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January 17, 2017

Timing is Everything: Connecting with Consumers in a Rapidly Evolving Marketplace

The Big Show continues and we have more news and insights from the event. Today, I was thinking about timing. When the announcement that one of the most iconic American enterprises was shutting down occurred during the start of the National Retail Federation's Big Show, there was a bit of irony in the air. The Ringling Brothers and Barnum & Bailey Circus, dubbed the "Greatest Show on Earth" for 146 years, has called it quits. The reason why it's closing is a good lesson for everyone in the retail world.

Yes, timing. For a century and a half, children were spell-bound when the circus came to town. The animals, including elephants, would come to their towns on extra-long railway cars and parade down the main thoroughfares. But during the last couple decades, the preponderance of must-see movies, television, video games, and, of course, the Internet and social media competed with the circus for the attention of its core consumer base: children. And the circus eventually lost.

The company that produced this particular circus - arguably the world's most famous - tried to keep up with the times. For instance, it acquiesced to the demands of animal rights groups and stopped using elephants as part of the show. Its owners also shortened the overall time of the show to about two hours from about three hours a generation ago to deal with the fact that children today tend to have much shorter attention spans. Despite all the fixes, including the first female ringmaster, the circus still couldn't remain viable.

This closing can't help us think about timing and disruption in the retail world. Tastes among consumers change very quickly. During a recent panel discussion at the Big Show, "From Data to Delight: An Insight-Driven Revolution of the In-Store Experience," retail executives and analysts talked about the challenges that consumer-focused businesses face in a market that is rapidly evolving and in which e-commerce continues to grow.

The presentation set out to answer who is winning this race for customers and why. According to an analyst who moderated the discussion, we are now at a "new normal." Retailers need data to grow market share as store traffic continues to decline, which means they have to do a better job of converting themselves into new entities. Retailers need to get people back into their physical stores and that means acknowledging that the shopping journey starts much earlier in the process. A bricks-and-mortar store is about completing the end of the shopping journey.

In the past two years, online retail sales have risen to 8.1 percent of the total market from 6.3 percent. That's barely a 2 percent growth spurt. In-store is where most sales continue to happen. But that's also why more retailers need to think about omni-channel strategies rather than an "either/or" plan. Companies are asking themselves what they should do to make stores more relevant - the same question the owners of the circus asked themselves as they saw attendance in a steady decline. It turns out that so many people are digitally savvy that they have come to expect a certain level of service and speed when shopping online, an experience that bricks-and-mortar stores are struggling to match.

So from a navigation perspective, in-store experiences are very important. So is variety. Yet it's much easier to return or exchange merchandise in stores. Plus, the opportunity to see the product up close is well suited to a store. Customers are online all the time, even when they are in the store, so it's important to integrate the experience. Retailers should be leveraging customer data in meaningful ways and creating compelling reasons to come back to stores because of the products for sale within them. Maybe a customer is looking for safety ratings or something else very detailed. Or maybe just something fashionable. Retailers need to meet those needs and distinctions across channels.

The President of GameStop International, Mike Mauler, showed the audience a video of what a great customer experience looks like. In Australia, GameStop attracts 35,000 people to come to their convention each year. And some 21 percent of the entire population of Australia is part of their loyalty program - something that's very important to their business model. GameStop has 7,000 stores around the world, and executives are focused on what could be considered a cliché: Thinking globally but acting locally. Back in the 1990s, said Mauler, everyone said they wanted to do that but didn't know how. Today, however, with Big Data and predictive analytics, a global company like GameStop can act locally while strategizing for a worldwide audience.

GameStop stores are the same from Sardinia to New York City, and customers enjoy that consistency, according to Mauler. The company posts $8 billion in annual video game sales. But they are also getting into mobile gaming, as well as collectibles and game-related merchandise. A digital ecosystem holds this all together. GameStop even has the fourth largest subscription magazine in the United States with 4 million subscribers. The key for the company? Its loyalty program.

According to Mauler, their goal is for customers to interact with them on many touchpoints. It's not about accruing points or perks. What they do find effective is using data to understand customers and then communicating with them. General updates and promotions work, but also very targeted promotions. For example, GameStop knows if you recently bought three very expensive video games. The company will send you a message suggesting that you trade them in for new games. "We're always surveying our customers - 50 million loyalty members around world," said Mauler. "We used to have a 15 percent open email rate, but today, because of targeted emails, we are up to a 35 percent open email rate." Clearly an integrated, digital, omni-channel strategy can work wonders for bricks-and-mortar stores. It's vital that enterprises acknowledge the evolution of retailing lest their retail operations go the way of the circus.

January 16, 2017

NRF's Big Show 2017 Day 1: A Barometer and a Sneak Preview of the Great Potential for Retail

The first day of any large trade show is a sensory overload. There is so much to see, hear, people to meet for the first time, and people you catch up with for the tenth. One gets to learn about all the changes in and the challenges facing this industry. There is no doubt about it: If you are fortunate to be a part of the retail world, you are in the midst of an incredibly exciting time.

While I could go on and on about the awesome Infosys booth and showcase, here are some pivotal moments from the start of Retail's Big Show. The presentation that people were talking about all day was the Q&A with Rebecca Minkoff, the creator of the one of the hottest fashion brands in the world. Her stores are unlike the usual boutiques you might see in the fashion capitals of Europe. Instead, her bricks-and-mortar operations are considered Retail 2.0 stores of the future.

She turned conventional wisdom on its head - from the construct that the designers know best, to the consumers know best. Minkoff took to social media in its earliest years and never looked back. She withstood criticism from the fashion world's established players that listening to and engaging her consumer base was not the way things were done. She was supposed to dictate what fashions they should wear. Instead, Minkoff empowered her customers by listening to their advice and suggestions through social media. You see, Minkoff had realized that the growing (but at that time, still small) social media community was going to be huge someday soon, and wanted to tap into it and have a one-on-one relationship with each and every consumer.

Today, of course, NOT listening to your consumers is the kiss of death. That's why every retailer (and consumer goods company) is looking for new ways to connect and engage with their consumers. Think about how quickly times have changed: Minkoff said she was the first fashion designer on Snapchat back when it was literally her ... and Taco Bell. She admitted that it was indeed a lonely place to be. But now social media and digital is the norm. Organizations find it essential to have a presence on Facebook, Twitter, Instagram, and more. To do so gives immersive and inclusive experiences to consumers.

What also struck me as fascinating about the young clothing designer's experience was her ability to take big risks. She said that being an early adopter of technology was the secret to her success. One example: The innovative "See, Buy, Wear now" fashion show that completely changed the rules of the industry. It was an innovative concept because it was aimed at the consumer, not editors of fashion magazines. After all, said Minkoff, why would a fashion designer want to show designs that wouldn't be on sale in stores for another six months, which was the longtime industry norm? Isn't this example the essence of perfecting a digital journey?

Will e-commerce eventually kill bricks-and-mortar? While there is bad news every other day, there are numerous stories of inspirational retailers that are enhancing the retail experience at the store by empowering customers, and effectively leveraging every bit of information they glean from Big Data, predictive analytics, and proprietary algorithms.

The President and CEO of the Neiman Marcus Group, Inc., Karen Katz, told an audience at The Big Show that being a successful fashion retailer today is a wonderful combination of technology, innovation, and disruption. It is dynamic and fluent - and it's an industry always looking ahead for the next big thing. If you happen to be here, please check in with us at the Infosys Booth 1353. If you aren't here, check out our microsite to hear from us about the next big things we're encountering. We'll be checking in with you again soon!

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