Verizon’s Retail Remake
Verizon Wireless has set itself an ambitious goal: to transform the in-store experience across its entire fleet of 1,700 company-owned stores.
In November, the company unveiled its “destination store” format, in Mall of America, Bloomington, Minn. More than about selling phones and other devices, the 9,000-sq.-ft. store is designed to help customers experience a more robust mobile life.
Designed by Chute Gerdeman, Columbus, Ohio, the Mall of America store features interactive lifestyle zones where customers can engage with specially trained associates and experience and learn about wireless gadgets, apps and tech gear in action. It features a dedicated workshop area where customers can learn about how to get the most out of a device and even take classes in front of a large touch-screen digital display.
Customers also can visit the “Customize It” zone and create colorful covers for their smartphones and personalize them with photos. A huge focal wall toward the back of the store allows customers to see themselves appear as avatar surfers, guitarists and more.
Verizon plans to open more destination stores in the next few years in strategic locations. The concept is part of a broader initiative that includes the overhaul of Verizon Wireless’ overall store portfolio, which is being revamped to the company’s “smart store” design. The core concept is similar to the destination format, with key elements fashioned for a more scalable implementation.
Domenico D’Ambrosio, executive director national retail operations for Verizon Wireless, spoke with Chain Store Age editor Marianne Wilson about the company’s new concepts and revamped retail experience.
As of May 1, how many Smart Stores are in operation?
We have over 100 Smart Stores now open across the United States, with several in various phases of construction, which will roll out soon.
Is the plan to eventually convert most of Verizon’s existing store base to the Smart Store concept?
Verizon Wireless has a goal to convert the entire fleet of 1,700-plus company-owned stores into Smart Stores.
What was the impetus for, and thinking behind, the launch of the new concept?
We are transforming the focus of our stores from selling devices to enabling customers to discover all that wireless technology can do for their mobile lifestyles.
All of our stores showcase our 4G LTE network and the various ways that wireless technology over our network can help customers do more based on their lifestyle needs, preferences and desires. It makes life easier and more fun. And from the business side, people can work smarter.
Our Destination Stores are visual playgrounds that showcase the power of our 4G LTE network around leading-edge gadgets, gear, devices and solutions.
We set the store up by Interactive Lifestyle Zones, which are designed to engage customers and introduce them to the latest wireless technology, showcasing how our portfolio of devices and accessories can enrich wireless customers’ lives.
For example, the ‘Get Fit’ zone features a working treadmill that in-store specialists will use to engage customers in a discussion about the latest wireless fitness gear.
Why did you decide to build a mock Destination Store prior to the real thing?
It allowed us to test a myriad of factors going into the whole concept, including the physical design, functionality, store flow, colors, customer friendliness and the zones before going live. We had some customers come as a focus group who were all under nondisclosures to give us their opinions. We built the store with the consumers in mind and from their input.
Is the Smart Store basically a scaled-down version of the Verizon Destination store?
Verizon Wireless Smart Stores are geared to showcase mobile lifestyles — such as fitness or music-focused lifestyles — and the devices and accessories that make these lifestyles a reality.
Smart Stores are not as fully equipped with interactive features, e.g., treadmills, music stations or life size game boards, as our Destination Stores. Smart Stores will, however, be staffed by expert, company-trained lifestyle zone specialists.
How did you decide to go with Chute Gerdeman for the store design?
We don’t discuss the rationale why we specifically work with a vendor. But I can tell you we were drawn to the experience, creativity and depth of team that Chute Gerdeman brought to the table. They listened to our needs, we listened to their counsel, and the project collaboration developed a successful launch for our Destination and Smart Stores.
What is your favorite part of the new Smart Store concept?
I like the Wireless Workshops because the customers take their knowledge to the next level. Through experience specialists, they learn that their devices can do more than they ever expected. It is truly a rewarding feeling when I watch them experience that ‘ah-ah moment.’
What do think is the main point of differentiation between Verizon stores (referring here to those with the new Smart Store elements) and other wireless stores?
While we can’t speak about what the other stores are doing, our business rationale is based on redefining the retail experience. In the past, people would come into a wireless store maybe once or twice a year with the sole purpose to upgrade their device when their contract ran out.
Our design and approach is to engage the customers with the essential elements that drive their mobile lifestyle.
What’s been the customer response so far?
It has been well received.
Based on our internal proprietary metrics, we see customers visiting more often, and spending time at the various zones. Also, the time to complete a transaction is quicker. Our Net Promoter Scores also have shown an increase too. [Net Promoter is a tool for measuring customer loyalty.] We can say that listening to our customers during our concept and focus group phase certainly helped.
How has the role of the store associate evolved with the new store concept? What type of training do store associates receive?
A good way to explain it is that we train and sell on a relationship basis versus a user’s manual approach.
The experience specialists have been trained to understand that customers have lifestyles they feel passionate about. We bring in experts from many fields, such as sports, to help sell the Get Fit products, and they share some interesting nuances with the specialists to get them to think differently and to hone in on the experience.
We also have the team train together in exercises and simulated environments so they have hands-on experience installing the products/accessories. This makes it easier for them to articulate the benefits and the ease of installation to the customer.
You joined Verizon in 1997. How has the business evolved since then?
We started off as a transactional business, and as I stated earlier, we only saw customers when they needed to upgrade their device or when their phone broke. Now they see the true value and power in their device and they come to learn about all the different things it can do. We now see customers regularly come in to check out what’s new. The best part is they are asking questions and want to learn more.
On a personal note, what’s your favorite app?
I like to listen to music, so I would say all of my music apps are my favorites. It is hard to pick just one.
Hot Concepts & Coming Attractions
There’s a new high-end fashion activewear brand in town, and this one speaks with a British accent. London-based Sweaty Betty opened its first two U.S outposts last year, one in Manhattan’s SoHo neighborhood, and one in Greenwich, Conn. A third is expected to open in 2014.
With an aim “to inspire women to find empowerment through fitness,” Sweaty Betty covers all the bases, with clothing and accessories for yoga, dancing, spinning swimming, skiing, tennis and running — all under its own label. The goods are stylish and well made, featuring the latest in fabric technology. On-trend prints and quirky detailing help ratchet up the brand’s fashion quotient. Price points, on average, tend to run above lululemon athletica.
Sweaty Betty stores have an experiential bent, offering free fitness classes that can range from yoga and Pilates to dance and high-intensity training (many locations have dedicated studio spaces).
The company tailors stores to each location, sourcing props from the local area, even as it maintains its overall sporty British aesthetic. The SoHo store has an urban loft gym theme, with a focus on dance. Vintage gym equipment, authentic dance stage lighting and strong pops of color help set the mood. In a nod to the brand’s roots, the wallpaper in the fitting rooms features a graphic landscape of London, while vintage ornaments, including tea cups, flags and double decker buses, help accent the space.
Sweaty Betty founder and creative director Tamara Hill-Norton may be the brand’s best weapon. A fitness enthusiast, she has emerged as a respected figure for women’s empowerment and entrepreneurship in the United Kingdom, growing Sweaty Betty from a start-up in 1998 to a $40 million business. With 36 stores in the United Kingdom, Hill-Norton said in a recent interview that her home country has a potential for 50 to 60 stores maximum. The United States, she added, is a “massive market.”
There aren’t too many retail brands that combine old-world craftsmanship and quality tailoring with a rock ’n’ roll aesthetic. Or that can lay claim to a downtown Manhattan flagship housed in a space formerly home to one of the world’s foremost punk clubs (CBGB). John Varvatos scores on both points.
The menswear company is named after its founder, a two-time winner of the CFDA’s prestigious Menswear Designer of the Year award and a veteran of Calvin Klein and Ralph Lauren. He launched the brand in 2000, with a collection of tailored clothing and sportswear. It has since evolved into an entire lifestyle brand whose offerings now include eyewear; limited edition watches; skincare and fragrance; and a second line, Star USA, which has a more youthful vibe.
Most recently, John Varvatos has been growing in other ways. In February, the company opened in Yorkdale Shopping Centre, Toronto, and in March, it unveiled its third store in Manhattan, on the tony Upper East Side. It is set to open its first store in Texas, in the Houston Galleria, in late summer/early fall. A store in Beverly Hills is also expected by year-end. Specialty store concepts, including one for footwear, are rumored.
The retail push follows a change in ownership. In 2012, Lion Capital purchased a majority stake in John Varvatos Enterprises from VF Corp., with an eye to expanding its retail footprint. (Varvatos remains chairman and creative officer.)
Kate Spade Saturday
From clicks to brick-and-mortar, Kate Spade’s sassy little offshoot, Kate Spade Saturday, is poised for big things. More youthful and casual in its overall vibe and much more affordable in its price points, Kate Spade Saturday could eventually surpass its big sis in terms of overall store count.
The fledgling brand launched in March 2013, starting with a store in Tokyo and an e-commerce site in the United States, followed by a series of pop-ups. Currently, it operates four U.S. stores, in Los Angeles, New York City, Houston and a just-opened location in Honolulu, in addition to six stores in Japan. Reports have it looking for additional locations in New York and on the West Coast.
Targeting young women in their twenties, Kate Spade Saturday has an upbeat, playful aesthetic. The merchandise selection ranges from apparel and accessories to beauty products and home decor. Fashion-wise, the selection is modern and unfussy, with lots of bright colors and minimal details.
Store interiors are bright and sunny, enhanced by light wood accents and the brand’s signature canary-yellow hue. In line with its millennial target customers, the brand is tech-savvy. (It featured eBay-powered, 24-hour shoppable touchscreen store windows in four pop-ups in Manhattan last summer.)
One of the most high-profile shapewear brands is extending its retail reach. Since opening its first stand-alone store in late 2012, in Tysons Corner Center, McLean, Va., Spanx has opened three additional locations, most recently in International Plaza, Tampa, Fla. Coming soon are stores in Westfarms Mall, West Hartford, Conn.; North Park Center, Dallas; and The Mall at Short Hills, Short Hills, N.J. (There are also several Spanx airport stores, which are owned and operated by The Paradies Shops.)
From department stores to boutiques, Spanx products are sold in more than 12,000 retail stores in more than 50 countries around the world. Its product lineup now includes more than 200 items, ranging from its signature — and slimming — pantyhose and body-shapers to bras and swimsuits.
Spanx stores reflect the brand’s larger-than-life personality and its ethos of comfort, function, fashion and fun. The spaces are stylish and chic, accented outside and in with Spanx’s signature red hue. Lucite finishes and high-gloss lacquer are combined with warm, feminine furnishings for a high-fashion feel. Special attention is given to the fitting rooms, which are spacious and enhanced with flattering lighting.
Who doesn’t love chocolate? Max Brenner certainly does — the company has created an entire culture and global portfolio around it. After launching its U.S. operations with a full-blown restaurant concept offering both sweet and savory meal options, the company is now rolling out a more casual, dessert-cafe concept, called The Chocolate Bar, that will define all future locations.
To date, the company has opened two Chocolate Bars in the United States, one in Bethesda, Md., and a just-opened 2,800-sq.-ft. space in Westfield Garden State Plaza, Paramus, N.J. The format is fast casual. Customers order at the counter and seat themselves, or take their order to go. The menu items range from hot chocolate and milkshakes to banana-split waffles and crepes. The space also includes a retail shop stocked with the brand’s signature chocolates.
The Chocolate Bar aims to give customers a full sensory experience, even pumping the scent of chocolate into the air. The centerpiece of the space is a long bar from which seated customers can watch the products being made. References to chocolate abound, from the rich color palette to the stylized graphics.
Starting in 2015, Max Brenner is looking to open a number of Chocolate Bar locations in the United States. Malls fall within its real estate strategy.
“Our ideal location is one that attracts heavy foot traffic on a consistent basis and has a healthy population of young adults, which comprise our target consumer,” said a spokesperson for the company.
Making the Case for Strong Brands
There is no substitute for a strong brand — whatever the sales channel. That’s the basic underlying premise of Interbrand’s annual “Best Retail Brands” report, which ranks the top 50 North American and international retailers by brand value. It’s a premise worth keeping in mind amid all the online versus offline talk. As Interbrand global CEO Jez Frampton puts it: “In the end, it is the brand, not the footprint, that will endure.”
This year’s report once again finds Wal-Mart Stores firmly ensconced in the No. 1 spot, as both the most valuable brand in North America and in the world. Even with a 6% decline in value, the chain is so far out in front, with an estimated brand value of $131.8 billion, that it’s unlikely another retailer will catch it any time soon, advised Dirk Defenbaugh, managing director, Interbrand Design Forum, Dayton, Ohio, which produced the report in collaboration with parent company Interbrand.
“Looking at the 150 retail brands that we valued from around the world, the next closest brand [after Wal-Mart] is Target, at $27 billion,” he said. “And of all the brands that Interbrand values, not just retail, Apple is next closest, at $98 billion in brand value.”
The top five North American brands remain unchanged from last year: Walmart, Target, Amazon, The Home Depot and CVS/pharmacy. But there are also surprises in the rankings, most notably a big jump by Macy’s, whose brand value skyrocketed 383%, the most of any retailer on the list.
“The incredible rise of Macy’s is most significant this year,” Defenbaugh said. “It’s a great example of a retailer that has effectively managed its brand. Macy’s has been quick to respond to shoppers’ new digital behaviors, rapidly becoming a leader in omnichannel retailing. Also, Macy’s has kept its brand well protected through the use of private label and shown commitment to elevating the store experience.”
Five brands fell off the list: Guess, Big Lots, Rent-A-Center, Radio Shack and Anthropologie. Best Buy made the Top 50, at No. 20, but its brand value plunged 41%, the most of any retailer. Defenbaugh sees the declines as an issue of “relevance.”
“Brands need to continually adapt to changing consumer behaviors,” he explained. “The brands that declined, including Best Buy, Guess and RadioShack, are all caught in a position where their current proposition isn’t as compelling to today’s customer.”
As to some of the key insights from the study, Defenbaugh called out Amazon’s goal of becoming the “everything store.”
“It’s predicted that Amazon will soon carry more than 85% of the products sold at leading retailers — including groceries with Amazon Fresh — at better prices, with more delivery methods and payment options,” he said. “The takeaway here is that retailers need to find a way to make their experiences better because Amazon is only getting stronger.”
The full Interbrand report can be downloaded at BestRetailBrands.com. More than just a ranking, the study is a great overview of the retail scene around the globe, with capsule summaries of all the leading retail brands.