That was the message to brick-and-mortar retailers at the 101st annual National Retail Federation Convention and Expo that ended here on Wednesday. Befitting an event with more than its share of tech exhibitors and sponsors, many speakers focused on topics such as e-commerce, mobile apps and social shopping.
Buzzwords at the convention included “restructuring,” seen as the destiny for Sears and Bon-Ton; “bifurcation” where strength at luxury players on one end, and value players on the other, keeps getting more pronounced; and “omni-channel,” the strategy retailers must deploy to satisfy consumers increasingly using mobile devices and social media to determine shopping choices. “A brand today that does not engage in a two-way dialogue with consumers is a dying brand,” said Ken Seiff, executive vice president, direct and omni-channel, Brooks Brothers.
Anxiousness outweighed optimism at the convention, where concerns among the crowd of 24,000 retailers, suppliers and consultants were fueled by forecasts for slowing sales in 2012. Presenters did little to dispel the idea that minimal job growth, sustained high unemployment, store closings, feverish promoting and bruising battles for market share — all issues of the last few years — will continue.
The inevitability of e-commerce and mobile commerce took on a sense of urgency. Web retail accounted for 20 percent of holiday spending in the U.S. “The pie for brick-and-mortar retailers is shrinking,” Sucharita Mulpuru, vice president and principal analyst at Forrester Research, said on Monday. “We need to lower our expectations. I look to the music industry as a telling example. The digital music industry delivers 25 percent to 30 percent of the revenues of a decade ago.”
As the convention was starting on Sunday, the news that Zappos.com had been hacked became a reminder that technology is not impervious to crime.
The NRF’s “Retail Means Jobs” campaign signs were visible all over the Jacob K. Javits Convention Center, saying that one in four U.S. jobs, or 42 million Americans, work in the retail industry. Meanwhile, just outside, the Retail Action Project held a rally on Tuesday to highlight the poor quality of retail jobs. An RAP report said that 51 percent of New York City retail workers earn less than $10 an hour and 34 percent don’t receive benefits.
On the Expo floor, Macy’s gave a clue as to how it will deploy technology in new ways, unveiling an open-sell Beauty Spot kiosk created in conjunction with Intel. Mike Tobin, senior vice president for omni-channel strategy at Macy’s, said the installation is being tested in four locations. It has products from Estée Lauder, Clinique and Lancôme on the endcaps, an interactive touch screen for product information, and is manned by a concierge. Tobin said Beauty Spot is designed to appeal to customers who want to shop on their own, rather than at traditional counters manned by sales associates. “I spent the last 12 years building macys.com,” said Tobin, who is looking at other technology for stores. “Imagine an endless aisle. We’re working on leveraging inventory and using inventory more efficiently.”
Intel has also developed in conjunction with HSN an imposing 13-by-8-foot interactive touch wall for gaming, introducing consumers to products and capturing data for e-mails, though in its current iteration it does not provide for e-commerce. According to HSN chief executive officer Mindy Grossman, the wall will be tested possibly in airports and hotels, and can engage consumers in virtual special events such as cooking classes with chef Wolfgang Puck, who sells on HSN. Adidas has a version of the Intel wall for product launches and enabling consumers to search assortments.
There was a standing-room-only crowd at a session about the deployment of Apple iPads at Guess and Pacific Sunwear. Scott Forrest, director of infrastructure at Guess, said the retailer was using the Verifone Global Bay iPad to “enhance the shopping experience,” but it found other uses such as store training and a look book for clients. With a mobile app for customer loyalty, Guess signed 500 customers in five hours at the recent Jingle Ball concert at Staples Center in Los Angeles. “We’re seeing on average an iPad increase in transactions because we put look books in dressing rooms,” Forrest said.
Cisco is piloting its new Style Me technology at U.K. retailer John Lewis. Shoppers “try on” outfits by superimposing them onto an image of themselves on a touch screen. Cisco’s new interactive digital sign technology will be used by Tesco and by “an apparel retailer in the U.S.,” a spokeswoman said. “One retailer is looking into different cities where it doesn’t have any stores and installing signs in malls and transportation sites such as railway stations.”
“We did a lot of work with C. Wonder,” said the Cisco spokeswoman, referring to the new retail concept developed by Christopher Burch.
Paco Underhill, ceo of Envirosell, is always looking for new concepts — including in the far corners of the world. Service was the centerpiece of his presentation. “I went to the Mall at Short Hills [in New Jersey] before Christmas and waited 45 minutes for a parking spot with nobody directing traffic,” he said. “At Iguatemi Mall in Brazil, there’s a parking concierge.” Another example of service is the roof of a parking garage at a mall in South Africa where there’s a drive-in movie theater, which he called “a painfully simple idea.” American rooftop parking areas get filled up less than 40 days out of the year, Underhill said, which can cause security concerns among shoppers. Thailand’s Paragon shopping center gets around this by designating one level of parking for women only. Underhill also put forward the 70-centimeter marketing plan where retail executives sit on a skateboard and roll through the store to see it from the vantage point of a five-year-old.
Over the years, Ralph Lauren has invested heavily in producing original content for the Internet, everything from music and an extensive style guide to its own RL Magazine, all in a quest to provide its customers with “merchantainment,” or what David Lauren, senior vice president of advertising, marketing and corporate communications for Ralph Lauren Corp., calls the “seamless blend of merchandise and entertainment” that allows the Ralph Lauren “world to come to life.” The company created a virtual fashion show for Rugby that allowed customers to shop for the merchandise immediately, designed a shoppable interactive children’s book and an ambitious 4-D promotion at the end of 2010 that transformed its Madison Avenue and London flagships into a series of 3-D objects and images.
“We wanted people to see Ralph Lauren as a modern brand,” he said, noting that other luxury labels were much slower to embrace this new medium. “We wanted them to get comfortable buying a $5,000 bag or a tuxedo” online.
Hiring and transition planning has long been a concern of the retail industry. “We don’t see a lot of formal rigor around succession planning,” said Brenda Malloy, managing director, global practice leader of Russell Reynolds, at a panel presided over by Stephen I. Sadove, chairman and ceo of Saks Inc. “Openness and discipline is a major part of retaining employees.”
Burberry ceo Angela Ahrendts said the company has embraced Facebook, using technology to communicate with employees. She also decided that one of the company’s core values should be compensation, because “we were not democratic. Only 10 percent of employees got bonuses. It’s very costly, but our turnover rate is down by 80 percent.”
Ahrendts also decided that Burberry needed to be “a young, old company” and she embraced technology. “We were a very disparate company. We were in 100 countries. There’s only one internet and the consumer knows only one company. One of our key principles is the brand is number one.”
Top Ten Retailers for Service
When it comes to service, online retailers are doing a better job than their brick-and-mortar counterparts, at least according to a survey conducted by American Express in conjunction with BigInsight. The companies obtained answers from 9,300 shoppers across the country to determine the retailers scoring the highest in customer service last year. Here are the winners of the “customer choice awards,” ranked one to 10, starting with the very best.
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