Blog Moving Time

It’s moving time for this blog and I am excited to announce that I’ve launched a new and improved personal website at www.tobydesforges.com.

Going forwards, all future blogs will be posted on www.tobydesforges.com, so please check it out and even subscribe if you’d like to get every post delivered right to your inbox. I promise not to spam you and your email address will only be used for the purposes of notifying you of updated posts and very occasional special offers.

If you are already a subscriber to this blog you will need to resubscribe to the new site to keep on receiving any post updates. It’s been great having you follow and participate in posts over the past year or so and I would love to have you join me over at the new site too.

The new site contains additional information about myself and engage. It also provides better opportunities for us to connect, share and discuss the goings-on in the world of shopper marketing and customer management.

If you have any questions or concerns, please don’t hesitate to contact me directly at toby@engageconsultants.com. I’d love to hear from you.

Best,

Toby

How To Ruin A Brand

If, like me, you’ve been following the backlash against comments by Abercrombie and Fitch’s CEO Mike Jeffries, you’ll have seen how in today’s connected world that bad PR can have a huge impact on a brand. I have to admit that I have little sympathy for Mr. Jeffries and no affinity to the A&F brand at all but I do think that anyone who wants to learn exactly how to ruin a brand can learn a lot from what has happened.

The Story So Far

How To Ruin A Brand | AbercrombieFor those who have missed the story, here’s what has happened. Back in 2006 Jeffries gave a rare interview to Salon Magazine. In the interview Mr. Jeffries explained A&F’s target market by saying “Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong.” Jeffries’ pursuit of the ‘in crowd’ has led to the company eschewing the larger woman (they don’t make large sizes) and apparently recruiting only those considered to be ‘good looking’. The current furor stems from the re-emergence of these comments in a new book co-written by Robin Lewis, called “The New Rules of Retail”. And this has caused chaos!

Amidst a barrage of complaints, pickets outside US stores and a YouTube video imploring viewers to make A&F the fashion brand of the homeless, sales have declined 17% and stocks are off by 8%. In the middle of the maelstrom of bad publicity, Jeffries issued a qualified apology on A&F’s Facebook page suggesting his comments had been taken out of context. This prompted one reader to comment “How can ‘we don’t like fat people working in our stores or wearing our clothes’ be taken out of context? Seems pretty clear to me,” and another to write “Your CEO is an idiot”.

Three marketing lessons from Abercrombie & Fitch

Beyond the very obvious “Don’t let your CEO dis potential consumers”, there are three very powerful marketing lessons to be learned from what has happened in recent weeks:

  1. If you want to limit your sales, limit your target market – Consumer brands grow by encouraging existing consumers to use the more of the brand more often or by attracting new consumers. Mike Jeffries defends his “exclusionary” marketing strategy by claiming it is legitimate to target a specific segment in order to avoid becoming “vanilla”. But here’s the thing: A&F’s growth in the last few years is due in no small part to the fact that it is an aspirational brand. New consumers have sought out A&F clothes because they want to be associated with “the cool kids”.
    By refusing to sell XL and XXL women’s sizes, the company already excludes nearly two thirds of the US market; by suggesting that if you are ‘not cool’ you can’t wear the brand, the market is limited further. This leaves a tiny proportion of the potential market: those who are slim enough and cool enough to wear the brand. Unfortunately, I suspect that a proportion of these people will now not choose A&F for fear of being labeled a bully, so all that will be left will be skinny people who don’t care what others think about them. This is not a great platform for growth.
  2. Bad news travels really fast – Like United Airlines before it, I’m sure that the marketing team at A&F has been taken aback by how far and how fast the negative publicity has travelled. Whilst controversy is no stranger to this team, even they were probably not prepared for a global hate campaign exploding in their laps. Many brands have been encouraged to embrace ‘social’ and ‘market digitally’ seeking greater numbers of likes and shares as if these were more important than sales and profits. What we learn here is that this is a double-edged sword. Too many brands treat social channels as a one-way street and very few are effectively managing the opportunity to learn more about attitudes, behaviors and how to influence these
  3. Manage bad press effectively – A&F’s response on Facebook is risible – they continue to post images of new products and little preppy questions like “If your friends could only describe you in one word, what would it be?” as if they are ignoring the barrage of negative comments that they receive in response (in answer to the question above, one user writes “Fat. Which means I won’t get anything from your store”). Mr. Jeffries’ response to why sales are off has been to blame poor stock availability which has created further negative comment. There’s little doubt that Mr. Jeffries’ days at A&F are numbered, but it will take years for his successor to overcome the issues he or she inherits. What current and potential consumers will need to hear from A&F is how they have changed and what they are doing to make amends, not that the brand will carry on regardless.

Really effective marketers today are able to define a target market that is likely to grow rather than decline; they engage that target market by creating an experience that resonates with and re-enforces consumers’ needs and desires and they manage their brand with care and integrity. It appears that Mr. Jeffries is not one of these marketers and those of us who are can only look on in despair. If you have examples of how to get it right that you’d like to share, please feel free to post them here!

Want better execution? Learn from Convenience stores

Just a few weeks ago I was at my favorite beach resort in Thailand for a well-earned break. On my first afternoon I realized I’d left my travel adapter at home so I headed out to find a replacement. Anyone visiting Thailand will know that convenience stores are now a feature of almost every street in every built up area of the country. My beach resort was no exception, with two 7-Elevens and two Family Marts within close walking distance of my hotel. So when my first stop (7-Eleven) yielded no luck, I continued down the road the Family Mart. Having no joy in the second store I thought I’d try my luck in the third and sure enough, they had what I was looking for, albeit in a part of the store I hadn’t searched in before.

Having visited three similar stores in quick succession, I’d noticed that the layout of each category on sale was almost identical. So, I wondered, if I can find what I wanted in the third store, would it be in the same place in all the others. And sure enough it was, but what struck me was that the merchandising in each store within each category was identical. In each of the stores I visited, all owned by different franchisees, the 7-Eleven and Family Mart had been able to secure completely identical execution.

In our work with manufacturers we know that this level of consistency is hard to duplicate, so it strikes me that manufacturers could learn from what C-stores.

Here are three C-store principles that could be applied by manufacturers (and some large format retailers too!) if they want to improve execution:

Keep things simple – C-stores maintain a minimum range of products – this is not to say a limited range, but they simply seek to define the minimum range to meet the requirements of shoppers in the particular community they serve. Likewise C-stores keep point of sales materials and promotions to a bare minimum in order to ensure their impact.

Be specific – C-stores provide specific and clear instructions for their franchisees that leave nothing to chance. They specify exactly how and where products should be arranged on shelf. More importantly they provide store-specific instructions which define the shelf layout that fits the amount of space the store actually has and reflects the way it is configured. This makes it easy for operators to execute merchandising instructions.

Present in pictures – great C-store manuals are not text driven, they provide pictures of how the shelf should look, including where point of sale should be. This includes graphics which show how promotions should be executed and where they should be sited in store.

These principles sound pretty easy to duplicate and yet very few manufacturers produce in-store standards or guidelines that provide this level of clarity and accessibility for their sales teams. This is a mistake as it leads to missed opportunities to drive purchase behavior.

At engage we believe that nothing should be left to chance, standards should exist for each category in each retail channel and these should be adapted for different sizes of stores in each channel. These standards should be developed with a clear understanding of what is needed in-store to change shopper behavior and drive sales results.

So if you are seeking to improve in-store execution, seek to lean from those who do it well, your role model could well be your local convenience store.

Are Sony Centres and Nike Stores examples of engaging the shopper?

A question I was recently asked from a marketer in China:

Are Sony Centres and Nike Stores examples of engaging the shopper?

Answer: Absolutely! Concept stores are a vehicle to engage the shopper but the key questions are which shoppers and to what end?

Concept stores are great environments to showcase a brand . They provide wonderful opportunities for people to understand their own needs, explore how products might fulfill their desires, to experience the feeling of brand ownership and to cement a feeling of community membership. All of which are a great draw for potential consumers or existing members of a brand tribe.

We researched how people purchase TV’s in China and found that TV shoppers use stores like the Sony Centre to build their understanding of a brand offer but rarely make a final purchase there.  Instead, most shoppers prefer to seek price deals in multi-brand stores or online. It’s clear that without the influence of these stores some shoppers may not buy the brand that’s bring showcased.

Other research we have conducted has demonstrated that when paths to purchase are extended (for example in buying kitchen appliances), rapid conversion of engaged shoppers is a great way to cement brand preference. As the opportunity to purchase online becomes universal, concept stores offer the opportunity for brands to offer personalization and customization that multi-brand traditional retail may not be able to grasp. Further, they present the potential to create more exciting dynamic and flexible environments that shoppers, jaded by bland big boxes, are increasingly seeking.

All this said, manufacturers should not automatically conclude that they must create their own showcase stores. Paths to purchase vary by category, brand and shopper so it’s important that this variety is understood before investments are made. It’s essential that that the process starts with a clear understanding of who is going to use the brand and for what purpose, then to define who is going to buy the product and the role that different retail environments play in their purchase behavior.

Here’s a personal example that I’ve lifted from the text of our forthcoming book “The Shopper Marketing Revolution”:

‘About eight years ago, I got it in my head that I needed a physical challenge—a very large physical challenge. I decided to set as my goal that I would compete in a triathlon. Considering I hated running, this was perhaps not the best choice, but I made the decision in spite of that.

With steadfast commitment, I hired a personal trainer. He analyzed the way I cycled, swam, and ran. After this study, he announced that he was going to run with me twice a week for ten weeks to teach me how to run properly.

At the end of the ten weeks, I was lighter and fitter but was suffering incredible pain in my shins and calves. My trainer advised me to buy better running shoes that offset the imbalance in my stance. Having always used Nike shoes I went to the Nike store. I walked in and saw an entire wall of impressive looking running shoes. I asked one of the salespeople for help finding a running shoe.

“Well, here are 20,” he said, pointing to the display and looking at me like I was an idiot for not seeing the great wall of running shoes.

Brilliant.

“Which is a good one?” I queried.

“Well, this one is on promotion,” he responded, picking up one shoe.

“That’s fine, but I need a really good running shoe,” I insisted.

He then grabbed another shoe and said, “This is the most expensive.”

Clearly, he wasn’t understanding my question. I proceeded to explain my problem, the pain in my legs, and my fervent desire to compete in a triathlon. I asked him again for a recommendation, to which he responded, “I don’t know. I play basketball.”

Nike invested a ton of money on the in-store merchandising of this outlet, a place to showboat the power of its brand. And I expect a lot of basketball players had a fantastic shopping experience here. But I left empty-handed.

Shortly after this disappointing shopper experience, I was heading to the UK for a visit with my family and decided to get advice from my father, an avid runner, while I was there. He pointed me to a shop called Advance Performance in Peterborough. In those days it was a small shop that specialized in shoes for runners. When I walked in, I marvelled at the unusual environment. The polar opposite of the sleek Nike store, Advance Performance was at the time cluttered. There were shoes everywhere, and a running machine in the corner. (In deference to my friends at Advance Performance have to say they now have two very nice new outlets in Peterborough and Cambridge).

A rather average-looking man approached and offered his help. Already, I experienced a shopping difference from my Nike visit. I explained the problem with my legs and he told me to take off my shoes. He knelt down and took a look at my legs and feet. Then he asked, “When did you break your ankle?”

Surprised that he could know about my accident, I answered that it happened about ten years ago.

“Did you do any physical therapy?” he asked.

“Not much,” I replied.

“It shows,” he said, not unkindly. He explained that my feet were pronated and that the injury aggravated the problem. The salesman—fast becoming a trusted advisor—then put me on the running machine and conducted a gait analysis. He watched to see the way my feet hit the ground when I ran. He had me try on six different pairs of running shoes and get on the machine to test each one, videotaping each effort. After viewing the tapes, he prescribed the shoe that would best meet my particular needs. As it happened, the choice was about 40 percent more expensive than the running shoes I had been wearing. I bought two pairs of these godsends and continue to order online from Advance Performance whenever I need replacements. This salesperson responded admirably to my need. He didn’t need the spit and polish of a slickly merchandised store, nor did he sit back and rely on brand performance. He burst through the performance barrier and instilled my faith in the shoe.”

Looking at this, you might begin to see how insight into the roles channels play for target shoppers can be extremely valuable. At the time I was a “novice triathlete” potentially a valuable shopper for a manufacturer of running shoes. As a novice, I was looking for information and to get that information I went first to a concept store. When my experience in the Nike store failed to deliver the advice I needed, I turned to a different environment, the “independent specialist” – Advance Performance. Both channels performed the same role for me – to provide information and guidance. Armed with both the shoes I needed and the necessary information, the next time I buy my shoes I may turn to a chain store, like Foot Locker, because I know what I need and getting the right shoes at a deal has become important. You see, not only did the ‘independent specialist’ have the potential to strongly influence my buying behavior eight years ago – but its influence continues to the present day, some 20 pairs of shoes later.’

Wake up Mr. Retailer – the shopper is now in charge!

It will be interesting to see how 2012 pans out, and even more interesting to see how it is viewed years from now. It’s still January and yet apparently Tesco is wobbling, Carrefour is in crisis and social and mobile technology is crippling retail.

I’d love to know what you think – I happen to agree that there are times when social and mobile are overblown, but we are clearly on the cusp of a revolution in the way people shop. Power, which moved from manufacturer to retailer, is now moving to the shopper – and retailers which have not invested in the relationship they have with shoppers will struggle.
Is this the year hat retailers finally realize that you can’t build a brand on price and discount alone – that it is too easy to get beaten at that game? If the suggestion here that the CEO of Carrefour plans to respond b cutting prices is anything to go by, then the answer is no.
The age of the shopper – interesting times indeed.

What do you think the retail landscape will look like in five years time? Will a big gun hit the wall? Will they respond? Will bricks and mortar still. E where we buy, or will expensive store become showrooms or just white elephants?

As the UK struggles, digital and shopper marketing thrives in India

Two articles this week illutsrate the pressure the UK is feeling – the first http://www.kamcity.com/namnews/asp/newsarticle.asp?newsid=61189 shows how prices are souring as sales collapse. The second shows the decline in shoppers http://www.google.com/hostednews/ukpress/article/ALeqM5igyHAZsYWX-CkBtnuZjuCc… If the economy is not yet in recession, consumer goods probably is. Yet in India the rise of digital and shopper marketing are inidcators of exuberant growth. Note also that this embraces the millions of ‘general trade’, independent retaillers! <a href="http://www.moneycontrol.com/news/special-videos/storyboarde-commerce-is-picking-steam-as-we-speak_578416.html.

http://www.moneycontrol.com/news/special-videos/storyboarde-commerce-is-picki&#8230;>

Australian analysis demonstrates low rates of saving, threatening long term recovery of retail sales

This from Micheal Evans in the Sydney Morning Post: “Just when retailers thought things couldn’t get much worse, along comes a piece of analysis that raises the prospect of the ordeal having a way to run yet.

It’s a widely held view that households have been saving aggressively as they bring their income and spending back into alignment. And, so the theory goes, they will eventually start spending when they are satisfied they have their debt under control.

But Simon Warner and Andrew Scott from AMP have taken a long-term view of the household savings ratio over 50 years that shows savings remain below historical levels.

In graphical form, they show how the household savings ratio bounced around between 10 per cent and 15 per cent from 1959 until the mid-1980s .

It then began to drop dramatically, falling below 10 per cent and sliding to virtually nil by 2000 when savings rates went negative as the era of cheap debt flourished.

For much of the past decade, savings rates have been between negative 5 per cent and plus 5 per cent .

Now in the wake of the financial crisis, they have jumped back strongly to between 5 per cent and 10 per cent. Warner and Scott point out that while in the US and Europe deleveraging of household balance sheets was forced, in Australia it has been done against the backdrop of a stronger economy.

So while retailers are hoping consumers can amass ”considerable firepower for future spending via a much strengthened balance sheet”, AMP ponders whether savings rates will return to the higher levels of the past 50 years.

The analysts conclude that the savings rate increase ”has been meaningful” and note that ”the risks around the savings rate remain to the upside”. Something unlikely to cheer struggling retailers being buffered by anaemic demand and structural challenges from online sellers.”

Read more: http://www.smh.com.au/business/more-retail-grieving-as-the-savers-dig-in-20110822-1j6ss.html#ixzz1VoBVnHRF