well-saved and time-well-spent strategies. Whatever they do, they should be careful not to choose a middle-of-the-road approach that fails to excel at either.

Original Page: https://hbr.org/2017/12/shoppers-need-a-reason-to-go-to-your-store-other-than-buying-stuff



SPoS: The End Of Showrooming (And Webrooming)

Below is a blog post about showrooming and webrooming from Six Pixels of Separation by TwistImage. What are your thoughts about webrooming? In my opinion, the building supply industry dominates the decking and windows’ categories. How is your company marketing about webrooming? Are you reinforcing multi-channel mindset? Or are you stuck in a silo mindset?

The End Of Showrooming (And Webrooming)

We are never going to solve for true consumer-centricity, if we keep acting like this.

First, we had “showrooming.” Showrooming is when a consumer goes to a physical location and uses a mobile device to either compare prices with other retailers or complete their transaction with another retailer (even later at home). Showrooming has been a headache for retailers for several years – and continues to be a challenge – as more mobile devices become increasingly connected and pervasive for consumers. Now, we have “webrooming.” Webrooming is when consumers are researching online and buying in physical stores.

Brands… we have a problem.

Let’s all take a step back and think about this… for just a second: consumers have devices (computers, laptops, mobile, smartphones, tablets, Google Glass, whatever). These devices are connected and give them access to both information and the ability to buy in a twenty-four-seven scenario. It’s an always open retail landscape. They don’t need for a store to be open in their local neighborhood to get information about a product or service, and they don’t have to wait to buy something during regular/traditional store hours. While retailers may not like the fact that they have this kind of access to information and inventory, it doesn’t look like it’s going away any time soon (especially, if Jeff Bezos and Amazon have anything to do with it). When was the last time you were confused about a potential product that you were interested in? Have you ever hopped over to YouTube and searched on it? Outstanding, isn’t it? The in-depth reviews, discourse and additional information is astounding (and, that’s just YouTube). So, why even bother calling it showrooming or webrooming?

It’s just shopping, isn’t it?

Brands struggled to build what they have called an omni-channel environment. How does a brand move from multi-channel (stores, catalogues, Web,) to omni-channel in our digital age? Take a look at the AdWeek article, Study Shows Prevalence of Consumer ‘Webrooming’, and think deeply about what it is telling us. Webrooming and showrooming are just new terms and ideologies that reinforce the multi-channel mindset. In reality – if you break down the channels, remove the silos and really think about it – the advent of these activities are simply the consumer leading a true omni-channel life. Consumers don’t stop and think about a separation between a physical store, the website, the mobile experience, how the brand interacts on social media and beyond. Every interaction with them is either an investment (or divestment) in the brand. Retailers and marketers can keep making up terms, writing white papers, building infographics and more to reinforce just how much the consumer has adapted, but what we really have is an omni-channel consumer in a world where brands are (sadly) still thinking in a multi-channel way.

What’s a brand to do? 

In my second business book, CTRL ALT Delete, I dig deep into the notion of the one screen world. This isn’t about physical, TV, computer and mobile devices. Screens are everywhere. They are connected, cheap, ubiquitous and easy to use (and this is only going to increase as the Internet of Things becomes a reality and all devices are connected in one way, shape or form). So, instead of thinking about a Web strategy, an e-commerce strategy, a social media strategy, a mobile strategy, etc… why not build, develop and deploy a one screen world strategy? Build a strategy that embraces and understands the contextual reality of consumers in 2014. We can call these things whatever we like: showrooming, webrooming or whatever. The truth is that it’s all hyperbole. Consumers are doing what consumers do best: trying to get the best deal from brands that they want to deal with. The more brands try to turn everything into it’s own unique and different channel, the more they are going to struggle with the realities of business in this day and age. The more they are going to build a multi-channel environment, while thinking that they’re building an omni-channel one.

Don’t call it showrooming or webrooming. Call it what it is: shopping.


Guide to Webrooming



Wise Up, Lumberyards: Smartphones Aren’t Going Away

Below is an article from FastCo. Design. What are you doing about smartphones in your Lumberyard? Are you embracing the new customer?

Wise Up, Retailers: Smartphones Aren’t Going Away

Walt Disney
Walt Disney

Rather than fearing in-aisle smartphone usage, retailers should embrace and support it. Only then will they eventually win back control of their stores.

I recently asked an audience of technology buffs how many of them used their smartphones to help them shop in physical retail stores. Over half of the hands shot up. Now for the surprise. “Those with your hands up, please keep them up if a salesperson has ever asked to help you to shop with your smartphone in any way.” All of the hands went down.

Their response mirrors a discrepancy that prevails more generally across the U.S.today (even among non-techies): Customers increasingly use smartphones in stores to help them shop, but the brick-and-mortar retailers are ignoring them.

We can’t go on like this much longer. For one thing, the retailers have no choice: In-aisle smartphone usage is here to stay. One in four Americans taps into the mobile Internet (or about 75 million, according to Forrester’s Melissa Parrish). That number is roughly equivalent to the population of the U.S. eastern seaboard. Most of them own smartphones, and the vast majority of them (84%, according to our own recent survey) use those devices to help them accomplish at least one kind of activity related to shopping, such as searching for product information, taking photos as memory aids, checking prices, or “checking-in” to a location-based service. Barcode scanning and QR, or Quick Response, code scanning is not only popular but sticky: 85% of people we surveyed use their phones to scan products today at least as often as when they first tried it out.

So if there is no chance at all that this is all going to blow over, how come more brick-and-mortar retailers aren’t exploiting this new medium — say, to drive sales? In most cases because they are doing their best to clamber out of the recession: managing prices, inventory and costs, as consumers trade down and buy cheaper. In this context, mobile technology plays into their worst fears: “scan and scram,” as the practice is rather dismally known. Or as a smartphone shopper in our observational field research described his personal experience, “You feel like you’re kind of cheating the store by doing one of these [holds up phone as if to scan a barcode]. Because it’s as if you’re going to hold [the product], and look at it, but not buy it here.”

So consumers and retailers are at odds on the whole subject of in-aisle smartphone shopping: with consumers loving it, wanting it, needing it, and retailers, by and large, hesitating to support it.

Even the most innovative retailers like Best Buy, which stakes brand equity on the success of its in-aisle mobile experience, still provide almost no physical support for it. Its QR code hangtag system, for instance, is progressive. Scan a product code with your phone, and you get instant product reviews and other detailed information. But as a whole, from a customer experience perspective, it’s far too tentative. There are no on-shelf instructions (e.g., how to use a QR code, how to distinguish a UPC code from an internal company barcode); no in-store signage about the Best Buy mobile app; and little, if any, staff advocacy.

Most crucially, an attitude of explicit support for mobile shopping does not shape store culture among any brick-and-mortar retailers, including Best Buy. In its absence, a large swath of consumers is able to imagine that the relationship with retailers is not just ethically ambiguous but positively adversarial. Over a third of in-aisle smartphone users we polled said they felt at least somewhat “self-conscious” about scanning a barcode or QR code with a salesperson nearby.

Fortunately, we know pretty much how this is all going to turn out. Think back to where social media was only in 2006, when photos circulated on the Internet of a Dell laptop ablaze after exploding at a conference in Osaka, Japan. Dell recalled the Sony-made batteries but was initially slow to respond to angry bloggers. Then it formed a social media team, which found that if they singled out influential blogs and commented on negative posts with helpful links to the recall site, the grateful blog owners took on the rest of the damage control for them, evangelizing Dell’s good deeds to their own flock of readers on Dell’s behalf.

Then, as now, you’ve got to go with the flow. Dell responded effectively only because it understood that the days of its monolithic control over its messaging was over. Similarly, for retailers, the only way out, is through. They will eventually win back their aisles, but only when they can accept that they no longer fully control them. At that point, the current “moral discomfort” of both retailers and smartphone-equipped customers will fade into the past: growing pains of a new practice for which norms have not been agreed upon.

This is a future that innovative retailers should want to embrace now, rather than later. Because with change, comes opportunity. Those who get in the game today can differentiate themselves, powerfully, by positive association with the new technology. Simply asking, “Did you know you can use your smartphone to help you shop here today?” will go a long way to set the relationship back on the right path. One of the great brand-building moments of the next decade is available, right now, to the first company who can design a place that shouts “smartphones welcome here.” The chance will not come again.

Prime the Pump

Do you have music playing in your retail store or while your customers are on hold? Below is an excerpt from Enchantment: The Art of Changing Hearts, Minds, and Actions by Guy Kawasaki.

Prime the Pump

Adrian C. North, David J. Hargreaves, and Jennifer McKendrickof the Universityof Leicester devised a study to investigate the power of “priming the pump.” The study, conducted in a market in the East Midlands area of the United Kingdom, involved displaying French wine and German wine while the market played French or German music near the shelf. (music, wine and will)

The market sold forty bottles of French wine and eight bottles of German wine to French music. With German background music, it sold twenty-two bottles of German wine and twelve bottles of French wine. A questionnaire asked the shoppers if they were aware of outside influences as they shopped. When asked via an open-ended question, only one mentioned the music as an influence. When the questionnaire asked specifically whether the music was an influence, only six of forty-four subjects said it was.

The researchers interpreted these results to mean that music can “prime related knowledge and the selection of certain causes if they fit with that knowledge.” So maybe the right music (or other environmental factors) can help you enchant people! And if you own a shop, you probably want to avoid playing “Shop Around” and “Walk On By” where customers can hear them.

Empathy: The Brand Equity of Retail

Below is an article from Harvard Business School Working Knowledge Forum . To summarize “retailers can offer great product selection and value, but those who lack empathy for their customers are at risk of losing them, says professor.”

Empathy: The Brand Equity of Retail

via HBS Working Knowledge on 5/19/11

There’s a famous line from the movie The Godfather, which is often repeated in corporate settings: “This is business, not personal.” Ironically, though, that statement is actually bad business advice.

During the Consortium for Operational Excellence in Retailing (COER) conference held May 10-11 at Harvard Business School, professor Ananth Raman discussed the importance of empathy in customer-facing business.

“As we’re talking about things like retail efficiency and profitability, this is a topic that I think needs more attention,”Raman told an audience of retail executives.

To kick off the conversation, Raman relayed what happened when Cleveland Clinic CEO Delos “Toby” Cosgrove visited a class at HBS a few years ago to discuss a case study on the renowned hospital. Dr. Cosgrove was intending to highlight the clinic’s record of operational excellence, when a student, Kara Medoff Barnett (MBA ’07), threw him a curveball of a question: “What is the hospital doing to teach its doctors about empathy?”

It turned out that Barnett’s father, also a doctor, had undergone a mitral valve replacement in 2000. Although the Cleveland Clinic had been consistently ranked No. 1 by US News & World Report for heart surgery survival rates, her father opted to go to the No. 2 ranked Mayo Clinic. The reason for his choice: doctors at the Cleveland Clinic had a reputation for communicating badly before and after surgery.

In other words, the Cleveland Clinic had lost business solely due to a lack of empathy. “It was like the prettiest girl in class not getting a date,” Raman said. For Cosgrove, Barnett’s story was a transformative experience that led the hospital to establish the Office of Patient Experience in 2009.

Ramanalso told the story of patient advocate Jackie Gruzenski, who faced an all-too-common experience when her husband was hospitalized for a cerebral bleed in 2009. Gruzenski was only allowed to see her husband during very strict visiting hours for the intensive care unit—four times a day in 30-minute increments. The hospital would not bend the rules, in spite of the patient’s repeated plea: “She’s not a visitor, she’s my wife.” The patient spent 8 of his last 16 days alive in the ICU, denied important time with his wife because of systematic rules.

Raman asked the executives to consider the story and apply it to their own work.

“It’s a core question for all of you: Are you in the business of rationality or emotionality?” he said. “If empathy is lacking in a nonprofit such as a hospital, what hope is there in retail?”

To that end, one COER attendee noted that an empathetic salesperson can make the difference between a customer’s decision to shop in a store rather than online. This is a key issue at a time when many potential customers will walk into a store, use their smartphone to snap a photo of a product they like, then return home to search online for a cheaper price.

Another attendee agreed, sharing the story of a woman whose luggage was lost on the eve of her husband’s funeral. Staff at a local Nordstrom store responded by staying open so she could purchase a few outfits, and her family has been loyal to the retailer ever since.

“Empathy can be the brand equity of retail,”Raman said.

Raman also talked about empathy in dealing with difficult customers who hurt business by disturbing other customers or by complaining publicly about the service. He cited the example of a hospital patient who consistently refused to follow medical orders, gave all the doctors bad reviews in customer surveys regardless of quality of care, and eventually threatened to strip naked in the hospital lobby and threw a tantrum. At that point the hospital faced an ethical dilemma. Should it refuse to treat the patient further because he was bad for business, even though his life depended on future treatment? (The hospital’s legal team advised refusing treatment; the doctor, who was often the recipient of the patient’s anger, disagreed noting his oath to always be there for the patient.)

Some COER attendees pointed out that in most of the retail sector, ceasing service is not a matter of life-and-death. “Sometimes you have to fire the customer,” said one executive. Another related a mentor’s advice that one of the smartest moves he could make in business was to allow difficult customers to defect to competitors.

“One of the challenges we face in retail service operations is that the customer is part of the operating process,”Raman said.

Toward the end of the session, Raman reminded attendees to consider the role of the customer’s empathy, too. He shared the story of a daycare center with operating hours from 7:30 a.m. to 4:30 p.m. The teachers were frustrated because several parents were consistently late in picking up their children, so the daycare instituted a new policy: a $3 fine for every late pickup. But rather than discourage tardy parents, late pickups increased dramatically. Now that they could pay for showing up late, the parents stopped feeling guilty and made it a habit.

“If you put a money value on the incentive, you often take away the pressure to conform to norms,”Raman said. “It’s a challenge…there are always big opportunities for us to do very dumb things. And it’s always tempting to say, ‘Can we just tweak the incentives and hope the problem goes away?’ But that can come back and bite us very badly.”

The Consortium for Operational Excellence in Retailing is focused on advancing retail operations from a combined academic and business perspective. The annual conference is used to present the latest academic research for participants to exchange ideas, thoughts, and challenges.

About the author

Carmen Nobel is the senior editor of HBS Working Knowledge.

Putting a Value on Training

Here’s an article from McKinsey Quarterly’s July 2010 issue, “Putting a Value on Training” (Click on the title to download the article). Jenny Cermak and Monica McGurk, talk about generating value for your organization and increasing performance. Below are two excerpts from the article:

“A retailer pursuing better customer service and sales growth, for example, could train employees by getting its managers to provide real-time coaching and to role-model best-practice customer-engagement techniques. Rather than just measuring the managers time allocation or employee-engagement data—as most would do now—the retailer should measure the impact of its programs through hard business metrics, such as sales, basket sizes, and conversion rates in critical categories or departments.”

“By tying the curricula of training more closely to key performance metrics and then measuring its impact on them, organizations can generate greater value from training programs and find useful insights to improve programs constantly.”