Modern Digital Retail: Everyone Gets a Participant Ribbon
Many socioeconomic pundits have bemoaned the trend in modern education and childrearing toward creating an artificially level playing field where everyone gets a participant ribbon for everything they do, regardless of how much effort they put in or how good (or bad) the results are. Whether it’s a game where no score is kept, a ban on musical chairs because only one child gets to be the winner, or allegations of grade inflation at the nation’s top universities, critics say this attempt to make children believe they are good at everything is psychologically damaging and even threatens the future competitiveness of our nation.
My role is not to comment on how kids are being raised these days (though as a parent of two preschoolers I think this “everyone wins” approach is okay until grade school, when kids need to start learning about things like striving to excel and accepting defeat), but on how IT is affecting retail. And the increasing digitization of how goods and services are delivered to consumers is indeed leveling the retail playing field and letting a whole bunch of new competitors earn their digital retail participant ribbons, whether established players like it or not.
Jay-Z sets another trend
Consider the recent announcement that the upcoming album “Magna Carta Holy Grail” from rap superstar Jay-Z will be available for an exclusive 72-hour presale as a digital download for Samsung Galaxy owners. While musical artists have been partnering with various retailers to offer their customers exclusive albums, bonus tracks, etc. for some time, this agreement marks a major departure. One of the world’s most popular musical performers is enabling a technology hardware provider to act as an e-commerce retailer for what will surely be an extremely lucrative product.
Software and IT service providers such as Apple. Microsoft and Google have been playing in the digital retail game for a while now, but to this point hardware providers have been more or less absent. And although Samsung is only joining the fun for three days, nothing precludes Samsung or some other mobile hardware provider from inking an exclusive deal to distribute digital copies of popular albums, films, TV shows, video games, books, software or other digital content.
Needless to say, the non-digital versions of entertainment content are becoming less important to consumers (and by extension retailers and creators) by the day, meaning deals like the one Jay-Z signed with Samsung will only become more lucrative over time. The proliferation of Internet-connected smart devices also extends the type of companies that can potentially enter the digital content market far beyond mobile hardware providers. In addition to wearable Internet devices such as Google Glasses, products such as TVs and radios are increasingly being offered in the “smart” variety and would make for natural digital commerce platforms.
Competition in three dimensions
Retailers also need to consider than an extremely disruptive technology known as 3-D printing, currently in its infancy, holds the potential to exponentially increase the amount of products that can be delivered digitally. Crude but functioning firearms have already been created with 3-D printers, and predictions of products that will in the not-too-distant future be available for 3-D printing include automobiles and even houses. It’s too early to conclude that 3-D printing will radicalize how products are made and sold (remember when the experts said Segway scooters would change how cities are designed?), but at a minimum printers will also soon become legitimate digital commerce platforms.
Nobody can be the best at everything
What are traditional (and at this point pure play e-commerce retailers are “traditional”) retailers to do in the face of all these new players in the digital space? Well, just as the elimination of a score doesn’t change the fact that not all players in a game possess the same natural ability or skill level, the elimination of barriers to entry in the realm of digital retail doesn’t change the fact that not all digital retailers are created equal.
Even though some consumer product manufacturers do engage in direct-to-consumer sales and customer service, it is not their specialty. Retailers, on the other hand, live and die by anticipating and meeting customer wants and needs, which they can do at a highly individualized level in the digital arena.
This means traditional retailers can (and should) introduce some Darwinian competition to the “everybody gets a participant ribbon” modern digital retail environment by doing things like offering individually targeted product assortments, discounts, upsells and cross-sells based on customer behavior and purchase history, offering targeted mobile discounts based on customer location and time of day, and offering full channel integration (where applicable) with features like in-store pickup and returns of items purchased online.
Non-traditional players aren’t necessarily incapable of offering some or all of these features, but they generally have far less skill and background in offering this kind of targeted B2C customer experience. Naturally, retailers should be transparent about collecting customer data to create a personalized digital shopping environment and only offer it on an opt-in basis.
Regardless of the leveling of competition in their younger years, at some point kids grow up and enter a highly competitive world where they must prove themselves or fail. The same is true of digital retailers. Maybe a manufacturer can start selling directly to consumers with a relatively easy digital commerce technology implementation, but that doesn’t mean consumers will accept an inferior customer experience. Participant ribbons are nice, but they don’t guarantee a spot on the varsity team.
PizzaRev: ‘The Next Chapter’
In its PizzaRev case study series, CSA Online offers an insider’s look at the conception, initial rollout and growth of the southern Calif.-based fast-casual concept PizzaRev. Likened to “the Chipotle of pizza,” this innovative chain lets customers choose from an artisanal array of toppings to craft their own pizzas very quickly in a high-end stone hearth oven. A test kitchen in Northridge, Calif. was launched in April 2012 and two additional locations quickly followed.
In part four of our series, PizzaRev’s senior management team and exclusive broker and X Team International Partner Bob Haas discuss how they are doing things differently to thrive in an increasingly competitive and active market.
Quick Facts about PizzaRev:
What: Fast-casual, “craft your own” artisanal pizza restaurant
Who: Partners and Co-CEOs Rodney Eckerman and Irv Zuckerman, Partner and COO Nicholas Eckerman, Partner and CMO Jeff Zuckerman, Exclusive Broker Bob Haas, X Team International Partner and Co-Founder of L.A.-based Cypress Retail Group
Current number of stores: 3
Average size: 2,000-3,000 sq. ft.
PizzaRev has had some exciting news break since its last installment in CSA. The announcement of a partnership with Buffalo Wild Wings (BWW) and the anticipated opening of its fourth and fifth stores in El Segundo, Calif. and Oxnard, Calif. The relationship with BWW has already proven to be extremely beneficial towards the company’s growth and, as one of the most respected restaurant groups in the United States, PizzaRev expects it to continue to play a role in its exciting future.
All of these successes can be attributed to PizzaRev’s unique strategy for growth and execution of the plan. In what can only be defined by some as a "race for space," securing a large number of venues seems to be the strategy for brands establishing a presence in the fast-casual pizza space. Others in this space are franchising exclusively or almost exclusively – some have offered that method prior to opening stores and selling on model only. Although PizzaRev believes in growing its brand outside Southern California, utilizing best practices in all phases is where they believe their true success will derive. That has meant completing and operating a growing group of PizzaRev stores and honing in on the critical elements with open stores in a wide variety and type of locations.
Franchise opportunities are in Pizza Rev’s near term future, but with the skill set and positive history of its partners, the company feels its thorough vetting process will yield the best results in this marathon – with the ultimate goal of creating a "You Win, We Win” franchise system. The company has waited to complete at least one-year of operational experience before beginning the franchise opportunity process – a point of difference that bodes well in securing the best franchise partners. That doesn’t mean the company hasn’t begun prospecting. With solid history in franchise partnering, BWW is an obvious choice that will be explored, as well as many other great restaurant operators outside of the BWW restaurant group.
PizzaRev is also looking at a variety of real estate options and markets as it continues to expand, which includes; stand alone pads, end caps and in line with great co-tenancy. Its model has flexibility in size of space, so having the ability to adjust to almost any variable has made it much easier to locate and secure good opportunities. PizzaRev is not only after a better product, but a more complete and totally synchronized operation. There are 73,000 pizza restaurants in the US, so it becomes paramount to be correct in all phases of growth. PizzaRev believes there is plenty of time to achieve its goals, and great associates and partners will enhance operations to that end.
To follow the story of PizzaRev, please stay tuned to ChainStoreAge.com and click here for past case study entries.
Rite Aid promotes Ken Martindale to president
Camp Hill, Pa. — Rite Aid Corp. has promoted Ken Martindale, currently senior executive VP and COO, to president and COO. Rite Aid chairman, president and CEO John Standley will continue in those roles.
The promotion of Martindale, 53, is effective immediately.
“Since becoming our chief operating officer in 2010, Ken has continued to play a significant role in helping the company improve its overall performance and return to profitability,” said Standley. Ken’s appointment as president and chief operating officer is an opportunity for Rite Aid to further leverage his exceptional leadership skills, broad operating experience and strategic capabilities as we continue to focus on successfully growing our business.”
Martindale is a retail veteran with more than 35 years of diverse operations, marketing and merchandising experience. Before joining Rite Aid as senior executive VP of merchandising, marketing and logistics in December 2008, he served as co-president, chief merchandising and marketing officer for Pathmark Stores.