RETAILOMANIA

THE END OF THE RETAIL WORLD AS WE KNOW IT,

AND WHAT TO DO ABOUT IT

GLOBALIZATION HAS MADE THE WORLD INTERCONNECTED

RETAILOMANIA

SO  THE  FUTURE  SEEMS  A  BIT  DARK  AT  THE  MOMENT?  

GLOBALIZATION HAS MADE THE WORLD INTERCONNECTED

RETAILOMANIA

RECESSION  OR  NOT,  WE  NOW  SEE  

TEOTRWAWKI      

(The  End  Of  The  Retail  World  As  We  Know  It)  

GLOBALIZATION HAS MADE THE WORLD INTERCONNECTED

RETAILOMANIA

Today’s  retail  business  is  a  ba1lefield  and  as  on  a  modern  military  ba1lefield,  the  enemy  isn’t  always  visible  or  doesn’t  fight  using  the  same  methods.  Fire,  protec=on  and  movement  remain  the  key  principles  of  combat,  but  an  enemy  can  also  infiltrate  the  ba1leground,  hide  among  civilians  or  plant  IEDs  to  fool  and  unnerve  his  adversary.  In  the  retail  context  this  would  translate  to  small,  fast  growing  and  digital  retailers  challenging  an  established  global  giant  on  its  home  turf,  or  consumers  joining  together  to  create  a  secondhand  market  instead  of  always  buying  the  latest  products  from  a  store.    

GLOBALIZATION HAS MADE THE WORLD INTERCONNECTED

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Or  even  brands  without  a  tradi=onal  media  budget,  using  social  media  and  branded  content  to  build  a  loyal  customer  base  without  a1rac=ng  a1en=on  from  the  compe==on.  In  short:  The  future  is  not  what  it  used  to  be,  but  rather  a  flickering,  confusing  place  where  the  established  marke=ng  methodologies  of  the  retail  giants  may  well  be  undermined  by  their  newer,  more  dynamic  adversaries  who  are  poten=ally  be1er  placed  to  fully  meet  the  marke=ng  challenges  created  by  new  and  emerging  markets.  

GLOBALIZATION HAS MADE THE WORLD INTERCONNECTED

RETAILOMANIA

 In  the  new  world  of  retail  then,  as  on  the  modern  ba1lefield,  size  is  not  necessarily  an  advantage.  Instead,  over  what  is  likely  to  be  an  economically  turbulent  next  10  years,  retailers  will  need  to  be  able  to  move  swiKly  in  order  to  adapt  to  consumers’  rapidly  changing  preferences.  Some  of  the  brands  of  yesterday  will  die  some  with  a  bang  and  some  slowly  as  if  from  an  incurable  was=ng  disease.  The  future  will  be  characterized  by  asymmetric  compe==on,  where  crea=vity,  intelligence  and  adaptability  are  more  important  than  size  and  brute  force.  

GLOBALIZATION HAS MADE THE WORLD INTERCONNECTED

RETAILOMANIA

THAT`S  WHAT  

TEOTRWAWKI      

IS  ALL  ABOUT.  ADD  ON  THAT  A  HIGHLY  PROBABLE  RECESSION.  

GLOBALIZATION HAS MADE THE WORLD INTERCONNECTED

RETAILOMANIA

LET´S  TAKE  A  QUICK  LOOK  AT    ”THE  RECESSION  ISSUE”  

Quick Global Overview 2012: American depth crisis…Peak oil…Euro crisis…Falling consumer confidence…China´s growth is slowing down…

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GLOBALIZATION HAS MADE THE WORLD INTERCONNECTED

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IT HAS BECOME APPARENT THAT WE LIVE IN A FRAGILE WORLD AND THE STATE OF DEBTS VS ECONOMIC STRENGTH IN THE US AND EURO ZONE MIGHT LEAD TO A

DECENNIUM OF VERY THOUGH ECONOMY OR EVEN RECESSION.

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RECESSIONS COME AND GO

IF THE ECONOMY FALLS INTO A DEPRESSION IT WON`T BE THE FIRST OR

THE LAST TIME IT HAPPENS

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RECESSIONS FOLLOW A PATTERN WITH A START AND AN END

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BUT  YOU  HAVE  TO  START  IN  TIME!  THE TRICK IS

TO SURVIVE IN THE MIDDLE…

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-­‐SPENDING  LESS    -­‐PUTTING  OF  MAJOR  PURCHASES  AND/OR  PRIORITIZE  BETWEEN  THEM  -­‐TRADING  DOWN  TO  CHEAPER  PRODUCTS  

BUT  -­‐PEOPLE  WILL  ALLOW  THEMSELVES  TREATS  IF  PROPERLY  PRESENTED  WITH  CARE  AND  SMARTNESS  -­‐VALUE  FOR  MONEY  

CONSUMER BEHAVIOUR DURING RECESSION

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…THIS  MAKES  RECESSION  A  RETAIL  

GRAVEYARD  

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BUT YOU DON´T NECESSARILY HAVE TO JOIN

“I was asked what I thought about the recession. I thought about it and decided not to participate”

Sam  Walton,  founder  of  Wal-­‐Mart  

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”It  is  not  the  strongest  species  that  survive,  not  the  most  intelligent  but  the  ones  most  responsive  to  change”  

Charles  Darwin  

SO WHAT IS ALL THIS ABOUT?

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BUT,  ONLINE  AND  SOCIAL  CHANGES  THE  CONSUMER  DECISION  

PROCESS…  AND  THERE  HAVE  NEVER  BEEN  SO  MANY  CHANNELS  OF  

COMMUNICATION  

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PRE-­‐TAIL   RETAIL   POST-­‐TAIL  

Researching  and  comparing  alterna=ves  by  using:  On-­‐line  search    Word  of  mouth  Social  networks  Ads  Apps  

Sharing  experiences  and  conquests  Word  of  mouth  Social  networks  In-­‐store  communica=on/Signage  

Staff  In  store  search  with  help  of  mobile  devices  

Good  and  bad  experiences  are  beeing  used  by  other  

consumers  to  facilitate  their  own  decision  process  

GeYng  more  detailed  informa=on  while  in-­‐store:  

TRADITIONAL  RETAIL  

ONLINE  RETAIL  

SERVICE  RETAIL  

HARSH  COMPETITION  AND  ONLINE  HAS  LED  TO  A  CHANNEL  DEVELOPMENT  IN  

RETAIL  THAT  MAKES  THE  WORD  ”MULTICHANNEL”  AN  UNDERSTATEMENT  

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NEVER  BEFORE  HAVE  SO  MANY  RETAILERS  HAD  SO  MUCH  TO  SELL  IN  SO  MANY  CHANNELS  

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C2C EBay

Service providers using retail tactics

Retail banking, insurance companies, travel agencies

Online services

Spotify Voddler

Multi- channel

Online retailers

”Social” media retail platforms

Facebook et al

Mobile retail services

Online virtual goods retailing Farmville etc

Third party co-op

Hotels, gyms, spas

Vending machines

Traditional retail

Retailers providing services

Popup- stores

Drive-thru stores

In-store online kiosks

FROM MULTICHANNEL TO HYPERCHANNEL RETAIL DEVELOPMENT 2012-2022 Online retailers are retailers

using only the online world as their field of operations. Online retailing are likely to rise the coming decade as more consumers are online, more consumers feel safe online and the evolution of payment systems will make payments easier.

The C2C-market is likely to rise due to both economical and environmental concerns.

Virtual goods are products or services consumed online and are never an actual asset of the use.

Online retailing on communities and online social media platforms are likely to be more specialized as the platforms mature.

Mobile internet has exploded over the last couple of years due to smart phones and various need-to-have and nice-to-have apps. More retail functionality will be built into apps and both ecommerce and in-store interactivity will be standard features.

Online kiosks inside stores makes it possible to research online and compare functions and features of the assortment.

Popup stores started as guerilla activities but have now matured as a new format when and where temporary installations are necessary. Here Telenor, mobile phone kiosk.

In order to improve the share of wallet ratio from existing customers several retailers are moving into the service industry providing banking, insurance, gardening wedding and even funeral services.

Vending machines are not what they used to be. Here is U´tiques luxury product vending machine, and its modern cousins from other vending operators are selling everything from shoes to vodka from designed machines.

Why should people need to go outside to grab a prescription or pick up a preordered bag of groceries. Drive-thru are a reality in many places and are likely to rise.

Retail opportunities for situational shopping. Shoes and training equipment at the gym, wellbeing at the spa and so on.

Several banks have launched retail store looking concepts in order to appear as a modern service provider. Photo from Danish Jyske Bank

Multichannel retailers includes offline retailers going online, but also those online retailers that chooses to open a physical store. Some use the online world to gather information before going to the store, while others use the physical store as a showroom before ordering online, perhaps via smart phone while still in the store

Outlets

Traditional retailing will continue to develop with focus on smaller concepts as turnover/square meter will become a critical KPI as competitions get harder. Small format also means: - Quicker, easier shopping - Smaller investments (risk) - Coming closer to the customer implies less fuel spending - More possibilities to optimize store location density.

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”The  only  easy  day  was  yesterday”  US  Navy  Seals  

AND COMPETITION STILL GETS TOUGHER BY THE MINUTE

THE  CREATIVE  RETAILER  HAS  NEVER  BEFORE  HAD  SO  MANY  

POSSIBILITIES  TO  COMMUNICATE  AND  REACH  ITS  CUSTOMERS  

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RECESSION  IS  A  POSSIBILITY  TO  

STARVE  OUT  YOUR  COMPETITORS  

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ACT  WHILE  YOU  CAN  AND  NOT  WHEN  YOU  HAVE  TO!  

BUT  YOU  HAVE  TO  START  IN  TIME!  

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Two guys are in the jungle when they see a lion running towards them. Frantically, one of the men starts putting on his running shoes. Surprised, the other man says “What are you thinking, you can’t outrun a lion!!!” “I don’t have to outrun the lion,” said the man, “I just have to outrun you.”

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NEW  FANCY  MEDIA  OR  SALES  CHANNELS  DOES´NT  MEAN  THAT  YOU  CAN  SKIP  OLD  SCHOOL  MATH  

FOR  INSTANCE,  WATCH  THE  CASH  FLOW  LIKE  YOUR  LIFE  DEPENDED  

ON  IT  (IT  DOES)!  

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Cash  flow  is  the  blood  stream  of  you  company.  Make  two  cash  flow  budgets  for  the  12  months  to  come  

In  best  case,  project  flat  sales  to  a  10%  decline,  in  worst  case,  go  as  much  as  a  30%  sales  decrease  

In  best  case,  project  expenses  10%  lower  than  last  year  and  in  worst  case,  expenses  at  last  year  levels  

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INVENTORY  CONTROL  IS  AS  IMPORTANT  AS  BREATHING  

OR  HOW  MANY  VARIATIONS  OF  MUSTARD  DO  YOU  NEED?  

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Evaluate  every  outstanding  buying  order.  

Do  you  really  need  the  merchandise?  Do  you  really  need  that  many  items  of  each?  Do  you  really  need  them  now  or  can  you  delay  the  delivery  to  a  =me  closer  to  when  it  is  supposed  to  be  sold?  

Check  the  stock  ra=o  for  each  item  in  stock  and  see  if  you  could  lower  the  levels  to  get  more  cash.    

Prepare  an  aged  inventory  list,  iden=fy  and  clear  out  the  dogs  at  any  price  you  can  get  for  them.  It  will  not  be  more  worth  later  on.  

Send  back  damaged  items  from  your  stock  room  for  credit  or  refund  

Re-­‐nego=ate  terms  of  payment  with  vendors  and  see  if  you  could  return  slow  moving  merchandise  when  placing  new  orders.  

When  things  get  tough,  vendors  will  come  to  you  with  offers  you  have  never  seen  before.  Use  some  of  the  cash  to  make  good  deals.    

CUT  COSTS  –  EVEN  IF  IT  HURTS  

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Go  through  every  line  on  your  P&L  –  are  there  any  possibili=es  to  cut  costs  or  get  other  terms  of  payment?  Re-­‐nego=ate  everything  possible!  

Do  you  balance  staff  costs  in  =me?  

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WHERE  CAN  YOU  FIND  MORE  MONEY  

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Can  you  a1ract  new  visitors?  

Can  you  convert  more  visitors  into  customers.  

Can  you  make  every  customer  buy  more?  

Can  you  make  them  come  more  oKen?  

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OPTIMIZE  THE  STORE  

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Store  layout/presenta=on  will  drive  sales  by:  

-­‐   Improving  conversions  -­‐   Sell  more  to  exis=ng  customers  -­‐   Get  them  back  more  oKen  -­‐   Increase  margins  through  adding  value  to  your  offer  -­‐  Keep  the  customer  longer  in  the  store  –  the  longer  they  stay,  the  more  they  buy  

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FIELD  TIP:  

Photograph  your  store,  print  the  photos  and  put  them  on  a  wall.  Photographs  don´t  lie  –  this  is  what  your  customers  see.  Mark  everything  that  does  not  contribute  to  sales  and/or  a  be1er  experience  with  a  red  ”x”.  Make  a  list  and  fix  it,  star=ng  today.  

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FIELD  TIP:  

Get  a  drawing  of  the  store  and  stand  right  inside  the  entrance.  Follow  visitors  around  the  store  and  mark  their  path  on  the  drawing.  AKer  some  20  visitors  a  pa1erns  usually  emerges,  showing  the  ”hot”  and  ”cold”  zones  of  the  store.  This  will  be  an  important  input  to  op=mize  the  customer  flow  and  increase  sales  steering.    

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Change  your  store  according  to  visitor  frequency:  

-­‐ Customers  habituate  to  your  stores  -­‐  Change  offerings  weekly,  move  everything  around  as  much  as  possible  

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Making  the  perfect  store  layout:  h1p://retailomania.blogspot.com/2010/04/everything-­‐you-­‐ever-­‐wanted-­‐to-­‐know.html  

On  great  range  presenta=on:  h1p://retailomania.blogspot.com/2010/03/everything-­‐you-­‐always-­‐wanted-­‐to-­‐know.html  

Define  more  seasons:  h1p://retailomania.blogspot.com/2011/08/more-­‐seasons-­‐more-­‐cash-­‐for-­‐retailers.html  

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FOLLOW  THE  FIGURES  

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Reward  loyalty.  

20  %  of  your  customers  are  most  likely  accountable  for  70-­‐80  %  of  your  sales.    

!  

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Follow  up  on:  

-­‐ The  number  of  visitors  -­‐ Conversion  rate  -­‐ Number  of  add-­‐on  sales  -­‐ Average  basket  value  -­‐ Average  number  of  ar=cles  per  transac=on  

Benchmark  several  stores  to  find  room  for  improvement  

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www.morm.se  Retailomania.blogspot.com  @retailomania  h1ps://www.facebook.com/Retailomania  

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