4 Truths Behind The Giant Apple Store Lines

In the era where most retailers are investing in line-busting technologies to reduce the idle time spent in the buying process, Apple is making sure the lines at their brick-and-mortar locations do not disappear.  Business Insider explains 4 reasons why Apple uses long lines as a marketing strategy tactic:

1) Lines have been part of Apple’s marketing strategy for some time

Over three years ago, people joined long lines to buy the iPad 2 at Apple stores around the world. These lines were even longer than those for the original iPad. In fact, they were longer than expected. What many don’t know is that Apple orchestrated these lines by not allowing pre-orders. They did not want a reoccurrence of short lines at Verizon stores when the Verizon iPhone was introduced.

2) Competitors making fun of the lines are only helping to promote Apple products

Competitors, such as Samsung and Microsoft, are drawn into the “Apple trap” by disparaging the waiting lines in their commercials. What they don’t realize is that disparaging competitors only gives them free brand impressions and free advertising — helping them to sell their products. Here are some of the many reasons why.

  • Free advertising
  • No reasons to buy your product
  • When you “put down” popular products, you are putting down the people that like them
  • Makes you look arrogant and insecure at the same time.
  • Puts a target on your back

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3) The lines are forming, even if not spontaneously

While the early people in line for Apple products may have an agenda, the lines are already forming and growing. So are Apple’s profits. In spite of a smaller market share than its smartphone competitors, Apple still commands 60% of the profits. As Apple increases its distribution around the globe, its market share is likely to grow too. Many forget that when the iPhone was introduced only one major mobile phone service provider — ATT — sold the iPhone. The other big players in the US have been added in recent years and new deals with China Mobile and others around the world are expected to follow. This is likely to help Apple’s global market share.

4) It’s a great way to do marketing

As Apple has shown, lines are a great way to do marketing. When combined with the brand advantage of uniqueness built into all Apple products, these lines are likely to keep the Apple profit machine going for the foreseeable future. Of course, Apple will have to keep innovating. If it fails to do so, it could open the way for more innovative rivals to build a beachhead that eats into its share of the market and profits. Stay tuned. No matter what happens, it will be interesting.

Read more: http://www.businessinsider.com/if-you-think-apple-lines-are-spontaneous-think-again-2014-9#ixzz3CpjezcU7

Uniqlo’s Killer Business Strategy

Since opening their first store in the US in 2005, the Japanese casual wear designer, manufacturer and retailer Uniqlo has swept the American retail scene by storm. Just like their competitors at Zara and H&M, Uniqlo has quickly become a visionary leader in retail.

We were pleased when we recently found Uniqlo’s business model posted on their parent company Fast Retailing’s website. We thought we’d share the secret sauce behind one of the world’s leading brands.

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*Image belongs to Fast Retailing Co, LTD

Their approach is simple – “UNIQLO clothes are MADE FOR ALL.” Since 1984, they have been committed to developing long-lasting clothing items that transcend across all categories and social groups, offering a seemingly unlimited supply of everyone-has-them – or should-have-them – apparel basics.

Uniqlo has established a SPA (Specialty store retailer of Private label Apparel) business model, which encompasses the entire clothes making process –from design and production to final sale. This model allows the retailer to successfully differentiate itself from other companies, by developing unique products based on selling highly finished elements of style rather than the pursuit of fashion trends.

Research & Development  (Designers/Pattern Makers)

Uniqlo’s designers work with project teams to develop new fabrics before studying fashion trends. Once the laboratory develops a new fabric, designers in Tokyo, New York, Paris, and Milano begin to make designs that fit the new fabric. Concept meetings happen around one year before a product launch. R&D then engages with merchandising, marketing, materials development and product departments to discuss and finalize concepts based on seasonal increments.

Development and Procurement of Materials

Uniqlo strives to provide such high-quality clothing at reasonable prices. Producing over 700 million items annually, Uniqlo can negotiate with global material manufacturers to secure materials at the lowest cost possible. Through setting up a Global Quality Declaration, an increased attention to material quality has led Uniqlo to develop innovative materials with some of the best martial manufactures such as Toray Industries and Kaihara Corporation.

Merchandising

Each Uniqlo store presents a sleek and modern look in a very Apple- meets-Gap way. Visual merchandising displays run from floor-to-ceiling and are no less than eye-catching, to give the illusion there is a lot to be found. The juxtaposed walls of men’s sweaters, women’s tanks, and kid’s T-shirts are tucked into cubbyholes and lining display cases coordinated to the shades in the rainbow. Customers are responding well, with 24,000 visits on a typical Saturday. NewYork Mag stated Uniqlo had become New York’s hottest retailer, an impressive title to be given from the retail and fashion capital of the world.

With Uniqlo’s urban megastore model, an average store is around 37,000 square feet; merchandisers play a vital role from product planning through production to make sure these stores are filled with the right product, at the right place, at the right time.

Merchandisers first meet with the R&D designers, they then apply the concepts for each season in product plans, materials and designs. Seasonal collections such as “Airism” in summer and “Heattech” in winter seasons represent Uniqlo’s philosophy of integrity and freshness.

Next, merchandisers decide the product lineup and volume for each season, paying close attention to a detailed marketing strategy. An important task for merchandisers is to decide when and where to increase or limit production. Decisions around adjusting production in line with demand are made with the product-planning department.

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Quality and Production Control

Uniqlo deploys about 400 staff and textile takumi* (skilled artisans) to offices in Shanghai, Ho Chi Minh City, Dhaka and Jakarta. The takumi team gives instructions on dyeing technology and techniques to partner factories to insure the best quality of products. Customer concerns regarding quality are communicated immediately to production departments, and then improvements are made weekly to resolve outstanding issues.

Expanding Production Network

Broadening its global reach, Uniqlo has formed business relationships with partner factories in China, Vietnam, Bangladesh and Indonesia. Production offices in Shanghai, Ho Chi Minh City, Dhaka and Jakarta to ensure clothes are made to the highest global standard of quality.

Inventory Control

The Inventory Control Department maintains the optimal level of store inventory by observing sales and stock on a weekly basis, and dispatching necessary inventory and new products to fulfill product orders. At the end of each season, merchandisers and the marketing teams help coordinate the timing of markdowns and sales (typically 20 to 30% off*) to ensure that inventory is sold.

Marketing

Marketing promotions are done by season. During campaigns, Uniqlo advertises core products, such as fleece, jackets, polo shirts and HEATTECH. Uniqlo uses TV, flyers (Japan) and other media sources to promote offerings and discounts that week.

Online Store

Sales from the Uniqlo Japan Online Store totaled 24.2 billion yen in fiscal 2013, or 3.5% of total sales. Uniqlo online portals are also in China, Hong Kong, Taiwan and the U.S. (Revenue from this has not been disclosed)

Customer Center

90,000 comments and requests are handles yearly.

Uniqlo Stores

For store locations, Uniqlo actively searches for areas with high potentials, usually in high-end shipping malls and urban centers. Uniqlo invests heavily into training stuff and awards high-achieving store managers. Some compare Uniqlo’s in-store experience obsession to a turbocharged version of kaizen, the Japanese concept that translates roughly as the continuous search for perfection. Uniqlo prescribes, records and analyzes every activity done at the store level, from folding techniques to how cashiers return credit cards.

Uniqlo business model has been successful in growing the empire; their aggressive expansion plan by year’s end is to have 39 US stores – with stores in Los Angeles and Boston – up from 20 at the start of the year. Uniqlo is the fourth-largest specialty-apparel store in the world behind Zara, H&M, and Gap; with sales around $10 Billion.

Source:

*”UNIQLO Business Model.” FAST RETAILING CO., LTD. N.p., n.d. Web. 27 May 2014.

Written by: Rebecca Shirazi

Rebecca Shirazi is the marketing manager at RBM Technologies. She is a frequent contributor to MerchandisingMatters.com, where she writes in the areas of marketing, merchandising and supply chain.

Lands' End spins off of Sears

Sears Officially Spinning Off Lands’ End in April

One of the more profitable arms of Sears Holdings is soon to be its own entity, according to the Chicago Tribune. Beginning April 6, Lands’ End will become its own brand, completely separate from its creator, Sears.

Lands' End spins off of Sears

From the article:

On March 24, stakeholders in Sears will receive about .3 shares of Lands’ End common stock, according to the filing. Lands’ End intends to be listed on the NASDAQ Stock Market under the symbol “LE” and will begin trading on April 7.

Wisconsin-based Lands’ End will pay Sears a cash dividend of $500 million before the spinoff, financed by a new term loan. Lands’ End may also borrow up to $175 million for working capital, according to the filing.

Hoffman Estates-based Sears has seen its sales decline since billionaire hedge fund manager Edward Lampert combined Sears and Kmart in an $11 billion deal in 2005. In recent years, Sears has spun off Orchard Supply Hardware and Sears Hometown and Outlet stores, among other assets.

Started in Chicago in 1963 as a sailboat equipment catalog, Lands’ End evolved into an upscale casual clothing retailer. Sears purchased the company for $1.9 billion in 2002.

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Bitcoin’s new home … retail?

It was probably inevitable that a digital currency made its way to the world of retail, but is it going to stick?

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According to a recent STORES article, BitPay, the service that allows customers to pay electronically with Bitcoins, has found a home in online purchases, and has even begun creeping into brick-and-mortar operations.

From the article:

Family-owned online retailer Bees Brothers began selling honey at local farmers’ markets and expanded its sales to include e-commerce. Owner Craig Huntzinger says PayPal was the only online payment option at first, but his teenage sons heard about Bitcoin and suggested that the family add it. The site began accepting Bitcoin in January 2012; Huntzinger estimates about 60 percent of business now comes via Bitcoin.

Adafruit.com, started in 2005 by an MIT engineer to provide a site where people could learn about and design electronic products, also sells tools and equipment used in high-tech design. Within the first few weeks of accepting Bitcoin, the site hit more than $100,000 in Bitcoin transactions, according to founder Limor Fried. The site also accepts PayPal and credit cards via Google Wallet.

Sales involving Bitcoin are typically for larger transactions — averaging about $200, Fried says. “Usually people are not excited by the form of payment they are using,” she says. “But with Bitcoin, it’s not only a currency, it’s a community.”

While merchants accepting Bitcoin are impressed by the lower fees and lack of chargebacks, consumers like not having to provide any information to the retailer other than what is required to ship the goods. International shoppers like not having to deal with currency conversions.

But that anonymity — and its potential abuse by criminals — is one of the reasons federal regulators and law enforcement authorities have looked closely at Bitcoin. The FBI last year seized 26,000 coins worth $3.6 million when it shut down Silk Road, a website accused of dealing in illegal drugs. The Treasury Department’s Financial Crimes Enforcement Network told a Senate committee in November it is working to keep digital currencies like Bitcoin from being used for illegal activities.

Bitcoin itself is anonymous, founded by an individual or group using the name Satoshi Nakamoto.

victorias-secret-brand-engagement

Victoria’s Secret, Nike top retail brand engagement index

Consumer loyalty and emotional connection to a particular brand are the highest they have been in decades due mostly to the combination of social/mobile technology, competitive pricing, and brand engagement. According to Retail Customer Experience, Victoria’s Secret and Nike rank the highest in apparel and athletic sportswear respectively and exemplify this highly saturated approach retailers are now taking to reach their customers.

victorias-secret-brand-engagement

From the article:

In the retail category expectations are up nearly 19 percent while the retail brands have only grown by 4 percent; that′s one of the critical findings in the 18th annual 2014 Brand Keys Customer Loyalty Engagement Index (CLEI), conducted by the New York-based brand and customer loyalty and engagement research consultancy, Brand Keys.

For all 45 brands tracked in the retail category (including online, apparel, department stores, home improvement, discounts, sporting goods, price clubs and natural food stores), emotional engagement expectations related to “brand buzz,” “shopping experience” and “value-for-dollar” exerted the strongest influence on consumer decision-making and engagement with brands.

“Congratulations to the companies that continue to create meaningful differentiation and engagement,” said Dr. Robert Passikoff, President, Brand Keys. “Our validated and predictive metrics prove that brands able to better meet consumer expectations act as surrogates for added-value, engendering engagement and loyalty than those based on the primacy of product and a coupon.”

safeway-grocery-store-shopper-marketing

What is Safeway up to?

From store closing to lackluster earnings reports, Safeway appears to be dead in the water in terms of impetus. A recent Motley Fool article looks at what the future might hold in store for the grocery giant.

safeway-grocery-store-shopper-marketing

From the article:

In November, the company sold its Canadian business to Sobeys for $5.8 billion in order to focus more on the US market. The move, however, has been met with great skepticism by many analysts, as the company’s Canadian operations had been generating healthy profits for the past few years. According to the company, the proceeds from the deal will be used for a stock-buyback program and paying off debt.

At the end of the third quarter, Safeway announced that it wanted to exit the Chicago market by selling all its Dominick’s locations in the region. The company has already sold 15 stores; four to New Albertsons and 11 to Roundy’s. For the remaining 57 stores, Safeway is still looking for buyers.

Safeway is expecting a tax benefit of $400 million to $450 million by exiting the Chicago market. The net present value of these tax benefits is around $145 million, as estimated by the company. This cash will be used for the share-repurchase program and investing activities.

On the other hand, leaving the market is going to trigger a multi-employer pension withdrawal liability for Safeway, which is amortized for more than 20 years. Safeway estimates the present value of these payments to be around $375 million. For this reason, many analysts are of the view that exiting the Chicago market may not be a very judicious decision.

Safeway is facing intense competition from big players like Kroger, Whole Foods, Wal-Mart, and Target, which means that the company’s margins aren’t going to increase significantly, at least in the near future. Hence, the company will not be able to generate considerable profits, casting a shadow of doubt over its future prospects.

cvs pharmacy removing tobacco from store shelves

CVS Dropping Tobacco from it’s Stores

By October 1, 2014 CVS will cease selling tobacco products in its 7,600 stores. According to Reuters, this move makes them the first national drug store chain to remove cigarettes and other tobacco products from its store shelves.

cvs pharmacy removing tobacco from store shelves

From the article:

Public health experts hailed the precedent-setting decision by the No. 2 U.S. drugstore as a step that could pressure other retailers to follow suit. With pharmacies taking on a larger role in the U.S. healthcare system with walk-in clinics and services such as managing health plans, many experts say they should no longer offer unhealthy products like tobacco.

President Barack Obama, a former smoker, praised CVS, saying in a statement the move will help wider efforts to “reduce tobacco-related deaths, cancer, and heart disease, as well as bring down healthcare costs.”

CVS expects the decision to hurt profits initially, along with a $2 billion hit to annual sales. But the company, whose Caremark unit is a pharmacy benefits manager for corporations and the U.S. government’s Medicare program, believes the move will boost its appeal as a healthcare provider.

CVS hopes to replace some sales through signing up customers to smoking cessation programs, which will be a selling point with potential corporate contracts.

retail-store-visual-merchandising-campaign-compliance

Reduced Shopper Traffic and the Effect on In-Store Marketing

Whether is was the shortened shopping season between Thanksgiving and Christmas, an increase in online buying, or just budget belt tightening, shopper traffic in brick-and-mortar stores was down this year – the lowest levels since 2009.

retail-store-visual-merchandising-campaign-compliance

According to a recent POPAI article, just because foot traffic is down, it does not mean that physical stores are going anywhere, it may just mean retailers will have to put more focus into merchandising, campaign execution and compliance.

From the article:

Shoppers say they have less time to shop either due to time constraints, toting around kids or long to-do lists, but they’re still out and about. WSJ quotes one person say, “My weekends are one long to-do list, so I’ve gravitated to online retailers that make it easy for me to shop without having to go into the store.” Why not take that insight and run with it? Make stores a destination spot for families or create more tailored store layouts for your location. We’re seeing a trend of stores being tailored to their local demographics. Target and Wal-Mart are creating Express stores that will make shopping easier and faster. We will probably learn more about these strategies in the future, but it still give us hope for increased shopper traffic. It will be interesting to see their shopper traffic statistics.

The other missed opportunities we can learn from this WSJ article are to create change in retail stores and provide more savings and loyalty programs. If shoppers are coming into stores less often they probably don’t want to see the same thing. When I worked in the furniture and clothing retail worlds we changed our floor plans and displays around every day to keep shoppers interested in products that would be there for several months. Granted that some of you are making store fixtures, that can’t really happen but maybe it can affect they way your designs can move or be installed. Shoppers want to see products in new ways. They want to imagine that item in their life in several ways, so let’s make it happen. I know that means retailers need to invest more money in in-store marketing, but it can create a big change in sales and shopper traffic. Doing this also lead to more innovative and re-purposed displays, which leads to more emphasis on producer companies. For creating more savings and loyalty programs, this can be done in several ways. Retailers creating more programs for customers to save and producers/agencies creating more displays that link to these programs. Granted I do not have all the stats for this, there are ways to make these happen.

Just because shopper traffic is lower than previous years, it does not mean that brick-and-mortars are going to die, thus creating void for the in-store marketing industry. It just means that retailers need to focus on in-store marketing more. With effective in-store marketing and displays, shoppers will come more often and spend more. People want the personalized experience of shopping and online shopping can’t always do that. We may be seeing a trend of retailers closing stores or shifting money to online, but online stores are still building brick-and-mortars, so what trend are you going to stand behind?

Staples Second Quarter Profit Drops 16 Percent

Using Asymmetrical Merchandising Online and Offline

For years advertisers have been using pictures to create stories in the minds of customers. Through magazines, TV, online, and now mobile, products and services are placed in picturesque settings – igniting customers to imagine how the product or service can fulfill their desires and needs.

Social sites like Pinterest and Polyvore have expanded on this concept; where users pin or post pictures of products, services or things that interest them. The result is a curated grid of products. When products are presented with this type of strategy, shoppers have shown to buy more. According to Gartner research, 59% of consumers made a purchase after seeing a Pinterest pin board. Polyvore drives 20% of all social media merchandising online.

These results caught the eye of 2nd largest online retailer, Staples. Staples used Pinterest and Polyvore as part of the inspiration for redesigning its online and bricks-and-mortar stores. By using asymmetrical merchandising strategies and utilizing consumer insights from social, scientific and lab insight perspectives, Staples decided to simplify the selection of items on their web-site and in their stores.

Arun Arora, ‎SVP/GM Global e-commerce at Staples, told delegates at this year’s NRF Big Show about how they leveraged the idea of “curation,” to help shoppers overloaded with information make purchasing decisions quicker and simpler to make.

In the redesigned of Staples’ physical stores, Staples’ decided to scale back on the overwhelming assortment of products offerings. This has meant selecting the “top three products that have most relevance for the features and price-points that our customers look at,” said Arun. If shoppers wanted to then browse a wider selection, Staples’ installed a variety of digital kiosks that give access to the huge assortment of items sold on Staples.com.

More specifically, Staples’ employed the strategy of asymmetrical merchandising, showcasing products together that have no obvious connection. Similar to how advertisers use pictures to tell a story, Staples grouped together unrelated products on a display to tell a story about how that grouping of products can fulfill a shopper’s needs and goals. For example, Staples created break room and facilities room mock-ups that put products into a context that may spur additional, related purchases from office managers. The strategy improved on the traditional aisle with simplified, more compelling product placement

Since October 2013—the day the new site went live—the company has seen a 100% increase in conversion. Their in-store shops reduced their store footprint from 28K to 12K sq ft and kept of product selection. By using an asymmetrical approach, Staples has achieved their goals of increasing revenue while simplifying the website or stores, reducing the number of SKUs.

Rebecca Shirazi is the marketing manager at RBM Technologies. She is a frequent contributor to MerchandisingMatters.com, where she writes in the areas of marketing, merchandising and supply chain.

retailers-consumer-big-data-analytics

How Big Data Helps Retailers Understand their Customers Better

One big topic at this year’s NRF Big Show was that retailers need to truly understand their customers’ tendencies in order to effectively target them across all channels – in-store, online, mobile, and beyond.

retailers-consumer-big-data-analytics

According to a conversation with IBM’s Ginni Rometty on Forbes, one way retailers can do this is by leveraging the increasingly vast amount of data retailers can collect and analyze on their customer-base.

From the article:

In the simplest terms, big data offers a means to understand shoppers via myriad digital touch points – from their online purchases to their presence on social networks.

“Mobile is everywhere – more people have a cell phone than running water and 25% of the world will be on a social network – that’s what created all of this big data: 2.5 billion gigabytes [of data] is created per day,” she said.

To put it in perspective the newness of it all, 80% of the world’s data has been created in the past two years, she said, a statistic also quoted by others in several show sessions.

It’s composed of structured data, “things that come in rows and columns,” and “unstructured data,” such as pictures, videos, tweets and location-based data.

And why should big data be top of mind for merchants? Because “it will be retailers’ basis of competitive advantage … and will be how you engage with your customers,” she said.