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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Tags: ease, innovation, retail, retailing, simplicity
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.
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 »
Tags: mall, retail, retailing, shopping
Maybe it’s because I grew up in the Midwest. But I just don’t like writing checks to lawyers.
I’ve lots of friends in the legal profession, and all are lovely people (well, most of them, anyway).
But as the pragmatic sort, it pains me to spend money to resolve something that might have been settled at a lesser price well before.
Which leads me to the topic of PCI.
Just reviewed a 2010 study from the data security experts at The Ponemon Institute that looked at the post-incident cost of data breaches. Forget, for a moment, the brand humiliation, the CEO news conferences, the critical whiplash in the blogosphere and throughout Facebook. Ignore, for a moment, that research suggests that 30% of consumers who were victimized by retailer data breaches promise never to patronize the offending brand again.
The Ponemon research found that 42% of all data breach incidents led to the involvement of a third party (there to provide additional, independent investigation, resolve disputes, and soak up consulting fees.)
The average cost of that third party involvement in the United States was $1.52 million, with final resolution costs ranging from $750,000 to upwards of $31 million. That’s on top of lost business estimated at $4.47M per incident.
Total: $6M. Perhaps not fatal to a billion-dollar business, but not a check I’d like to request.
Yes, I know that active, careful PCI compliance is no guarantee. And that active, careful PCI compliance doesn’t put revenue on the top line. And that there’s ongoing confusion about PCI for mobile. And everyone thinks it’s all too expensive. And on and on and on.
But I also know this: active, careful compliance reduces risk. Significantly.
And that the price of risk is not just a bruised brand.
Tags: credit card, payment card industry, pci, retail, retailing, security, shopping
I was talking with a friend the other morning about the strategy of a struggling retailer.
You could see his head shake, even over the phone. “They’re getting eaten alive by Amazon in e-com, and Wal-mart’s taking away the low-end in chunks” he said. “And they certainly can’t go premium.”
Yikes. Another brand caught in the middle. Two monsters below, and price resistance above.
Hmmm . . .
Maybe they can go premium. Especially if we consider a new definition of the term.
Most of the time, the words “premium” or “upscale” are used to describe an elevated price point and a luxurious customer experience. Premium retailers sell more expensive goods. They also offer such wonders as concierge-level service, discreet-yet- fashionable technology, and soap in the bathrooms.
But maybe – just maybe – the new definition of premium retailing has less to do with luxury, and more to do with creating additional customer value . . . the kind of value that creates lasting stickiness to the brand.
There’s a little independent running shoe store down the street that might be a poster child for this new definition of premium. It’s maybe 2000 square feet. Thin industrial carpet on the floor.
The little running shoe store offers a standard good-better-best assortment of shoes, running apparel, and some new technology-based wizardry: a computer-aided analysis of your stride.
Overall, quite nice, but not fancy. Not “upscale” by any stretch of the imagination.
But the little running shoe store does more. They recognize that what their customers really want to buy goes well beyond shoes, shorts, and gear. They really want to buy 20 less pounds and a smaller dress size. They really want to buy lower blood sugar levels. They really want to buy new friends. They really want to buy the pride of completing a marathon. Or the high of a great workout.
And so they organize runs. Walks. Events. Meets. Gatherings. Their product is an orchestration of the SKUs and services (stride analysis) and interest-centric activities, all under the brand banner of the little running shoe store.
Premium? You bet. Scalable to the big guys?
I don’t think there’s a choice.
Tags: luxury, premium, retail, retailing, shopping
14.2 Billion Square Feet
Was doing the Google-dive a few days ago in preparation for a customer presentation.
Two numbers popped out. Amazon sales were up 40% in 210, to $34 billion. And the current vacancy rate in US shopping centers is at 10.9%.
At first glance, it’s easy to see that online sales are eating into store-based sales. Morgan Stanley reports that online is now more than 10% of all revenues in a number of product categories, from consumer electronics to jewelry.
It’s also painfully obvious that the greatest creators of new retail real estate vacancies in North America (Borders, Hollywood Video, and Blockbuster) have digital tire tracks on their chests.
Hmmm . . .
But let’s take a moment, and look beyond the obvious. And specifically at the future of the 1.22 million stores in the USA that occupy 14.2 billion square feet of gross leasable area. Which calculates out at 46.6 square feet of total retail space for every man, woman, and child in the country.
What retailers are learning – all too slowly, in many cases – is that the opening of more stores is not the end-all, be-all path to revenue growth. In certain categories, comp-store revenues in status quo stores will decline faster than good stores can be opened. Revenue is now a question of channel optimization. Store operation is more a question of net margin.
Second, the store’s not dead. But the store must evolve rapidly – probably into smaller footprints, with virtual selections and services. Probably into living-breathing web sites, where net-based experiences offer the transparency, speed, abundance, and expertise that shoppers find on the web. Probably into interactive, educational, experiential zones, where shoppers learn and play. Probably into a tri-furcated structure of large, full services-experience stores, small footprint urban-and-fast stores, and down-sized low-cost stores.
Status quo just won’t work. Big changes ahead
Tags: amazon, retail, retailing, shopping, store