Jason Wu

As loyal Target customers, the launch of Jason Wu at Target had been highlighted on our calendars for months with us anxiously anticipating its arrival. Still on a high from the fabulous pieces from the Missoni for Target collection, we arrived on February 5th at 6:50am for the 8am store opening. Needless to say, we were not the only ones with this idea. With an hour and 10 minutes still remaining until the doors opened, there was already a line of 15 people – and not all women! Both men in front of and behind us were in line sans wives in hopes of scoring the perfect Valentine’s Day gift. While waiting in line, we overheard many women mapping out which pieces that they were going after first after studying look books online. At about 7:45am a Target security guard on a Segway addressed the crowd of 150+ eager Jason Wu fans with a message about safety. Like a grade school teacher, he asked us to walk not run and be nice mature adults. This little pep talk did little to curb fashionistas at the front of the line who did their best speed walk/run to women’s apparel when the doors finally opened.

Once the crowds were let in at increments of 100, it was as if the rule book had been thrown out the window. Within seconds the racks were clean with clothing strewn on the floor, leaving only the larger sizes as remnants of what took months of planning and collaborating to create. I was stealth enough to grab the three pieces that I had my heart set on and quickly made my way to the fitting rooms. To say that the pieces were a disappointment would be an understatement. The cute fluffy yellow shirt that I saw online looked more Big Bird than a chic top made by an “it” designer. The adorable stripped pale pink and navy dress that I couldn’t wait to see in person was so poorly constructed and matronly. I had a third piece that I didn’t even bother trying on since I was so disappointed in the quality and styling. When I left the dressing room, it seemed that everyone else had the same reaction as I did. The fitting room attendants had their hands full hanging up the rejects to send back to the floor. This made the entire experience even more frustrating – waking up at 6am on a Sunday when I could have come in by 9am and seen the entire collection since so little was actually being brought to the register. To make the bus trip to Target not a total waste, I picked up solid black and white tank tops and nail polish. Needless to say, I would have much rather picked up these basics at a more reasonable hour on Sunday.

After making the trek back home, I proceeded to call my Mom and girlfriends to tell them to stay in bed and wait for the next designer collaboration. We can only hope that the Shops at Target will deliver and stay true to the upscale stores that they are trying to emulate.

JC Penney's Dramatic Transformation Begins

If you pay any attention at all to the retail scene, it would have been hard to miss the news of JCP's announced transformation. It has garnered significant buzz with its new management team led by Ron Johnson, Apple store's former retail guru and a star-studded cast recruited from Target and others.
The transformation has three main components:
--A "simplified" everyday low price strategy with a few twists, called fair and square
--A new logo (above)
--Planned dramatic changes to the retail environment, with 80-100 well defined shops within shops and a Town Square component

While it will take a fairly long time to create dramatic change within the stores, the new marketing strategy can be seen now, in circulars as well as TV spots...
From the very basic standpoint of marketing, it is already working. We flipped through the JCP Sunday circular, which is the first time we can say that in quite some time. The ads, highly reminiscent of Target in style, begin to demonstrate the new pricing strategy's three elements:
--Simplified everyday prices, all ending in $ price point ($16, $20, etc)--In Red
--A monthly price, which is presumably a savings from the everyday price--In White
--Mark down prices (Best Prices) which will be in store the 1st and 3rd Friday in February--In Blue
The first time through, this seems extremely confusing. It was difficult to understand what a "February" price really is and the everyday prices are difficult to gauge without clear comparisons (most of the promoted items are private label). And, of course, we don't know how great the mark down deals will be (how many, how deep, etc...). The circular format itself is clean and refreshing and a definite breath of fresh air.
In the extraordinarily annoying TV commercial(don't say you weren't warned): http://www.youtube.com/watch?feature=endscreen&NR=1&v=uI42p6j4yNA, customers rebel against the craziness of multiple pricing strategies, markdowns and clearances. Note: there are much better versions that play off the same theme elsewhere on YouTube.

Simplification of retail pricing in much of the department store channel is desperately needed but has also been historically difficult to achieve for those who have gone down the path before.

Of course, the real test will be the experience once customers get to the store--the transformation in JCP's 1100 stores will be a longer and more expensive process. It will also be an eagerly awaited test to see if simplification can be extended to stores as complex as JC Penney.

We admire the boldness of vision and no doubt JC Penney will be monopolizing retail headlines for some time as their initiatives play out.

As we have always remarked, the great thing about retail is its immediacy: JCP's stock had a very nice run up after the announced new strategy. We'll know fairly quickly if customers beat a similar path to their doors.

Post Script. Had a chance to visit a JCP the other day while on the road. The new pricing policy is in full effect, with every item re-stickered to reflect the new pricing strategy. Some of the everyday pricing seems incredibly sharp--$5 super absorbent bath towels and the like which should certainly grab the customers' attention. They weren't kidding on markdowns either. Blue tagged items took items that were already marked down about 70% and reduced them 20-30% further...
The big miss? Not a scrap of signing explaining the new program to customers, which could have easily been accomplished by replicating the very clear explanations evident in the print ads. And, the intent and purpose of month specials (February specials, in magenta, of course) is not terribly evident in store.

"Made for All" - our visit to the new Fifth Avenue NYC Uniqlo

Japan’s basic apparel category killer store Uniqlo opened its 89,000 square foot (bigger than a football field!) Fifth Avenue/53^rd St. location (second of three planned New York City locations) on October 14, 2011. We had the opportunity visit this store during a short 20-hour jaunt to the Big Apple.

By nature of our flight’s arrival time into the city in the late evening, we had the good fortune of experiencing the store during an off period – about half hour before closing. The store was certainly less chaotic at this time during the day – we attempted to go the next evening as well but quickly exited the can-of-sardines environment.

From across the street, the store exudes an Apple Store-esque glass cubic glamour. Fully-functioning elevators are closed off to the public and instead display a mannequin couple, riding up and down in the front windows to the delight of passersby.

It’s easy to forget that you are in a clothing store– with the clean, stark open format, the store has the same look and as Narita airport, complete with three long escalators in the center of the store and a cool, soothing female voice over the loudspeaker welcoming you to Uniqlo and announcing what products are on each floor.

Uniqlo somehow attracted the only happy, helpful, and efficient employees on the island of Manhattan. Two Uniqlo jacket-clad greeters at the entrance welcome customers and offer a large basket – genuinely friendly and not at all pushy. (Note: the staff wins extra kudos for calmly and genuinely willing to spend quite a bit of time helping us dig through a huge pile of Uniqlo’s $9.90 opening special jeans to get our size – seemingly oblivious to the surrounding chaos!)

The store does a beautiful job of “layers” of communication on the merino cotton apparel and the brand’s new “Heat-Tech” line:

Large block letters catch the customer's eye by  indicating what material line the product is from - "100% Extra Fine Merino"

Second board gives information about the premium quality of the merino material.

Smaller sign as you look closer at the product -- indicates the style, and a more detailed description of the style.

Eye-catching hallway draws customer in

Boards on top of product racks educate and encourage shoppers to buy other products from the same line.

The store makes good use of brightly lit floor-to-ceiling LED screens to feature their products as well as Uniqlo brand ambassadors. The screens were not interactive, but this may have been deliberate, as shoppers seemed more intent on stuffing their bags with as much Uniqlo product as possible rather than admiring the surrounding décor.

Several walls are completely paneled with LED screens, giving shoppers styling ideas

The store is somewhat confusing in terms of layout, but there are maps on the walls and the aforementioned loudspeaker message. On the main floor, the layout is maze-like and designed for the quick-paced wanderer. There are specific areas on the mezzanine floor for people to sit, conveniently out of the way of shoppers – genius. 

Seating area for tired shoppers and shoppers' mates, conveniently out of the way.

Uniqlo’s impressive displays are essentially the apparel version of Whole Food’s produce section. The merchandise is neatly stacked, hung, and folded in wall shelving, displaying Uniqlo’s extensive range of color options in each style.

Category killing in basics - like basic t-shirts.

More category killing in basics.

Take one product/material and do it well...in every color!

Checkout is stress-free single-line Whole Foods –style. Interesting to note: when checking out, staff members have a scripted response: “Your total is $X for X# of items.” – perhaps to emphasize how much bang you’re getting for your buck?

Overall, Uniqlo gives off a very clear message that certainly seemed to resonate with consumers – there was no rhyme or reason to the demographic in the store, and the melting pot of people epitomized Uniqlo’s tagline (which is currently plastered all over New York City public transit and billboards) “Made for All”.

It was certainly made for us, that’s for sure. We actually had to purchase another bag to haul back our Uniqlo treasures…

Report from WRC--A Global Perspective on Global Innovation

We had the pleasure of attending the World Retail Congress in Berlin, which was held from September 25-28th of 2011. The World Retail Congress is a gathering of international retail executives. While there is a decidedly European feel to the conference (and attendees), North America and Asia was reasonably represented.
Ebeltoft’s (and our) official role at WRC was a coordinator and judge in this year’s Retail Innovation awards as the US member of Ebeltoft Group. This year, a record number of nominations were submitted and categories were split into two categories—business innovation (more about process) and format innovation (more about format).
The finalists provide a telling view on where Innovation is headed. In the format innovation category, they were:

• American Eagle –77 Kids. Their new concept store incorporates innovative digital in-store experiences with a dynamic in-store design
• Carrefour Planet. The most significant reinvention project in retailing. An attempt to reinvent the generalist hypermarket concept into a multi-specialist store
• Disney Store—New York. The largest Disney Store , representing their large scale reinvention, incorporating immersive interactive experiences
• Shoes of Prey—Australia. The only pure play on-line retailer, where customers can customize and design their own shoes, changing the color, toe, heel type, back etc.
• Eataly—New York. The fantastic New York outpost of the Italian food concept, blending together restaurant and food retail in a dynamic experience.
• The Craftsman Experience. Built as both a store and studio, this concept re-defines the relationship between a bricks and mortar store, the Internet and social media.

The winner in this category, Eataly, proves that retail excitement can still drive significant traffic to a brick and mortar store. Eataly reports first year revenue of an eye-popping $80 million.

Under business innovation, the range of submissions were vast, from weather forecasting tools to the latest take on loyalty marketing. The finalists were:
• Donna Ida—Denim Clinic. One-to one appointments to find the perfect pair of jeans.
• Karen Millen and Aurora Fashions—Deliver from 90 minutes. The world’s fastest fashion on-line delivery service
• Payvment—Facebook Storefront. The number one Facebook ecommerce payment platform for more than 800 million Facebook users.
• Titan Industries Goldplus—A soft benefits loyalty program for a jewelry chain in India, which rewards customers in the form of life experiences (a Cricket Match, trip to a Temple, etc
• Adidas—adiVERSE Virtual Footwear Wall. An in-store virtual footwear wall for Adidas utilizing state of the art Intel processors and touch screen technology.
• Tommy Hilfiger Europe—The Hilfiger Club +ID24. Interactive touch screens at POS to drive higher loyalty.

The winner here was Adidas, who also had their wall on display at the WRC. They plan on introducing this into a physical store environment within their London Flagship store.

What do these concepts have in common?:

• The seamless (or attempt to make seamless) integration of new technologies
• Blending together on-line and off-line experiences
• Creating more personalized and customer experiences, whether through the customization of products or the customization of experience.

In addition to the cases highlighted at WRC, Ebeltoft Group produces an independent project focusing on additional cases from around the world that showcases true global innovation. Contact me at nstern@mdretail.com to reserve a copy.

Loyal Until The First Screw-Up

Like many, we received an e-mail from Netflix CEO Reed Hastings this morning concerning the controversy surrounding their sudden price increase (upwards of 60% in many cases, including ours) a few months back. In addition to suddenly increasing prices, there seemed to be zero recognition of customer loyalty. When we cancelled the “by mail” portion of our subscription, the response was an automated statement requesting that the outstanding DVD’s be returned immediately or we would be charged the full price, etc… Nice knowing you, Netflix.
Apparently, we weren’t alone. The latest results from Netflix reveal a rash of subscriber cancellations, with subscriber base declining by nearly a million. This is even more startling because the company was on a significant growth trajectory prior to this move. The streaming side has also faced its own issues of late, losing its contract with Starz, a popular source of streaming content. The stock, predictably, has plummeted from its earlier dizzying highs. And yet, two months went by without a direct response to the million(!) customers who apparently were unhappy.
So what did Reed have to say to customers today? Along with a brief apology, a more detailed explanation of the “business” problem emerges. Internally at Netflix, streaming and by mail businesses need to be nurtured and grown separately. As a result, they are officially separating the two models, even renaming the original business to Quikster. Customers who subscribe to both will now get two invoices and visit two separate websites. But, the good news—no more price increases for the added inconvenience!
While Reed Hastings has been one of the more dynamic executives of the Internet age, we suspect that this second explanation isn’t going to play much better than the first. The consumer moved from a bundled (and intuitive) solution to a separated one. We would suspect that more customers will opt out of one (or both) services and that it will be much easier to view their offers independently against other options. Two months in and can’t saw we’re missing the by-mail service and the streaming option often disappoints with limited or dated content.
While the intent of aggressively positioning the business for a streaming future so his business doesn’t become the next AOL or Borders is an admirable one, the execution of this plan has consistently lacked thoughtfulness and most importantly, a focus on the customer that Netflix (or Quickster) is supposedly serving.
So, apology not accepted. And for businesses that pride themselves on delivering customer service, the caveat in the headline applies: customers are only loyal until you give them a reason not to be.

Diapers Direct and the Perils of Groupon

“We sincerely apologize about the delay on your product delivery.” These are not the words that you want to see when you open your email, particularly with something as essential as diapers. At the beginning of June, we purchased a $25 Groupon for $50 worth of product from diapersdirect.com. We promptly placed our order (as many others did as well), and received our diapers in mid-June. Apparently, we were one of the lucky ones, as we discovered that this was the fourth email that Groupon customers had received regarding unfulfilled orders. So, we did a little digging and this is what we found:
• A quick Google search indicates that Diapers Direct offered a Groupon in Amarillo on May 11 which was purchased by 1,396 Groupon-ers. Over the course of the next 3 ½ weeks, this deal was featured in at least five other cities and purchased by over 900 additional customers. As we read the email mentioned above further, Diapers Direct goes on to state, “An estimated 98% of Groupon customers at our website have used their coupon within one day of purchasing it. The steady stream of customers over a six month period that we had planned for became a tidal wave of orders all made in the past thirty days.” Recent data from Groupon is consistent, with only 10% redeeming their coupon within one month, but if nearly 1,400 orders were placed on day one, this leaves us scratching our heads as to why Diapers Direct didn’t pull the deal after the first tidal wave of orders.
• Diapers Direct is a small business (with only 3 employees, according to their email) that presumably used Groupon in order to get a couple hundred new customers. “We have had commercial customers that purchased as many as 110 Groupon coupons.” Unfortunately, they didn’t set a limit on how many people could purchase their coupon and they instantly became overwhelmed.
• In a recent study on daily deal sites conducted by Rice University, nearly 80% of coupon users are first-timers, and only 20% of them become repeat customers. This conversion rate does not bode well for Diapers Direct (particularly since so many customers still have open orders). “We are by nature a recurring order company. A company designed to make monthly deliveries to a regular repeat customer base.” We’re betting the commercial customers mentioned above were not planning to become repeat customers. What’s more, any pre-existing customers are likely having a difficult time placing non-Groupon orders, damaging their existing customer base.
So what are the lessons learned?
• Know how Groupon works. Understand everything from what percentage Groupon will take of your profit, how many coupons the deal is limited to and how many coupons are available to purchase for each customer.
• Ensure your business can cover the discount you will offer. Diapers Direct planned to “lose a little money on every transaction and expected to do so as this was our way of introducing ourselves to all of you.” They likely did not plan for as many transactions as they got.
• Plan for best and worst case scenarios. Can you accommodate 1,000 new customers? Have you ordered additional stock for the initial wave of orders and the final month of your deal as customers try to use their soon-to-expire Groupons? Do you have enough staff to accommodate the influx of orders? Even if Diapers Direct had all product in stock, three employees could not efficiently and effectively fill all orders in a timely manner.
Groupon is bigger and more powerful than most of us understand. It’s either a quick way to double your sales or to go out of business.
There’s no question that Groupon, Living Social and the myriad of competitors are nothing short of a global phenomenon in retailing, service and foodservice businesses over the past two years or so. It is equally clear that there is much that’s unknown about these offers, particularly as it relates to both short and long-term success. We know the old saying Caveat Emptor (buyer beware!). In this instance, Caveat Venditor (seller beware!).

This is a guest blog from Felicia Greenbaum, McMillanDoolittle Business Manager

Bloomingdales.com--The devil is (apparently lost) in the details

It is wonderful to see how well Macy's Inc. (parent of Bloomingdales) has been doing of late. They are in their second year of comp store increases and they do seem to have the company heading in the right direction. In their last press release, they also made note that their e-commerce division is performing even better--up a spectacular 40% year to year.
As a retail consultant, we tend to live in the kind of numbers above. As a customer, things tend to be a little different. We recently bought some California King sheets during a great sale at Bloomingdales...good item, great price, etc...
When the sheets arrived (in a horribly oversized box with no padding, by the way), they were not the "latte" clor we wanted but a very lovely purple. This is despite the fact that the bar code tag said latte...oops.
So, now what?
1. Called our local store who nicely explained that they don't sell Cal Kings in Chicago but we could try and call a California store...
2. Returned the item (at our expense) and explained they got the color wrong
3. A few weeks later, the replacement comes...and yes, still purple! Two observations--they clearly mis-tagged the product and; there is no human checkpoint to distinguish between latte and purple..
4. Return the sheets to a local store and (again) explain the problem. Their advice? Wait about 30 days before ordering again and HOPEFULLY, they will have figured out the whole latte/purple mix up by then
5. Receive a Bloomie's gift card (no credit refund) for an amount that is less the cost of the original shipping, return shipping, etc
6. Bottom line--no sheets, an enormous hassle and out money
What's wrong with this picture? It's almost impossible to figure out where to begin--failures in process, quality control, customer service, and so on.
It's nice to hear that on-line sales are up 40% but how will they be able to position themselves in the long run against a growing number of competitors who have figured this stuff out?