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Although retail may be everywhere a transaction happens, the same is not true of the retailer’s brand experience. Today’s digital mobile media gives timepressed consumers the ability to shop on the fly. So going to the store is rarely the event it used to be, if it happens at all. Shopping is now more often a spontaneous reaction to requests from socially networked family and friends. Combine that with high fuel prices and it’s clear why retailers need multiple distribution channels to get into this real-time market and capture demand with combinations of instore, catalog and e-commerce. But these are three very different worlds and brands are still learning how to live in them in a way that leverages their strong suits. In reaction to the demand for locationfree shopping and the need to give the consumer more control, brands are trying to become less static while still pursuing the retail shopping ideal in all their channels: a unique experience that leads to a deeper involvement between the brand and the shopper. “We all understand that you can create a meaningful, relevant brand experience in the store. You’re immersing the shopper in an environment with the opportunity for all kinds of sensory cues and emotional connotations that connect,” says Lynn Gonsior, executive vice president and CMO at Interbrand Design Forurm. “As for print, in the past catalogs like Frontgate, Land’s End, Cabela’s and J. Peterman have done a great job engaging our imaginations to bring the brand to life as much as possible with only the visual cues. “Online has been more elusive. Despite its 24/7 accessibility, in terms of brand experience it’s a value-subtract medium. So you make up for it in customer-centricity. Online, everyone is in the service business. At the very least, merchandise and returns should be integrated across channels. Anything you can do to solve customer problems will help you engage the shopper and encourage them to return.” The most successful retailers across all channels are those that began in the catalog business, perhaps because they understand all the nuances of the longdistance transaction. The Land’s End boutique in Sears feels right, with the same traditionally fashioned, cleanly presented aesthetic that appears in print and on screen. Brands that have built communities through consistency of approach and attitude across the store and the website include Apple, IKEA, and surprisingly Chipotle. All continue to be so distinctive, if the name didn’t appear on their real and virtual sites, you would still recognize them immediately. They share a distinct understanding of their customer’s sensibilities. However, Pink, is the bomb. Victoria’s Secret brand of sweats and jammies targets a very slim segment, college women 18–22. Original expectations of $300 million in yearly sales have exploded to $1 billion. Pink built a unique consumer community in a very short time. How did Pink do it? By their own account, it took a vision for continuity and an understanding of how events threaded cohesively through online, catalog and store displays. It is currently the largest retail presence on Facebook. Why should retailers even worry about giving shoppers an online brand experience beyond basic e-commerce functions? Because people become loyal to experiences as much as, sometimes more than, products. “When they can rely on a company to offer a great experience across channels, they’re more likely to shop that merchant anywhere,” says Gonsior. “But the Internet channel is where many retailers look stalled.” There are numerous examples of retailers that haven’t yet figured out how to weave the brand experience into their e-commerce business. Stores like Sephora are challenged to deliver their magic online, as well as Target.
A Retail Publication August/September 2008
“Each channel has weaknesses that really can’t be overcome,” says Gonsior. “Not only in how well it sells merchandise but just how it is able to enhance the customer’s total brand experience. But those problems may not need solving because you can compensate for them with the other channels.” One way to compensate is to integrate, starting with the merchandise teams, which are less effective when separated by channel. Next, bring online into the store, and design the store to give the retailer credit for “endless aisles.” Add the opportunity for two-way conversation with the ability to post reviews, or offer a greater depth of information about the products than could ever be provided on the sales floor. Sales associates aren’t always able to show how products solve customer problems. With all our digital advances, in shopping there is still no substitute for looking, smelling, touching, testing and physically comparing. So it’s a natural to put in-store and online side by side. Expectations keep getting higher for all channels, for immediacy, functionality and service. If brands let you dress your avatar or build your dream car online, you expect it all to be in the store when you get there. That won’t happen until the channels are integrated. “Rather than have their channels compete, or merely mimic one another, the best retailers are taking their brand and merchandising strategies to a higher level so they can support one another holistically in driving company objectives,” says Gonsior. “That kind of retail brand strategy is at the heart of your company’s growth and profitability.”
The Value of Brands
published business rankings in the world. If you think your business is a potential leader, here’s where you can find out what it takes. And of these 100 brands, you’ll see who the top riser and faller were this year. (Spoiler alert: Google and Merrill Lynch.) Brand value is a simple idea. If brand plays a role in choice, and shoppers must choose between competing products, then brand must contribute to earnings and profit. It then follows that brand must be quantifiable and valuable to its owner. Design Forum has changed its name… sort of. When we became part of Interbrand in 2002, we kept the name of the company that I founded in 1978. Since then, we’ve evolved from a pure design entity into a multi-disciplined consultancy with a deep pool of talent, including a lot of brand expertise. “Design Forum” contains valuable branding in its own right. Our name has touched hundreds of success stories and a lot of people who’ve become our friends during thirty years in business. Anyone who’s been through a company name change is aware of all the ramifications, from switching the sign on the front door to the logo on the coffee cups. And the risk, of course, that customers will assume there’s been a change in leadership—in our case there has not. The time has come to take on the new Interbrand Design Forum identity in order to focus more precisely on what our business does—global retail design that incorporates brand strategy, shopper analytics, architecture, retail-sensitive implementation—and to stress our ability to draw on resources from around the world: 1,249 creative minds in 36 offices and 22 countries. This month, Interbrand publishes the annual Best Global Brands in conjunction with BusinessWeek. It’s one of the top three By using brand valuation as a diagnostic tool, we understand the precise economic benefit that brand has on every aspect of business. Insights into which brand attributes are relevant at each step in the customer journey tell us exactly what must be changed to make the brand perform better. You can then invest in the touchpoints that generate the most demand. The topic of brand management has been generating more interest every year in the face of proof that strong brands, consistently managed, are more resilient in shifting economic climates. A study of Best Global Brands versus the S&P 500 conducted by Harvard and USC showed they outperform the market. Yet, business pundits say we’re living in a post-branded world and that traditional branding is outdated. Perhaps that shouldn’t surprise me. Although the concept of brand value has been evolving since the ‘80s, it’s still misunderstood. Brand is not an advertising gimmick. It’s a set of attributes and a promise: the attributes consumers have ascribed to store or product, and a promise made by the company to deliver those attributes through the way it does business. Ideally, the brand idea shapes the company and directs the behavior of everyone in it. That’s why we believe brands have the power to change the world. There are some interesting new names on the list this year. BlackBerry makes its way onto the global brand stage. We’ll see if it can outperform the iPhone. Luxury brand Ferrari zooms onto list. The debut of H&M is a great example of a retailer understanding consumer demands, as is the entrance of Marriott. Our longtime client Honda still ranks high; also new to Best Global Brands is our client FedEx, whose promise we’re bringing to life in the FedEx Office stores (formerly Kinkos). Like all the leaders, they have managed to strike a clear note of differentiation that we have translated into retail environments. Although we can understand nervousness in a results-oriented world, we’re hoping the current slowdown will push retailers to change. The world is becoming one global economy. Competing in it demands a connected and holistic approach to brand management, not siloed 20th century corporate habits. In order to stand out from the crowd and engage our associates and customers, our businesses must become branding communities, resilient and flexible. Because—particularly in retail—there are always new and unknown challenges ahead. Thoughtfully,
D. Lee Carpenter
A Retail Publication by
7575 Paragon Road, Dayton, Ohio 45459 P +1 937 439 4400 F +1 937 439 4340 email@example.com D. Lee Carpenter, Chairman & CEO Jill Davis, Editor Mike England, Design/Production © August/September 2008
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The Merits of Zero
There is a limited supply of reputation and attention. It’s a form of currency.
Thanks to King Gillette, the idea that you can make money by giving something away is no longer radical. But until recently, practically everything “free” was really just the result of what economists would call a cross-subsidy: You’d get one thing free if you bought another. Over the past decade, however, a different sort of free has emerged. The new model is based not on cross-subsidies—the shifting of costs from one product to another—but on the fact that the cost of products themselves is falling fast. It’s as if the price of steel had dropped so close to zero that King Gillette could give away both razor and blade, and make his money on something else entirely. Shaving cream? You know this freaky land of free as the Web. A decade and a half into the great online experiment, the last debates over free-versus-pay online are ending. In 2007 The New York Times went free; this year, so will much of The Wall Street Journal. The rise of “freeconomics” is being driven by the underlying technologies that power the Web. Once a marketing gimmick, free has emerged as a full-fledged economy. Digital technology does more and more for less and less, bringing the marginal costs of the units that we individuals consume closer to zero. Anything that touches digital networks quickly feels the effect of falling costs. For everything from banking to gambling, the moment a company’s primary expenses become things based in silicon, free becomes not just an option but the inevitable destination. Technology is also giving companies greater flexibility in how broadly they can define their markets, allowing them more freedom to give away products or services to one set of customers while selling to another set. Between the new ways companies have found to subsidize products and the falling cost of doing business in a digital age, the opportunities to adopt a free business model of some sort have never been greater. Ads on the subway? That’s so 20th century. By sponsoring the whole line and making
by Chris Anderson
Manhattan’s 6th Avenue local free, the East Village Merchants association brings grateful commuters to neighborhood shops. Low-cost digital distribution will make the summer blockbuster free. Free movie with popcorn purchase! At an electronics store: Free second-gen Wii! But only if you buy the deluxe version of Rock Band. Free air travel? Ryanair is defining itself more as a full-service travel agency than a seller of airline seats. From the consumer’s perspective, there is a huge difference between cheap and free. Charge a single cent for it and you’re clawing and scratching for every customer. Give a product away and it can go viral. Offering free music proved successful for a swarm of bands on MySpace that grasped the audience-building merits of zero. They use the product to market the performance. Just because products are free doesn’t mean that someone, somewhere, isn’t making huge gobs of money. Google is the prime example. To follow the money, you have to shift from a basic view of a market as a matching of two parties—buyers and sellers—to a broader sense of an ecosystem with many parties, only some of which exchange cash. From Freecycle (free secondhand goods for anyone who will take them away) to Wikipedia, we are discovering that money isn’t the only motivator. Altruism has always existed, but the Web gives it a platform where the actions of individuals can have global impact. In a sense, zero-cost distribution has turned sharing into an industry. In the monetary economy it all looks free— indeed, in the monetary economy it looks like unfair competition—but that says more about our shortsighted ways of measuring value than it does about the worth of what’s created. “Externalities” is a concept that holds that money is not the only scarcity in the world. Your time and respect are the new scarcities. The “attention economy” and “reputation economy” are too fuzzy to merit an academic department, but there’s something
Chris Anderson Editor, Wired
As editor of Wired magazine, Chris Anderson explores media, culture, technology and change. He spent seven years at The Economist editing the technology and business sections. He holds a degree in physics, has conducted research at the Los Alamos National Laboratory, and has written for Nature and Science. He’s perhaps most famous for authoring the best-seller, The Long Tail: Why the Future of Business is Selling Less of More. Find more of his provocative thoughts on www.longtail.com.
real at the heart of both. Thanks to Google, we now have a handy way to convert from reputation (PageRank) to attention (traffic) to money (ads). Anything you can consistently convert to cash is a form of currency itself, and Google plays the role of central banker for these new economies. There is, presumably, a limited supply of reputation and attention in the world at any point in time. The world of free exists mostly to acquire these valuable assets for the sake of a business model to be identified later. “Free” shifts the economy from a focus on only that which can be quantified in dollars and cents to a more realistic accounting of all the things we truly value today.
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