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The changing luxury retailing market in China

 Recently I sit down with Bertrand Pellegrin, president of b. on brand and author of the book “Branding the Man: Why Men Are the Next Frontier in Fashion Retail”  for a conversation on global retailing trends.  We had both just finished reading KPMG’s   Luxury Experiences in China report and the Economist article on Retailing in China  titled “Walmart v Wumart”. 

 We recorded the following short Q&A about the subject.  Hope you enjoy our converation.

httpv://www.youtube.com/watch?v=s8RsAJ-iroc

Key points made during our conversation include:

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The Global E-Commerce Gold Rush Is On!

E-commerce is going global as retailers from around the world take advantage of faster growth trends to discover riches overseas. For many brick-and-mortar and pure-play retailers, however, expanding e-commerce into a foreign country is unknown territory.

The common questions I get from retailers who want to start new country website operations include: Where should I expand, and in what order? How do I adjust my practices to meet different cultural norms?  Which functions should be located at headquarters versus locally? How should the entire operation be governed?

To address these concerns and more, Cisco IBSG conducted in-depth interviews with leading e-commerce executives at many of the top global retailers and suppliers to understand the best practices they use to ensure online success globally. The resulting information described in a recently published paper titled, “The Global E-Commerce Gold Rush: How Retailers Can Find Riches Overseas” is pure gold for retailers wanting to grow global revenues with e-commerce.

Best practices include:

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In Between the Numbers: Demographics, Destiny, and the Great Evaporating American Middle

May 27, 2011 at 9:31 am PST

 35%, 25%, and $20 an Hour:

Demographics, Destiny, and the Great Evaporating American Middle

 Reading this morning about Walmart, and eight quarters in a row of comp-store declines.

 Reading last week about Sears Holding, with annual revenues down from $53B to $43B in five years.

 Reading recently about Gap Inc., with US sales down 32% since 2004 in its US Gap-branded stores.

 And – reading a few weeks ago (The Economist, 30 April) about the decline in employment among US men – blue collar men in particular.

 According to the US Bureau of Labor Statistics, the EOM April unemployment rate for US adult men was 8.8%.

 However (as The Economist points out), the unemployment rate for US 25-54 year olds without a high school diploma is nearly 35% – up from around 10% in the 1960s. Of those with a high school diploma  but no college, today’s unemployment rate is almost 25% – up from less than 5% in the 1960s.  

 The odds are that neither group will find work at pre-recession levels. In each of the past recessions, the percentage of poorly educated men in work has fallen sharply – and not recovered to prior levels economic expansion returns.  

 Or, if they do find work, the odds are that the job will pay less than before.  According to the Bureau of Labor Statistics, the percentage of workers at $20 or more-per-hour jobs in the United States – a wage rate equivalent to at least $41,600 per year – declined more than 20% from 1979 to 2007.

 Don’t get me wrong.   There are dozens of reasons why Walmart, Sears, and Gap Inc. are in the situation they’re in.

 But demographics is destiny.  

 As a retailer, you can change assortments, beat up vendors, and find new merchants.  You can open and close new formats and rapidly expand your presence on the internet.   God forbid, you can even hire consultants and change logos.

 But if the personality of your brand is irrevocably wedded to the great American middle, and that great American middle is evaporating before your eyes, there’s going to be a problem.

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In Between the Numbers: Less than a Third, and Less than Half.

April 29, 2011 at 11:58 am PST

Less than a Third, and Less than Half.

I was reminiscing with a friend recently about NRF shows past, and the graveyard of consumer-facing retail technology ideas.

Yikes. Lots of ghosts. Even a few zombie ideas that refuse to die (cart tablets, anyone?). The big question is why – with the exception of self-service – have so few new “breakthrough” ideas found acceptance?

Here’s a hypothesis: Caught in an ever-fast cycle of innovation, the sales and engineering departments – understandably – always seek more. More headroom. More functionality. More interoperability.

We dream of the possible. We dream of platforms, of vendor lock-in, of recurring streams of high-margin revenue, of bosses pinning ribbons to our medaled chests. Ignore the cost implications for a moment.  (As grave as they may be, given the expense of rolling something out to all stores.)

Here’s what we too often forget: Shoppers dream of ease and simplicity.  

A 2009 McKinsey study on consumers’ use of electronics devices sheds some light on the matter.  Less than one-third of all consumers use the advanced features of any CE device – and less than one-half even know that the features exist.  

Allow those factoids to simmer for a moment. Think of the hours of brilliant engineering innovation that most consumers simply ignore -- that for most is too complicated, too complex. Brilliant engineering innovation that brings joy to the engineer, but immediate dismissive frustration from the consumer who simply wants to watch a movie.

Simplicity is the byword of the McKinsey paper. Simplicity in functionality.  Simplicity in usability. A quick glance, and you know how to use it and what to do.  A quick glance, and you know why it matters. The learning curve: a straight line north.

But it’s not just simplicity. Just as important is the usability – perhaps defined for retail as simplicity in context. Who’ll use it? When? Why? To what benefit? Consider the mother-of-two-in-a-hurry at the modern mega-grocery/mass retailer.  Consider, for a moment, the value of a cart tablet to her.  See wailing children pounding on the screen. Weep.

The very smart and always wise Bob Anderson, former CTO at Best Buy, points us to the “popcorn” button on the microwave as a perfect guide for consumer-facing technology.  No questions.  Immediate understanding of value.  One push and sixty seconds equals hot buttery-salted goodness.

Food for thought.

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The Future of Shopping Malls

 Recently my colleague Jon Stine, wrote on his blog In between the numbers – Big Changes for Stores about amount of retail square footage that is available today and the need for stores to evolve with changing consumer patterns.

This change is also reflected in shopping malls that needs to change to make the destination attractive to shoppers and for retail store operators.  In a recent trip to the local shopping mall in San Bruno, California, I noticed how the retail shopping mall has changed in the last few years to adopt to the new shopping trends.

httpv://www.youtube.com/watch?v=T5NIOrIOmhs

Some of the changes include:

  • Mixture of services and store formats in the main mall aisles
  • Use of vending machines to dispense higher end products such as cosmetics and electronics
  • Integration of digital video inside the store and at the display window to draw traffic/interest
  • Store exclusive offerings from personal appearances to store only merchandise that is not available online
  • More services offering in the mall from child care to education and entertainment. Read More »

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