Trends for the New Year
It’s a new year, and with it comes some optimism that the economy is finally starting to gain some traction. Indeed, in a survey released in December by Business Roundtable, an association of CEOs of big U.S. companies, 45% of the executives said they expect their companies to add more workers in 2011. It’s the highest percentage of CEOs who have said they planned to add jobs since the survey began in late 2002.
In other good news, nearly six in 10 CEOs expected to bump up capital spending, another signal of confidence in the economy. Consumer sentiment is also slowly improving.
But while executives and consumers are feeling more bullish than they have the past couple of years, no one expects a return of the freewheeling spender anytime soon. For retailers, many of which sustained profits throughout the downturn due to productivity enhancements, the challenge is to generate real revenue growth. Some good advice is offered by the experts at the management consulting firm Booz & Co., New York, which believes retailers (and other consumer companies) can leverage growth in 2011 and beyond by pursuing opportunities generated by four key consumer trends. As the editor of Chain Store Age, I’m inundated with trend forecasts and surveys. The Booz annual year-end update is right on target, in my view, succinct and to the point.
Here’s how Booz sees it:
1. Frugality with a twist: Consumers’ frugal spending habits are lingering; for some, these habits may become an enduring reality. However, there are still opportunities for companies to grow, provided they can capitalize on the demand for products and services with emotional appeal as well as more functional items.
2. An aging and health-conscious population: Booz calls this one the trend with the most far-reaching implications. As the population ages, consumers are increasingly demanding goods that promote health and well being. Companies need to harness scientific research in the development of products for this group and influence government and professional communities.
3. Fragmented media, digital consumers: Marketers can no longer rely solely on broadcasting brand messages via traditional television or print advertising. Now more than ever, companies need a marketing function that can reach consumers in the right way and at the right time, no matter where they are on the path to purchase: at home, on the go or in the store.
4. Big emerging markets: Retail companies already know that China, India and Russia hold rich potential. In China, for example, GDP growth in 2011 is expected to slow to 8.7%, compared with 2.9% here at home, according to the World Bank. But capturing this value depends on a company’s ability to navigate some complex challenges, including fierce competition from already-established multinationals and from local companies.
Winning in these emerging markets also is dependent on the ability to attract and retain the highest-caliber talent, which can be a major challenge in some areas. Expansion initiatives require executive teams that can marry a multinational perspective with local knowledge, as well as the training and development of competitive, highly engaged front-line managers.
Focus on: Lighting
The new Cole Haan in Manhattan’s SoHo neighborhood combines the brand’s signature craftsmanship with a modern perspective that extends to the lighting. The 1,720-sq.-ft. space is a showcase for the latest in solid-state lighting technology.
“It’s the first specialty store we’ve ever done that is entirely lit with LEDs,” said Lisette Ditters, director retail and hospitality segment, Philips Lighting North America.
Among other advantages, the LEDs considerably reduce the shop’s lighting-related energy consumption.
“It is less than half a watt per square foot of lighting,” said Doug Russell, Lighting Workshop, New York, which designed the lighting.
With its custom metal cabinets, steel and wood shelving systems and oak herringbone floors, Cole Haan’s SoHo location has an early industrial aesthetic. A large, plush and inviting ottoman is located in the center of the space.
“It’s a very unique look,” Russell added.
The lighting accentuates the store’s inviting ambience.
“It’s very warm,” Russell said. “And the ambient lighting is fairly low. We didn’t want it to feel like an over-lit retail space.”
Among the featured lamps is Philips’ 8W EnduraLED (450LM), which is designed to deliver more than 80% in energy savings. With its estimated 25,000-hr. average life, the lamp lasts 25 times longer than the standard 60W incandescent, according to Philips.
“It provides the same familiar shape and light quality as a traditional incandescent, while also providing significant energy savings,” Philips’ Ditters said.
Other lamps used in the installation include Philips’ EnduraLED PAR 30 and PAR 38 dimmable indoor flood lamps. The LEDs, which take the place of traditional halogens in the recessed and track lighting, have a uniform beam that puts the merchandise on center stage. The lamps provide approximately 75% energy savings and have a 40,000-hr. average life.
LEDs (Powercore, from Philips Color Kinetics) are also used in place of fluorescent cove lighting, where they create a soft, uniform glow on the walls and ceilings.
In a boost for the environment, the lighting system in place at Cole Haan is mercury-free. It also produces virtually no heat, thus cutting down on material fading. And the extended life of the EduraLEDs is expected to significantly reduce re-lamp frequency and related maintenance costs.
“The maintenance savings with the LEDs is tremendous, especially compared to halogens,” Ditters said.
“If the store went eight years, for example, before a remodel, you might not even have to touch the lighting in all that time,” he said.
Making the Connection
The largest retailer most people have never heard of — The Army & Air Force Exchange Service, or AAFES — has updated its store brand identity and design. The brand is now simply called the Exchange and has a new tagline, “You Save, We Give Back,” that conveys the organization’s competitive prices and mission to provide annual dividends to the Army’s Morale, Welfare and Recreation and Air Force Services programs. The updated store design reflects the same, and puts a more contemporary face on the far-flung retail enterprise, which has some 3,000 storefronts around the globe.
“The retail concept was in need of an update, particularly in today’s competitive retail marketplace,” said Brian Shafley, president, Chute Gerdeman Retail, which was responsible for the brand and design overall concept along with store planning and fixture and graphic design. “The organization wanted to provide its customers with a retail experience that was as good or better than they could get in off-base stores and online, while also building a lifelong emotional connection with them.”
The new look debuted in September at Tinker Air Force Base in Oklahoma City.
“We designed the prototype and applied it to the existing facility at Tinker,” Shafley explained. “It was an aggressive renovation.”
The change is apparent on the façade, which sports the new red-and-blue logo. It forms an “X” — visual shorthand for Exchange.
“Previously, they used several variations of the AAFES logo and had different names for the store brand, from PX to AAFES Store,” Shafley said. “We brought them all under one umbrella brand called Exchange, which works for both the Army and Air Force. Eventually, the storefront signs on every retail facility will be branded as Exchange. The new identity is also being used on the advertising.”
The Exchange at the Tinker base is 174, 015 sq. ft., with 14,367 sq. ft. devoted to a mall and food court area. The central attraction is the 87,918-sq.-ft. main store, which sells everything from fine jewelry and home furnishings to designer fashion apparel and consumer electronics.
“Our main goal with the interior design was to elevate the shopping experience and give it a more contemporary look without destroying the value proposition,” Shafley said. “We also wanted the store to reflect a younger lifestyle, as most of the people on the base these days tend to be younger, with families.”
The new design provides a fresh and modern shopping experience, enhanced with lively colors and upbeat lifestyle imagery. Polished concrete, which replaced the previous VCT and carpet, adds a hip, upscale feel. Clean, open aisles allow customers to move freely through the space, and interesting focal point “vistas” at the end of aisles entice customers to explore the entire store.
Customers enter the store from the common mall area, which has also been updated. The new entryway features a wall that honors local military personnel and their families.
Inside the store, the customer service area has been relocated to a prominent upfront spot. With the words “Hello” and “We’re here for you” imprinted on a big blue wall, the service counter reinforces the Exchange’s brand and overall mission.
“It’s warm, welcoming and fun,” Shafley said. “The Exchange has great service — we think it’s a real point of differentiation for [the company] — and we wanted to bring attention to it. We branded it as ‘Expert Service’ and created a series of service stations and call-outs around the store.”
Digital signage in the customer service area indicates which specific base areas are being helped by the profits generated by the Exchange.
“We also put in a digital readerboard at the checkout that keeps track of the profits of the store and how much has gone back to the local base,” Shafley said.
In a dramatic change, the design team laid out the store in three distinct merchandising worlds: home (includes furniture and home decor, toys and video games, housewares and pets), life (electronics, men’s wear, sporting goods, fitness and health) and style (women’s apparel, baby goods, jewelry and cosmetics). Large, impactful displays in the entry introduce the zones to incoming customers.
“The store is organized around the concept of outfitting your life,” Shafley said. “It brings out the fact that the military [personnel] and their families have a unique lifestyle and that the Exchange can provide for it.”
Key departments within the three worlds are given in-store shop, or destination, treatments. The BeFit zone, for example, combines athletic apparel, footwear, fitness equipment and nutrition in one area. A giant overhead ellipse and feature walls create a true shop feel. Metal fixture details recall the technical nature of modern workout gear.
Another primary destination is the high-energy electronics department, or PowerZone, which includes an interactive gaming pod, an enhanced HDTV wall and dedicated computer, camera and entertainment zones. The furniture department is anchored with a centerpiece model showroom setup.
The updated approach to merchandising is evident throughout the large store. In the fine jewelry department, customers are invited to sit down and browse at an engagement diamond bar. In cosmetics, products are displayed in an interactive studio zone.
A V-styled aisle layout takes advantage of sight lines and helps pull customers to the key destination areas and rear corners of the space. Large lifestyle graphics do the same.
All of the components in the store, from the displays to the focal points on the walls, are modular. Even the overhead soffits, which look architectural, are built out of lightweight materials and pieced together.
“The imperative was that everything needs to be mobile,” Shafley said. “Everything had to be designed so that it could be built and sent anywhere in the world. AAFES wanted a design [it] could take hold of and put into an operations mode fast.”
A large master-brand project, the Exchange overall was a comprehensive undertaking for Chute.
To see more photos of the Exchange, go to chainstoreage.com/multimedia.