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Ideations_SepOct2007

Ideations_SepOct2007

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Published by ibdf
Interbrand Design Forum's Ideations Newsletter - September/October 2007
Interbrand Design Forum's Ideations Newsletter - September/October 2007

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Published by: ibdf on Dec 23, 2008
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05/09/2014

 
Great retail ideas often start with a vision from the mind of ahighly creative and persuasive individual. If a company is luckyenough to be led by a Gene Pressman, a Mickey Drexler or aHoward Schultz, it could put its faith in a pure creative leapand succeed. For the rest, there’s analytics.Analytics is the function of dynamically using facts to reachdecisions objectively. It means a company doesn’t have toextrapolate from the past or rely on intuition. Using it doesnot limit inspiration or creativity, and it supports design. Asfor creative leaps, it uses facts to create a compelling business case for change. Charismatic leaders have aseemingly magic ability to build consensus. So does analytics.Many companies use data analysis in Customer RelationshipManagement (CRM)—the use of transaction data to personalizemarketing messages. Some are employing Web analytics tooptimize their online businesses. But as a tactical and strategictool for brand and space, retailers are just beginning to take its
 power to the sales oor.
“Retail has never been more complex in terms of what informationyou need to make a good decision,” says Amanda Yates, DesignForum’s vice president of strategy and research. “The sheer amount of all the moving parts, each with its own velocity andinteractions overwhelms decision-makers.”
Although at rst analytics doesn’t sound like a sexy big idea, its
 broad application, level of precision and orchestration power issuch that many companies experience a big ‘aha!’ once they get it.Take the case of brand. Companies have always known that brand
inuences demand, but not how much or why. Analytics has an
important role to play in connecting a company’s data to itsstrategy. A data-driven approach uncovers the economic power of 
a brand and identies which elements create that power. It can
shed light on previously unrecognized opportunities and helpmanagers make smart decisions.
“Brands are about relationships,” says Yates. “Business is dened
 by how people interact with and socialize through the brand.Analytics help deconstruct the brand and its drivers; its positive or 
negative value according to customer segments. It helps you nd
the brand elements you can put to use.”In its search for greater differentiation, the BMW Group brought
the power of analytics to bear, both on the clarication of its core
 brand and the relaunch of the Mini as an independent,contemporary mark. The company used the resulting knowledgeas a platform for brand decisions around dealerships and exhibit
spaces. Their efforts also beneted from a deeper understanding of 
target customer behavior “Right now companies are in hot pursuit of shopper behavior,” says
Yates. “Segmentation is great, but there’s a more nite level of 
understanding available. What we commonly see are clients whoover-invest in segmentation that is unactionable, and people aregrumbling because the marketing department isn’t making it work.It’s because the right message will get you onto the short list of store choices, but you’ll have to address a new mindset, newneeds, and provide new information inside the store at the momentof decision.”Traditional demographic analysis does not comprehend the shopper mindset as driven by occasion and need state. With in-store shopper insights derived from analytical methods, stores can adjust theshopping experiences to satisfy both according to segment. With shelf  principles linked to shopper behavior, more productive shelf sets, andimproved shopping experience, retailers are seeing a positive impacton total basket. Procter & Gamble is one of the early adopters of suchin-store analytics.“We’ve seen how a single insight can ring the cash register thousandsof times and generate millions of additional dollars,” says Yates.“Smart retailers, often in conjunction with their manufacturer partners,
have been guring out that in-store experience, and translating
shopper insights into strategic and tactical recommendations thatenvironmental designers and merchandisers can actually use inthe store.”
In terms of oor space, retailers more than ever need to make the
most of every square inch of space while keeping capital spending incheck— 
and 
creating a unique shopping experience to keep thecustomer coming back. Because of its ability to orchestrate space,
 brand and nance, three-dimensional analytical tools can determinewhich store plan congurations maximize prots, or which are mostefcient. Retailers in the furniture, convenience and drugstore
categories have successfully employed such methodology to optimizetheir stores.“If you want to create a great shopping experience, you have to knowhow consumers are linked to space. And of course how to balance thedemands of the manufacturers, merchants and operations people towhom space allocation is critical,” says Yates. “How do I use mystore and brand touch points? Where should I invest and what willit cost me?“Opportunities abound to employ analytic methods to substantially
increase protability. Positioning strategies, package design, branding
in a post-merger environment—we’re just scratching the surface.”Understanding the constantly changing variables of consumer  behavior, attitudes, perceptions and preferences is one of thefundamental challenges of the industry. Given the greater levels of exactitude in decision-making required, the trend toward analyticswill likely continue.
September/October 2007
A Retail Publication by 
an Company
Analytics
C
 
reating with
 
A Retail Publication by:
7575 Paragon Road, Dayton, Ohio 45459Phone: 937.439.4400 Fax: 937.439.4340Email: retail@designorum.comBranch Ofces: London,Los Angeles, New York, Paris,San FranciscoD. Lee Carpenter, Chairman & CEOJill Davis, EditorAmy Niswonger, Design/ProductionFor more inormation or to be placedon our mailing list, visit out website,www.designorum.comand complete the contact orm.Reprints o articles or excerpts without the express written permissiono Design Forum is prohibited.Ideations is printed bimonthly.Subscriptions: $125 annually in the U.S.;$150 elsewhere.© September/October 2007
Chairman’s Commentary 
 
 Where to next?
Any time a little deviant behavior occurs in theretail world, I take it as a positive sign. It’sgood to shake up the status quo now and again.It means someone is taking a risk, and that’sgreat. Getting to someplace new requires alittle daring.Gap’s hiring of CEO Glenn Murphy, for instance, strikes many as highly irregular. He’sa drug store guy! A supermarket operator!He’s Canadian! Come on. If he surroundshimself with Gap’s smart passionate peopleand lets up on their reins, he’ll succeed.I was in New York last month, speaking at the annual Women’sWear Daily Brand Forum, where the buzz was all about hotdesigners moving from luxury to mass. Vera Wang in Kohl’s wasthe most mentioned. Will Wang’s luxury stock drop “now that her creations can be found hanging cheek-to-jowl with Mom jeans?”Designers are used to taking creative risks. But this is a businessrisk. And why should non-apparelretailers care? Because, as they say, everyretailer is in the fashion business. Every brand has an aesthetic, a cachet thatshould be carefully managed and adaptedto extend its life. The great challenge— always—is to maintain integrity, honesty and passion. Peopledon’t like phonies.If the move to mass is done condescendingly, the aspirational brand is in trouble. If the designer compromises their vision, as a pair of notable upscale designers admittedly did for Uniqlo, theymay be vulnerable to loss of equity. As a creative decision that’sdecidedly risky. As a business decision, to be seen in hundreds of stores worldwide is priceless advertising.The concern about brand “dilution” is actually about the loss of  passion. Maybe Kate Spade faded because of a long-termcommitment to the Macy’s customer, someone the brand didn’treally know. Maybe the limited runs of Target and H&M are whatkeep stars like Mizrahi and Lagerfeld in love with creating for everyone without class snobbery.It would be great if it could work both ways. Martha Stewartstarted at Kmart. It would be fun to see her verve and passion takeher into luxury. On the other hand, I’ve been to the Plano, Texas,Wal-Mart. You can’t convince me that Bentonville has a true passion for wine and gourmet chocolates.
When I see the retail news lled with stories about the near-
comical extravagences of luxury—Nieman Marcus is selling a personal submarine this holiday, as well as his and her portraits painted in chocolate syrup—I know the American dream is aliveand well. Unlike other cultures, those of us who are not rich donot have a class-based resentment for those who are. We allaspire to riches.Although the greater concentration of wealth within a tinyminority looks like a mad return to the Roaring 20s, luxury is aniche. And retailers are going ever narrower to reach newcustomers. It’s the job of every business to continually try andreach more people. In fashion, especially, you don’t want to getold and you want to attract new customers constantly. In theupper spheres, there’s the newly rich, the hyper rich and the old
money rich, each with specic needs to be met, as Burt Tansky
will tell you.Although it’s been referred to as “wealth porn” we enjoy watching.Riches may not be everyone’s destiny, but thanks to the greatdesign and retail genius of the last several years, everyone hasaccess to beauty and a little of theexclusivity they crave.
The recent urry of brand extensions and
new concepts is all about narrow niches:Gymboree’s Crazy 8, J.Crew’s Madewell,or Brooks Bros. 346. The executions have all been very sensibleand practical and minimally exciting. Nothing disruptive. But an
honest and protable connection to the customer.
I don’t think it’s a matter of “going upmarket or downmarket.”Does Vera Wang really want to get involved with the Kohl’sshopper? The line could be better merchandised, the prices might be out of line and some items may be stripped of the designer’s
special magic. But Kohl’s says the numbers are terric. So
shoppers must be feeling the love.I will always raise my glass to a little messing with the establishedorder. To quote my good friend Watts Wacker, “Sacred values are
ne. Sacred cows are not.”
Thoughtfully,D. Lee Carpenter 
Chairman & CEO
 
Getting someplace newrequires a little daring.

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