The Top Ten Department Stores, Shopper Marketing, Macy's

The Top 10 Department Stores

A few years ago, it seemed department stores were becoming extinct, that there was no place for these bloated beasts of shopping past in today’s fast-paced, digital, 24/7 shopping environment. While the department store landscape has shifted, predictions of its demise couldn’t have been more wrong. For those players still on the field, the game has become one of the most exciting in retail for both industry observers and shoppers.

The Top Ten Department Stores, Shopper Marketing, Macy's

Apparel Magazine has ranked the Top 10 department stores, a list comprised of retailers with at least $100 million in annual sales that are publicly traded on the U.S. stock exchange, by profit margin for their most recent fiscal years, respectively. Privately held retailers are not included, as well as Nordstrom, because it files with the SEC under Retail – Family Clothing Stores, rather than Retail – Department Stores.
The Top 10 Department Stores:
1.       Dillard’s
2.       Kohl’s
3.       Belk
4.       Macy’s
5.       Saks
6.       Neiman Marcus
7.       Burlington Coat Factory
8.       Bon-Ton Stores
9.       JCPenney
10.     Sears
As websites, mobile apps, tablets, smartphones and everything else digital continue to proliferate, the role of the physical store – albeit a quickly changing one – has never been more important. For department stores that do it right, their larger footprints offer added opportunity to entertain their customer (as JCPenney proposes to do with its new Town Square concept, where shoppers will gather socially for fun activities and services – and then shop); to devote more space to in-store digital offerings (as Macy’s is doing with digital displays side-by-side with physical product, offering both a touch and feel, as well as an endless aisle of product and a way to interact with it); and more space for more physical offerings (such as Macy’s soon-to-be-unveiled acre of shoe-selling space in its flagship herald Square location, which is in the middle of a massive $400 million renovation).
While some other department stores have made a big splash reinventing themselves recently, Dillard’s has more quietly been focusing on inventory control and expense discipline, while striving to "own" the spot as the destination for an edited merchandise selection of revered national and exclusive brands, supported by outstanding customer care. This focus led to an impressive 4% increase in comp-store sales and improved gross margin growth by 30 basis points (following increases of 190 and 410 basis points in 2010 and 2009, respectively). Increased focus on its online store is highlighted by its new state-of-the-art, 850-000-square-foot Internet Fulfillment Center in Maumelle, Ark.
With exclusive and private brands continuing to rise as a percentage of total sales, Kohl’s is up 240 basis points to 50.3% in 2011, helping to drive Kohl’s 6.21% profit margin. Kohl’s store expansion rate has slowed in recent years and most of the company’s anticipated 20 new store openings this year will be in a smaller format (55,000-to-68,000 square feet vs. 90,000 square feet). Kohl’s also continues to remodel its existing store base, completing 236 remodels in the past three years with 50 on tap for 2012, a process the company has honed with experience; a typical store remodel now takes just seven weeks — half the time it took in 2007.
The tagline "Modern. Southern. Style." is just part and parcel of a massive revitalization project going on at Belk that is already producing strong results for the company with comp-store sales up 5.5% and profit margin up 132 points over last year. Over a five-year period that began in 2011, Belk is investing approximately $600 million in a number of key strategic initiatives in the areas of merchandising, rebranding, e-commerce, store remodels and customer service. In June, Belk opened a new $4.5 million 515,000-square-foot e-commerce fulfillment center in Jonesville, S.C., to support its growing e-commerce, whose sales grew 10%, to $72 million, last year. The retailer is also rolling out a new Oracle enterprise system providing solutions in areas of purchasing, planning, allocation, replenishment, demand forecasting, pricing and promotion, merchandising, financial planning and size optimization.
Macy’s is supercharging its omni-channel strategy, one of three key strategic initiatives underway at the company, by integrating stores, the Internet and mobile devices to put the company’s entire inventory at the service of customers anywhere, by equipping 282 of its more than 800 Macy’s stores to pick and ship orders. Two other key initiatives contributing to a third consecutive year of significantly improved financial performance — including the addition of more than $1 billion in top-line sales, same-store sales up 5.3% and online sales up 40% — are: My Macy’s localization, focused on tailoring the merchandise assortment and shopping experience by store; and MAGIC Selling, focused on improving customer engagement in stores by training associates to "meet and make a connection" with every customer. The retailer is also continuing adoption of RFID throughout both Bloomingdale’s and Macy’s locations.
The Hidden Needs of Shoppers, Shopper Marketing

The Hidden Needs of Shoppers

When it comes to price, “shoppers don’t know diddly-squat about what they paid”. So said US shopper marketing guru, Herb Sorensen, during a series of events for retailers last week, set up by IdeaWorks and TNS (the world’s leading shopper research agency).

The Hidden Needs of Shoppers, Shopper Marketing

He should know. Over four decades, Sorensen and his associates have analysed millions of hours of shopping to understand what it is that makes shoppers really tick.

So if customers don’t even recall what an item cost, why are we all constantly employing the tactic of price off? Good question, quipped Sorensen in his folksy but straightforward style. “I’m against discounting… you never recover the money you lose in a promotion.”

Sorensen’s business bestseller, In the Mind of the Shopper, proves the premise. The book highlights a 1997 study of 300 randomly chosen shoppers in four US chains which found that customers were unaware that 51 per cent of the items they had bought were on sale.

And of the 49 per cent who were cognisant of specific promotions, 40 per cent would have purchased anyway.

Apart from giving away margin unnecessarily, price promotion can have a detrimental effect on image.

“Never forget that price does two things – it conveys what an item costs… and what it’s worth.” With perceived value in mind, Sorensen often advocates increasing prices to get a result. “I’ve got data going back 30 years that shows if you raise the price, you’ll sell more.”

[via Inside Retailing]

Verizon Retail, Shopper Marketing, Restaurants

Verizon Retail Store Partners with Restaurant to Enhance Customer Experience

Thanks to its partnership with a Verizon Wireless retail store, Kitchen 67 Brann’s Café, a new fast casual restaurant created by Johnny Brann Jr., not only specializes in breakfast, lunch and dinner, but it also serves its Michigan customers a hefty portion of technology.

Verizon Retail, Shopper Marketing, Restaurants

Verizon recently opened a new store concept in an adjacent 3,600-square-foot space accessible from inside Kitchen 67. A digital queue in the restaurant gives visitors waiting for service at Verizon the flexibility to grab food while keeping their place in line; they’re notified via digital screen in the restaurant when it is their turn. Restaurant diners may also venture into the Verizon side to play with smartphones, tablets and other devices while they wait on their food.

“Verizon Wireless is the ideal neighbor for Kitchen 67,” Brann Jr., said. “Our tech-forward concept compliments Verizon’s innovative products and services. The collaborative efforts we are working on will enhance the customer experience for our customers and theirs.”

Most of Kitchen 67’s menu is under $10 and includes steak burgers, Sizzle Wraps and hot-pressed sandwiches. Pastries, scones, custom-roasted K67 Coffee, beer and wine are also available.

[via Retail Customer Experience]

The Titans of Tech, Retail, Shopper Marketing

The Impact of the ‘Tech Titans’ on Retail

After 15 years in the industry working for what would be considered a competitor to NRF, I had the pleasure of attending my first NRFtech event last week. My attendance felt like a dawning of a new era at the venerable leader in all things retail. An era of more openness and community that in these days of hyper competition was refreshing.

The Titans of Tech, Retail, Shopper Marketing

Retailers are also in a new era as technology providers that once focused on their core businesses of computers, or search, or auctions, or social media have now expanded into massive conglomerates that serve as both partners and competitors. A fascinating session led by Lori Schafer and Deb Weinswig detailed the impact that five companies are having on the world and, more specifically, the retail industry.

Amazon, Apple, eBay, Facebook, and Google were profiled and deemed the ‘tech titans.’ Schafer detailed the uniquely different strategies these companies have taken to become what they are today and highlighted the fact that most, if not all, serve as both friends and foes to traditional retailers.

For example, we know the impact that Amazon has had on the book industry and with plays such as MyHabit we know they are laser-focused on making a similar impact on high fashion. However, several retailers in the room also admitted to using Amazon’s marketplace to sell inventory.

What retailer wouldn’t want to find a way to achieve Apple’s mind blowing sales of $6,000 per square foot in their retail outlets? And what retailer isn’t contending with the impact that the smartphone has had on the shopping experience? However, Schafer detailed how Apple’s ambitions don’t stop there, and with access to 400 million iTunes customers, the iStore mobile payment platform could be the next revolution for the industry.

As everyone knows Google has moved well beyond search and has made a huge impact on the industry through their mobile platforms. They essentially invented localization and have given stores an important tool to drive traffic. Yet this has also created immensely high levels of transparency, making it more important for retailers to be aware of what their competition is doing.

[via RIS News]

Seven tips for attracting Millennials

Expert advice on how restaurants can tap into the spending power of the country’s largest demographic group

Millennials, the country’s heaviest restaurant users, are cutting back restaurant spending, according to consumer research firm NPD.

Although NPD estimates that Millennials made more than 12 billion visits to restaurants in 2011 and spent $73 billion during those visits, the firm also reports that the number of visits by that demographic has been falling since the start of the Great Recession in 2008. That makes it even harder to win over this young crowd that not only has strong opinions, but also likes to share them through social media.

Millennials represent “the biggest gap between cultures in our history,” said Craig LaRosa, a principal in the Newton, Mass.-based consulting firm Continuum, which designs and develops products, services and business models.

Also known as Generation Y, Millennials make up the country’s largest demographic group at about 76 million people — even outnumbering Baby Boomers, according to the U.S. Census Bureau, which defines them as people born between 1977 and 1995.

In order to understand this age group better, LaRosa and his colleagues have been doing ethnographic research with Millennials, spending time in their homes, talking with them and eating with them. Below are some tips on how restaurants can cater to Millennials’ social needs and habits, based on information LaRosa shared from this research.

Tip 1: Encourage sharing and interaction. 
For Millennials, food is secondary to interactions with people. So they like smaller portions that allow them to share multiple dishes instead of ordering traditional plates just for themselves. They also are not interested in the standard service in which the food for each course is brought out all at once. Instead, they like plates to be delivered as soon as they’re ready.

Tip 2: Remember that less is more. 
Millennials are not only fond of small portion sizes, but they also like fewer ingredients.

“When they shop, the less ingredients, the better,” LaRosa said, adding that members of Generation Y like “clean” labels that list ingredients that they can identify.

Tip 3: Put food and preparation on display. 
Just as Millennials like transparency on their labels, or knowing the origin of the cattle they’re eating, they like open kitchens for the same reason: They like to know where their food is coming from.

LaRosa said some members of Gen Y have even bought cows, named them, had them slaughtered and then shared the beef.

Tip 4: Make dishes familiar but not boring. 
“Family foods done interesting,” like the Korean taco, are a gastronomic goal of Generation Y, LaRosa said. “Exotic flavor is being brought to very traditional foods,” he noted, adding that Thai, Vietnamese and Indonesian flavors appeal to Millennials.
[via NRN]

Nike store, lebron shoe, shopper marketing

Nike Sets New Rules for Customer Safety Ahead of $315 LeBron Shoe

As it prepares to launch a $315 LeBron James basketball shoeNike Inc., has come up with new rules for retailers, prompted by unruly crowds outside stores, the Wall Street Journal reported.

Nike store, lebron shoe, shopper marketing
According to a company memo reviewed by the paper, the world’s largest sportswear maker told sporting-good stores that they will not be allowed to pre-sell or take reservations for new shoes.

The retailers, which include Foot Locker Inc. and Dick’s Sporting Goods Inc., will also have to give up midnight releases of shoes that had prompted customers to camp outside and stampede stores, the paper reported.

“Retailers should assess what measures are necessary to secure the store and ensure the safety of personnel and consumers,” the Nike memo said, according to the Journal.

[via Chicago Tribune]

IKEA, self-service checkout, shopper marketing

IKEA Checks out of Self-Service

IKEA stores, by design, are a destination shopping experience. The Swedish-based retail stores draw in customers with modern home furnishings at an affordable price, while their massive store spaces and winding floor plans often keep shoppers inside for an hour or more.

IKEA, self-service checkout, shopper marketing

Spending that much time picking out a book case is one thing. Waiting another 20 minutes to pay for it is another. And after a rash of complaints from customers who described just that kind of repeated delay, IKEA stores in the United States are yanking the self-service checkout systems that were causing the back-ups.

While most IKEA stores house a sprawl of checkout lanes, both self and cashier operated, typically the cashier lanes were opened only on peak shopping days. That meant that customers were funneled into a smaller group of self-checkout lanes that became clogged with shoppers trying to operate the system and manage their purchases.

IKEA did not return calls to be interviewed for this story, but company spokesperson Joseph Roth told The Tampa Tribune that the self-checkout system “wasn’t as efficient as we originally hoped.”

Francie Mendelsohn, president of Summit Research Associates, an international consulting firm devoted to kiosks, personally experienced the frustration with IKEA’s self-checkout and quipped, “What took them so long?”

Mendelsohn described a typical shopping experience when the only option for checkout was the self-service kiosks. Roughly half of the shoppers hopped from lane to lane in attempt to shorten their wait times. Once able to use the self-checkout, users found the directions to be unclear and the scanner uncooperative.

“There was no explanation on how to use them,” said Mendelsohn, who has tested kiosks worldwide. “I was aiming the scan gun at the bar codes and it just wasn’t working.”

Whether IKEA’s self-checkout kiosks were difficult to use as a result of user-error, company-error or manufacturer design-error was a topic of consideration for Mendelsohn, who said she felt the kiosks lacked proper instructions for such a touchy system.

[via Retail Customer Experience]

Macy's is VMSD's retailer of the year 2012, shopper marketing

Macy’s Inc. Named VMSD’s Retailer of the Year

The 12th annual International Retail Design Conference (IRDC) will be held September 5-7 in Chicago at the Renaissance Chicago Downtown. Register now to attend IRDC – the premier educational and networking event for the store design and visual merchandising community.

Macy's is VMSD's retailer of the year 2012, shopper marketing

Macy’s Inc., recently named VMSD magazine’s Peter Glen Retailer of the Year, will be the focus of a special session at the 2012 International Retail DesignConference in Chicago, September 5-7 at the Renaissance Chicago Downtown.

Amy Hanson, Macy’s executive vp, property development and credit and customer service, will accept the award on Wednesday, September 5 and discuss the role of store design and visual merchandising, and share the brand’s story.

“Macy’s Inc. is a leading example within the department store of a retailer that has adapted and evolved with its shoppers’ needs,” said VMSD editor, Anne Dinardo. “We lauded the department store for being aggressive and willing to take chances.”

The Peter Glen Retailer of the Year Award honors VMSD’s former columnist, Peter Glen, who died in 2001 following a career in retail as a designer, consultant, industry critic and motivational speaker.

The award goes annually to the company that meets his demanding criteria for smart retailing, market awareness, innovation and an intuitive understanding of who its customers are and what they want, need and expect. Recent winners include Whole Foods, Forever 21, Urban Outfitters, Costco and Best Buy.

[via PR Web]

j.c.penney store-within-a-store redesign, retail localization

Ron Johnson’s J.C. Penney Plan Continues To Transform Stores

Struggling retailer JC Penney (JCP) reported lower than expected second quarter results Friday. Sales fell a startling 23% to $3.1 billion, driven by a same-store sales decline of 21.7%, both of which were worse than expected. The firm swung to a loss of $0.37 per share on a non-GAAP basis versus a profit of $0.07 last year, which was also worse than the Street predicted. The company no longer gives full-year earnings guidance, but CEO Ron Johnson did point out that sales won’t fall much more than 20% in the back half of the year.

j.c.penney store-within-a-store redesign, retail localization

Though gross margins fell on adjusted basis 170 basis points to 36.6%, most of the decline can be attributed to liquidating old clearance merchandise at tremendous discounts in order to clean-up inventory. Selling margins on everyday items, as calculated by the firm, increased 380 basis points to 51.2%. The firm also cut SG&A expenses by $193 million year-over-year and remains on target to achieve $900 million in cost cuts by 2013. The retailer is getting rid of old, tired merchandise that should be replaced by more profitable and popular items.

In the short-term, it’s hard to ignore the fact that sales are falling sharply. However, we think Johnson might be on to something. Clearly, the promotional department store model wasn’t working before, and the firm risked being cannibalized. JC Penney is taking a risk on transforming its business model, and we think it might work (but we’re not completely on board). Wall Street is generally unwilling to give any firm time to transition its business model, so the stock should continue to languish as Penney’s sales and earnings tumble throughout the rest of the year.

[via Seeking Alpha]

Apple Stores: The Most Profitable Retail In America [INFOGRAPHIC]

While online shopping is quickly dominating retail, there’s no substitute for a visit to the Apple Store. From the distinct style to the bright-eyed employees with an encyclopedic knowledge of the brand’s products, shopping at an Apple Store is an experience all its own.

If you count yourself among the Apple fanboys and fangirls, you’re in one of the biggest clubs in the world. In just 11 years, Apple has opened 363 retail hubs that shoppers have come to associate with the latest tech innovations. As part of the most valuable public company in the world, Apple stores make more money per square foot than any other U.S. retailer.

OnlineMBA created this graphic, which takes you behind the scenes of Apple’s in-store retail operations. One stat that particularly caught our eye: Getting a job at a Manhattan Apple Store in 2009 was harder than scoring a spot at Harvard, with a hire rate of just 2%. It’s no wonder they seek out the cream of the crop. In 2011, Apple store employees’ average sales per square foot were more than twice the sum of three of the retailer’s competitors (Best Buy, Costco and GameStop).

[via Mashable]