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VOLUME 20 ISSUE 01 • 2012

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BORDERS STORE CLOSING

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The first indelible images were the “Store Closing” signs in the windows of Borders book stores and the announcement by electronics retailer Best Buy that, due primarily to the impact of online shopping, it no longer needed as many physical stores so it would shutter some and sublet space in others. Then, as the 2011 holiday season came to a close, came the announcement that Sears/ Kmart would close 100+ stores in 2012. It's not hard to anticipate more retail closings as 2012 unfolds. As shoppers cut back their trips, spent less on “wants,” focused more on “needs” and went online to do more of their shopping, the overstoring we’ve discussed for years has finally become a reality. Especially in the US, but

TESCO HOME PLUS VIRTUAL SUBWAY STORE, SOUTH KOREA

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3DIGITAL 4 SHOPPING 5 6 ARRIVES F-A-S-T I

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THE YEAR OF "MOVING ON"

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AND MORE...

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CANADA -- NEW GLOBAL HOTSPOT

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WALMART WOES -- OVER OR NOT?

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DEPARTMENT STORES TANTALIZE AFFLUENT SHOPPERS

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BIG BOLD, AUDACIOUS SPACES

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DIGITAL SHOPPING ARRIVES F-A-S-T

also in other developed retail markets around the world. (In developing markets, it’s an entirely different story as the fervor to open stores continues. More about that later.) E

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Looking back on 2011, images come to mind that instantly capture the state of retail around the world, and anticipate the year to come. The images reflect the yin and yang AG M of the world: the global economy as it limped 1 along (at best) and the now unrelenting pervasiveness of digital technology. Together these converged to transform everything at retail in 2011, everywhere we traveled, the US, South America, Europe, Asia, the Pacific Rim and on.

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Another image that defined the year was the opening of the Home plus virtual store in subways in Seoul, South Korea. We’ve talked about this in previous issues of The EDGE. However, it bears repeating because it so clearly reflects the changing state of retail in many ways. UK-based Tesco and Korean Home plus leveraged a virtual pop up concept created a year earlier into a retail game changer, a way to open stores in the market and gain share of online sales fast. These virtual stores on subway platforms feature images of products as if in a regular store aisle. Shoppers use their smartphones to scan QR codes on the images to order instantly, pay and arrange for delivery. All in a click. The result: Home plus is now the #1 online retailer in Korea…from a standing start. Pictures of the stores were transmitted around the Internet in nanoseconds. So was

JUMBO VIRTUAL GROCERY STORE, CHILE


VOLUME 20 ISSUE 01 • 2012

the technology. Within the year, Chilean grocery retailer Jumbo launched a similar concept and, in London, John Lewis Department Stores turned its Waitrose windows into a virtual store. The speed at which the initial idea, the technology and the execution moved from Asia to South America to England says much about the future of retail. M

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The opening of Duane Reade’s hugely audacious flagship drug store at 40 Wall Street, NYC, set the tone for BOLD in 2011. Once a bank, the marbled columns, floors, fireplace, and chandeliers provide a backdrop for the "Look" beauty department. The "Upmarket" sushi bar, juice bar, fresh produce, and expanded grocery offering reflect the growing importance of convenient food in US drug stores. The pharmacy “powered by Walgreens” was the first nod to Duane Reade’s new owners. There is a shoe shine stand for local Wall Street types, and lots more. The 20,000 feet store is the precursor of the new Walgreens’ flagship that opened in downtown Chicago on January 9, with more to come around the country. There was the opening of the boldly presumptuous new Apple store on the mezzanine level of New York City’s iconic Grand Central railway station. Talk about retail chutzpah. It overshadows even the Apple store in the Louvre Museum in Paris.

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© WSL MARKETING INC. 2012

JOHN LEWIS AT WAITROSE, UK

At any time of day, hoards of shoppers and Apple employees mass at the top of the swooping sandstone staircase under, the

LOOK BOUTIQUE & UP MARKET AT DUANE READE, 40 WALL ST., NYC

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5 6 DEPARTMENT STORES TANTALIZE AFFLUENT SHOPPERS I

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LOCATION:

Ritz-Carlton, Naples, FL

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CHAIN CONFERENCE

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This isn’t only a place for waiting travelers to idle away minutes between trains. It’s a destination unto itself, and an enticement for shoppers to visit the other innovative retail stores now established in the train station, including one of the newest, Australian beauty retailer, Aesop, with its store made out of recycled New York Times newspapers. I

WENDY LIEBMANN | CEO will speak at:

starlight ceiling, clamoring for “I” something.

Department store retailers around the world have come to recognize they must dazzle their higher income shoppers -- locals and tourists -- in ways they haven’t for decades if they want them to regularly shop and buy. Even the wealthiest shoppers are now more discriminating, more value savvy, more engaged in digital commerce, with more shopping options than ever before. Retailers who serve them have finally recognized they must “up” their experience to keep these shoppers. Hence, all the store renovations we saw in 2011, including online stores. There were renovations at many major department stores around the world. From the age-old Printemps flagship in Paris, now dazzlingly new behind its traditional 19th century façade, to La Rinascente in Milan, and the completion of a multi-year remodel of Bloomingdale’s NYC 59th Street flagship -- to mention only a few. In 2012, London’s Selfridges and New York’s Macy’s will both undergo renovations. (Macy’s will spend some $400 million, according to its CEO.)

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WOES -- OVER OR NOT? 5 WALMART 6 Walmart finally achieved positive same store

sales in its US stores, breaking a record of nine negative quarters. And its vendor community breathed a universal sigh of relief.

The retailer closed its small format Marketside stores to focus on Walmart Express stores. It experimented more aggressively in the digital space: it opened walmart.com bricks and mortar stores (two in California this past holiday season) so mall shoppers could test select products, then order online in store). And it launched the Shopycat app that enabled holiday shoppers to buy gifts for friends based on their Facebook “activity” preferences. (If you don't know what that means, sign up for Facebook.) In spite of all this, it is hard to dismiss the image of Walmart’s price matching program or its advertised post-Christmas clearance sales. Both run so counter to the retailer’s philosophy of everyday low prices that it leaves one wondering will the thrill of walking into a Walmart store stacked high with trusted everyday low priced brands ever return? M

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6 CANADA, A NEW GLOBAL HOTSPOT E

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Target’s announcement that it will open stores

in Canada in 2013 revealed much about the growth challenges US retailers face. In the good ol’ days, US retailers had the luxury of just opening more and more stores in order to grow. That’s no longer an option for most. Now, as the economic and technological landscape force their hand, more US retailers, such as Target, will follow expats Walmart,

PRINTEMPS, PARIS

Costco, Sears, and Bath & Body Works north across the border into Canada. Those who have already made -- or are considering -- the move feel it’s an easier transition, closer to manage, a similar lifestyle and language. Even with that, it’s clearly no retail “picnic.” Going global is a challenging proposition. Few, beyond Walmart, Costco, and such specialty retailers as Apple, GAP, Victoria’s Secret and Urban Outfitters, have moved beyond North American shores. However, it’s something more retailers will have to consider as opportunities for US growth diminish. (Word is that Nordstrom has been assessing a move into Canada. It’s a short drive across the border from the company’s Seattle headquarters, so who knows?)

AND MORE... Diapers.com is one of the latest examples of

how online shopping can decimate the aisles of a physical store in a nanosecond. Ask any new mother if she’d prefer to order -- and reorder -- big bulky diapers in store and carry them home, or have them delivered to her door, often at better prices. It’s a no brainer. What will be the next aisle to move out of the store in 2012? (We are in the midst of researching this. So stay tuned.)

As global retail strategists and shopping futurists, we at WSL/STRATEGIC RETAIL are recognized for our ability to turn shopper insights into smart actionable strategies. Since 1989, in our HOW AMERICA SHOPS® studies, we have tracked the mindset, attitudes and behaviors that shape shopper trends, successfully predicting how they transform brands and retailers throughout the US. Check out our database at... www.wslstrategicretail.com For more info, contact us at: PHONE

212.924.7780

FAX

212.924.7608

EMAIL

info@wslstrategicretail.com

Extreme Couponing. If you haven’t seen this

highly rated reality TV show, you can imagine what it’s about, and why it’s all the rage. When it airs, coupon websites gain significantly higher traffic. Everyone wants to be a smart shopper. While most shoppers don’t care to devote as much time as the TV show contestants do to

LA RINASCENTE, MILAN

BLOOMINGDALE'S, NYC

© WSL MARKETING INC. 2012

© WSL MARKETING INC. 2010

WALMART EXPRESS, AR

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VOLUME 20 ISSUE 01 • 2012

is published by WSL STRATEGIC RETAIL

1 yr. Individual Subscription $300 2 yr. Individual Subscription $500 1 yr. Corporate Subscription $3000 2 yr. Corporate Subscription $5000 Send check to: WSL STRATEGIC RETAIL 307 Seventh Avenue, Suite 1707 New York NY 10001 CEO/EDITOR ART DIRECTOR CONTRIBUTORS

Wendy Liebmann KC Chung Candace Corlett Amy Marcus Paul Menichelli Elizabeth Neagle Shilpa Rosenberry Peter Silsbee Peggy Wang

get their groceries, and more, for almost nothing, they do admire those who do. Regular shoppers want to find their own “extreme couponing” in your stores. What will you do to ensure you’re worth their trip in 2012? Food = the New Retail Opportunity. In 2011, everyone and his brother added or expanded convenience food. Drug stores, like CVS, Walgreens and Rite Aid, were particularly aggressive. They offered packaged foods, beverages, fresh produce in urban "food deserts” and suburban locations. Target successfully expanded its PFresh program to many of its stores. Dollar stores (Family Dollar and Dollar General in particular) expanded their branded packaged food and beverage options -- and created better looking stores -- to attract a broader range of value conscious, convenience-minded shoppers. And digital retailers, such as Amazon.com and Alice. com, added more branded grocery products to attract the everyday shopper.

And that’s what it’s all about. In good times and bad, one thing shoppers still buy is something to eat. If you’re a grocery retailer, who will your next competitor be in 2012? If you’re a food or beverage manufacturer, where will your next opportunity be? Probably not a typical supermarket. Angry Protestors are Your Shoppers. There

We have lots of tools, research, shopper insights to help you. Drop by to find out more... www.wslstrategicretail.com

© WSL MARKETING INC. 2012

WALMART.COM STORE, LA

are a lot of angry people around the world today. Not only on Wall Street or Tahrir Square in Cairo, Egypt. They are in your stores. Remember what happened when Bank of America attempted to add a $5 monthly fee for the use of its debit cards? Or, just before New Year, Verizon’s quickly unsuccessful effort to

WALMART SHOPYCAT ON FACEBOOK

charge a $2 “convenience fee” for customers who make one-time bill payments via online or phone? From this day forth, consumer protests will be loud, quick and effective. Remember that as you build your strategies for 2012, and beyond.

THE YEAR OF "MOVING ON" After four years of economic upheaval, American shoppers have taken control of what they can and are moving on in new and different ways. Retailers are moving on in their own way, as is evident by the degree of retail innovation and renovation in 2011. They have recognized that the only way to get shoppers back to buy -- beyond the omnipresent sale -- is to create compelling, value-based retail experiences that build meaningful customer relationships. Nothing else will do, unless you want to literally give away the store. And so, may we all move on successfully in 2012. A very happy New Year, and thanks to you all for your continued support. (With all this “moving on” no surprise that the title of our 2012 How America Shops® MegaTrends study…is “Moving On”. Read on for more details.

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