Retailers must focus on in-store experience

The Christmas shopping season is upon us as the traditional Black Friday after Thanksgiving shopping day seems to move sooner and sooner and might soon be known as Black Monday.

Every retailer has been hedging its bets through on-line portals, as more and more shopping dollars seem to be heading to Internet sales. But I believe the sea change is more dramatic than that. Not only is online shopping easier, often times cheaper and more convenient than traditional shopping, it is getting to be more fun too. But more on that in a minute.

The online shopping experience has gotten better, which is bad news for some retailers.

The idea that door-buster sales are the main drivers of holiday sales is a bit myopic. Retailers will find that these bounces in traffic will be very short lived. I predict they will find the Christmas shopping season disappointing again this year. Consumer spending will be up but the bricks and mortar retailers will grab a much smaller share. The reason? Fun.

Many retailers need to up their in-store game.

Online shopping has become a lot more fun than it used to be. The emotional driver of experience of discovery is even more powerful than the more traditional shopping experience. The web retailers have found a way to broaden our shopping discovery through smart technology. They’ll suggest other products that we might be interested in. They will ply their knowledge base to products we have shown to have a casual interest in the past. They use multiple images, interactive video and a myriad of choices to whet our shopping disease state.

Even a casual shopper can find hours of exciting discovery on iPads and tablets. It has become more than a virtual experience. It has become a bonafide experience. Rich in detail, options and a customizable environment. Even the payoff of immediacy has been accounted for in that often delivery is next day.

What does this mean for old school stores? It says that in order to compete they need to have a richness of experience. They need to compete in the totality of the shopping experience like never before. Jammed shelves and compact Walmart-like aisles just won’t cut it. They need to grab a larger portion of online browsing at their own portals and improve the more traditional shopping experience to make it more of an event. Right down to encouraging in-store shoppers to use their tablets and smart phones in the store to see greater selections and even check out without standing in lines.

All bets are off. It’s all about change and trying to shoehorn the customer into your old paradigm will simply backfire.

Amazon wins Christmas

The final sales from the holiday shopping season won’t be officially in for a month, but one thing is for sure: Amazon came out the clear winner.

Big surprise. (Insert sarcasm font.)

We’ve noted in the past that the retail industry is in flux as it adjusts to the emergence of e-tailing, especially among mobile phone users. According to Amazon, 60% of its shoppers used a mobile device this season and that its sales through the Amazon app doubled.

This is what most used to holiday shop.
This is what most used to holiday shop.

Amazon rocked during the holiday season and the online retailer is the main point of contention for the brick and mortar retailers. They are simply at a loss at how they can combat the growing effect of e-commerce.

Sure, most – if not all – retailers have their own apps and websites from which shoppers can buy Christmas gifts. Many offered consumers the chance to order from the store itself if the product was not in stock.

But Amazon’s large inventory, with even products from the competition, makes it a far easier and simple choice for those wanting to get the right gift – and buy it quickly.

The tactics retailers are employing are all fine and dandy, but most miss the most important point: Each retailer must own something. I’m not specifically talking about becoming specialty shops. I’m more in the mind of what Sears used to be: The place where you bought appliances and Craftsman tools. Now, Sears has become so enamored of being everything to everybody, it’s become irrelevant.

The same thing has happened at JC Penney, Kmart and many others. It is, therefore, no surprise that, according to a MasterCard Advisor’s SpendingPulse survey, that the top sales came from jewelry and women’s apparel. Niches, so to speak.

There is another element, of course, of which retailers fail miserably. Few of them have any emotional meaning to customers. They are simply looked at as warehouses with products inside them. The only reason to go to one is simply based on location. Their pull as destinations is waning.

By next Christmas, expect to see even greater sales for the likes of Amazon and the brick and mortar stores to continue to flounder.

Black Friday isn’t a holiday

Thanksgiving is next week and I can’t wait. Call me an oddball, but it’s my favorite holiday of the year. I can’t wait to get my entire family back together under one roof. This year is going to be a particularly sweet one as we’ll be up to 20 visitors, coming from Alaska, New Jersey and Florida. It’ll be a year to remember.

Yet, as is what comes with the ever-present balance of life, what’s very good is followed by the bad. And so, I’d like to rant a little about that.

Let it be known, then, that I detest Black Friday.

Who wants to join this horde?
Who wants to join this horde?

Hear this: The wretched day after Thanksgiving is not a holiday – and neither is Thanksgiving night. I can’t stand the talk amongst folks considering it to be one, either. Call me a cynic, but the day (and night before) represents what’s worst about America – from stores opening at midnight to customers trampling upon each other (sometimes to death) to reach the cheapest 50-inch HDTV first – I frankly, can do without all of it.

As we approach my favorite time of the year, a twinge of resentment resides in my heart over the day that is to follow. I wish that Thanksgiving could come and that families would sit together at the table after their meals, instead of rushing off to wait in lines to buy stuff.

Maybe this blog can help to change a few minds about doing that, too. I do hope so.

How To Beat Wal-Mart Without Going Broke

Beat WalMart Everyday

By Tom Dougherty

break out and beat WalmartThe Holy Grail in retailing is, of course, how to take market share from the biggest retailer of them all: Wal-Mart. Hundreds of billions of dollars in yearly revenue, more than five times as much as the nearest retailer. Continued growth in both revenue and earnings. Wal-Mart is king.

Meanwhile, retailers like Home Depot, Lowes, Sears, Macy’s and J.C. Penney continue to bleed money, and even direct competitors such as Target continue to lag behind.

How do you beat that? How do you beat the Market Leader?

The first thing all retailers should do is stop copying Wal-Mart. If you copy Wal-Mart, that only helps Wal-Mart. If you market on price, you will lose. Wal-Mart wins that every time.

beat WalmartMany retailers are doing just that, though, which is one reason why Kmart, once a formidable competitor, is practically a non-entity right now.

That doesn’t even take into account Wal-Mart doing a better job of marketing price than everybody else. It has a new, brighter and more sophisticated look with a theme (“Save Money. Live Better.”) that allows those of us who once thumbed our noses at Wal-Mart to go there. “Living better” is a very attractive outlook these days, and it shows that I’m smart for choosing them.

What Some Say

So when Kmart says, “There’s smart, and there’s Kmart smart,” it attempts to hold the same position as Wal-Mart – and not as well. What seems smarter to you? To “Live better” or be “Kmart smart”?

beat WalmartKmart, of course, is an easy target. (No pun intended.) Target is Wal-Mart’s nearest direct competitor. However, despite holding that position since the mid-80s, it has yet to make much of a dent in Wal-Mart’s fast-driving engine.

Target’s revenue has basically flattened and no wonder. It often fights on price. “Great electronics at surprisingly great prices” said one recent spot. So it’s no wonder that many news outlets reported that Wal-Mart took a lion’s share of the flat-screen television purchases over Christmas, stealing Target customers in the process. So, how effective was “at surprisingly great prices”?

Target promises “Expect More. Pay less.”, a theme eerily similar to Wal-Mart’s promise. The “Expect More,” and the sophisticated and trendy nature of Target’s advertising, suggest that you will get a better in-store experience at Target.

Target Does Not Have The Answer in beating Wal-Mart so don’t Copy Target

But have you been in a Target store lately? They seem stale and bizarrely empty now, less important compared to the bustling, almost overstuffed, nature of Wal-Mart. Target has even tried to copy Wal-Mart right down to sporting grocery departments: Tiny, little grocery departments with practically the same goods as Wal-Mart, but not nearly the range of selection.

beat WalmartIf you don’t copy Wal-Mart, then what should you do? Are there inherent weaknesses in being a market leader? For one thing, you must uncover what is most important to your target audience. That means understanding more than just what goods and merchandise they want to buy. It means understanding what drives them so they can see themselves in the brand and covet being a part of it. (Hello, Apple Store!) It means finding the most intense emotion in the market and owning it.

A Lost History of a Weakness in a Market Leader

There are retailers, for example, that had that kind of emotional preference but lost it by copying Wal-Mart. (See Rule #1.) Sears was once a giant, owning its own position as a man’s place for appliances and other equipment. Now, its theme, “Life Well Spent,” is a carbon copy of Wal-Mart’s winner.

beat Walmart

Sears or any other retail brand that has lost its once-proud luster (RadioShack, Foot Locker, Gap) would regain their position if they’d embrace change and dig deeper into today’s consumer than simply understanding usage and attitudes.

It’s time for retailers to start embracing change and think about transforming its model because, right now, everyone looks and feels and acts the same from the perspective of the consumer. (Read our blog on discounting.) In department stores, for examples, the differences between Macy’s, Dillard’s, Kohl’s, JC Penney and Belk are paper-thin. How can a consumer choose among them?

Even the specialties copy each other. Office Depot vs. Office Max vs. Staples. The same. Family Dollar vs. Dollar Store vs. Dollar Tree. The same. Advance Auto Parts vs. AutoZone. The same. Petsmart vs. PETCO. The same.

It’s insane.

Wake Up. You Can Win. You Can Beat WalMart

Retailers are expecting to win by being exactly the same and those chasing Wal-Mart are trying to duplicate its model and messaging without the buying muscle.

The lesson is that if you want to beat Wal-Mart, stop trying to be Wal-Mart. If you want to beat the leader in your category, stop trying to be them.

It’s no wonder that the ones gobbling up market share – GameStop or Wegmans, for example – are the ones most different from their competition, both in model and messaging. That’s living better.

(Read our market study of the retail category here)

Is Kmart becoming…edgy?

We at Stealing Share believe that media placement matrixes are important because you need to maximize your ad spending dollars – and measure it. But they often don’t tell the whole story.

So take the following news with a bit of skepticism while acknowledging a learning.

Kantar Media, developing a ranking based on spending and in-store visits, gave Walmart, Target and Kmart top efficiency ratings for Black Friday, while naming Sears, Radio Shack and Macy’s at the bottom.

Look at those names. Not surprising Sears and Radio Shack are so low. It probably has little to do with its spending because the fact is that they are two of the most irrelevant brands in retail and have struggled to find their place in the market. (Call us. We can help.)

We know Walmart is the king (for many reasons, including its brand) and I suppose Target and even Macy’s have varying levels of brand success.

The shocker here is Kmart. It has long been a troubled brand, the one most hit by the rise of Walmart. It seemed to follow everything Walmart did, which just made Walmart stronger because it is the default choice when all things were equal.

Screen Shot 2013-12-05 at 10.50.58 AMThe Christmas ad for Kmart getting the most buzz is the “Show Your Joe” ad, which shows men in boxer shorts playing Jingle Bells with their, um, bells. It’s working and…I like it. It’s simple, funny and plenty edgy. Whether it creates any long-term preference is doubtful. But its themes (“Shop Your Way. Get in. Get more Christmas”) centered around control, speed and price is interesting.

The ad itself doesn’t really support that theme, so we may find later into the holiday shopping season that Kmart’s rise was a blip on the radar. However, for once, Kmart is being noticed.