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TABLE OF CONTENTS 4A

A New Generation of Retail

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The Engagement Is Off

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Surprise Me

Delighting shoppers through discovery, not just deals, pays dividends.

Mastering Social Skills

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E-commerce Ventures Into the Outernet

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Creation and Evolution

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Renaissance Men

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Five brands that would benefit from a refreshed, re-engaging experience.

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Five standout brands challenge expectations and make their own rules.

How retailers use social media for interaction, communication and relationship building.

Pop-up stores and micro-retail satisfy shoppers’ need to touch and try on.

Five Ways to Defy Convention

The industry has some bad habits that need to be broken.

Secrets to remaining relevant

Welcome to a new era of retail, where men shop and brands respond.

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Chain Store Age Top 100

The nation's largest retailers by annual sales.

Top 100: Ten Retailers to Watch Top 10 Retailers by Net Income

Top 100 Methodology: By the Numbers

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EXPERIENCE IS EVERYTHING Ours is a highly refined consumer culture. We’re adept at moving through intricate sets of digital touchpoints to get what we want, when we want it. Tastes are highly individual. Expectations continue to climb and attention is highly fragmented—ask anyone who sits down to lunch with smartphone-wielding friends. What can retailers do to keep pace and break through in a way that captures demand? Tap into good old human instinct. By nature, people value aesthetic pleasure. Style, beauty and visual excitement touch us deeply and fundamentally. Every day we make myriad decisions based on sensory experience. And, just as naturally, we want to make the world around us special. Moreover, for most of us consumption is meaningful— something top retailers have figured out and are using to their advantage. Since meaning is closely entwined with our real experiences of the world, retail brands don’t simply talk at people anymore. Instead, they devote themselves to the creative process of delivering meaning through sights, sounds and actions. The focus is on participation, inviting people into experiences through involvement, collaboration and discovery. While companies remain steadfast in their work to close the gap between online and in-store experiences, the store is reasserting itself as the experiential center of the brand, no longer starved of investment and innovation, or appropriate levels of design, media and technology. This year, we find ourselves in a marketplace blooming with experiences that sell.


A NEW GENERATION OF RETAIL

Standout retailers challenge expectations and make their own rules * Bonus Content: visit www.chainstoreage.com/soibonus for more up-and-coming brands

A New Way to Look at the Market Warby Parker turned the eyewear industry on its ear by challenging assumptions that eyewear must be professionally fitted, with quality frames and lenses costing $300. While Luxottica (LensCrafters, Pearle Vision, et al.) may have the mega mall and strip mall markets locked up, less than one percent of eyewear was sold online, leaving opportunity wide open. The brand, which trades in “vintage-inspired eyewear with a contemporary twist,” creates its own designs and sells direct to consumers for as little as $95 a pair. Online tools help shoppers find the right frames. Its free, five-pairs-for-five-days try-on program instills confidence. This year, after experimenting with a series of successful shop-in-shops and showrooms, Warby Parker made the leap to brick-and-mortar, opening a flagship in Manhattan’s SoHo neighborhood, followed by a location in Boston. The stores allow customers to fully experience the brand, to touch, feel, try on and buy the product on site.

Driving Directly to the Consumer Electric automaker Tesla Motors was riding high earlier this year after posting its first-ever quarterly profits and earning nearly perfect scores in Consumer Reports for its Model S sedan. Company shares tripled. More headlines were generated when the automaker announced plans to grow to 50 locations by the end of the year. Tesla’s unorthodox, self-owned stores engage consumers primarily in high-end shopping malls. But traditional dealers are demanding that Tesla push in the clutch, claiming that Tesla’s retail stores not only cut them out of the sales process, but also violate auto sales laws in several states. Tesla claims its stores aren’t set up for sales, but exist to educate consumers about electric cars in general, and the value of the Tesla brand in particular. To do so, they feature interactive displays and design studios where customers configure their own cars and view them on an 85-inch video wall. The brand expects consumers to buy later—online— where the restrictive sales laws don’t apply.

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It’s All in the Mix Cumberland Farms, a convenience store chain in northeastern USA known by its fans as “Cumbys,” recently made headlines for ensuring its 4,500 full-time employees will have healthcare coverage next year, bucking the trend of cutting employee hours to avoid paying benefits. Not only does the company have ethics, it’s also a caring community member with a sense of humor. Cumberland Farms has a full social media schedule—YouTube videos, music play-lists, Facebook pages and great online reviews. Children’s charities figure big into its business model; a digital SmartPay program offers savings and payment at the pump; a highly recognizable food truck dispenses free iced coffee; and what other convenience store can claim a costumed coffee-cup mascot? Central to the store experience is the Chill Zone, featuring the beverages at the heart of its light-hearted TV ads, which feature David Hasselhoff. The original campaign went viral immediately—every 4-foot poster of “the Hoff” was stolen by brand fans. Anyone expecting the same-old beer, chips and lottery ticket experience is sure to be surprised.

Home Decor Branches Out Online home décor and furniture retailer Wayfair has moved up from its humble beginnings as RacksandStands.com to become something of a multinational superpower, an “online source for a zillion things for the home.” The company credits its adaptability as well as its creative, entrepreneurial employees with growing the company from its initial $450,000 in annual sales to $ 600 million dollars in 2012.

An Experience-based Brand Thousands of customers have inked themselves with Johnny Cupcakes’ distinctive cupcake-and-crossbones brand logo, so you know something remarkable is going on. To begin with, the five-store Boston-based retailer doesn’t sell baked goods, it sells limited-edition T-shirts designed with the kind of graphic wit Millennials love, to the point of tattooing themselves. High-profile product collaborations have included Nickelodeon, Hello Kitty and Warner Bros. With no major advertising and a child-like sense of humor, the brand has built a cult-like following based on a dissonant store experience, product, service and surprise. Surprises include 80’s themed movie night (The Goonies, Ghostbusters) and random gifts (vintage Teenage Mutant Ninja Turtles trading cards, a free hat), which not only amuse and delight, but get people talking.

To increase engagement and sales, Wayfair just unveiled its Inspiration Gallery in beta. Now visitors can search for products in the context of beautifully designed rooms, similar to Pinterest. Shoppers drag and drop items onto a “clipbar” to see how different items look together. The company’s home furnishings flash-sale site, Joss & Main, was born from customer desire just over two years ago. The site hit 5 million members and is currently the biggest daily deals site of its kind. Mobile sales account for 30 percent of revenue—double the online retail average.

Will success spoil Johnny Cupcakes? Founder/owner Johnny Earle is trying to decide if he should stay niche or expand, like Vans or Ed Hardy. One thought: How many shoppers have Vans tattoos?

opposite page, top: Warby Parker, 2013, http://www.warbyparker.com/; opposite page, bottom: Tesla, 2012, http://www.automotiveit.com/; top right: Adweek, 2013, http://www.adweek.com/adfreak/hundreds-hasselhoffs-stolen-outside-cumberland-farms-141997; bottom left: La Lily, 2008, www.tumblr.com


The Engagement is Off Even great brands can’t take our love for granted. After years of success, it might be time to invigorate the brand story. * Bonus Content: visit www.chainstoreage.com/soibonus for brands in need of a refresh

What’s Next for Whole Foods? The education and awareness propagated by “America’s Healthiest Grocery Store” can be credited for helping change consumer values around personal health and the health of the environment. The brand’s love affair with natural food also encouraged high-income consumers to adopt lifestyles of shopping, cooking and eating well. But since its groundbreaking push for earth-friendly fare in 1980, the rest of the grocery industry has had time to catch up with Whole Foods Market, dulling its competitive edge a bit. Upscale grocers such as Wegman’s, as well as middle-market players like Kroger, H-E-B and Publix have long-since adopted aspects of the Whole Foods experience. Consumers have come to expect beautiful merchandising, expanded local and organic products, larger gourmet selections and knowledgeable service from their supermarkets. In such a circumstance, it might not be wise for Whole Foods to simply continue doing more of the same as it continues to expand. A brand’s meaning and identity is not found in its reaction to the market, but in its capacity to keep searching the brand narrative, to find a fresh connection that turns what may have become ordinary into something with renewed meaning.

Getting Beyond Beds and Baths The steady success of retailer Bed Bath & Beyond seems to indicate that consumers prefer to shop for housewares in a specialty-store environment rather than mass and department stores. Though the brand can’t claim to be lifestyle or aspirational, it does deliver a relevant proposition. Few changes or improvements have been made to the stores in the last five years, and the average shopping experience could be said to be unremarkable, consisting mainly of pushing a cart through often-narrow aisles of pans, pillows and ironing boards with little help from associates. Online, the brand has a very functional website that provides useful shopping information and allows for local store inventory checking. The question is one of long-term relevance, especially as shopping alternatives grow online, with the promise of same-day delivery. Maybe in the future, Bed Bath & Beyond might consider a hybrid online/in-store experience, a stylish look and materials, segmented spaces to intrigue customers rather than an open floor plan, a shopping space that reflects what’s happening in consumer’s homes, or at minimum, something more engaging than its perpetual 20% off direct-mail coupon.

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Rite Aid: Layout is not Design Rite Aid’s wellness store concept, now a couple of years old, would seem to have all the elements needed to improve its shopping experience: lower shelves, new store sections, interactive features, health services and a more visible pharmacy. While the new experience certainly offers structure, clarity and control for the shopper, there are no aesthetic details to trigger emotion, build trust or inspire loyalty. Strategy and design remain powerful forces in retail, helping shoppers access a truly meaningful experience. A comparison of the nation’s top three drugstores seems to show that Rite Aid’s lack of investment in brand experience could cause it to lose ground to the competition, which now includes not just other drugstores, but mass merchants and supermarkets as well.

Apple is for Old Folks While a loyal percentage of today’s parents love Apple’s effort to make things simple and beautiful, there’s some evidence that the “net generation” perceives it as a stodgy old control freak. Mom and dad may still see the iPhone as neat, elegant and perfectly formed with its familiar grid of icons, but young minds seem to want things left open to them. Digital natives, they want to do it all, their way, and all at the same time. They value digital flexibility and find it rewarding, where an older generation finds it annoying. If Apple needs a fresh perspective on how to connect with younger customers, it may have it in the new Apple campus store at Creighton University in Omaha, to be called iJay. Creighton’s business students will help run the stores for college credit, giving the brand direct access to young people’s thoughts and skills. Word has it there will be two dozen such campus stores across the country.

American Apparel Described by the press as “bright, breezy and slightly sleazy,” ethical clothing brand American Apparel has seen its ups and downs. Considered cool in the ‘90s for making non-logo T-shirts and sweatshirts into exciting fashion statements, then nearly bankrupt by 2010, the brand has been criticized by fashion insiders for failure to develop. There are plenty of online reviews, such as “explain to me just exactly what’s the deal with American Apparel,” that attest to the fact you either get its design sensibility or you don’t. Which should be a good thing where a brand is concerned, since it often leads to a devoted following among those who do get it. Yet it’s no longer the hottest place to shop. Brands like Uniqlo, H&M and Zara have styles for the same demographic, teens and twenty-somethings, that change faster. The stores themselves remain simple white boxes punctuated with American Apparel’s signature visuals of wispy youth in mildly provocative poses. People may have forgotten the fair trade ethos the company was founded on, and so have lost track of why they should care. It might be time to recreate the brand image and update the design.

opposite page, top: Polar Technology, 2013, www.refrigerantauthority.com; opposite page, bottom: 2012, http://www.torontoretail.wordpress.com/; bottom right: American Apparel Inc, 2013, http://fashionbi.com/newspaper/american-apparel-holds-strong-revenue-in-april


Surprise Me

Delighting shoppers with the unexpected pays dividends

It’s not what you’d expect Today’s fickle, seen-it-all consumers may seem too cool to delight. But nail it and they’ll be devoted customers. They’ll like you, tag you, pin you and blog about you. High tech is the entry point to retailers without a brick-and-mortar presence, but high touch still wins loyalty because it’s so unexpected. Love letters pour into online retailer ModCloth for its affordable vintage-inspired women’s wear. More often, comments nod to its cute, friendly packaging, coupons and free gifts tucked inside. Little tokens of appreciation like stickers or bracelets inspire giddy testimonials. Also a hit is ModCloth’s new Be the Buyer experience where customers vote on which merchandise to carry. Home-party fashion jewelry retailer Stella & Dot relies on attractive packaging—down to the branded bubble wrap—to create excitement for shoppers opening their shipments. Messages like “Hello gorgeous” and thank-you notes keep the feel-good vibe going until the next order. Online retailer, Birchbox, turned surprise and delight into a booming subscription service. More than 100,000 men and women pay $10 to $20 a month for a box of tiny beauty and lifestyle goodies sight unseen. Half of subscribers go on to buy full-size products from the retailer.

Service Hits a High Note Musical instrument and audio equipment retailer Sweetwater Sound strikes a chord with customers. Because online orders leave customers with a bit of nervous anticipation, Sweetwater calls within minutes to verify your purchase. Once confirmed, the company emails a photograph of the actual item on its way to you—not a generic stock shot. Shipments often arrive sooner than expected and include a bag of candy to sweeten the deal. Sweetwater’s 100,000-square-foot facility in Ft. Wayne, Ind., houses a music store, distribution warehouse, recording studios, music school, coffeehouse, gym and hair salon. Its 150 sales reps are easy to reach, and have a reputation for being friendly, exceptionally knowledgeable and going the extra mile to help. That kind of service builds strong customer connections among its 150,000-plus Facebook fans and Twitter followers. So does hosting local events, like its rock camp for teens, bimonthly open acoustic jam sessions, and free performances and workshops featuring professional musicians, such as 20-time Grammy winner Chick Corea. Living its “Do what’s right for the customer” mantra earns Sweetwater loyalty from novices to professional musicians and sound engineers.

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Discovery Over Deals Subscriptions services aren’t new, but in their search to drive demand through something other than constant promotions, retailers are taking advantage of them again. The thrill of discovery is replacing the thrill of a bargain. Walmart’s beta venture, The Goodies Co., entices foodies with a selection of snacks and treats not found in stores. At least not yet. The Goodies lets Walmart tap into new customer segments, while testing to see which products are worthy of shelf space. Subscription start-up Love With Food donates a meal to a hungry child for every gourmet sampler purchased. So far, the company has donated more than 100,000 meals through Feeding America and Share Our Strength. Food producers gladly offer free or deeply discounted samples to get their products directly into consumers’ hands—the secret to making the numbers work. Highly curated Bespoke Post promises men a “Box of Awesome” each month filled with lifestyle upgrade discoveries based on themes, such as Swagger (high-end socks), Stirred (cocktail essentials) and Polish (stuff to spiff up your kicks). Its Web page, The Post, supports products with tips, recipes and more. Cooper & Kid launched its first boxed kit for dads with kids ages 5 and older who are looking for cool projects to share. The inaugural How Things Fly kit included a catapult, DIY missile launcher and instructions for turning the box itself into an airplane. Cooper & Kid delivers the cool, earning rave reviews and a 2013 Evolve Award from ModernMan.com.

Admit it’s an Art With all the new thinking and new materials in visual merchandising—futuristic touch-screens, minimalist displays—it’s refreshing to take a look back. Stepping into Fishs Eddy in Manhattan’s Flatiron district has been likened to stumbling upon the world’s best yard sale. Displays keep a mishmash of merchandise artfully heaped, stacked and shelved to create an organized, exciting shopping experience that merges past and present Americana. In that spirit, Fishs Eddy recently partnered with designer Todd Oldham to reimagine Charley Harpers’ 1950s fish and bird graphic illustrations onto lively plates, glasses and linens. Shoppers delight in finding classic toile and colored-glass serveware next to modern prints and crisp white dinnerware. Yet, the effect doesn’t overwhelm and confuse, and that is where the artistry comes in. In just the right balance, people are enticed, linger long enough to become engaged by the brand story, have their thoughts inspired and select a purchase that makes them happy—all byproducts of the merchant’s skill and imagination.

opposite page, top: 2012, http://www.beachstyleboutique.com/; opposite page, bottom: Sweetwater Inc., 2011, http://www.namm.org/summer/2011/top-dealer/ sweetwater-sound-inc/; top right: The Goodies Co., 2013, http://www.ramblingsofasuburbanmom.com/2013/06/june-goodies-co-review/


MASTERING SOCIAL SKILLS Success comes from commitment

Retail marketing experts recognize social media as a vital component of the consumer decision journey. It’s the only marketing form that can touch a consumer at every stage, from consideration to after-purchase. But the universe of social media continues to expand—a daunting challenge for any retail brand to boldly go there, much less determine ROI. Companies that can trace positive results to their social involvement seem to be those most committed to being there 24/7, listening, sharing and responding. Facebook is still king of all the networking sites. It’s hard to find a retailer that’s not there. Sandwich chain Subway and top lingerie retailer Victoria’s Secret rule with more than 21 million and 18.5 million likes, respectively. Walmart ranks high when it comes to all-around social currency, with more than 15 million Facebook fans. While offering customer discounts, promotions and perks make up a large percentage of retail activity, top brands also use the platform for real-time customer service, and for building online communities by sharing inspiration and information. Like a sprawling focus group, it’s also about looking for new opportunities to connect. As one retail executive put it, “We don’t think about the ROI of social; we think about the cost of ignoring it.”

Why do Marketers Use Social Media? 89% Increase exposure 75% Increase traffic 69% Provide market insight 65% Develop loyal fans 43% Improve sales

How “Like” Leads to “Buy” • • •

4 in 10 social media users have bought an item after liking it on Facebook, Twitter or Pinterest. 80% of social media-inspired purchases take place within three weeks of sharing or liking items. 29% credit Pinterest with getting products on their radars in the first place. Most Facebook and Twitter buyers say they were already thinking about buying the items they liked or shared.

We Live Online

Listening is a Round-the-Clock Job

80% of Internet users between the age of 18 and 50 use social media.

Social Media Today estimates 58% of tweets about bad experiences aren’t answered by the offending companies. A recent analysis by eModeration gives Walmart top scores for engaging its customers via Twitter while solving their issues. Less so for Amazon.com. The online giant reportedly bothers little with complaints that appear outside of its e-commerce site. It is present on Twitter but makes sporadic use of it. Why be there?

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The Home Depot: Connecting Sales Floor to Social Media While Richard the Cat has his own following on Twitter, The Home Depot home improvement chain has more going for it than the viral success of its orange tabby. It found a cost-effective way to incorporate a strong social media effort into its brand experience. A hand-picked group of floor employees across different stores handle customers face-to-face while serving as experts on Home Depot’s how-to and “The Apron” blogs. According to Advertising Age, “social media store associates live a double life: apron-wearing store associate three days a week and savvy content creator two days a week. The hybrid role…is a cornerstone of the retailer’s social media strategy.” The information in their content comes directly from in-store shoppers, a masterful way to work connections.

How to Project a New View of Your Brand

Instagram claims one hundred million users who embrace brands that aren’t too salesy. Clever hash tags and user-generated photo contests work. So do company shots. Almond Surfboards of Newport Beach captures its retro surf style with artful photography that’s grabbed the attention of 80,000 followers, boosting buzz, brand recognition and sales.

Fashion specialty retailer Nordstrom gets unfailingly high marks for its shopping experience, as well as its use of image-sharing network Pinterest. Color, style and brand values are on full display, bringing the Nordstrom aesthetic alive in your imagination.

About 14 million people look to social platform Houzz for inspiring home images, downloading 500,000 photos to their ideabooks every day. Thousands of businesses use Houzz to showcase products and services, and interact with potential customers. Lowe’s teamed up with Houzz for a strategic marketing partnership that runs sweepstakes and allows Houzz’s images and articles to appear on MyLowe’s.

Vines, the six-second video clips posted through Twitter, are already being eclipsed by the next big thing, 15-second clips from Instagram Video. Especially when it comes to moving images, it’s important not to make socializing look like a chore. It should be fun for your fans and followers. Fun for you.


E-commerce Ventures into the Outernet

In response to the changing market, online retail expands its boundaries

Shoppable Windows In partnership with eBay, Kate Spade Saturday is experimenting with interactivity and same-day delivery via 24/7 “window shops” placed in vacant stores. No need to go inside these eye-catching, innovative exteriors. It all happens on the street, rain or shine. Select your purchase from a touch screen, enter your phone number, a messenger is dispatched with your goods and you pay upon delivery. This fresh and relevant definition of “window shopping” has been generating plenty of buzz for Saturday, a younger and more affordable version of Kate Spade’s stylish apparel and accessory line.

Sizing you up Quickly Online retailer Indochino, offering “essentials for the modern man,” creates affordable custom-tailored suits with a four-week turnaround time. The trick is, you have to take your own measurements—accurately—which is difficult. Solution: the Traveling Tailor pop-up shop. Indochino recently took over a wing of New York City’s Grand Central Terminal, filling it with tailors and stylists, dressing areas, samples and first-class service that’s “all about guys” for a change. The reassuring and personal experience has gotten high marks from shoppers in major cities across North America, grateful they “don’t have to stand half-naked in front of a computer with a pencil and measuring tape.”

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Bling Your Own Addictive online jewelry retailer BaubleBar wanted to create a physical environment with the same engagement, editorial content and conversiondriving features as its website. The resulting pop-up shops feature iPads on which shoppers can design and purchase jewelry, interactive store displays that respond with information when shoppers pick up merchandise, and opportunities to share photos of themselves wearing sparkly baubles. The fun touch-and-feel experience attracts new customers to the brand who continue to shop online.

Continuous Change BIRDHOUSE is a single-location concept store in Tokyo that calls itself a “pop-up department store” because it changes themes on a regular basis “to provide excitement for one’s living and working spaces.” A rotating and highly curated offering of apparel, home décor, garden and beauty is designed to stimulate imagination, intellectuality and—according to the brand—add humor, excitement and love to a shopper’s life.

Smaller Stores and Smarter Tech Brand loyalty begins with engagement. Office supply giant Staples is transforming its shopping experience with small, efficient “omnichannel stores” that empower consumers through a mix of cross-channel touches, personalized messaging and customized rewards. The new format carries the optimum SKUs, while its digital components drive, track, measure and reward desired behaviors. Says the brand: This is just the beginning.

Small Footprints in the Outernet Quirky online indie shoe shop, Solestruck, opened its first brick-andmortar store in a micro-retail storefront. By definition, micro-retail means doing business on a smaller scale in narrow storefronts of 20 feet or less along heavily traveled pedestrian routes. Solestruck, one of six retailers in an adaptive-reuse space in Portland’s urban center, makes a big impact from a small footprint with a versatile design that can be easily converted into an event space.

opposite page, top: 2013, http://www.cheetahisthenewblack.com/2013/06/life-lately-photo-diary.html; opposite page, bottom: Chris John Fussner, 2012, http:// why-youmad.com/2012/; top right: 2013, http://screenmediadaily.com/; middle right: fashionsnap, 2013, http://superfuture.com/; middle right: 2013, http://www. businesswire.com/; bottom right: 2012, http://in-vested.blogspot.com/


Five Ways to Defy Convention… …and open up a space where ideas can start

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Forget the Gondolas When it comes to tearing down barriers to creativity, it works to challenge basic assumptions—even one as entrenched as the need for that old workhorse of the store, the gondola. It’s high time to challenge the rule that a shopping experience must be designed around the same old shelves, base decks, endcaps and slotted uprights. Rather than let these traditional fixtures constrain the design of a new shopping experience, why not question them altogether? Begin instead with what you know about your shopper’s behavior and the unique personality of your brand. Imagine what an ideal sensory encounter would be within your store—whether it’s marked by visual excitement, ease and comfort or problem solving. With former constraints removed, you’re free to imagine a more complete transformation of the experience, and at the very least, give creative thought to how the humble gondola can be improved.

In the case of shoe retailer Camper, thinking outside the gondola energizes the brand. Merchandise floats, hiding within zigzagging walls and climbs never-ending staircases in an unforgettable environment.

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Address the Dinosaur in the Room The “cashwrap” area of the average brick-and-mortar store remains ripe for innovation. Even the name feels obsolete. While self-checkout stations and rapid tunnel-scanners certainly count as innovations, their goal is to save labor costs, not entice the shopper with a better experience. There have been a few recent notable alternatives, such as the roving store associates at Apple who complete transactions on iPads, and the Square Stand, a tidy little screen preferred by coffee shops and independent retailers. But for the most part the bulky cash register still sits on a counter manned by an upselling clerk. Why have so few retailers found a way for the cashwrap to take up less square footage, run more efficiently and appear more aesthetically pleasing? It might be that the status quo is simply being left unquestioned when it comes to new store designs—a bad habit that begs to be broken. Creating the experience is the first step in the design of any innovation around the checkout counter. Depending on the way it solves your own brand challenges, the new solution could be high-tech or low, but it should be a solution unique to your brand and your shoppers.

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A favorite solution for micro-retailers, the efficient, chic Square Stand iPad register marks an improvement on the traditional checkout counter. However, there’s still the inevitable queue to mar an otherwise pleasant experience.

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Beware the Hazard of Over-Merchandising Too often, the answer to “How do we sell more stuff?” is to cram stores with merchandise, blocking aisles, cluttering checkout areas and overwhelming shoppers with dizzying choice. It’s no wonder time-starved consumers find themselves more and more attracted to the retailers who carefully edit their offerings, who continually fine-tune a collection of goods curated according to the brand’s distinct point of view and service proposition. For branded stores especially, a reduced product offering lends itself to a highly visual style that immediately conveys brand values. Of course, consumers will always love their multi-category mass merchants, online and off. And even though big boxes and drugstores are bound by product categories rather than consumer needs, there’s plenty of room to improve categories with a less-is-more approach. It results in a better experience and in many cases higher margins.

The Johnny Walker “embassies” in China nicely display the power of a singular experience driven by a distinct viewpoint, commanding luxury prices. Various interactive and bespoke experiences immerse aficionados in the world of Scottish whiskey.

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Think Different about being Different It’s tough to name an environment anywhere close to the distinctive architecture and design of the Apple stores. They’re proof that style and beauty represent a margin on which people create meaningful value. Retail design firms everywhere have heard their clients say, “We want to be like Apple.” But while imitation is a sincere form of flattery, it makes a poor retail brand strategy.

Another way to transform a commodity: Popular London coffee shop, Attendant, has been upcycled from a Victorian-era underground gentleman’s urinal. The original porcelain fixtures have become tables; the attendant’s office a small kitchen.

It might be possible to adopt the kind of thinking that led to Apple’s iconic stores, but not everyone can or should look like Apple. A transformative shopping experience must come from the heart of a brand, flowing from its reason for being. Also worth considering—it’s possible to discover whole new dimensions of your brand by exploring the creative reuse of space.

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Stop Saying “Value” In a sluggish economy amid fierce competition, effective promotions are critical, especially if your shopper belongs in the middle- and low-income bracket. Sensitive to price, these consumers have plenty of choice among the growing number of retailers that beat the value drum—mass, off-price, warehouse clubs, dollar stores and online merchants. Unfortunately, overuse of the world “value” has robbed it of meaning. Low-price players are under pressure to show exactly how they are different. Warehouse club Costco maintains excitement and high loyalty with outstanding private-label programs. Grocer Aldi wins customers with a highly curated, easy-to-shop product selection. The experience aspect of value shopping, however, has yet to be explored to the extent it has by mass merchant Target.

For the frugal shopper seeking style on a budget, value retailer and branding powerhouse Target keeps its store experience fresh and playful. Its Liberty of London pop-up shops recently proved this with unmatched whimsy and imagination.

opposite page, top: Zak Hoke, 2013, http://www.addicted-to-retail.com/; opposite page, bottom: Square, 2013, http://www.fastcompany.com/; top right: Zak Hoke, 2013, http://www.addicted-to-retail.com/; middle: Jon Choo, 2013, http://blog.cloudbooking.com/; bottom: 2010, http://piecesofmyearth.com/


Creation & Evolution Secrets to remaining relevant

Aging Gracefully & Profitably In 2005, when the great Marshall Field & Co. flagship on State Street became Macy’s, Chicago shoppers felt the loss keenly. Although many argued that if the grand old 1887 store was so dear to them they should have been shopping there more, thus preventing its closure. Nevertheless, the strength of such a word-of-mouth protest demonstrates the power of our cultural and emotional attachment to retailers. They can become part of our lives. Two great American institutions have been tested by changing times and economic ups and downs: 175-year-old Tiffany & Co. and 85-year-old Sears. While it may not be a completely fair comparison to hold up a luxury brand to a mid-market department store, the basic concept is the same. Keeping a brand relevant over the decades takes some serious investment. Studies show that consumers still have a soft spot for Sears, even though it appears to be a shadow of its former self. There was a time, it’s been said, that virtually everyone in America bought at least one thing from Sears & Roebuck during their lifetime. While Walmart and Target have brought plenty of competition to the landscape, Sears may be guilty of “starving” its own great brands, Kenmore appliances and Craftsman tools. Revenue growth at Tiffany & Co. proves it’s still relevant a second century later. The legendary retailer is successfully translating its elegant brand experience to the digital realm. In a perfect PR move, the retailer designed the Jazz Age jewels for the star-studded Baz Lurhmann film, The Great Gatsby. One of the danger signs of aging retail is an overdependence on the analysis of dollars-and-cents data with scale and earnings becoming the dominant objectives. In such a case, brand recedes. Competitive advantage belongs to the company, of any age, that displays ingenuity, gathers customer intelligence and keeps up with the times.

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A Great Partner Makes You More Attractive If you watch television at all, you’ve probably seen the Geico commercial where the little green gecko discusses insurance and marriage, then compliments the groom’s choice of a Helzberg Diamond ring. Which seems random at first, since there’s no apparent connection between Geico and Helzberg. But the spot works. Viewers recall both brands easily after one viewing. It takes a couple of beats before you see the reason for the brand partnership. Two brands working toward a common goal. The audience they’re reaching out to— young couples entering a new life stage, needing new coverage. So why haven’t more retailers caught onto this? Take a look at Best Buy. Before downloadable content made music CDs obsolete, Best Buy devoted a lot of floor space to that category. And the video section isn’t far behind. So they have plenty of space. And surviving categories aren’t showing enough growth to fill the gap. Why not take on a partner? Why not court a brand that, when combined with Best Buy, makes the shopping experience bigger than the sum of two parts? What if Dave & Buster’s created a café in that space, providing customers with an immersive gaming experience that complements Best Buy’s sound and video expertise? Not as a store-within-a-store, but as a brand that shares the nameplate. Dave & Busters’ grows its brand footprint, and Best Buy gets a partner that might fit like the proverbial glove, drive more traffic and share the real estate cost. Brick-and-mortar seems ripe for hooking up, especially if you have extra or newly found space. Why not put a Great Clips in Every GapKids? Should Toys “R” Us extend itself to four-legged family members by including a selection of PetSmart toys? Lastly, why isn’t there a Geico office in every Ford dealership? The brand might be twice as attractive in the eyes of the consumer.

From Store to Community Hub The possible implementation of Health Care Reform in 2014 could have ramifications for the shopping experience at the traditional brick-and-mortar store. More certain is the impact from industry trends to disrupt current formats, such as localization, labor cost-cutting and same-day delivery from the biggest online players; hand in hand with consumer trends, such as increased online shopping and subscription replenishment of household commodities from e-commerce sites. The “store of the future” could well be a renewed version of drugstores, particularly those that already have in-store clinics offering basic healthcare services. If physicians need to divest their clinics of less profitable patients, the local drugstore could find itself filling the gap. Already acting as mini mass merchants, drugstores need only add improved personal service and a receiving area where shoppers can pick up and return their online orders. Such a store would be viewed as the hub of its neighborhood, serving its particular demographics—with the kind of retail experience that inspires true loyalty.

opposite page, top: Cal Otero and Tiffany & Co., 2012, http://chictraveler.com/; opposite page, bottom: Allie Betker, 2012, http://nymag.com/thecut/; this page, bottom: Marvin Fong, 2009, http://www.ideastream.org/news/npr/164332663


Renaissance Men Welcome to a new era of retail, where men shop and brands respond

While still enjoying the likes of Bass Pro Shops, Tractor Supply and Harley Davidson stores, the American male has added a bit more dimension to his shopping profile. Men are shopping for their families in increasing numbers, though their behavior in the aisle continues to be characterized less by browsing and more by grab-and-going. Thanks to the proliferation of food-related TV shows and a broad awareness of the benefits of natural food, more men are driving the grocery cart because of an interest in meal preparation, which to the surprise of researchers, is stronger among men than women—although men’s favorite cooking method is still the grill. It’s in health and beauty that men show stereotypical reticence. A growing concern for skin and hair has spiked the men’s personal care market, but not so much in brick-

More men are driving the grocery cart because of an interest in meal preparation, one that is stronger in men than in women.

and-mortar stores. Sixty percent of men say they buy beauty products such as eye gel and hair growth tonics online versus in-store for comfort as well as convenience. Studies show that men are more likely than women to buy beauty products on a whim, as long as it’s online. Men and women are equally comfortable with a high level of buying activity on the Internet, with men dominating the music, auction and computer hardware categories. They also arrive in-store ready to make a purchase, having done product research beforehand, and are less likely to regard shopping as a leisure activity. Over the last five years, there’s been a resurgence of interest in looking good and dressing well, making it an exciting time in men’s fashion retail. Some observers give

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Blogs like Gilt Groupe’s GiltMANual give the kind of style advice that has largely disappeared from traditional retail.

AUGUST/SEPTEMBER 2013


credit to the Internet with its conversations around fashion and style, which would be less likely to happen among men offline. Content from blogs like A Continuous Lean, Put This On and Gilt Groupe’s GiltMANual give the kind of fit, style and wardrobe advice that has largely disappeared from traditional retail. While there has always been a certain percentage of the population that wants quality, a great interest in details around materials, origins, technique and craftsmanship has fostered a new market for authentic goods. Designer menswear is reportedly booming, especially among men age 24 to 54. But the trend itself goes beyond suits and ties to encompass a wide gamut of style beyond the old tyranny of chinos and golf shirts. It’s time to recognize men as sophisticated consumers, and rise to the challenge of determining the appropriate way to connect to various male audiences. Men no longer want to “wade through perfume counters to get to the men’s department.” They’re hungry for a better experience and will reward the brand that brings it. Sixty percent of men say they buy beauty products such as eye gel and hair growth tonics online versus in-store for comfort as well as convenience.

Food and housewares retailers: Man up! Could this be why purveyor of high-end kitchenware Williams-Sonoma goes deep into topics like “Getting to Know Grill Tools”? • Men enjoy preparing meals more than women (men 82%, women 75%). • Men enjoy eating more than women (men 91%, women 88%). • The majority of men prefer to eat food cooked by other men (53%). • When asked to describe the perfect dish, the top two adjectives among men are “spicy” and “meaty,” whereas women select “healthy” and “savory.” • Men are willing to spend more time preparing meals than women—57% of men say “40 minutes to as long as it takes” is acceptable, while 52% of women prefer to limit cooking time to “0 to 40 minutes.”

favorite Dish?

Men = Steak

Women = Pasta

Favorite way to cook? (grill vs. oven)

46%

42% 17%

16%

allrecipes.com Men = Grill

Women = Oven

opposite page top: 2013, http://uncrate.com/; opposite page, middle: Eat Like a Man, 2011, Chronicle Books, Ryan D’Agostino, Tom Colicchio; this page, top: 2013, https://www.facebook.com/uncrate


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experiences that stay with your customers long after they leave the store. Looking for a partner to bring your brand to life, inside the store and out? Let’s chat. We’ve built a history on building retail brands with staying power. We get the complexity of the retail landscape. And we know how to uncover what’s driving your customers to purchase. We bring together experts in strategy, design and consumer experience to celebrate what makes you uniquely you.

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2013 State of the Industry Report  

2013 State of the Industry Report, produced by Interbrand Design Forum for Chain Store Age.

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