News

Ollie’s Bargain Outlet

BY CSA STAFF

At the back of the new Ollie’s Bargain Outlet in Reading, Pa., is a self-serve café setup with a sign that proclaims: “The Pot’s Always On. Have a free cup of coffee on us, and if you like, use two sugars … it’s been a pretty good year!”

From the sounds of things, there hasn’t been a bad year since the first Ollie’s opened in Mechanicsburg, Pa., in 1982.

“We have never, ever had a store lose money in 30 years. When the economy is robust, we prosper because manufacturers have more outlet merchandise. When the economy is weak, people struggle and the consumer has a much greater appetite for deals,” said Mark Butler, one of the four original founders, and now president and CEO of the growing 130-unit chain. Sales are expected to reach $500 million (2012), with stores in 13 states.

Since 2008 and “the trade-down effect,” as Butler called it, Ollie’s has been a “rocket ship.”

“American’s have always loved a bargain; now they need a bargain,” he said.

With new backing from private equity firm CCMP Capital, whose other retail investments include Cabela’s and Francesca’s Collections, Ollie’s plans to grow to 250 doors by 2016, with about 23 openings in 2013.

Ollie’s guiding business has been the same since it was founded: Selling quality, name-brand, close-out merchandise in a folksy store environment. At a recent grand opening, Butler, wearing an Ollie’s logo shirt, circulated among the morning shoppers. His neighborly attitude cascades down to sales associates who are instructed to say “thank you” to all customers always.

“We just try to be nice to people,” said Butler, who gets recognized due to his TV and radio ad appearances. He also encourages direct consumer dialogue through the ‘Reach the President’ tab on the company’s website.

Ollie’s ‘Good Stuff Cheap’ slogan is posted on the front of stores and on flyers, along with an image of Ollie, a wild-haired man, who has an Einstein-like appearance. There is a 30-day ‘no hard time guarantee’ return policy.

“It is all in fun. It is unique old-time merchandising,” said Butler, who learned the retail trade from his older co-founder Mort Bernstein.

Co-founders Harry Coverman and Oliver “Ollie” Rosenberg were primarily equity partners. Of his late associates, Butler said, “Ollie had the most comical name and character.”

Ollie’s sites average 28,000 sq. ft. to 35,000 sq. ft., in locales with a population of at least 50,000 in a 10-mile radius. With bright lights, high shelving units and pallets, the company describes its stores as ‘semi-lovely.’

Stores offer 21 merchandise categories, with five — floor covering, domestics, housewares, food and books — accounting for 55% of sales. Ollie’s has an exclusive deal with Penguin Publishing for its children’s books on closeout and remainders. While categories are consistent, merchandise is ever-changing due to the nature of its sourcing.

“We buy cheap and we sell cheap,” Butler added. “We say we offer ‘real brands at real bargains.’ ”

Ollie’s merchandise and prices fall between those of Tuesday Morning and Big Lots. Aside from accrued discounts through the chain’s loyalty program, the company doesn’t do other sales or price promotions save for perhaps end-of-season clearance items.

Ollie’s trajectory began in earnest in 2003 when Butler, with help from SKM Equity (which sold its stake to CCMP this year), bought out his mentor Bernstein from the then 26-store company. Butler remains the private company’s largest single investor.

The majority of Ollie’s stores are in the Mid-Atlantic region, along with Ohio, Kentucky, Tennessee and Michigan. Next up are Connecticut and Indiana.

“We are only interested in adding contiguous states,” Butler said. “I am not interested in jumping over states and over regions.”

Keeping Ollie’s Ollie’s, however, is not so easy.

“It is a battle to maintain the culture,” said Butler, who has no desire to pursue e-commerce. “But I am the gatekeeper. The culture starts and stops at the top. We work hard at it.”

Laura Klepacki is a contributing editor to Chain Store Age.

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INVENTORY

Sears ‘ Digital Strategy Keeps Evolving

BY CSA STAFF

When it comes to mobile commerce and digital solutions, Sears Holdings has evolved into a best-in-class company, one that has truly embraced the cross-channel shopping experience. Seeking ways to make shopping more convenient for its customers, the chain was among the first to offer visibility to in-store inventory, as well as the ability to buy online and pick up in-store.

One of the centerpieces of Sears’ digital experience is the Shop Your Way program and Shop Your Way Rewards program, which is available on the retailer’s site via a mobile app.

Chain Store Age editor Marianne Wilson talked with Imran Jooma, Sears’ executive VP and president of marketing, online and financial services, about the Shop Your Way program and the chain’s evolving digital strategy.

How is Sears using technology to integrate the customer experience across all channels?

Sears Holdings has been investing in integrated shopping options for years to seamlessly bring the in-store, online and mobile experiences together for our customers and members. Today’s customers are increasingly moving between channels to shop, and our focus on integrated retail is designed to meet the customer where and how he or she wants to shop. About half of the online business at Sears and Kmart now includes interactions with another channel.

Sears Holdings remains a leader in shopping convenience and technology, and our relentless focus on integrated experiences enables us to offer super conveniences across all channels for our Sears and Kmart customers, such as:

• Shop more than 50 million items through our endless aisles online, through the mobile apps or use our in-store terminals at the register to buy online;

• Buy online and pick up in-store, guaranteed in five minutes;

• Text us when you get to the store; we will bring the product to your car;

• Make layaway payment online and on a mobile device, and now our customers can ship their layaway directly to their home;

• Personalized deals and rewards points and shopping privileges through Shop Your Way — a free, member-only rewards program;

• Stores have been equipped with free Wi-Fi; and

• Store associates have been armed with thousands of tablets to work directly with customers to do side-by-side product and price comparisons right in the store.

What role does the SHOP YOUR WAY Rewards program play in this integrated strategy?

We are rapidly moving to a member-centric business model. Shop Your Way is a free, members-only program and shopping community that offers rewards, daily sweepstakes, personalized deals and other customized benefits that is now responsible for driving more than half of Sears’ and Kmart’s business. The program creates new convenience for shoppers by connecting all of the ways to shop in an integrated way — in store, at home, online and via mobile.

Shop Your Way members have access to unique discounts, services and offers, not only through all of Sears and Kmart in-store, online and mobile shopping channels, but also through the social shopping experience of ShopYourWay.com and the Shop Your Way mobile app. Through the Shop Your Way mobile app, members will be notified of exclusive holiday savings and receive coupons that they can access and bring to the store via their mobile devices.

New to holiday season 2012, members were able to return or exchange an item without a receipt or pay off their layaway through mobile device. To add even more value, our members receive 5% back in points when they use their Sears card.

The enhanced Shop Your Way program is first to create a digital experience where members can interact socially about products they want, own and like, and buy directly from the site at the same time. The program is the first to combine a mobile social platform with 2,600 stores and a large existing rewards program with millions of members.

Sears has won kudos for its outstanding use of mobile. Tell us about the company’s overall mobile strategy and how it works to connect all channels?

Mobile is critical to our integrated strategy. As a leading mobile retailer, our relentless focus on integrated experiences enables us to offer superior conveniences for our Sears and Kmart customers, such as the buy online, pick up in-store feature, guaranteed to be ready in five minutes. Plus you can text us when you get to the store for curbside delivery.

Customers can also make layaway payments on a mobile device, and Shop Your Way members can receive personalized deals, rewards points and shopping privileges through the Shop Your Way app. This year, we have introduced mobile checkout at Sears stores that will speed up the checkout process for customers. These are just a few of the ways we’re utilizing mobile this year to connect the in-store, online and mobile experiences to enhance the customer and member experience.

What are some of Sears’s biggest successes in this area?

The penetration of customers using our mobile app and site, as well as the integrated way they are using it is a big success. Over half of our mobile orders are fulfilled in stores, which shows how customers are embracing our integrated retail offering.

What about mobile payments?

As I mentioned previously, in addition to purchasing from our endless aisles of more than 50 million items through the mobile device, customers can also make layaway payments on their smartphones. Through the Shop Your Way mobile app, members have been notified of exclusive holiday savings and received e-coupons that they can access and bring to the store via their mobile devices.

Tell us a little about Sears’ content strategy and how you use it to promote the brand.

We are using a variety of traditional and non-traditional methods to reach our customers and Shop Your Way members, including in-store, via circulars and emails, social media and Twitter parties, and exclusive notifications through mobile apps. We understand that our customers and members are busy and on-the-go, so we want to reach them wherever they are.

What new initiatives are planned for 2013 in the digital arena?

In 2013 we will continue to advance our fully integrated retail solutions to provide seamless accessibility to endless aisles of online merchandise through desktops, mobile apps, tablets and in-store at Sears and Kmart. We will accelerate our engagement with Shop Your Way members utilizing the program’s core platform ShopYourWay.com and the mobile app. Of course, as mobile continues to explode next year, so will our mobile integration for customers and members. And finally, we’ll continue to add merchandise categories to our online store Sears.com, making it a one-stop site for all your needs.

How do you see the role of the physical store evolving going forward?

Our focus on integrated retail is designed to meet the customer where and how he or she wants to shop, and the physical store is a critical element of that offering. Experiences in-store that are digitally enabled to link to online and mobile in a seamless fashion provide additional, differentiated services and benefits to our customers and Shop Your Way members.

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News

Winning the Battle

BY CSA STAFF

By Chris Donnelly, managing director, Accenture Retail

Ahead of the holidays, 56% of U.S. consumers told us that they expected to ‘showroom’ as they bought gifts this year — underlining the threat of online pure play retailers to the success, and even existence, of traditional retailers. However, traditional retailers can compete and even win this battle.

Customers don’t just want to shop online but in-store, with mobile devices or through call centers — whichever route offers them the convenience of access and value that they are seeking. Their key demand is for the experience to be seamless across channels. To succeed, traditional retailers must deepen and sustain their innate strengths, and learn to match the online pure plays for innovation, technology and execution.

In developing a roadmap to help traditional retailers achieve this goal, Accenture has reflected on the principles of Sun Tzu, a Chinese military strategist from the 6th century B.C. For Sun Tzu, “The Art of War” was summed up by five core concepts; agility, preparation, understanding your strengths and weaknesses, disciplined organization, and first in the field having an advantage.

Agility: The online pure plays don’t just innovate — they do so at speed. In the current retail environment of rapid technological and cultural change, retailers that thrive will be those that are able to experiment their way to success — innovating, testing, discarding the failures, building on the successes, and implementing them at speed and scale.

Preparation: In contrast to the fit-for-purpose, single-channel technology environments enjoyed by the online pure plays, many traditional retailers are stuck with legacy systems and must consider both the store and online channels whenever they contemplate change. They need to start embracing their inner geek. Placing at the core of their operations are digital natives who are able to keep pace with the latest offerings, spot emerging trends and have the confidence to exploit them.

Understanding your strengths and weaknesses: Competition on both product range and price is possible. One route is private-label goods that are either as good as the leading brand, yet priced lower, or offer better quality or design and are priced higher. The creation of bundled products or bundled product and services packages that offer a better deal, beyond that offered by the online retailers’ range, should also be considered.

Disciplined organization: If integrated with other channels, stores can become key components of a traditional retailer’s strategy to compete with online retailers, and play an important role in the multichannel experience. They can provide consumers with more convenient options than long waits at sorting centers or for deliveries to arrive, such as Click and Collect, or the “drive-through” option offered by French hypermarkets. Store staff can help ensure that customers are comparing like with like in terms of the product and the delivery cost.

Customer service will be a critical weapon. The social interplay that shoppers can enjoy via sales associates can be a key differentiator, if traditional retailers can apply the personal touch at every stage of the purchase journey. Stores need sales associates who can help customers pick just the right product for their needs and help them remember their store visit as an enjoyable and fulfilling experience.

First in the field has an advantage: Trying to be another Amazon is not advisable, and traditional retailers have strengths of their own. Brand is a key driver of customer loyalty, and even online shoppers will choose to buy from a familiar and trusted name. If traditional retailers can build faster, cheaper fulfilment capabilities, and couple them with outstanding service, they will be able to press home their brand advantage.

Traditional retailers can beat the online rivals with seamless, personalized, multichannel offerings. Through faster innovation, technologically savvy staff, embracing social media, exceptional in-store service and making every store count, they can boost the power of their brand to drive customer loyalty and profitable growth.

Chris Donnelly is the global managing director of Accenture’s Retail practice. Donnelly has more than 21 years of retail experience and works with many of the leading global retailers on the critical issues facing their business. He can be reached at [email protected].

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