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A Report on the Current State of Retail produced by
Are you “straight leg,” “skinny,” “slim,” or “stretch flare?” Maybe a “curvy fit, low rise, flare leg?” That’s just a sample of the products available from Express Fashion. When did buying get so complex? In the last decade, consumer products in general have tripled in complexity. With these increasingly complex products and everexpanding categories—whether it’s wireless laptops and MP3 players or the eighteen different Swiffers sold in thirty-one separate combinations—successful retailers are using their space to compose an experience that builds awareness and creates demand for these progressively complex products and growing categories instead of simply offering a venue for the customer to comparative shop. “With so many new products incorporating a host of innovative features, customers are coming into stores unaware of all the additions or alternatives, let alone the value added by the improvements,” notes Bruce Dybvad, Design Forum president. “It’s causing retailers to completely rethink how they merchandise. They now have to generate demand.” Demand creation has traditionally been the responsibility of the manufacturer, but the 30-second spot no longer seems to have the capacity to accurately capture the benefits of today’s intricate goods. To experience these new products, customers are heading to the stores. “Although this increased burden is a challenge in retail, it also offers an opportunity for smart, forward-thinking retail brands to deliver expertise and guidance to shoppers—building affinity for the retailer and generating customer loyalty for the brand,” says Dybvad. “Some retailers just miss the whole boat on that. They don’t take charge on behalf of customers deploying data that is meaningful. Telling the right story in the right space can be very transformational in the way people view the retail brand.” Nokia’s new experience store in Chicago puts an innovative spin on selling technology. In this space, they simply don’t do it. They removed the traditional noise of retail and have focused on the brand experience, breaking the technology into very identifiable activities and comfortable spaces that connect with a customer’s lifestyle. By creating this personal environment, they’ve connected with consumers on an emotional level—creating demand in other retail channels by matching hardware to real life. More manufacturers are moving into retail to build branded spaces that provide customers with the information needed to purchase the right products for their specific requirements. And for manufacturers who choose not to invest in their own storefronts, a few are working to design guided selling environments which can be adapted by their retail partners who may not have enough trained sales associates to adequately support the product’s sale, upsell or cross-sell.
When Intel wanted to simplify the selling of their wireless technology in electronics stores, they had to do more than integrate their “Unwired” advertising message into the environment. The maker of Centrino wanted to boost buying interest in computers containing its technology and educate shoppers about the broader importance of wireless mobility. By breaking down the consumer purchase-decision path into key touch points, Intel was able to communicate the right message at the right time to influence the shopper’s thinking. The new merchandising system was more engaging and encouraged shoppers to spend more time in the department. More time equals more spend. “Complex selling can be simplified if you devote space to the product story,” says Dybvad. “There’s always a sweet spot—optimizing the retail space with the product narrative and connecting it all to a lifestyle benefit.” In some cases, the product story can be told dynamically and dramatically. IKEA tells their quality story with robotics that put their products through the paces and demonstrate their durability—a strategy that seems to grow naturally from IKEA’s modernist brand—while educating and entertaining shoppers. And Best Cellars, the East Coast-based wine retailer, has made the arduous task of picking the right vintage of vino a lot easier for consumers who don’t aspire to be a pseudo-sommelier, but do enjoy a good bottle of wine. With categories like fizzy, fresh, smooth or sweet, and an edited selection to assure consistent quality, this retailer is actively cultivating a loyal and growing customer base by making this complex product category fun and easy to shop. Understanding the buying decision and making strategic use of the environment to explain product features and assortments are more crucial than ever in creating demand and encouraging shoppers to come back again—for the next product upgrade, alteration or new edition.
J u l y /A u g u s t 2 0 0 6
Driving for Show
Whether you agree with her methods or not, Carolyn Bivens, the new LPGA commissioner and former advertising executive at USA Today, is taking her shot at building more interest in the LPGA Tour. She clearly understands the importance of brand. She’s moving forward with the “These Girls Rock” marketing campaign and has signed up a branding coach to help the golfers manage their images. Bivens is primarily relying on a group of talented, fresh young players like Michelle Wie, Paula Creamer and Natalie Gulbis to attract more attention to the game. We’re seeing more product endorsements, marketing pushes and even some sexy calendars. Like it or not, television ratings and prize money are up. Infusing your store with freshness and excitement can have the same attention-getting impact on your brand—and you don’t need a calendar to do it. New formats, floor plans, remodels and resets can generate customer interest and revitalize the shopping experience. The results can truly be amazing. Earlier this year, American Eagle Outfitters announced that they experienced a 46 percent increase in average store sales after remodeling 43 locations. That’s the kind of news that’ll turn some heads! And it apparently has. At the end of last year, Gap introduced a new store remodeling program with a limited ad campaign produced by popular film director, Spike Jonze, titled “Pardon our Dust.” The ads were a hit, but they were getting more attention than the tentative renovation effort. Gap yanked the spots almost immediately, and it looks like they’re taking a mulligan on the design. They just announced another store renovation that should provide more of a major change, and I’ve got my fingers crossed for them. I’d really like to see them get back in the game. Their commitment to revamping their stores so soon after abandoning the earlier remodeling effort has me hopeful. It shows that they’re motivated—and they need to be. Because there’s never a break in the competition—Japanese success story Uniqlo (often referred to as the “Japanese Gap”) is committing to the U.S. with a flagship opening in New York this fall. This retailer is one to watch as they enter our market. They’ve already established New York as their world design headquarters and intend to ramp up their design process in order to compete for fashion dollars.
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And that process is critical. The trend cycle continues to grow shorter. Fast fashion winners like H&M and Zara have completely altered the course of the style lifecycle, and our Web-fueled world isn’t going to let it rest. Keeping up to date with your stores is a necessary component to success in apparel retailing. PacSun, Forever 21 and Marc by Marc Jacobs all introduced new store designs this past year. And after seven years without offering customers a fresh store experience, Aéropostale has announced that they will be implementing a new prototype. In the fashion industry, seven years is an eternity. This doesn’t mean you have to completely remodel your stores every year or two, but it does mean that you need to be relentless in looking for ways to revitalize the shopping experience. Innovative layouts and merchandising can create new excitement for loyal shoppers. You can keep the core constant, but allow for the chance to add fresh stories and updates so that there is always news around your brand. Cutting edge fixtures, lighting and signage can also restore vibrancy to your existing operations, and new technology can bring the space to life. But these design tools aren’t the only elements you can use to energize the shopping experience. Introducing a retail partner into your space can add vitality and offer a fresh perspective. The JCPenney and Sephora venture looks like a winner. Sephora will offer a new brand experience to JCPenney’s core customers—and Sephora is seizing the opportunity to really increase their exposure. And in fashion, the right exposure is everything. Getting the brand environment staged right sets the tone for the entire shopping trip. It’s like knocking one straight and long off of the first tee—you just know you’re in for a great experience. Thoughtfully,
D. Lee Carpenter Chairman & CEO In addition to his current duties as CEO-Founder of Design Forum, Lee Carpenter is now CEO of Interbrand North America. This sends a strong message about the value of Brand in today’s competitive retail climate. It also signifies the importance of Retail in the eyes of Design Forum’s parent company, Omnicom.
D. Lee Carpenter, Chairman & CEO Mike Dunekacke, Editor Lynn Lockrey, Design/Production For more information or to be placed on our mailing list, visit out website, www.designforum.com and complete the contact form. Reprints of articles or excerpts without the express written permission of Design Forum is prohibited. Ideations is printed bimonthly. Subscriptions: $125 annually in the U.S.; $150 elsewhere. © 2006
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to do its job. Who has it? Apple certainly has it. Look at the iPod. Most competing products have a lower price and a higher storage capacity. Any rational, left brain– oriented, decision-making person would buy a Dell Jukebox or any other of the digital music competitors. But Apple has 85 percent of the market. Why? Magnetism. The iPod appeals to the right-brain elements. Its hip, aspirational attraction comes from two sources: design— it looks and feels better than anything else on the market; and marketing—U2, Eminem, Shakira, bright colors, loud music, fast action. Its brand magnetism is strong enough to get customers to think it’s cool, so when the opportunity arises to close the sale, regardless of the channel, the job is much easier. Brand magnetism is created by marketing episodes, which I define as anything a consumer remembers about your brand. It could enter your customer’s memory bank through a TV spot, an interaction with a salesperson, a conversation with a peer, or an actual product experience. Brand episodes increase or decrease the magnetism of your brand. The strength of the magnet determines the difficulty factor for your sales team. A brilliant and unconventional example of a brand episode is Pepsi’s cross-promotion with iTunes. Pepsi Senior Vice President and CMO Dave Berwick is one of the best episodic marketers out there. He launched a promotion that invited customers to download a free song from iTunes when they typed in a code found printed inside Pepsi bottle caps. It aligned Pepsi with a hot brand and the hottest musical acts. It created a positive marketing episode. It strengthened brand magnetism. And guess what? Pepsi’s salespeople sold a lot more Pepsi to their retail partners, and consumers bought a lot more Pepsi. Brand magnetism made the sales effort easier. Brand episodes can turn a company around. Take Cadillac as an example. In the late 1990s the average age of a Cadillac owner was close to 60 years. That was not a demographic to base a long-term successful brand on. So in 2003 Cadillac sharpened its designs to bring a lean and sporty look to the car. It created TV commercials that resurrected Led Zeppelin’s “Rock and Roll” from classic rock limbo. Instead of an old Jim Schroer President and CEO of Carlson Marketing Minneapolis-based Carlson Marketing helps global Fortune 1000 clients by delivering sales and marketing programs that drive measurable results. For more information visit www.carlsonmarketing.com. man tooling around town in an old man’s Cadillac, you have Jimmy Page, fast images, sharp edges, and a new brand episode. The episode created new brand magnetism that attracts different, more valuable customer groups. Today Cadillac is still the cornerstone of GM, and an amazing success story. Keeping the Magnet Charged Brand magnetism can die off completely if a company is not diligent about creating consistent and positive brand episodes. You must keep making deposits in the consumer memory bank. An obsessive focus on this quarter’s results will not lead to brand magnetism. Remember Oldsmobile? It used to have a brand, but its magnet lost its power entirely. It takes a great team effort to get a piano up a flight of stairs. Someone needs to be at the top, pulling. That would be the CMO. It also requires someone at the bottom, pushing. That would be the head of sales. So if you’re a CEO or a sales executive, stop expecting marketing to sell products. Expect your CMO to deliver a plan for brand episodes that continuously adds to brand magnetism. If you’re a CMO or any marketer, don’t expect to sell. Instead, keep your brand turbo charged with magnetism.
Reprinted with permission from 1to1 Media, a division of Carlson Marketing Worldwide. © 2006 Carlson Marketing Worldwide. All Rights Reserved. www.1to1media.com
Truly effective marketing creates brand magnetism on which salespeople can capitalize. It would be easy and convenient for me to use this column to espouse all the various and spectacular ways marketing can actually sell your company’s products. After all, I would be adding my voice to the chorus of CEOs and CMOs who say that marketing’s job is to sell products. But after running sales and marketing at R.J. Reynolds and Chrysler, I can attest that although sales and marketing are equally important, it is naïve to think that marketing sells. Most of the great sales leaders I’ve had the pleasure of working with believe that marketing is not really “pulling” hard enough. In fact, the words they sometimes used to describe the overall impact of marketing were often less than kind.
Similarly, the great marketers are oft critical of the sales folks, especially those who actually do the selling, because the marketers believe that salespeople will cut the price rather than support and execute the myriad marketing programs designed to build the brand. As my hero, Forrest Gump, said, “Maybe it’s both.” Marketing Does Not Sell—Never Has, Never Will Any CEO who expects marketing to sell products and services has grossly overestimated the role and capabilities of the marketing department. And any CMO who says marketing can sell products is perpetuating an illusion that needs to be brought into its proper focus. Sales forces sell products. Marketing gets consumers closer to the products and services that need to be sold, and as such, is a critical and valuable function of any company. The job of marketing is to pull customers toward your brand so salespeople can capture them. Good marketing is responsible for, and accountable for, creating brand magnetism. Brand magnetism is the force that attracts customers to a product or service. It strengthens customer relationships and makes it easier for a company’s sales force
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