Despite the digitization of most customer-facing communication, printed flyers are still an important promotional vehicle for many retailers. By analyzing terabytes of offer-, store- and item-level sales data for products promoted in its weekly flyers, Hudson’s Bay Company (HBC) is determining the true incremental return on printed promotions and optimizing the efficiency and effectiveness of its flyer-based marketing efforts for its Hudson’s Bay stores.
“Everyone knows printed mass communication is not the most efficient method of communicating with the customer,” said Ashley Whicher, VP marketing, HBC, Toronto, which operates 90 Hudson’s Bay department stores. “There is no customization. We didn’t have something to measure the incremental ROI of each offer.”
Getting What You Need
Whicher joined HBC about three-and-a-half years ago, coming from another Canadian retail chain that employed an off-the-shelf automated solution for determining the incremental ROI of offers in printed flyers. He quickly realized that HBC needed something similar. After about six months, he started evaluating potential solution vendors with the IT department and went through an RFP process that lasted about a year before HBC selected a custom-built solution from Saferock Retail.
Running on a virtual Oracle infrastructure, the solution enables Saferock to retrieve data from HBC servers through a multi-encrypted secure virtual link for optimization at SKU level. Data is stored on a Teradata data warehouse running on a separate physical server.
“There was a cost benefit in getting exactly what we needed from a custom-built solution,” explained Whicher. “With an off-the-shelf application there is the expense of development and ongoing maintenance and running of the system.”
Setting the Baseline
Once the hosted Saferock solution was up and running, HBC loaded more than 18 months of historical data about items featured in weekly print flyer offers.
“We determined the sales baseline,” said Whicher. “Promotions never offer a 100% return. They’re incremental.”
HBC launched its measurement of printed promotional effectiveness in the first quarter of this year. Each Friday morning, following the close of its Friday-Thursday marketing week, HBC uploads promotional data and by noon the following Monday, HBC receives data, including performance analysis by offer, incremental sales and incremental sales-driven gross margin.
The retailer uses the gross margin driven by incremental sales as the numerator to determine ROI at the offer level, as well as incremental sales lift and margin at the macro-and item-level. This allows HBC to perform comparisons, such as the incremental return of different promotions on the same item, as well as measure incremental sales driven by specific offers on specific items.
“We may repeat an offer with a lower ROI to help drive traffic,” said Whicher. “If you know in advance, you can build it into your profitability model. Obviously you can’t have every offer be low-ROI.”
Looking ahead, Whicher said HBC may use the Saferock tool to help create flyers segmented for market niches. Internally, the tool has had an important cultural impact, as well.
“We’ve changed the culture of how people look at the business,” he said. “We used to look at gross sales generation of promotions. With the tool, you can determine the baseline you would have gotten just by opening the doors and determine the actual incremental sales and margin, which are the true number.”
Dunkin’ Donuts Brews up New Look
Earlier this year, quick-serve behemoth Dunkin’ Brands, which operates 10,500 Dunkin’ Donuts in 31 countries and 7,000 Baskin Robbins in 50 countries, announced its first new store design in seven years.
The new design — now in rollout mode — includes four different options. Each features variations in layout, color palette, graphics, textures, furniture and lighting, and allows for the personal taste of franchisees. An underlying theme in every version, however, is customer comfort. Some offer free Wi-Fi, others flat-panel TVs, and most provide seating geared toward a longer stay. The overall goal is to provide franchisee flexibility and underscore the company’s commitment to expanding the morning daypart to a full-day serving affair.
Dunkin’s new face won’t appear overnight. The sheer size of the Canton, Mass.-based chain dictates a more methodical pace, according to VP franchising and business development Grant Benson. Over a 12-month period, some 1,000 locations will sport the new look.
Chain Store Age senior editor Katherine Boccaccio talked with Benson about the store design, expansion plans and competitive trends. Benson, a 28-year veteran of the company, is responsible for franchise sales for both the Dunkin’ and the Baskin Robbins banners, oversees market-planning functions — which determines where stores are placed and analyzes franchisee-submitted sites — and handles nontraditional development, which puts both concepts in such venues as universities, airports, military bases and transportation hubs.
Under Benson and the rest of the executive team, Dunkin’ Donuts continues to expand aggressively, with a long-term goal to double the number of stores in the United States to 15,000 within the next 20 years. In 2013, nearly 350 Dunkin’ Donuts units will open across the country — demonstrating that, despite its size, Dunkin’ Brands still has room to grow.
How has the Dunkin’ brand evolved over the years?
Both the Dunkin’ Donuts and Baskin Robbins brands are, in a word, iconic — each with a more than 60-year legacy. Few brands are that old, and these two are truly loved and recognized by guests throughout the world. Both brands have evolved in many ways; Dunkin’ has gone from predominantly a franchisee base of smaller operators to ownership groups that handle six to 200 units. And, on the conceptual side, the brand has evolved from one that sells primarily baked goods and coffee to a powerhouse quick-service restaurant concept that is much more focused on beverages, other dayparts, and an expanded menu.
What about Baskin Robbins?
At Baskin Robbins, we have stayed true to our heritage, maintaining a small network size (meaning, the number of stores a franchisee owns) positioned in or near neighborhoods and serving as a frozen treat destination. The menu has evolved, however, shifting toward desserts such as cakes and toward more of an emphasis on beverage sales.
As part of the evolution of both banners, we have developed a combo store that merges both brands into one — which is essentially a third company concept. There are more than 1,000 combo stores in the U.S.
What was the thinking behind the new store design?
It’s not really a single new design — it’s a selection of four different designs under our ‘Fresh Brew’ concept. The offshoots allow us to play to different venues. Some are more upscale, some play better in urban versus suburban locations, and each allows for franchisee personal tastes. A franchisee can select the one most appropriate to the venue, and the design can be tailored toward location and consumer base. This is not a cookie-cutter design.
It’s critical a brand remain contemporary. Every seven or so years, we will come out with a new design that will be rolled out in all new stores and will be remodeled in existing stores. Much of the time, we are remodeling more stores than we are opening … and that’s a substantial number. In fact, more than 1,000 stores a year are unveiling a new store design — whether in a new or an existing store — which allows us to change the face of the brand and stay relevant.
How is the new design different from the current look?
The new design has an increased focused on comfort, promoting a longer stay. We have included Wi-Fi in many locations, as well as television. It’s a bit more inviting from that perspective. It’s also somewhat brighter, featuring more contemporary colors, in keeping with other brands that are known for great design, such as Starbucks and Panera Bread.
Does it have any green elements?
We’ve got some units that are fully LEED certified. We really considered how we could help our franchisees build greener stores, addressing heating and ventilation, lighting, and components such as window design and shielding.
The new design includes LED light fixtures, no VOC paints and wall tile with 35% pre-consumer recycled materials. Our franchisees have the option to select some or all of the various sustainable options and incorporate those features or materials into their stores. We will continue to build on that.
What kinds of trends are you observing in your competitive space?
We are seeing guests who have higher expectations in terms of the environment they’re served in, quality of the food and service, and the menu options. Internally, we are trending toward more unique products — such as breakfast sandwiches, lunch options and snacks. We do that so the consumer who wants it all in one place — coffee, Internet, sandwich or snack — can find that at our restaurants. Guests have increasing choices where they will spend their money and time, and they prefer not to make multiple stops.
The concepts that have the ability to flex and be more things to more people in the right environment are going to do well going forward.
From a growth perspective, particularly via franchising, brands that have a history have an edge. Dunkin’ and Baskin at 65 years old have a leg up on other, newer concepts. There’s less interest from franchise candidates in something that is a start-up or new … today’s franchise candidates are more risk averse.
There is so much growth potential for Dunkin’ and Baskin. Despite our size, we still have room for thousands of stores in the United States.
How would you describe your leadership style?
A leader is a coach — someone who is accessible and available to coach and counsel the team, and to ensure that all barriers to performance are removed. I coach, I counsel, I am accessible, and I try to be in tune with what is working and what isn’t. You have to empower your people to get their work done, and you have to listen to their feedback.
JustFab, the fast-growing fashion subscription e-commerce brand, has joined the growing ranks of pure online players venturing into brick-and-mortar. The company made its retail debut in Glendale Galleria, Glendale, Calif., opening a 3,000-sq.-ft. flagship that combines digital and traditional retailing.
“We’ve heard from our members that being able to see and try on products before they buy is still an important part of the shopping experience for them,” said co-CEO Adam Goldenberg. “With the JustFab flagship, we’re giving current VIP members and new customers a new way to connect with the brand and to experience the JustFab world in person.”
Founded in 2010 as a members-only footwear retailer, JustFab has expanded its reach and its offerings. It now counts more than 33 million members around the globe and has a portfolio of brands. In August, it acquired ShoeDazzle, which it is maintaining as a distinct brand.
Each month, JustFab sends members a new selection of shoes, handbags and other items tailored to their individual tastes, with all JustFab branded items priced at $39.95. Members can skip buying any month, as long as they notify the company by the fifth of the month. Non-members can shop the site, but pay a premium price for items. (The site also offers a range of products for less than $39.95.)
With its clean, sleek lines and white background, the JustFab store has a modern, fashion-oriented look. The space is designed to mirror the brand’s online shopping experience and features curated product displays with trend story videos. Sales assistants are trained to offer personalized fashion advice. Customers can sign up to become members, making them eligible for the exclusive pricing. And similar to the online model, shoppers who don’t want to become a member can purchase items at regular retail price.
The store’s sales assistants are equipped with iPad mini devices on which they can access a proprietary app, using it to check inventory or send product requests without having to leave the customer’s side. The retail app also makes it easy for stylists to create wish lists for customers, get real-time status updates of customer requests or access customer accounts.
As to future expansion, company spokesperson Alice Chung told CSA: “Our hope is that this flagship is going to be tremendously successful, and we are going to look at other footprints across the country.”