There are plenty of reasons for people in the retailing business to embrace the importance of big ideas. Retailing—perhaps because of the cutthroat nature of competition, perhaps because executives are afraid that wrong moves could result in derailed careers—often opt for small steps that won’t rock the boat too much. Better to take the incremental low-risk step than the bold gamble, the thinking often goes.
A perfect illustration of this kind of thinking—and its exception—was on view at the annual Food Marketing Institute (FMI) Midwinter Executives Conference earlier this year. The bold initiative—a solution to the nation’s healthcare crisis offered by Safeway CEO Steve Burd—stood out in sharp relief to some of the other suggestions made in sessions, such as the importance of nurturing up-and-coming managers and the advantages women executives can bring to a retail format still primarily shopped by women. (Be still my heart!)
I do believe that retailers need to seek out big ideas that can redefine their businesses in the minds of consumers, and that can create for them differential advantages that are at least temporarily unassailable. Of course, once you’ve found that big idea, it is time to start looking for the next one…because there’s really no such thing as being unassailable.
But I also think that sometimes it is important to pay attention to the little things, because it is those little things that often can make the difference between a customer being satisfied…or not.
And what made me think about this lately is buttons.
Let me explain.
I have this tendency, when it comes to clothes, to order a bunch of the same thing in various colors when I find something I like. Especially shirts. I love, for example, some great chambray shirts as well as some sun-washed canvas shirts that I get from L.L. Bean. I probably have four or five colors of each, and I like them because they go great with jeans and a leather jacket, or jeans and a blazer—which is sort of my uniform nine months a year. Keeps my life simple.
About a year ago, I found another shirt I liked—a twill shirt from The Territory Ahead. It was a little bit more expensive than the L.L. Bean shirts, but the colors were different and I thought I ought to be a little more adventurous. So I bought one, liked it, and then got three or four more colors.
(You’re laughing at me, but this is my definition of living on the sartorial edge.) Then I found something out. The buttons on the Territory Ahead shirts keep breaking whenever the shirts go out to the laundry. And, no matter how much I complained to the company, all they would do is replace the buttons with more of the same, which also kept breaking, because they use cheap, lousy buttons.
Which ruined the shirts for me. And stopped me from ever buying anything at Territory Ahead again, because now I find all their workmanship suspect. If they’re cutting corners on the buttons, what else are they compromising?
This, by the way, is never a problem with the L.L. Bean shirts, which retain their color, their size and their button integrity no matter what I do to them. And so I will continue to buy my shirts, as well as numerous other clothing items, from L.L. Bean, because I trust its quality of workmanship.
There’s a lesson in here for every retailer and manufacturer. Cutting corners is almost never a good idea. It may help reduce costs, but it also is likely to reduce the integrity of the product, which can have a broader impact on the credibility of a brand name and/or a shopping experience.
What’s been interesting about this experience is that I share it with so many men. Since I’ve begun talking about my buttons metaphor, dozens of guys have come up to me to say that they shop for shirts the same way I do, that they’ve experienced the same button problem that I have, and that they agree that such little things help define where they shop and what businesses they trust. There’s even a small but definite subset of guys who have stopped shopping at The Territory Ahead for the same reason…so there’s a very specific message here for the folks who run that company.
It also made me think about other retailers who do the little things right, turning what could be a mundane shopping experience into something special.
Take Trader Joe’s, for example. When customers go to check out, almost invariably the employee will ask, Did you find everything you were looking for?” A little thing, but it is one of the few food stores that I’ve ever been to where it happens.
Think about the way that big chains such as Costco, or small independent retailers such as Stew Leonard’s, have seemingly mastered the art of sampling. In the food-retailing business, you’d think it would be a given that if a product smells good, looks good and tastes good, people are a lot more likely to buy it. But only a surprisingly small group of food retailers does it, and an even smaller group does it well and consistently.
One of the best things about retailers such as Starbucks is the availability of wireless Internet—it defines the comfort and usability of the space. Every retailer with a sit-down area should have it, because that’s what consumers increasingly are going to demand. (I’d like it to be free, but I won’t even quibble about that.)
At Wegmans, the company consistently uses its e-mail list to ask customers to register their opinions about products and services. And because Wegmans is Wegmans, I think all of us who get polled assume that management is listening and acting upon our suggestions. Since when did a little thing like listening to customers become a big deal? Go figure.
Retailers can’t just assume that the little things are getting done right. They have to work at it. A perfect example of this happened the other day when I got an e-mail from L.L. Bean promoting its spring men’s wear collection—including a new item described as a “Vintage Chambray Shirt.” I was curious, so I sent customer service an e-mail asking what the difference was between the traditional chambray shirt that I own so many of and this new version.
Within about a half-hour I had a response from Laurie S. in customer service: “The Vintage Chambray is a higher quality, slightly heavier fabric—5.9 oz. per square yard—than the Chambray—5.1 oz. The Vintage fabric has also been brushed for a softer, more lived-in feel. The other difference is the buttons, the Vintage has traditional horn buttons while the others are white plastic.”
L.L. Bean got two little things right here. It responded to the e-mail quickly and completely, and it paid attention to the buttons.
Sign me up for one in each color.
Home Depot Projects Lower Profit in 2007
Atlanta, The Home Depot Inc. said Wednesday it will pump $2.2 billion into improving its business this year even as it expects lower earnings and slim sales growth. Home Depot said that for fiscal 2007 it expects sales growth in the range of flat to an increase of 2%, a decline in comp-store sales in the middle single digit percentages and an earnings per share decline of 4% to 9%.
Including the effect of a 53rd week in its fiscal year, consolidated sales are expected to increase by 1% to 2%, and earnings per share are expected to decline by 3% to 8%, Home Depot said.
CEO Frank Blake told investors at Wednesday’s conference that like last year, “2007 also will be a difficult year.” But he said it will be a year of focus on Home Depot’s priorities and a year with “hopefully less noise.”
The “noise” was apparently a reference to the investor furor over former CEO Bob Nardelli’s hefty compensation in light of the company’s lagging stock price. Nardelli resigned in early January after six years at the helm of the company. He took with him a severance package valued at $210 million.
To improve its business, Home Depot said it will invest $2.2 billion this fiscal year in key priorities, including the opening of 115 stores. The investment includes $1.6 billion in capital spending and $600 million in expense.
Home Depot said it will recruit master trade specialists, simplify its staffing model, use more technology to aid customer service, and redesign employee compensation and reward plans. It also will invest in new merchandise and review its pricing strategies. Additionally, the chain will spend money on customer loyalty programs, direct-ship programs, credit programs and other specialty sales initiatives.
Federated Plans Name Change
New York City, Federated Department Stores on Tuesday said it would ask shareholders to approve changing the company’s corporate name to Macy’s Group Inc. A vote to amend the corporation’s charter to accommodate the new name will be held in conjunction with Federated’s annual meeting on May 18. If approved, the company will be known as Macy’s Group Inc., effective June 1. The move comes on the heels of the company changing most of its store nameplates to Macy’s.
“Macy’s Group is the appropriate name for our company, given that about 90% of our sales involve the Macy’s brand. That said, Bloomingdale’s is—and will remain—a very important part of our company,” said Terry J. Lundgren, Federated’s chief executive. Federated Department Stores also said stronger sales at established stores and lower costs drove a 5% rise in fourth-quarter earnings. For the quarter ended Feb. 3, net income rose to $733 million from $699 million the prior-year period. Sales fell 4% to $9.16 billion from $9.57 billion, as the company shuttered 80 “duplicative” store locations. Comp-store sales rose 6.1% in the quarter.
During the quarter, Federated lowered its selling, general and administrative costs 11% to $2.31 billion.
The company also announced a $4 billion increase to its stock buyback program and said it will immediately repurchase 45 million shares for $2 billion under the plan.