November 8, 2017

2017 Holiday Shopping Forecast — Black Friday is No Big Deal?

Black Friday is here again! Well not here, yet. But that’s how it's worked for years, it’s here even before it’s here, right? It’s the big event before the big event. Retailers and the advertising industry create news and events around announcing that it's almost here. Getting the engines primed, right? In the meantime, Amazon is dominating the early deals game, announcing Black Friday action, 50 days early! So yeah, it’s here.
Black Friday is still the single biggest day of spending and shopping on the calendar. But while online opportunities expand, popular attitudes around friday-focused brick-and-mortar feeding frenzies have cooled a bit. Two years ago REI made noise with their OptOutside campaign, staying closed on Thanksgiving and Black Friday in a sort of sacredly secular celebration of the outdoors and non-consumerism — and generated a lot of conversation in the process. They stuck to it last year and just announced they will continue the tradition moving forward.
Then last year we saw more stores choosing to stay closed on Thanksgiving.
Even the Mall of America closed on Thanksgiving last year, opening at a tasteful 5am on Friday morning. Malls are feeling the pinch as much as any individual retailer as spending continues to rise, but primarily in newer transaction channels. Malls are generally claiming a desire to spare the employees and the shoppers all that stress but reducing overhead in the face of stiff competition is also pretty fundamental.
So what does that mean for expectations this year?
According to a study from Field Agent, both Black Friday and Cyber Monday are polling at just over 50% of respondents saying they are “very likely” to shop on those days. The question now is not so much about When or, which days will get the most sales activity — but rather Where and How will customers choose to shop this year? Over half of respondents said they plan to buy “most” of their holiday gifts online. This is the first year this expectation has hit a majority percentage.
With shifting behaviors we also see shifting values. “Affordability” and “quality” are top values this year, while “traditions,” and “brand names” are falling to the bottom of the pile. Amazon is loving it, Macy’s not so much. Macy’s and Nordstrom are forecast to see outright declining sales through holiday season as malls struggle to draw shoppers.
Amazon, WalMart and Target lead the field for retailers overall. soundly dominates the website category with 62% of shoppers expecting to use it. is #2 at 11%. Amazon and WalMart also lead with customers in the mobile app category.
With online and mobile shopping sliding into the forefront of all shopping experiences this year it only makes sense that the in-store frenzy of Thanksgiving Day and Black Friday shopping may be a thing of the past. The same study cites a lot of frustration from a majority of shoppers around overcrowded stores with under-trained agents and fickle availability of in-demand inventory. These realities may accelerate the trend toward better shopping experiences that hinge on more convenient technology.
Make no mistake that physical stores are an asset to the brands that use them well and staff them well. But the familiar narrative around Black Friday highlights some very apparent pain points for customers. And in turn, smart technology and savvy shoppers have deemed all that FOMO and frenzy to be an easy trade off for a happier holiday experience.
Jeff Smack
Director of Interactive Media

October 11, 2017

The New Retail Ecosystem Needs Traditional Chains

Twenty years ago, I watched the movie You’ve Got Mail starring Meg Ryan and Tom Hanks and hated the fictional big chain Fox Books (owned by Hanks) for driving Ryan’s small, independent book store out of business. After the closing is inevitable, Ryan writes in one of their AOL Messenger exchanges, “My store is closing this week. I own a store, did I ever tell you? It’s a lovely store, and in a week it will be something really depressing. Like a Baby Gap.”
For years, the traditional retail chain has been the villain. Retail chains so big that small, independent stores can’t compete. They get squashed by the 600-pound gorilla who sits wherever he wants. But the fallout from the Toys “R” Us bankruptcy suddenly casts this movie in a new light. The big chain retailers are still 600 pound gorillas, able to drive the independent stores out of business. But now they are equally endangered, and the success of entire industries rests on their survival.
The mighty Amazons and Wal-Marts of the world have left the single category chains vulnerable.  However, it is imperative that these big chains do not die. Much like how the 600-pound gorilla is an apex predator in its ecosystem, single category chains are apex stores in the retail ecosystem. Traditional retail chains now anchor the brick and mortar shops by giving suppliers a place to sell goods at full price, year-round. They provide the manufactures with a place of resistance against the price wars indicative of the online and big box retailers. This explains the unwavering vendor support Toys “R” Us has been getting since its bankruptcy announcement last week. Toys “R” Us is the last remaining single toy chain standing. If they fail, suppliers will lose their last leverage point.
Isaac Larian, founder and chief executive office of the toy manufacturer MGA Entertainment, Inc. described the importance of the relationship, “Oh my God, they are very important, and people don’t understand. I’ve always said that is there is no Toys “R” Us, there is no toy business.” Larian said he has already shipped his holiday goods to Toys ‘R’ Us and will continue to do so, and he is one of many toy vendors saying the same. Why? Suppliers know that without Toys ‘R’ Us, the toy industry will topple.
The toy industry’s dependency on Toys ‘R’ Us as a single category chain is not unique. Best Buy holds up the electronic industry after the closings of Circuit City and HHGregg. Home Depot and Lowes share the responsibility in the DIY home improvement industry. And Barnes and Nobles now bears the cross after Borders’ liquidation. Without these single category, traditional retail chains there would be no single electronics industry; no single DIY industry; and no single book industry. In today’s world, it is a symbiotic relationship between small independent stores and big retail chains, rather than the competitive world of twenty years ago. The success of the small shop owner is directly tied to the success of the chain store. They need the chain retailers to survive, because without them there are no single category industries. Traditional single category chain retailers serve as apex stores in the retail ecosystem, supplier leverage points. Without them, entire industries would fall.
It turns out the big, bad Fox Books might just be the hero after all.
Jane Broadbent
Senior Strategist

September 19, 2017

Will Kohl’s Harness Amazon's Foot Traffic?

Kohl’s is bringing Amazon’s brand and customer service into their floor space. The apparel giant will now allow Amazon returns to be serviced through Kohl's store locations. The move is controversial, but without much analysis the first thing I considered is that “inventory" is not enough of a motivator at brick and mortar anymore. The key is driving foot traffic into the store. Give the customer a prioritized reason to come in that is either experientially valuable or need-serving. Once they are there, inventory can do more to win purchase.

Amazon is so engrained in the broader fabric of customer behaviors with a leg up through volume of inventory, ease of experience and convenience of transaction that this move by Kohl’s does not seem that crazy to me. The convenience of brick and mortar returns for online purchases is a huge factor for higher register sales at brick and mortar.

Shopping behaviors are in flux and retail relationships have to figure out new ways to break down the literal walls of retail. If this gambit is not Kohl’s solution to that, they seem well poised for selling to Amazon. Historically speaking, groceries and apparel have been two of Amazon’s low-points. In that light, Kohl’s position looks an awful lot like Whole Foods’ prior to that acquisition. This development may well be another first-down in Amazon's game plan to expand its real estate.

Jeff Smack
Director of Interactive Media

August 18, 2017

Back To School Boosts Brick and Mortar Retail Brands

With the new school year beginning, back-to-school shopping is kicking into full gear and parents are looking to shop with retailers who match their mental checklist of needs.
A report from Fung Global Retail & Technology, featured in an article on Retail Dive, tells us “more than 80% of consumers plan to shop at mass retailers during back-to-school, an increase of 24% over the past year.”
Brands with fast, one-stop-shop and value-friendly qualities will be seeing the highest sales this season to no surprise. Tradition stands strong this year as brick and mortar retail dominates back to school shopping over prominent e-commerce brands such as Amazon, who have seen more wins than losses in recent times.
Morning Consult conducted a nationwide poll a couple weeks ago that show Wal-mart as a parent’s top choice for back-to-school shopping. “When asked whether they would patronize a particular retailer, 63 percent of parents said they would go to Wal-Mart Stores Inc. for their student’s back-to-school items. Target was second, with 50 percent of the respondents saying they would shop there, and 34 percent of parents said the same about Inc.”
The rhythm of back-to-school shopping seems to be determined by customers who want to do it quickly, do it well, and get it over with. Popular budget concerns skew destination decisions towards mass merchant and discount stores, as well as the assumption that the majority of buyer purchases will be influenced heavily by their children.
This year’s unnecessary stresses are being avoided by parents who can bring their child to one store and get everything they need for a reasonable price, and we don’t blame them!
This annual tradition refreshes us on the differentiated values brands have to offer across the landscape. Various matters call for different types of consumer behaviors, and brands who can stay relevant, aware and up-to-date will be favored in fitting situations.
Emily Mondloch
Market Research & Insights

June 16, 2017

Amazon Buys Whole Foods – Our Reaction

There’s of course a lot of investment politics behind the deal that have little to do with better meeting an end customers’ needs. Whole Foods CEO John Mackey has had a few different things to say this week about the potential and the conclusion of the deal.

However, Amazon’s choice to purchase a premium brick-and-mortar grocery brand with a national footprint represents the potential for some pretty radical changes coming to retail that have been knocking on the door all along.

We’ve been talking about clicks and bricks and “Tearing Down the Walls” between the mobile/online customer experience in this blog for a few years. The location-based, real-world, in-store needs of brick-and-mortar shoppers that are able to be addressed by mobile technology has been a very hot subject for awhile but to date we haven’t seen anything of this scale.

Amazon has dabbled in brick-and-mortar with a series of tests over the past few years and the retail industry has questioned, “why not grocery?” but this acquisition seems to validate the location strategy of brick-and-mortar real-estate as an asset for a previously “online only” delivery-based business model.

The equity and positioning of these two brands together stands to unlock a lot of potential for mobile experience at brick-and-mortar retail that has only been a bit of dabbling to date, by comparison.

Expect to see fluid options between grocery delivery, curbside or in-store pickup based on mobile shopping lists with options for one-click ordering as users manage their needs on-device and fully integrate that support into their grocery routines. Mobile store maps, product suggestions and timely cross promotion of merchandise between a user’s purchase history and live inventory could all come to life in a new way.

Of course, every grocery shopper is not an Amazon grocery shopper or a Whole Foods Shopper and the operational and cultural realities could present significant challenges, but if the merger of their respective retail worlds is well executed, the potential to lead by example in the field of total customer experience seems truly massive.

Jeff Smack
Director of Interactive Media

February 27, 2017

Specialty Retailers — Tap Into the "Network Effect"

Why turn to Amazon instead of ordering products from specialty brands you love? Trust. By now, you probably trust Amazon. While they don’t sell everything, they very likely sell something close at a few different price points. Amazon has found a way to be at the front of the consumer’s mind before they even consider the next purchase. Not to mention the convenience of research experience and fast, cheap (or free) shipping.
These factors contribute to the surprising fact that 58% of people make the majority of their purchases with Amazon.* So what is a specialty retailer to do?
Adrien Nussenbaum, the U.S. CEO of Mirakl, digs into this for an article on Chain Store Age. He reminds us of ways that specialty brands with physical stores can gain an edge with their customers against the giant, Amazon.
Specialty brands should remember the importance of leveraging brick-and-mortar as an asset for opportunity, instead of a liability of overhead.
Brands need to be inventive to establish stores as a destination. They can do this by offering the customer a bigger reason to visit that doesn't hinge on simple "product for price" transaction. Nussenbaum explains that tying this approach to location to online community of people with lifestyles relating closely to the brand can create a “network effect.” Customers connect with each other at the store and share a connection with the brand. This leads to brand loyalty and involvement among individuals but also anchors a community.
Specialty brands are much better positioned to connect to passionate and interested people in niche communities. Open-minded leaders in niche retail must find the right mix of resources and strategy using location and experiences to connect with customers. And more importantly to connect customers to each other through the brand.
Here are a few examples of specialty, niche or hyperlocal brands making it work:
Lululemon offers their customers in-store yoga flow classes on Savasana Sunday.
REI encourages their people to "Opt Outside" and offers a variety of “skills classes."
Sur La Table offers cooking classes that are searchable by location and culinary styles
• Richmond’s own Carytown Bikes offers community rides every week at two different levels of intensity.
All of these examples allow customers some flexibility to join an event that fits their life and connect with the community and the expertise of the brands.
*Mintel — Online And Mobile Shopping, US
Emily Mondloch
Market Research & Insights
Jeff Smack
Director of Interactive Media

November 2, 2016

Grocery Retailers – Shake Up on Aisle 9

Competition among grocery retailers is on the rise and the winner will ultimately be the customer.

Media consumption and shopping behavior are two worlds that have turned each other upside down in recent years. And yet the grocery store has remained largely unchanged. Predictability is sort of important to the grocery shopping customer. Innovation is a bigger challenge in this space. The grocery store experience is largely built upon reliability and familiarity. The unexpected must layer in and offer more to the well-established weekly routine.

However, innovators will innovate and some major grocery retailers are testing new ideas to offer greater flexibility and remove guess work from the customer equation.

As the nation’s largest online retailer, Amazon is creating another big disruption for brick-and-mortar grocery stores. They will be competing more directly by carrying the brand to 20 pilot stores launching by the end of 2018. Half of these stores will be more traditional grocery shopping experiences while the others will test online ordering and local pickup.

In the face of this heated competition, well-established grocers must evolve and stay competitive as well. The Fresh Market is taking on a visual rebrand and making adjustments to their position by offering more staple items and reduced price options. The company hopes to retain their specialty, artisan market identity while becoming more available to a value-conscious consumer.

Making changes while serving this foundational consumer behavior is risky business. Adjustments must increase the customer’s convenience and fit better into their lives to be tolerated. The companies that anticipate disruption and customer needs will win the day and chart the way.

Jeff Smack – Director of Interactive Media

Andrea Neudecker –BMA Millennial Marketer

July 8, 2016

Tearing Down Walls for the Customer’s Sake

The proverbial walls segmenting the customer experience from one channel to the next are quickly becoming a major focus of retailers and other businesses.

It’s clear what numbers are telling us about today’s trends: more digital, more mobile and more social media engagement from company to consumer. However, hiring a digital specialist and giving them a budget to start creating, facilitating and expanding digital platforms for customer engagement isn’t enough.

Customers’ demands and expectations have never been greater as word now spreads at the speed of a megabit, and demand calls for seamless integration of all these channels in order to create a consistent message and brand.

Companies are always trying to figure out what customers want and what they need to know in order to have an effective call to action. Choose your medium: Post on Facebook, update the website, design a new window display. Those things are relatively simple, but chances are there is little, if any, communication or collaboration between the departments handling those things, which ultimately increases the chances of having three separate messages instead of a clear and consistent one.

The silos we create when segmenting our business functions are for efficiency’s sake, not the customer’s. While moving money from one department to the next can help a company stay afloat, particularly in troubled times, it’s the customer that ultimately moves the bottom line.

Today, customers are utilizing more than one device when purchasing from retailers. And, at times, they’re utilizing more than one device on one purchase.

Consider a trip to Best Buy. A customer wants to actually hold a new Bluetooth speaker prior to purchasing it in hopes of avoiding a return in the near future in the event of any dissatisfaction. Standing in the aisle chatting with a store associate, the customer pulls out their smartphone, and the search for consumer reviews, price comparisons and better options ensues, if it hadn’t already prior to the customer reaching the store.

If or their mobile app weren’t there, they’d likely be out of the picture. A customer can easily walk away from a purchase if a consistent message isn’t there and even more so if the products or sale prices are different from one channel to the next. In order to even get into the competition for a sale, a company needs to have a consistent customer experience throughout its offerings.

If you’re having a seasonal sale on certain items, be sure to promote it on multiple channels in the same manner in order to leave an effective trail of breadcrumbs for potential customers. These channels don’t compete with one another; they complement one another. Working together will always benefit the whole.

Imagine Amazon decides to open up a large-scale retail store, which isn’t that far-fetched considering the e-tail giant continues to open staffed pickup locations near college campuses across the country and is expanding Amazon Books locations. Customers would immediately create expectations for this store. One might see it as an extension of their giant fulfillment centers, following the superstore concept. Perhaps, they might even go so far as employing a brood of drones as sales associates.

It would be up to Amazon to ensure their message stays consistent with the conclusions customers have already drawn about the company – quick delivery, vast inventory, reasonable prices, innovative solutions – in order to meet customer expectations and sustain customer engagement, which ultimately creates greater customer loyalty, more opportunities to reach more customers and a better bottom line.

As the retail world continues to evolve, so too should the way we communicate with customers.

Colin Riddle
Millennial Marketer

UPDATE 7.26:
Retail Dive and Digimarc released a "playbook" white paper on this topic today:
Bricks and Clicks Converging at Retail

January 14, 2016

Clicks Need Bricks Too

A new study out from L2 points to something we’ve been wondering about. With Amazon, Warby Parker and other online success stories opening physical stores, could it be that “clicks and bricks” works both ways?

The study  would suggest that it does. Since the study was funded by a real estate firm we have to assume a little bit of salt is needed. However, it does help explain what the very smart people at the aforementioned companies have probably concluded on their own: online-only retailers must, at some point, make their way into the exciting world of stores.

Just as traditional stores have to evolve in the digital space. Ultimately, it’s in the best interest of the companies and their customers to serve in both spaces.

See the article from Chain Store Age.

November 23, 2015

"Amazon Prime Now" is live in Richmond

The online mega retailer has kicked off their quick and local delivery service, Amazon Prime Now, in a handful of markets. Most recently Richmond Virginia and Nashville Tennessee were added to the list. This model takes “Amazon Same-Day” shipping to the next level with a more limited product offering, 2 hour delivery, scheduled drop-offs, or 1-hour delivery at a premium.

This past weekend was its first in about 50 Richmond area zip codes, delivering everything from groceries, to electronics, to pet supplies.

Amazon’s evolution seems paradoxical at times. Earlier this month they launched brick and mortar bookstores, targeting millennials. However, the retail mammoth continues to unlock business opportunity by understanding customer needs and defining user experiences.

How will this venture impact the local retail ecosystem in Prime Now markets? Can local retail offer more in terms of experience to compete with the convenience?

While many stores will close shop for the day, Prime Now will operate on Thanksgiving. And as Amazon vies for more mindshare with the shopping public going into the holidays, might this localized expansion serve to grease the wheels of more early online shopping with Amazon?

We’ll continue to observe with interest and would love to know your thoughts on the subject.

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