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Study: Amazon, Trader Joe’s and Costco Tops With Consumers

BY Marianne Wilson

Amazon.com, Trader Joe’s and Costco Wholesale Corp. came out on top with consumers in a survey by global consulting firm OC&C Strategy Consultants. Rounding out the top five were Zappos and iTunes.

Respondents in the “OC&C Retail Proposition Index” rated retailers they had shopped at on the overall strength of their offer, and also on the following individual elements: low prices, value for money, fashionability, quality of products, wide choice of products, products that are suited to me, service, trust, and store look and feel (or, if online only, quality of website).

Amazon ranked first in the overall segment of the Index, and also came out on top in several individual elements: value for money, wide choice of products, products that are suited to me and online shopping. The online retail powerhouse was rated No. 1 across all consumers, regardless of gender, household income or price sensitivity.

When it comes to low prices, Dollar Tree came out on top, followed by Aldi and Ross Dress for Less. In fashionability, the leader was Zappos, followed by Zara and Forever 21. In store look and feel, Williams-Sonoma was rated highest, followed by Crate & Barrel and Nordstrom. Williams-Sonoma also claimed the top spot in quality of products, followed by Whole Foods Market and Apple Store.

Trader Joe’s was the leader in service, followed by Zappos and Bath & Body Works. Zappos ranked as the most trusted retailer, followed by Amazon and Costco.

TAKE-AWAYS: Rambaut Fairley, associate partner in OC&C’s retail practice in Boston, summed up one of the biggest take-aways for retailers from this year’s Index: Pick your battles.

“It would be easy for competitors to become obsessed with combating Amazon’s broad set of strengths and look for ways to beat the retailer on all fronts simultaneously,” he said. “However, the challenges in setting strategy are not just about choosing what to do, but also include selecting what not to do.”

Fairley noted that a review of leading retailers reveals that those who are successful in building strong customer propositions are aggressively pursuing the key areas in which they want to compete and win — even if that means making sacrifices in other areas.

“As a result, the leading contenders to Amazon’s crown produce much more polarized performances than the online giant, with Trader Joe’s and Zappos investing in service at the expense of price, Costco sacrificing choice to compete on value for money, and Whole Foods and Williams-Sonoma focusing on product quality ahead of value for money,” he explained.

As to the overall strength of online retailers, Fairley said the reason it should be so concerning for brick-and-mortar players is that while online companies have always had the structural advantage in areas such as price and range, they are now also beginning to outperform in areas that were traditionally the store’s key strengths, most notably service.

“While Trader Joe’s took the overall prize for service in this year’s Index, both Zappos (2nd) and Amazon (6th) are in the top 10 for this key proposition element, which is often cited as the store’s last remaining source of advantage,” he explained.

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Bombay Company Is Back!

BY CSA STAFF

For many retail brands, Chapter 11 is not always the end of the story. Just consider the sequel being crafted by home furnishings retailer Bombay Company, which was founded in 1978 as a mail-order operation and grew to a national presence with 461 stores before filing for bankruptcy in late 2007 and closing all its U.S. locations.

Wil Hollands, who served as VP merchandising for the former Bombay Company, is now president of Hermes-Otto International USA, the U.S. division of the global lifestyle and fashion company Otto Group. Its holdings include Bombay Company. Hollands talked with Chain Store Age contributing editor Connie Gentry about the return of the brand and the launch of its e-commerce site.

After Bombay Company shuttered its stores in 2008, what happened to the brand?

Bombay was, and still is, a vibrant, popular brand. When the stores closed, retailers began bidding for the brand, but the IP rights were purchased by Hilco Consumer Capital and Gordon Brothers Group.

After that, Hermes-Otto International, which also owns Crate & Barrel, acquired the master license for Bombay Company. Hermes-Otto was looking for another home furnishings brand in the U.S., and Bombay was a highly recognized brand with positive association.

I joined the company in October 2009, and convinced our board to buy the brand outright. For me, the Bombay brand is a personal commitment — it is very important to finish what should never have ended.

When was Bombay introduced back into the market?

About 18 months ago we launched the brand through a series of shows on QVC, and about one year ago, Bombay products began selling in select retail stores. Although we are maintaining a controlled environment for the Bombay brand, there has been such enthusiasm and so many eager inquiries on our Facebook page about where to buy product and when stores might open that we knew the next step was to launch an e-commerce site. [Bombaycompany.com was due to go live at press time.]

Did the bankruptcy filing negatively impact the brand’s image?

Most people did not realize Bombay went out of business; they just thought the local store closed. That speaks to the overall positive perception of the brand, and it’s important to remember the stores didn’t go out of business because the product was bad or customers lost interest. It was simply due to a shift in real estate strategy at a time when the economy plummeted. All of the company’s assets were leveraged and, as banks were going under, they pulled businesses like Bombay Company down with them.

How have you kept Bombay fans interested and engaged?

Primarily through our Facebook page, which not only talks about what we’ve been doing, but also engages fans to describe what they’ve been doing with their homes and decorating styles and share photographs that show how they are using Bombay products they bought over the years.

We also email, tweet when we have something important to say, and use Pinterest to create a buzz around new ideas and new products. Similarly, we reach out to bloggers to encourage talk about our website and the launch of products in stores.

What are the biggest challenges of resurrecting the brand?

The growth of mass-market retailers and value-priced stores altered the retail landscape. The challenge is to combine value and style while remaining true to the brand and still find a niche within this marketplace. We’ve been able to do this because it really didn’t matter what a person’s income bracket was — Bombay had something for everyone. Shoppers could walk out of a Bombay store with a $10 purchase and feel phenomenal, or they could buy a bedroom set or home office set for $2,000 and still feel incredible. The range of price points made it possible to bring the assortment into different levels of retail.

A number of retailers filed Chapter 11 in recent years. When does it makes sense to resurrect a historic brand versus introduce a new brand?

That’s a tough question because every brand would have a different answer. Bombay is unique because everything we sell is designed and manufactured for us; the brand has such a loyal following, and brand awareness remains high. In fact, a recent study showed that seven out of 10 people would purchase a Bombay product. Other brands that have gone out of business did not have that same business equation. They carried multiple brands in their stores, and the retail brand stood for a place to shop but didn’t necessarily stand for a particular style.

Are there plans to open Bombay stores?

I had a discussion about that very topic this week. No, there aren’t immediate plans for brick-and-mortar locations, but it is definitely something under consideration.

Do you have a favorite Bombay piece in your home?

Yes! I gravitate to the interesting designer pieces, and my favorite is the wingback bed that was introduced in 2005. It’s a great example of Bombay innovation. We were the first to introduce many products, including the wingback bed, and other retailers followed.

What is your vision for Bombay Company?

This year I want to continue building great retailer relationships and successfully launch our e-commerce site. Next year we’ll continue to identify strategic partners to help grow the brand, and possibly re-evaluate when to open stores. I’m committed to steady, planned growth.

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Focus on: E-commerce

BY Deena M. Amato-McCoy

The e-commerce experience has expanded beyond desktop environments and moved in-store via Web-based kiosks and consumers’ personal mobile devices. One of the biggest hurdles for retailers is delivering a consistent, rich, user experience across all digital channels. Eager to overcome this challenge, Best Buy Canada sought a solution to streamline digital information delivery.

“Our consumers expect to have a rich experience, one that provides robust details helping them make a purchase,” said Robert Pearson, VP e-commerce, Best Buy Canada, Burnaby, B.C., which operates approximately 225 stores under the Best Buy, Future Shop and Best Buy Mobile banners.

Pearson explained that Best Buy was managing product information, photos and supplier information with a homegrown API (application program interface) system that was installed in 1998. It served as an interface that allowed the retailer’s digital channels to communicate and synchronize data in real time.

“This interface synchronized price, product information and imagery across all of our channels,” he said.

As data volume increased, this solution struggled to manage workflow and delivery of information, especially more robust files such as pictures and videos. It also took a toll on the overall shopper experience as the retailer used its digital channels to expand its assortments by adding more SKUs.

Best Buy Canada canvassed the marketplace for a workflow solution that could bundle delivery of collateral appearing on digital channels, and eliminate the complexity of managing individual data files. The chain wanted an open solution that could be integrated onto its existing operating platform. The solution also had to be able to manage multi-lingual data files since the company operates in English and French.

The retailer selected a master data management (MDM) solution from Stibo Systems, Atlanta, to optimize its customers’ online and mobile e-commerce experience. Providing a common point of reference, Stibo’s STEP platform is helping Best Buy Canada link all of its critical digital files into one master file. This move will streamline data-sharing and workflow among the retailer’s channels. Once the data migration is complete, the retailer plans to connect all its suppliers to the platform.

“Currently, our vendors’ data points are outside of our firewalls, so they use a manual Excel spreadsheet to share data, and we input it on our end,” Pearson said. “The new platform will allow them to enter a portal to update content.”

Once the files are received, Best Buy Canada can edit, analyze and bundle creative and pricing files for all content pages. (The retailer has more than 500 suppliers in its network.) The company is currently migrating its existing data to Stibo’s MDM platform, and plans to begin using the solution in the first quarter of 2013.

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