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Register now for Chain Store Age’s Customer Disruption event

BY Marianne Wilson

New York — From mobile devices to social media to 24/7 connectivity, it’s a brave new world for retail — and one that Chain Store Age will explore at its first-ever Customer Disruption event, May 7-9, 2014, at Sofitel Hotel, Redwood Shores, Calif., the Gateway to the Silicon Valley.

Taking full advantage of the locale, the upcoming event — Customer Disruption: Winning the engagement revolution — will include a visit to the Plug and Play Tech Center, where retailers will have the chance to network with executives from some of the Silicon Valley’s most innovative start-ups.

Attendees will also hear from Facebook’s Nicholas Franchet, head of retail and e-commerce, global vertical marketing along with Nadia Shouraboura, founder and CEO of the hot retail start-up Hointer, and other leading-edge retailers on how innovative technologies are reshaping the retailer-customer interaction.

Don’t miss this unique event. Click here for more information.

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Engaging Millennials online

BY CSA STAFF

With the surge in smartphone and tablet purchases in recent years, and the increasing accessibility of Wi-Fi, there is no surprise that almost 70% of consumers are now shopping online as well as in stores. Among those leading the trend are millennials (ages 18–33) making $75,000 or more a year.

According to the Shullman Research Center’s Luxury and Affluence Monthly Pulse, millennials making $75,000 or more are more likely to spend money on luxury goods when compared to the two older generations — Generation X, now age 34 to 48; and Baby Boomers, ages 49 to 67. Saddled with large amounts of student loan debt and a difficult job market, millennials must make very strategic decisions on how to spend their money. To understand how best to sell to millennials, you have to understand their shopping behavior and the best places to engage with them. Through our research, we have found that millennials are engaging with brands online through social media and constantly telling their friends about what they find. Other trends found to influence buying decisions include:

  • Showrooming and webrooming
  • Engagement through multiple platforms
  • Discounted items by at least 30%
  • Unique customization of products
  • Rich, detailed content
  • Strong loyalty programs

A known trend among millennials is showrooming, or using physical stores for browsing and websites for purchasing the goods inspected in person. While 63% of millennial consumers engage in showrooming according to a recent study by Accenture, another new trend called webrooming, or purchasing an item in a physical store after conducting research about it online, is popular among 65% of millennial shoppers. For the first time, webrooming has surpassed showrooming as the most prominent shopping trend among consumers and millennials. However, no matter which trend a potential millennial customer plans to participate in when making purchasing decisions, retailers and ecommerce sites must engage them online to increase their overall customer experience, and ultimately their loyalty with the brand. As a way to develop brand loyalty with millennials, modern retailers must offer deeper engagement, faster service, a faultless experience and consistent rewards.

In an effort to cater to millennials’ mindset of getting what they want, when they want it, Rakuten implements “omotenashi,”a Japanese word used to depict a mindset of service and hospitality that is not as common among western retailers. The omotenashi philosophy is aimed at helping merchants create lasting relationships with customers through ‘discovery’ shopping, online video content and reviews. By becoming a trusted resource and focusing on discovery shopping, whereby you introduce your customer to products and items they may never have otherwise found, you will build a long-lasting relationship with them that goes far beyond a one-time sale. By meeting the consumer on multiple platforms (online, smartphones, tablets, social media), Rakuten is able to create an environment that is the opposite of most faceless, transactional marketplaces, and offer more than 17 million products from 6,700 merchants in 24 product categories.

While many may argue that discounting your product takes away from the value of your offerings, according to Accenture, 62% of millennial customers said that it would take a discount of 30% or more to persuade them to make a purchase. Additionally, 39% of respondents were cited saying that if an item they bought was later offered at a lower price, they would likely return it and rebuy it.

When addressing the problem of staying competitive at full price, retailers have to make every attempt to embrace customization as a key area for strategic growth. To be successful in this area, customization must be made a priority for every area of the business, from sales to IT. Failure to do so will result in an inconsistent experience for customers, and ultimately negate loyalty towards the brand. Among millennials, customization is highly important and arguably the most important thing affecting their purchasing decisions.

Further adding to the ways to engage millennials online and create an impeccable experience, retailers must take the conversation to millennials via social media. Rich, detailed content is increasingly important — not just when showcasing products and driving sales but also to give consumers a reason to keep coming back to you. If you provide all of the information a potential customer needs, as well as valuable opinion about trends and purchasing decisions, a customer is going to come straight back to you next time they are searching for inspiration. Make sure the additional content is easily seen and even more easily shared; consider adding share buttons to your posts and use additional social media channels, such as Twitter, Pinterest, Tumblr or Facebook to ensure you reach as many pairs of eyes as possible. It is important to remember that your customers want to know what others are buying, what’s trending, and what is going to make them stand out from the crowd. According to research published by Vision Critical, Pinterest is the network most likely to drive spontaneous purchasing. In comparison to larger social networks, Pinterest offers a visually, aesthetically pleasing user experience that, when coupled with the right product imagery, can provide a sizeable return, particularly among tablet users. If retailers want a bigger piece of social sales, then they have to be willing to connect with millennials where they are — social media.

As a way of saying “thank you” to customers and gamifying the shopping experience for millennials, retailers can offer a strong loyalty program to entice customers to make more purchases with the brand. We have a Rakuten Super Points program that rewards shoppers with every purchase. Customers can accumulate points in exchange for free offers and gifts or discounted purchases. Rakuten lets the customer decide how they want to use their points at any time. Remaining balances for item can then be purchased with various payment methods to complete the transaction. Among millennials, we have seen amazing success with the program. Millennials love that they can earn points buying things they love, and then use those points to buy other items that they love even more.

Research shows that online shopping is here to stay and retailers need to make the necessary adjustments to captivate this growing audience. With millennials leading the pack, retailers have to overcome the unique challenges of engaging an audience and turn them into reoccurring customers. Ultimately, every customer has to be treated as an individual with the option of buying unique, personal items whenever they want. Through deep engagements, fast service, personalized experiences, and consistent rewards, millennials will become brand ambassadors of your brand, and life-long loyal members.


Bernard Luthi is CMO and COO of Rakuten.com Shopping. He has 15 years of experience in e-commerce, technology and consumer electronics. He leads marketing initiatives in Web, advertising, BuyTV, public relations and promotion, and works closely with Rakuten on overall corporate branding.

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Swipe fee ‘settlement’ far from settled

BY CSA STAFF

There’s been a lot of talk lately about how the retail industry has supposedly settled a federal lawsuit with Visa and MasterCard over credit card swipe fees.

The truth is that there is no settlement with the retail industry. Instead, there’s a settlement with a grand total of nine individual retailers trying to represent themselves as a “class” in a class-action case. That’s right — nine retailers out of the millions of retailers across the country. A majority of the original plaintiffs in the case repudiated the settlement as soon as they saw its terms; the nation’s largest retailers have spoken out against it, and close to 8,000 retailers have formally rejected the proposal.

Ordinarily, a small group of plaintiffs can bring a lawsuit on behalf of an entire industry and, barring a verdict in court, negotiate a settlement on behalf of that industry. But this is no ordinary case. With so many members of the industry saying they want no part of the deal, forcing them into a settlement and stripping them of their rights is an abuse of the class action system that should never have been approved.

To understand why so many retailers oppose this settlement, you need to understand why the underlying lawsuit was brought.

For years, Visa and MasterCard have set the complex schedule of fees that are collected each time one of their credit cards is swiped to make a purchase. But it isn’t Visa or MasterCard that issues the cards or collects the fees. Instead, thousands of banks issue the cards, and it’s the banks that collect the fees. Yet these thousands of banks — ostensibly in intense competition with one another — charge exactly the same amount.

With no actual competition and the growing use of plastic, the fees have soared, tripling to $30 billion a year in the past decade or so. And since Visa and MasterCard rules have effectively required the fees to be built into the price of merchandise, retailers’ profits have been squeezed and consumers have paid higher prices as a result.

Retailers have argued for years that this practice is a violation of antitrust law the same as if retailers colluded to all charge the same price for a gallon of milk, a pair of pants or a television set. In 2005, a number of lawsuits making that claim were filed in U.S. District Court and were ultimately consolidated into the case that is the subject of the current settlement proposal.

The case never got to trial. Instead, lawyers negotiated behind closed doors — with little or no input from the retail industry at large — and in July 2012 unveiled a $7.25 billion deal that was highly touted as the largest antitrust settlement in history.

Retailers, however, began bailing out as soon as the settlement was announced, blasting it as a one-sided deal written by the card industry for the card industry.

To start, the amount of money offered, while undoubtedly large, amounts to only pennies on the dollar for the nearly quarter-trillion dollars collected over the period covered by the lawsuit. Divided among millions of merchants based on card volume, some small retailers would see as little as a few hundred dollars.

Secondly, the settlement does nothing to dismantle the cartel-like price-fixing system that was the heart of the suit. After making the payment, the card industry would be free to continue fixing and raising prices, even to the point of recouping the payout.

Thirdly, the card industry’s alternative to lowering its fees is to allow retailers to pass them along to consumers as a surcharge. That is the total opposite of the goal of the lawsuit, and has been rejected by virtually every major retailer who has spoken out on the issue.

Finally, the settlement includes an unprecedented broad ban on future lawsuits over swipe fees that would last indefinitely, blocking even retail companies that have yet to be formed from going to court.

Despite these obvious flaws and widespread objections, the settlement was approved by Judge John Gleeson in December. The approval triggered another round of headlines claiming “millions” of retailers had settled their dispute with Visa and MasterCard. In fact, retailers and retail groups — including the National Retail Federation — filed appeals almost immediately, and the case is now before the Second U.S. Circuit Court of Appeals.

How could such an obviously unsettled “settlement” win approval?

To start, as lead plaintiffs, the nine retailers still involved in the case would receive a larger share of the money than other retailers, and have the incentive of a significant influx of cash regardless of whether the deal solves the problem. The class action lawyers are seeking to collect half a billion dollars in legal fees. And the lower court has cleared a complicated and time-consuming case off its always-busy docket. Visa and MasterCard and their banks, needless to say, have no objections because they will be allowed to continue collecting tens of billions of dollars in hidden fees each year.

Each of these parties, however, has done a disservice to the retail industry and American consumers. The retail plaintiffs should have stood up for their fellow retailers, as intended in a class-action case. The lawyers for the retailers should have stood up for their clients rather than just looking to maximize fees. And the judge, more than anyone, should have stood up for what was fair.

At this point, it’s up to the appellate court to tell the lawyers and judge to go back to the drawing board and come up with a settlement that truly fixes the broken system of credit card swipe fees. But with briefs yet to be filed and oral arguments yet to be made, this case could come close to its 10-year anniversary before any final decision is reached. Until then, remember — a “settlement” isn’t always settled.


Mallory Duncan is SVP and general counsel of the National Retail Federation

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