Staying the Same is not an Option
By Joseph Bona, [email protected]
In media interviews of late, Beth Newlands Campbell, the new CEO of Food Lion, has been offering reporters a frank assessment of the supermarket chain’s ho-hum, middle-of-the-road situation: “Staying the same,” she explains, “is not an option.”
Slogans such as these can only go so far. But in the topsy-turvy world of 21st-century retailing, you could do a lot worse than Campbell’s mantra. Retailing, after all, continues to be rife with homogeneity, commoditization and redundancy. Imagine a team of researchers conducting a blindfold test. They strip the logos from inside a wide range of drugstores, supermarkets and big boxes. Then they bring in some blindfolded consumers. Would these shoppers, once their blindfolds were lifted, actually know where they were? Arguably, many would not have the foggiest idea whether they were in chain X, Y or Z.
Such is the sameness of the shopper experience today. While there are leaders in various retailing categories — among supermarkets, for example, chains like Whole Foods, Trader Joe’s and Fairway have carved out distinct identities — many other operators would likely flunk the blindfold test. Their stores are neither good nor bad. They utilize similar layouts, offer basically the same type and level of customer service, sell the same products at the same or similar price and their store environments are generic at best.
To be stuck in the middle in this way is to be on a clear path to irrelevance. For the likes of Food Lion, the trick is to figure out how to give consumers a clear reason to drive past the competition and stroll into your store. Retailers are in control of their own destinies, but to be competitive they need to exercise that control in creative and strategic ways.
Gone are the days when a lagging chain can take a “me, too” approach and try to eke out an existence by copying successful innovators. Nor can you save a bad retail proposition by making incremental improvements alone — things like cleaner floors, brighter lighting or a new customer-service manual geared toward plastering smiles on the faces of your employees. Basic tweaks such as these might have worked 10 or 15 years ago. Today these kinds of changes are table stakes.
Retailing today is hyper-competitive. The bar is higher than in the past. But if staying the same is not an option, how should retailers tackle the challenge of change?
Start with another timeworn slogan: “Know thyself.” Once you identify an opportunity in the marketplace — something like the brand-building and cost-saving potential of private-label products, or the trend toward prepared food — the next step is to take an honest look at whether this opportunity matches your capability. Do you have the corporate culture, backend systems, financial strength, human capital and other resources needed to pull off the reinvention? If not, is the opportunity you have identified so great that it would be worth the herculean effort required to raise those capabilities?
Brand attributes are an important consideration here. Let’s say a chain is widely regarded for its fast, hands-on service. In focus groups, consumers say things along the lines of, “I go to you because you get me in and out of there in a snap.” It would be a disaster to adopt a new program designed to, say, slow the entire experience down under the pretext that longer dwell times translate into greater spending.
Consider the road taken by William Ackman, manager of the $11 billion hedge fund Pershing Square Capital. At the end of August, Ackman announced that he had finally sold his entire stake in J.C. Penney Co. — about 18 percent of the company — amid internal squabbling over strategy. Ackman, of course, had brought in Apple’s Ron Johnson in a failed bid to remake Penney, which saw its sales and stock-price take a nosedive. As CEO of Penney, Johnson had sought to enrich the customer experience, redesign the stores, beef up the roster of brands and otherwise reinvigorate the chain. Unfortunately, though, there was a mismatch between the perceived opportunity and Penney’s capability to execute on it. Johnson’s vision had merit, but it was an expensive and ambitious about-face that required securing the buy-in of shoppers, employees, shareholders and the media. With a clearer message and greater reserves of time and money, the strategy might have worked. Unfortunately, this was not to be.
The Penney saga also highlights the pitfall of launching a reinvention after the company’s market position has deteriorated. A weak position translates into a reduced capability for serious change. And so, even when times are good, true leaders tend to think hard about where they will be, not just a year or two from now, but also 10 or 15 years down the road. They understand that, regardless of how swimmingly things might seem today, a fierce competitor could rear its head tomorrow. As a result, leaders see innovation as a necessity. They constantly look for ways to improve design, product delivery, customer service and more.
This involves risk. A product line might fizzle. A test-store rollout might go nowhere. A ballyhooed mobile app or in-store technology program might fail to live up to its promise. But this is just part of the cost of admission in retailing today. Ultimately, what matters most is the willingness to keep looking forward so that you can move the needle in the direction of the next big idea. This does not have to mean chasing one tech trend du jour after another. If your business is not particular visual in nature, forget about the Pinterest page. The focus should be on how individual technologies and services can bolster and fit into the overall mission. Where does the company need to be in the marketplace? Who does it most want to serve? What do these customers want, and how can you meet or exceed their expectations?
Staying the same is easy. Innovating is hard. But by being honest and realistic about the limits of the brand and the actual capabilities of the company, it is possible to stay on the leading edge. Otherwise you fall prey to inertia, which is no option at all.
Joseph Bona is president of branded environments at brand agency and retail design consultancy CBX. He can be reached at [email protected].
Reigniting shoppers’ love affair with loyalty programs
The love affair between retailers and loyalty programs is in serious distress. Several major retailers have cut or reduced their loyalty programs and more are considering a trial separation. Customers seem to be shrugging off the change for now. As long as they’re getting the discounts, it’s easier for them to not have to carry and swipe their cards or give their phone numbers at checkout.
So, how did we go from the road to “happily ever after” and end up at “apathy at best?”
Like any healthy marriage, loyalty programs are all about the relationship. Birthed to foster deeper relationship with customers, loyalty programs have faded in some circles as data is crunched, munched and — in too many cases — overanalyzed the wrong way. According to a 2012 SAS Loyalty 360 study, “Only 24% of [retailers] believe their efforts are very effective in delivering desired results” proving that these programs have been “neutral in their impact” or even worse — completely ineffective.
From my conversations with retailers about their loyalty programs, it seems this data has been swirled and debated so many times; it’s like a good book that is now being read upside-down. The story is going nowhere and eyes of experienced marketers are getting tired of trying to make it out.
And for customers, loyalty programs have lost some luster. Customers know they are being watched — the long list of coupons attached to the checkout receipt attests to that. Yet, do they actually feel more loyal because of the rewards they’ve received — or perceived — to date? Discounts are expected and customers will swipe their loyalty program cards to get them, but it doesn’t mean they’ll drive past a competitor, who also has a loyalty program, to shop at your store.
Still, loyalty programs have their believers and they have stories of success. Programs that reach a higher level of personal relevance and build a relationship beyond discounts have achieved a genuine sense of loyalty and even transparency. Proper analysis of the data is at the core of loyalty program success. Here are some steps that can help you get your loyalty program back on track.
Commit to changing the way you’re reading the data
Loyalty programs are delivering loads of data. Sometimes the current big data obsession can pile up information and obstruct the view on why you started the program in the first place. Now is a good time for a reset. Clear your vision path and focus on what you really want for your loyalty program. Are you focusing on the most important data to achieve that objective? Is your organization distracted by other data points that have emerged? Remind everyone of what really counts.
Refocus and retrain
Since you launched your loyalty program, you’ve likely made a lot of new discoveries and gained new insights from a massive amount of new data. Has the training for your team evolved with your loyalty program? Analyzing and acting on data and insights requires a constant evaluation of team training and skills to maximize return — especially when the investment is as large as a loyalty program. Your data view reset requires a retraining, too.
Interpreting data from the wrong angles is a lot like using Google Translate to prepare a proposal written in English for your colleagues in Japan. It just won’t make sense. Yet, we see it happen often, particularly with loyalty programs. There are a lot of ways and debates to interpret data, but those options narrow considerably when a clear objective is in focus. Again, it’s about what really counts. Here’s where your renewed focus and training will really matter. This is where you can pivot toward stronger return if your team is trained to do so.
Shape the customer experience
Some of the most successful loyalty programs feel like a dialogue from the customer perspective. Your customers already know you’re monitoring what they buy so how about taking that interaction deeper?
According to a recent PWC study, which measured the experiences of about 6,000 U.S. consumers across 11 industries, consumer loyalty is “strengthened by shopping experiences that forge powerful psychological connections, and not by points or rewards programs alone.” Therefore, customers must feel that you care to personalize versus sell experience. If a retailer is going to collect information, they should at least do something meaningful with it. Direct mailers and store layout shouldn’t reflect products that retailers want customers to buy, but products that customers want to buy. Are you carrying the brands they love among the products they buy regularly? Are you considering other ways to engage them such as social media platforms? Is anyone bringing the loyalty program to life inside of the store during the shopping experience? These are all engagement points you can develop with a new approach to data — and these new interactions may serve as new data feeders as well.
Sometimes an outside perspective makes the difference
Let’s face it — like a couple that’s been together for several years, retailers can get stuck in their ways with loyalty programs and data. Making the most meaningful change can mean tapping an outside data counselor who can bring an expert perspective.
Although the decision to axe a loyalty program may be beneficial in the short term by eliminating costs for operating card database efforts, retailers should revamp their approach and evaluate the long-term effects on their brands down the line.
Data from these programs is vital for driving key business decisions and profitability for the retailer. SAS Loyalty 360 notes that the cost of acquiring a new customer is “estimated at 5 to 10 times what it costs to maintain a current one,” proving that “the nurturing of loyal customers is not only becoming a high priority” but also a strategic imperative. Data has to be used in a way that is going to matter most for consumers. For retailers that realize the opportunity, the marriage and ROI is significant.
Dr. Matthew Green is the managing director for emnos U.S., where he spearheads expansion of the company’s retail partnerships, support services and financial growth within the region. Based in the firm’s Chicago office, he has more than 15 years of expertise in client leadership consultancy and analytical data insights.
J. Crew to offer digital wallet service ahead of holiday shopping season
J. Crew consumers can now take advantage of MasterCard’s digital wallet service, MasterPass, at checkout. The digital wallet service enables shoppers to use any payment card or enabled device to unlock a simplified and speedier checkout experience regardless of where they are.
“The world of online shopping is changing rapidly,” said Jenna Lyons, president and executive creative director, J.Crew. “Customers want ease and simplicity. MasterPass has paved the road to easy. We were thrilled to partner with MasterCard and to be one of the first to share in this new technology.”
With MasterPass, shoppers can pay for purchases through the click of a mouse, touch of a tablet or tap of a smartphone. The wallet securely stores shoppers’ preferred payment and shipping information so that it is readily accessible when they click on the Buy with MasterPass button and log into their accounts.
The introduction of MasterPass at the J.Crew online checkout will be supported by an integrated marketing program that includes the launch of a new advertising spot — the first for MasterPass and J.Crew — focused on J.Crew’s seasonal offerings and highlighting MasterPass as shoppers’ shortcut to online holiday shopping at J.Crew. The program will also encompass digital and social initiatives set to kick off in November.
“The MasterCard team put together a great campaign to support the launch of MasterPass and we are thrilled to be partnering on such an exciting initiative, especially during the busy holiday shopping season,” said Lyons.