 You’ve probably heard the term, “You need to be different at your store.” Well, in order to do that, you need to have different ideas. So with that in mind, we decided to seek help from a source we have not tapped before: The National Retail Federation (NRF) convention, which took place in New York City in January.
NRF serves retailers of all industries, but exhibitors there wanted to cater to you. And advice could perhaps be used by you.
The convention began on Jan. 11 at the Jacob Javits Convention Center, but it really hit its stride on Jan. 12, when NRF CEO Tracy Mullin hoped to encourage the audience at 8:30 a.m. with talk of how Barack Obama inspired others to think of better times ahead. “Retailers too know we need to inspire customers. Think about the many ways retailers have fundamentally altered the middle class by providing items that were once out of reach to nearly everyone….Retailers inspire neighborhoods. Retailers open a new store and suddenly, a troubled neighborhood becomes a cool place to live and it seems to happen overnight. In many ways, the economic crisis has brought out the best in retailers, who found new ways to inspire customers or refined their vision.”
Mullin then brought out an industry heavyweight, Lee Scott, then CEO of Wal-Mart, who gave his last public speech before retirement. It’s certainly safe to say Scott ran a successful business, but he sees tough times ahead. “Fundamentally, I wonder if we’re seeing a change in young people’s spending habits [due to the economy],” said Scott. “Twenty percent of our customers don’t have a checking account and live off of each paycheck…Some people have given up eating out; some have given up movies. But most people have given up something and many feel good about doing so. A lot of young people have learned what it’s like to live on the edge. I think the first half of this year will be extraordinarily challenging. By Christmas, I think if things are better, they will be moderately better. I don’t see anything that will turn things around quickly.”
How can you be successful as a retailer today? “You’d better understand your customer. And you better understand your inventory. People still have money, but [they spend it on] very specific things they want. When you are one-thirty-second of an inch off from what your customer wants, you don’t have any sales. You have to manage your business in a much more detailed manner.”
Now that Scott is retired, Mullin called upon him to provide his greatest key to success. His frank answer can be applied to most, if not all retailers. “You have to hire people who are better than you are and you have to give them credit,” Scott said. “That sounds so easy, but it isn’t for me. For example, the $4 prescription [drug] program we have has been incredible. I want to take credit for that so badly. But I can’t. I had nothing to do with it other than saying, ‘Let’s try it.’ If you give other people credit, it’s extraordinary what can happen.”
Carl Steidtmann of Deloitte Research followed Scott’s speech by stating that 2008 was not an anomaly for retailers. “Times will be tough, even as we come into a recovery,” he said. “It will be different because the recovery will not be driven by increases in consumer spending. It will be driven by increases of companies coming back to the United States. It will be driven by increases in exports and more importantly, increases in government spending. We’re already talking about a $1.2 trillion deficit this year and President Obama has talked about a $1 trillion deficit for years to come. This is a structurally different economic environment. This is also a different demographic era. Most of us have grown up on spending from the Baby Boom era. The ‘90s were so great because Baby Boomers were at their peak earning period. We will now see a dramatic increase in the 60- and 70-year old age group. This is not a group that is traditionally known for its risk taking or high spending.”
Stacy Janiak, also of Deloitte, marveled about how a customer can now take a picture from their iPhone and that item goes straight to a shopping cart. “Take a picture and it’s yours,” she said. “How easy is that? Too bad Match.com doesn’t offer that.”
Janiak continued by referencing a December Wall Street Journal article that said retailers are making it easier for consumers to shop online with their cell phones. “On the corporate side, Infosys Technologies recently launched a platform, Shopping Trip 360, that can collect data through a customer’s cell phone and through heat sensors while that customer is walking in the store. This is just another example of technologies that connect retailers to their customers even more closely.”
Added Janiak: “Technology should be a top consideration for all retailers going forward….The cell phone, or as we like to call it, the S-E-L-L phone, is truly an enabler of purchasing decisions. The balance of power has shifted. Consumers are definitely in command. You need to provide your customers with a multi-channel experience. You must have several ‘touch points’ where consumers can tap your products, services, and most importantly, your brand.”
Janiak stressed that today you must have an Internet Web site for your store. A Deloitte study showed that every dollar spent online influenced as much as $3 in the store. “Retail executives say cross-channel marketing is a highest priority for the years to come. We’re seeing a reinvention in retailing…Consumers today want services and solutions, not just products.”
Exciting Exhibits
It wouldn’t be a convention without exhibitors. We took a scan at the show floor and saw some things you’re probably aware of, such as People Counters from SenSource (www.sensourceinc.com).
You’ve also probably heard of customer exit polling when they leave the store. Cleva Technologies’ Xit Poll devices were displayed throughout the show floor. The easy-to-use device is available for lease or purchase. It costs $1,500 to purchase, as well as $50 to $70 per month that allows you to download data, questions, etc. Check out more at www.xitpollsurvey.com
Now, how about a different idea? How about scent marketing? A company named ScentAir would like you to rent scent canisters, often at a price of about $99 per month, including refills. What is it? ScentAir allows you to pipe in a selection of 1,600 smells into your store. Would the smell of wood appeal to your customers when buying guitars? How about the smell of bubble gum or chocolate? OK, that’s probably a stretch.
The bigger question is, does scent marketing work? Will customers buy more products from you if you own the product? Or is it ridiculous?
Well, a 2007 Economist article called “Subliminal Smells Can Have Powerful Effects” said scents could affect a person’s likeability.
Hmm. Well, as they say, “the nose knows.” Look at www.scentair.com for more information.
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