Friday, April 30, 2010

If It’s Tuesday, This Must Be Seoul

Sure, we’re showing our age with the outdated pop culture reference above. But, in this time of growing Internationalism, the analogy seemed appropriate after visiting one of the newer shopping centers in the high profile Myeong-dong shopping district in Seoul. Traveling the globe, previously exotic locales now somewhat blend together with the homogenization of retail. In the five years we have been traveling to this market, we have seen dramatic changes to the retail landscape.

As in every part of the world, global influences are rapidly spreading. In country after country, the influence of globalization is apparent, from fast food franchises to high-end luxury goods and fast fashion. As we were walking through the new and exciting NooN shopping center, the roster of tenants reads like an international who’s who of fashion.

This is the site of H&M’s first store in Korea, occupying partial space in several floors of the six story structure. H&M continues to improve its branding, visual merchandising and communications as the format evolves from its relatively no-frills beginnings to a true lifestyle powerhouse.

Zara and Mango, the two Spanish global brands also have presence. Zara felt a bit lost, perhaps unsure of its positioning. The thinness of merchandise and negative space used so effectively in Europe is not to be found here. Supply chain may play a factor in promising quick replenishment.

A floor of the center is devoted to sports fashion brands. Nike, Adidas and Puma all have brand shops, along with Foot Locker, strangely. Strangely, of course, because it’s selling the same brands that are in their dedicated shops. Of course, brand management in Korea always leaves something to be desired. In the incredibly (take our word for it) dense and crowded streetscape, we can encounter shops of these very same brands multiple times within a three block radius. And, you can see everything from a full-blown flagship store to a tiny footprint boutique.

The fifth floor actually begins to show some Korean (or at least Japanese) flavor and heritage. It houses an extraordinarily cool collection of small independent boutiques, offering the “best of” fashions of Japan, Korea and the U.S. The sixth floor is a food court and yes, Starbucks and Coldstone Creamery can be found. The Singapore export Breadtalk has a small café here in addition to their street presence, with a delightful collection of bread and pastry with exhibition style baking.

The dynamic parts of Seoul continue and the shopping district maintains its unique Korean identity in the thousands of shops and boutiques that dot the landscape. But, with these International brands (and spectacular Japanese brands like Muji and Uniqlo also present), it is easy to forget where you are. Only momentarily, one might add, since the sizes available don’t quite match our carb-filled American bodies!

The rapid global presence of the powerhouse fast fashion brands of Zara and H&M is amazing to contemplate. Inditex (Zara’s parent) does business in over 70 countries with sales of over $13 billion while H&M is present in 30 countries with sales right behind. They have redefined the fashion business and seem to translate their business to great effect across the world.
U.S. retailers, once the innovators, are struggling to keep pace. The world is indeed getting smaller.

Thursday, April 22, 2010

The 40th Anniversary of Earth Day and Greentailing

It’s hard to believe that we are officially at the 40th Anniversary of Earth Day. Green, while now blasted into our consciousness, still feels very new. While concern for the environment has been circulating in fits and starts in retailing for quite some time, it has not really gained traction until the past few years. In fact, we published an infamous edition of our Retail Watch newsletter exactly twenty years ago that spoke in glowing terms about the green revolution, the rapid embrace by consumers and ambitious programs being launched by retailers. As we eloquently stated, “The “Green Revolution” represents one of the quickest and most significant shifts in consumer attitudes in this country’s history.” Oops. The recession of 90-92 came along and green once again receded into the background.

Fast forward to three years ago and we were in the midst of writing our latest book, Greentailing and other Revolutions in Retail. We attempt in this book to be provocative and look ahead in the key trends that will influence retail as we move into the future. Along with green, these trends include shifting demography, the rise of experiential retailing, brands going retail, services growth and new ways to reach consumers outside of traditional brick and mortar. But, as the title suggest, Greentailing vaulted ahead of the pack.

What have we learned about green since we began researching this subject:

· Green is important to around two-thirds of customers. While only a small percentage (around 17% at last count) are actively green, another 50% or so will consider green in their purchases and activities.

· The stigma around green products is disappearing. The perceived quality is going up which is encouraging trial and usage.

· Customers will not pay more for green. At most, consumers are willing to pay around 5% more for a green product.

· Retailers, from a customers’ point of view, are not doing enough

Taken together, these facts present the challenge and opportunity of going green. We developed a simple model called T.A.S.C. to present an overview of effective retail strategy:

· Think Green. Build green into the mission of the company

· Act Green. Utilize various energy savings, waste reduction and recycling programs and invest in conservation and sustainability to run more efficiently.

· Sell Green. Carry more products that offer “green” benefits

· Convey Green. Communicate your green strategy to consumers in a compelling way

Of these four, Act green has gained the most traction because of the tangible savings and benefits arising from it. The two consumer fronting areas: Selling Green and Conveying Green need the most work still. Figuring out what products truly are “green” is extraordinarily confusing for the consumer and the lack of uniform standards and labels exacerbates the issue. And, retailers are not getting enough credit for what they already do. Conveying Green is a significant opportunity. We can say that there is significantly more marketing activities around Earth Week 2010 than we have ever seen. Hopefully, more consumers get the message.

Has Greentailing been the revolution we predicted? It is perhaps too early to say. While it has dominated headlines, it is still not clear that a retailer can build a sustainable advantage by being green. Important? Yes. Necessary to compete? Absolutely. Game changing? Not yet…