Serving Up Stores
TCBY, The Country’s Best Yogurt, found its sweet spot in the chain’s infancy. The Salt Lake City-based frozen yogurt concept rocketed out of the chute — from a single Little Rock, Ark., store in 1981 to several hundred units in five years — based on a platform that Americans wanted a healthy alternative to ice cream.
The chain charged forward with purpose, reaching 3,000 units worldwide and $1.6 billion in revenue before the challenges that come with rapid expansion began to unravel the yogurt giant. A nine-year string of flat earnings during the 1990s culminated in swirling sale rumors and an acquisition by Mrs. Fields Famous Brands in 2000.
Ownership change, mounting losses and store closures, and a groundswell around super-premium ice cream negatively impacted the company and saw what once was a 3,000-unit chain dwindle into the hundreds. TCBY currently operates 406 units in the United States and 188 internationally; all but two stores are franchises.
But, in 2010, the company developed a prototype that operated under a different business model. Instead of customers ordering and being served in a traditional fashion, they serve themselves using any combination of available yogurt flavors, add their own mix of toppings and pay by the ounce. The innovative self-service concept, coupled with a frozen yogurt comeback, has breathed new life into a struggling chain.
Since the opening of the first TCBY self-serve model in Charlotte, N.C., another 15 or so have opened, and 20 are in the pipeline for the first quarter of 2011.
“Almost all new stores to open will be under the self-serve model going forward,” said Rob Streett, VP franchise development for TCBY. “We will still do traditional stores when the venue or the real estate calls for it, but most will be self-serve.”
The typical footprint for a self-serve store is 1,300 sq. ft. to 1,400 sq. ft., larger than the average 1,000- sq.-ft. to 1,200-sq.-ft. full-service unit. The increased footage accommodates the topping bar, added equipment and amenities such as soft seating and flat-panel televisions. “The new prototype is intended, like a Starbucks, to promote socialization,” Streett said.
Site criteria haven’t changed much with the self-serve model. The TCBY demographic is a $70,000+ average income and a population base of 50,000 or more. Desirable anchors or co-tenants are casual-dining restaurants, booksellers or other concepts that provide a significant nighttime draw. “It is critical that we have those evening draws, or we are challenged to have a successful store,” Streett said.
TCBY has partnered with Fort Worth, Texas-based Buxton to evaluate the existing portfolio and prep the chain for an expansion plan that calls for 100 new self-service locations worldwide in 2011 and another 100 per year over the next three years, depending on the availability and cost of real estate. The Buxton solution is allowing TCBY to map out and benchmark its competition, and provides a tool to help franchisees with site selection and market identification. With information gained from the solution rollout, slated for the first quarter of 2011, TCBY will identify what leases should be re-upped and what stores need to be closed, relocated or converted to the self-serve model.
The main avenue for growth will be via franchising, although the company is exploring a limited number of corporate stores from which it can conduct menu and concept testing.
“We have an aggressive expansion plan,” Streett said, “but we can be thoughtful and selective in our growth, thanks to the excitement in our brand and our category. There is a lot of breadth to where we can go.”
The concept of “same shopper” sales, which puts the emphasis on how well a retailer grows sales to an individual customer across channels, will not only continue to gain momentum in 2011, but will carry organizational implications for retailers as they attempt to integrate sales channels, according to IDC Retail Insights, a retail information technology research and consulting firm.
Indeed, the growing importance of same shopper sales as a key metric heads the list of IDC’s recently released report, “Worldwide Retail Industry 2011 Top 10 Predictions,” which also looks at projected IT spending for the year. It’s worth noting that most of the predictions are driven by consumers and the new shopping patterns that have emerged.
“2011 begins with momentum from a good holiday season that recovery is on the way, but also with an acknowledgement that the industry has been permanently changed,” said Bob Parker, VP research, IDC Retail Insights, Framingham, Mass. “It will be imperative for retail IT organizations to cut traditional infrastructure and back-office spending by at least 20% over five years to free up funds for investing in more sophisticated customer experiences.”
Here are IDC’s top 10 predictions for 2011:
1 Retailers will integrate channels to support same-shopper momentum and to attract new customers to the brand.
2 Retailers will reorganize information technology to support both embedded and exposed technology portfolios.
IDC defines exposed technology as applications and tools that the customer interacts with directly, from e-commerce and social media to in-store kiosk and digital signage. Embedded technology, which reflects traditional investments, is not directly exposed to the customer.
3 Retailers will focus on quality, synchronizing their supply network with consumer expectations.
4 Retailers will get back to basics by investing in technologies that make complex supply networks less complicated, more productive and attentive to the customer.
5 Retailers will realize that it is one brand, one experience for the shopper regardless of the interaction point.
Consumers don’t care about sales channels, but they do care about effective and valuable interaction opportunities with their preferred retail brands, IDC noted.
6 Retailers will create omni-channel options by investing in a retail intelligence platform.
7 Retailers will fight to win the “swing shopper.”
8 Technology investments will have a “LASAR” focus. (LASAR stands for localized assortments, constrained for space, allocation and replenishment.)
9 Sustainability will become an integrated part of the retail brand.
10 Social media will extend beyond marketing into merchandising, product development and social shopping.
Focus on: Consumer-Centricity
Coming off their most successful holiday season since 2004, retailers met at the National Retail Federation’s 100th Annual Convention & EXPO in New York City, looking for new ideas to sustain customer relationships and spur repeat shopper visits. One idea industry experts are bullish on is leveraging data produced by emerging digital consumer touchpoints and using the information to bolster consumer-centric strategies.
While retailers are currently working harder than ever to use customer data to get closer to shoppers, they are challenged by their metamorphosis into multichannel organizations. Today’s “connected” shopper also poses a challenge with the new digital touchpoints available at consumers’ fingertips, providing more information than most associates can deliver at store-level.
“Consumers have the power to communicate in ways they never have before,” said Ira Kalish, global director, Deloitte Research, at the NRF super session, “Consumers 2010: What Lies Ahead for the Retail Industry.”
According to Kalish, this poses new challenges in that these newer communication methods trump traditional messages, and with so much information being shared, commoditization of merchandise and services can occur.
“It is up to retailers to learn to use the technology in a way that will enhance their brands,” Kalish said.
At the heart of this transformation — and in a theme heard again and again during the NRF show — is a stronger retail adoption of Web-based services and the personal communications channels that consumers continue to adopt. The other key is to use these technologies to simplify the consumer’s shopping experience. Between an oversaturated marketplace, channel blurring and the vast assortments that retailers tend to carry, it is no wonder that shoppers are overwhelmed.
“Living in such a complex world, shoppers are looking for simplicity,” Kalish said. “Think back to the successes of retailers between the 1920s and 1930s, and it stemmed from simplicity. The industry has enough customer data that we can take care of our customers, and do it even better.”
Other speakers at the session emphasized that by understanding customers and their past shopping visits and habits, chains can help shoppers make their choices.
“To do this you need a 360-degree view of the customer, and this is where consumer-centricity plays a role,” said Peter Sachse, CMO, Macy’s, and chairman and CEO, Macys.com (see related story, page 26).
Sachse detailed the “My Macy’s” customer-centric localization initiative, whereby it created eight store regions and 49 new districts (for a total of 69 districts). Under the My Macy’s program, the company tailors merchandise to local customer needs and preferences.
Supermarket operator Food Lion is taking a lesson from Macy’s and embarking on its own consumer-centric program. The company, which is owned by Brussels-based Delhaize Group, > considers itself a global organization due to the insight it garners from its sister chains worldwide.
“However, all globalization still needs to be locally relevant,” said Cathy Green, president, Food Lion Family, which operates more than 1,300 supermarkets under several banners. “We take learnings garnered from operations in Greece and try those concepts on domestic soil. We truly believe diversity drives innovation. However, we are mindful to bring this innovation to a local level in a way that is relevant to our shoppers.”
As the consumer becomes an omni-channel shopper, however, retailers need to adopt new technologies to sustain consumer-centric strategies and meet their shoppers’ needs.
“The omni-channel configuration allows us to talk to our shoppers on a 24/7 basis, but she is letting us know her needs have not changed,” Green said. “She still wants merchandise when, where and how she wants it. By leveraging the millions of bytes of shopper data we collect, we have actionable insights to provide the best shopping experience based on her preferences.”
Food Lion is going one step further and using this data and digital technology to bring that simplicity back to the shopping experience. Food Lion delves into its MVP loyalty card database to create incentives that are delivered via e-mail, and even via SMS text message to mobile and smart phones.
“Many of our shoppers are busy moms. We can analyze our shopper data to understand her habits, get to know her and learn what she puts on her shopping list,” Green reported. “By delivering tailored incentives and assortments, and even offer service, like guiding her through our store with an electronic aisle companion, we are simplifying the shopping experience and letting her know we consider her relationship with Food Lion valuable.”
The mobile channel can help retailers support customer-centric strategies. The speakers agreed that while mobile will become an increasingly driving force in retail, delivery configurations will continue to evolve.
“The mobile world is constantly developing, and while smart phones fit in a pocket today, tablet computers are now emerging and supporting mobile apps as well,” said Macy’s Sachse. “Most importantly, mobility has to make her powerful on her terms.”
Social networks can also be tapped to enhance retailers’ consumer-centric strategies.
“We are actively engaged,” Sachse said. “Consumers want two-way dialogue. For years, we spit stuff to them, and they want to spit it back. We are embracing it by offering promotions that can only be viewed through social networks. It is another avenue we are trying to master.”
Regardless of the channel, panelists believe the way to build their brands is to have consumers on their side. More importantly, they need to respond to their input.
“Chains need people to build their brand and invest in markets, and the only way to do that is align with customers and listen to them,” Kalish said.