Photomontage by artchandising
Think about your last flight. What do you remember about it? Some hassle like the person in front reclining their seat to within a few inches of your nose? Or maybe a pleasant conversation with the person next to you, prompted by the realisation that you were both reading sailing magazines?
Negative experiences and positive experiences all happen inside the same âpackageâ: the jet cabin. But some one realised that itâs a cabin with a brand, the airlineâs brand, so everything you experience in there affects the brand image â for better or worse.
KLM wants to manage the customer experience as part of their branded travel.
An interesting gal/guy in the next seat
KLM Royal Dutch Airlines was established in October 1919 to connect Holland to its colonies. In 2004 it became part of the Air France KLM group. With a view to enhancing the customer experience, this retail company has created several new services.
KLMâs Meet & Seat service â âmake your flight an inspirational journeyâ â helps you to locate other people you think are interesting â for personal or professional reasons â and be seated next to them.
The selection is based on the social network profiles (mainly Facebook and LinkedIn) of users who authorise the use of their data beforehand. This enables passengers to find out about the occupation, likes and hobbies of other unaccompanied passengers and decide who they would like to sit next to depending on similarities or interests they have in common.
ButâŠ What about my privacy?
Critics of âMeet & Seatâ say that KLM may be delving too deep into their lives of their customers. Some feel that KLM is converting the jet cabin into a high-school cafeteria.
One drawback is that users cannot veto who sits next to them, the only escape being to choose another empty seat â if there is one. It is, however, the customer who decides whether or not to be visible and accepts the possibility of sitting next to someone they have something in common with.
In general, customers are increasingly asked to provide information in order to provide personalised services to fit with their preferences. The secret is to strike a happy balance between the information requested and using it appropriately depending on the circumstances and matter in question.
Another of the Dutch airlineâs ventures is âShop@KLMâ which sells the products usually sold by airlines. Purchases can be made on-line at shop.klm.com, for example, before the flight and KLM delivers them either on-board during the outward or inward flight or to your home address.
The customer avoids having to carry gifts about and enjoys an enhanced, more convenient shopping experience.
According to Dixon, Freeman & Toman (2010), customer loyalty is achieved not by fascinating them but by making things easier for them. Hassle-free service increases customer loyalty â and ensures sustainable future cash flows.
I want to travel in a group
KLM has also created a âtrip plannerâ (tripplanner.klm.com) to plan group travel on the Internet in a collaborative way. This app uses each group memberâs Facebook profile to suggest destinations and types of trip (beach, party, mountain…) in response to a highly visual, short questionnaire.
The app compiles the group membersâ answers and preferences about travel destinations and times, and displays the option that received most votes from group members. An easy, fun and convenient way to plan group travel without the hassle and confusion of countless calls and emails.
KLM is one of the first airlines to integrate social networks into their own sales process â all on the same site.
A cross-channel strategy
These three KLM services are an example of a cross-channel strategy, i.e. the integration of two customer-interaction channels which until recently were apparently separate: on-line and off-line channels.
Generating synergy and integrating the two channels achieved what Steinfield, Adelaar and Liu (2005) define as enhanced legitimacy and trust in the brand, a wider coverage of different shopping preferences and the creation of natural complementary factors between the two âchannelsâ.
KLM doesnât take advantage of what Gallino and Moreno (2012) explained. These authors observed that BOPS (buy on-line, pick up in store) generates higher sales â not when the on-line purchase is made but when the item is picked up. When customers visit the store to pick up their purchase, they stroll around and increase the likelihood of an additional purchase. In KLMâs ase, products are not picked up in store but the new logistics will probably generate positive spin-offs that have not yet been studied.
KLMâs on-line/off-line integration helps reinforce their brand image as a customer-oriented company that cares about their customers.
Making the most of social networks
On-line/off-line integration is reinforced by using the social networks: proof that they are not just useful for keeping up to date with friends.
KLMâs social network interaction strategy enables them to sell not only plane tickets but also entertainment, networking opportunities and great in-flight service.
KLM as a âcuratorâ
With âMeet & Seatâ KLM also acts as a curator, aiming to provide personalised outcomes based on their customersâ needs and preferences. This enables them to empathise more with customers and broaden their travel experiences.
âBe my guestâ
Perhaps passengers are more willing to sit next to some one who is a professional DJ, a super model, an astronaut or a Hollywood actor.
In 2012 KLM launched âBe my guestâ, a campaign enabling customers to enter a virtual chat room and chat to one of Hollandâs six most famous celebrities: Armin van Buuren (famous DJ), Ruud Guillit (footballer), Yfke Sturm (supermodel), Wubbo Ockels (astronaut), Jeroen KrabbĂ© (Hollywood actor) and Hella Jongerius (furniture designer).
Participants answer 5 questions to choose the celebrity to travel with, and then the celebrities themselves decide which participant they will travel with to an inspirational destination. If, for example you are a fashionist, you might end up going to New York on a shopping trip with supermodel Yfke Sturm.
The campaign was a great success and very well received by the general public. It also won several awards and special mentions.
What matters in business management is not so much having ideas (although they are always welcome), as keeping customers as our compass north, so that a retail company becomes a brand focussed on the clientele.
Because of the empathy generated, customers can be won over in a sustainable and profitable way. At the end of the day, thatâs what itâs all about.
Dixon, M.; Freeman, K.; Toman, N. (2010) Stop Trying to Delight Your Customers. Harvard Business Review. July 2010.
Gallino, S.; Moreno, A.; (2012) Integration of Online and Off-line Channels in Retail: The Impact of Sharing Reliable Inventory Availability Information. Management Science. (Under Review)
Martinez-Ribes, K; (2012) El surtido, los cuadros de una exposiciĂłn. La curaciĂłn en Retail. CĂłdigo 84, nÂș 167. December 2012
Steinfield, C.; Adelaar, T.; Liu, F. (2005) Click and Mortar Strategies Viewed from the Web: A Content Analysis of Features Illustrating Integration Between Retailers’ Online and Offline Presence. Electronic Markets. V.15, No.3, pp. 199 – 212.
Meet & Seat reviews:
Be My Guest reviews:
Source: CĂłdigo 84, nÂșÂ 171.
Tags: Efforts · Esfuerzos · Redes sociales · Social networks · curaciĂłn · curation · empathy · empatia · experiencia de compra · innovaciĂłn · innovation · lealtad · loyalty · off-line · on-line · retail · shopping experience
Image by artchandising
Every day we are bombarded with some 2,000 messages (ads, ideas, suggestions) but only a tiny fraction of them â the ones the brain thinks might be relevant â are actually perceived by customers.
Thanks to functional magnetic resonance imaging (fMRI), neuroscientists now know that 85% to 95% of human decisions are implicit and not conscious. In other words, reasoning with people to convince them about how good a shop (or product) is, is a waste of time strategy.
What is the so-called sensory marketing?
Triggering emotions makes persuasion much easier because emotions bypass the filter of selective perception. But this is only possible with help from the senses, which are the fast track to emotions.
Stimulating the senses triggers an emotional response. Consumers then experience sensations that make them aware of an external factor.
This is the biological explanation for what is known as sensory marketing, a term Iâm not particularly fond of because despite its biological basis, itâs just part of the favourite store creation process.
Point of sales sensory marketing consists of using ambient elements that impact customersâ senses and make their emotional, cognitive and behavioural responses favour the creation of a brand image and encourage purchases (Manzano et al., 2011: 74).
This is where the senses step into the limelight. We all know the traditional five senses â sight, hearing, taste, touch and smell â but there are others that deserve a closer look. Ken Robinson, a creativity and innovation expert, points out the importance of the senses of balance, motion (spatial perception and spatial self relation) and heat, to name but three.
Antonio Damasio, a foremost Portuguese neurobiologist, explains that if someone screams, for example, our heartbeat accelerates and we think thereâs danger nearby. Weâll then either listen hard or run away. All of this together â the stimulus, the bodyâs response and the consequences â is what constitutes feeling. Feeling is the perception of all this. Itâs something that starts externally, affects our body, because the brain says so, and then we perceive it.
Beyond sensory marketing: âimplicit marketingâ
Because of the way the brain works, the most appropriate term for marketing, that is the processes and methods used to become a favourite store, would be âimplicit marketing âor marketing of the implicit.
There are lots of examples of âimplicit marketingâ, but Iâd like to focus on one particularly interesting case that casts a bold, new slant on an apparently well-established area: in-store music.
Since March 31st 2010, 17 million customers have been shopping without music at Lâilla, Barcelonaâs leading town-centre, shopping centre. The mall replaced its background music with computer-generated abstract sounds. It represents quite a radical innovation in the shopping experience.
Back in 2001, M. GobĂ©, the author of the best seller âEmotional Brandingâ said that music affects the time and speed of shopping and even the amount spent and is, therefore, a major factor in consumer behaviour. Therefore, replacing background music by abstract sounds could trigger different, new responses, and even more so bearing in mind that customers are used to listening to music while they shop.
Chapin et al (2010), from Florida Atlantic University, discovered that emotional responses and neuronal triggers depend as much on the parameters of the musical stimulus (e.g. the type of sound, or its tone or tempo) as on the prior musical experience of the listener. In an area like a shopping centre intended for a variety of segments, such as a shopping centre, maybe this project is not as crazy as it might seem.
Image by artchandising
The relationship between culture and the senses
Although “culture” can be defined from very different viewpoints, the UNESCO definition is very interesting for retail and marketing.
According to the UNESCO, “culture can be defined as the set of distinctive spiritual, material, intellectual and emotional features of society or a social group, and it encompasses, in addition to art and literature, lifestyles, the basic human rights of the individual, value systems, traditions and beliefs.” In other words, the way in which we live together. Hence, culture plays an important role in the way in which we interact with each other and our surroundings.
Each culture has a different way of defining, understanding and experiencing âthe non consciousâ. The processes generated by the implicit part of our minds are greatly influenced by the culture to which we belong.
Ken Robinson, for example, says that the sense of balance is essential in Africa. Whereas Mediterranean cultures place great importance on smell, taste and touch (hand shakes, hugs, cheek kissing, etc). This way to understand the sense of touch is very different from Anglo-Saxon or German cultures in which physical proximity is interpreted in other way.
The future of sensory marketing
Sensory marketing could be a powerful segmentation strategy because it is based and works from the non-conscious.
The senses can even be used in the online arena, particularly in product delivery time. Some of its applications are related with packaging used for product shipment, using innovative designs in contrast with the traditional and impersonal cardboard box.
Lastminute.com went one step further by expanding their on-line advertising strategies into their off-line activities, and sending small gifts to their customers to remind them of specific experiences. One such gift was a small tube of suntan lotion to remind them to plan their summer holiday (see font).
In the not-too-distant future it will be possible to sense smells in digital platforms and the media. As Russel Brumfield and other experts have already said, weâre on the brink of a breakthough into the world of smells: in the near future phones will probably enable us to smell who is calling, and websites and emails will be aromatised (Manzano et al., 2011: 154).
But thereâs still a lot of uncharted territory in the sensorial marketing. Aradhna Krishna (2011) believes we still know very little about how the senses interact, and about possible clashes between sensorial perception and oversaturation in different people.
A final note
Until now, the highstreet stores able to exploit the senses best to create specific experiences and sensations have had a great advantage over e-stores. The full sensory experience in highstreet stores in comparison with just the two senses (sight and hearing) used by e-shoppers has been a huge advantage that drove Dell USA to copy Appleâs strategy of allowing their products to be sold on the high street too.
But touch-screen phones and tables have enabled another sense to make inroads into the digital world: touch. Itâs no coincidence that shopping on these devices is rocketing.
Chapin, H.; Jantzen, K.; Kelso, J.; Steinberg, F.; Large, E. (2010): Dynamic emotional and neuronal responses to music depend on performance expression and listener experience. PLoS One, Vol.5, No.12, p.1-14.
Krishna, A. (2012): An integrative review of sensory marketing: Engaging the senses to affect perception, judgment and behavior. Journal of Consumer Psychology. Vil.22, No.3, pp. 332-351.
Manzano et al., Marketing Sensorial: Comunicar con los sentidos en el punto de venta. 2011, Prentice Hall, ISBN: 978-84-8322-812-8
Source: CĂłdigo 84, nÂșÂ 170.
Tags: Antonio Damasio · L'Illa · cultura · culture · emociones · emotions · implicit marketing · lastminute.com · marketing de lo implĂcito · marketing sensorial · no-consciente · not-concious · on-line · retail · senses · sensorialidad · sensoriality · sensory marketing · sentidos
Image provided by Cookiteca
It is 5.30 on a Friday afternoon. After hanging up their coats, and carefully washing their hands, 15 children excitedly open their eyes as they enter a kitchen larger than the front room of their homes. There was a rising crescendo of murmured admiration. One of the children, Julia, has invited the others to celebrate her birthday. However, this was not going to be a conventional birthday party; rather they were going to have fun learning, and then eating, a cake. Hopefully, there will be enough left over for them to take samples home to show their families.
The party was taking place at Cookiteca, a new business that is hard to define yet easy to understand and love. This Barcelona-based firm is less than 30 months old, yet it has already opened four locations and served more than 11,000 clustomers. The firm is managed by the two partners SĂlvia Mirabet and Neus Canal.
When Neus describes the business she uses different ways according on who is he addressing. She tells suppliers that Cookiteca is a cooking course centre and a shop. However, she tells prospective clients: âCookiteca is a place where you can enjoy cooking and have a good laughâ.
Neus is an architect, entrepreneur, and business consultant. I met her when she came to visit me at ESADE to discuss attending a 3.5 day course in retail innovation. Registration for the course would cost âŹ3000 and it was clear that she wanted to make the very most of her time and money. I was delighted with her vision and focused energy.
Cookiteca began in January 2010 when SĂlvia, a cooking lover, asked Neus for advice about a business concept based on cooking. The idea hinged on the fact that it was easy to find cooking courses, but very difficult to find utensils and ingredients. They founded the business in May and opened their first location four months later in an attractive building in the traditional neighbourhood of SarriĂ in Barcelona.
On entering Cookiteca and seeing a display of semi-professional cooking tools you might feel that you had entered a rather stylish kitchen utensil shop. To one side is the reception desk that doubles as a cash desk. Enter a little further inside and you will find an area displaying utensils and ingredients for making desserts. This area leads on to a very large and well-equipped kitchen where cooking classes are given. But it does not end here, further on there is a room with a large table where participants can taste what they have just prepared. On their way out, participants can buy some of the more unusual ingredients used in the class.
This is a guild-breaker retail formula: it is simultaneously a kitchenware store, a specialist bookstore, a cooking school, a restaurant, and a grocery.Â And sometimes it is also an event planning company, whether it is for individuals or companies.
Who does Cookiteca serve?
One of the strengths of the business is the diversity of segments served. The business aims at three segments â although never simultaneously:
- Adults interested in cooking
- Event planning businesses where the kitchen plays a leading role
There is a growing public interest in cooking. According to Neus some 20% of people who could cook do not know how â and there are many others who want to expand their abilities by learning a manual skill that is unrelated to their professional work. Neus says that by learning a new skill people gain more self-confidence and escape from daily life tension.
Activities range from a basic healthy cooking course to more skilled and fashionable courses â such asÂ backery.Â The usual price of registration is between âŹ35 and âŹ45.
Part of its activity is B2B rather than retail. Cookiteca sells active kitchen-based events to local companies: such as cooking demonstrations and tastings. The firm has a psychologist on call who helps clients design specific events.
But it is children who have made Cookiteca famous and remain a vital segment. Children (who must be older than six to follow and enjoy the learning dynamics of the classes) always have plenty of fun cooking and many develop latent abilities. Their self-esteem is also given a boost when they return home with something they cooked themselves. The children make Cookiteca a happy place, and have quickly spread the word about Cookiteca around Barcelona.
In addition to the scheduled courses, various other events and birthday parties are hold (with cooking always as the main event). Self-catering courses for children are organised during the school holidays. The children arrive early in the morning, prepare their breakfasts, eat together, go grocery shopping at the local food market, attend an external workshop, return, then prepare and enjoy lunch together before going home. The course serves as a rounded experience in cooking and working together â while having fun.
Offline and online combined
The company web plays a key role in creating awareness and marketing the cooking classes (25% of places are booked on the web). It is also increasingly used for selling other products.
Cookiteca has not yet offered what will become the main digital interface, a smartphone app, and for the moment the business remains a good example of a start-up that is not technology based.
The current revenue pie shows 35% earned from cooking workshops, and 65% from shop sales. The partners aim to balance both items and expect to reach breakeven soon.
Image provided by Cookiteca
More than cooking
Neus is clear that she does much more than co-manage a cooking school.Â She is establishing Cookiteca as a strong brand with humanist principles. Neus says the company emphasizes the role of good cooking for well-being, and maximises the fun inherent in group learning.
Brand building, explains Neus, is more important than aggressively aiming at short-term profit.
There are two essential elements for building the business:
- A competent and enthusiastic team â perhaps the most difficult element to achieve in a retail model.
- A suitable building as âpackageâ, Neus says locations must be: cosy, authentic, practical, inexpensive, and undecorated. The food, she says, tends to provide the colours needed.
My six tasting notes:
My tasting notes for Cookiteca suggest that the business leaves the following after-tastes:
- 1. Cookiteca offers a retail model that understands the economic reality in the street, and treats customers as people.
- 2. Cookiteca has devised a solution tree, with a common trunk (the love for cooking), but with different branches yielding in an unique and intense experiences as fruit
â Using a mixture of products, services, and activities;
â Combining products usually found in very different sectors.
- 3. It is a business model that serves different segments at different moments â but never simultaneously.
- 4. Cookiteca knows how to answer the question that I usually put: âwhat do you mean in my life?â Cookiteca is a place where I can meet with other âfoodiesâ like me.
- 5. Improvements will come from a better fit between the three dimensions:
â Solution portfolio
â Locations (including the online shop)
- 6. Despite requests and having prepared some documentation, Cookiteca does not yet wish to franchise the business because the founders feel that further fine-tuning is needed. Franchising means offering the franchisee a reduced risk of failure, and Cookiteca wants to improve their model first. This is a good example of an ethical business philosophy.
Source: CĂłdigo 84, nÂșÂ 169.
Tags: Cookiteca · cocinar · fĂłrmula de retail · limbic system · off-line · on-line · personal abilities · potencial humano · retail formula · sistema lĂmbico · start-up · to cook
Image: LluĂs MartĂnez-Ribes
In August 2007 I spent two weeks in China working on a retail project for household goods. I visited a lot of homes as well as a few shops in several cities. In one of these stores, I saw a sofa with a piece of paper on top. It was a public list for those interested in buying the sofa to jot down their personal data. If 10 people signed up indicating they were interested, the store would then sell that model to all of them at a heavily discounted price.
This was the first time I saw an example of we-commerce, albeit an analogue version.
Currently, the group shopping phenomenon is spreading around the world, though taking advantage of Internet instead of paper due to its ease.
What is âwe-commerceâ?
At the individual level, we-commerce is what many companies have been doing for decades: creating shopping groups to be able to negotiate better prices from their suppliers.
We-commerce is the name used to describe a particular way of selling products. Itâs led by an aggregator which takes advantage of the bargaining power of group purchasing and the possibilities Internet provides. When a certain number of clients are strongly interested in a given item, the purchase can be made with a very advantageous discount.
Example we-commerce sites include comprarunidos.com, everybodycar.com, compramospiso.com, valesmucho.com, entregrupos.com, numismatica-visual.es (occasionally), etc.
How we-commerce works
There are three players in the sales process: interested individuals, companies selling their products, and the agent facilitating the relation between the previous two. The fundamental role of the latter is to aggregate demand so that a certain volume is created, thus allowing the seller to offer interesting price discounts.
In fact, the aggregator creates a âvertical distribution systemâ as it is referred to in academia: Â âactorsâ who are organised and related in such a way that they carry out beneficial commercial transactions for all.
Despite the fact that this bargaining power resides in the purchasers grouped together, the aggregator usually takes the initiative in organising the system. However, the potential customers indicate which products they want to buy through the group.
These items normally consist of high-priced goods which are only purchased sporadically. Examples include homes, large household appliances, stamp collections, etc. This model does not work with ordinary products. One company, tiketocio.es, tried to apply the model to perfumes in 2010 but it now sells them through conventional retailing.
Advantages and disadvantages for purchasers
In exchange for a highly reduced price, in general, interested purchasers are not sure when they will actually be able to carry out the purchase or even if it will occur as this depends on having enough purchasers. Another negative factor is that shoppers are often the ones who have to pay a commission to the agent organising the purchase.
To a certain extent, group purchasers also have to accept certain trade-offs, such as having fewer customisation options available.
For sellers, group purchases represent an important increase in their sales volume though at a notable price reduction. They also have to remunerate the aggregator, whether via commission or periodic payments. This sales model does not encourage brand loyalty, though short-term sales are high.
For aggregators, this model allows them to earn significant income since the other two parties are very interested in reaching an agreement. The weakest aspect of the model currently is that it is still in the early stages and lacks critical mass.
For all three, it is extremely important that all the purchasers who say theyâre interested truly commit to carrying out the purchase if the appropriately-sized group is created. If this doesnât occur, the transaction will not take place, and all those involved will, at a minimum, have wasted their time. In 1989, Bagnoli and Lipman, discussed this modelâs theoretical foundation for the first time, arguing that this type of contract required certain guarantees.
What it isnât
We shouldnât confuse we-commerce with other business models that share some common traits.
Online outlets (e.g., vente-privee, letsbonus, groupon, privalia, buyvip, primeriti, yoox, net-a-porter, etc.) do not practice we-commerce. They offer products at reduced prices to registered customers that have agreed to be periodically informed about special deals, the latter normally lasting a very short time. In addition, the clients donât choose the products to be sold; these appear and disappear based on what the companies selling them want to liquidate or promote. This type of outlet store does not need a minimum number of purchasers to carry out the sale.
Social media commerce, that is, sales organised via social networks (e.g., Facebook, Yahoo!, Google+, etc.), can be defined, according to Anthony Mayfield, as the use of social networks for their members to acquire products or services through the network, taking advantage of the highly influential recommendations provided by friends and acquaintances.
Thefancy.com is an example of a mixed social media and affiliation commerce model. Some consider this site to be the Pinterest of e-commerce. Each time someone buys something through a link someone else has shared, the latter receives a commission.
Though it is a type of group purchase, we-commerce is not about sharing ownership or use of a given product. The latter model, in which usage takes precedence over ownership, is growing. Clear examples include firms such as Zipcar.com, through which members share cars, and myluxury.biz, which rents luxury purses by the day or week.
A fairly similar model is cloud housing (vidamesfacil.com/cloudhousing) which manages buildings, applying economically and environmentally sustainable principles and sharing or purchasing supplies together. Another example of a company with strong social and environmental values is Londonâs The peopleâs supermarket, though it is still not online. It has been partnering with Spar since 2012.
On the other hand, there are also examples of firms who use the term âwe-commerceâ though they are, in fact, traditional retailing. This is the case with Join2buy, whose name, appearance and introduction seem to be that of a we-commerce site though it only offers a limited number of products for which it believes there will be strong demand: it simply buys them from suppliers at a low price and sells them cheaply.
We-commerce has a strong social foundation which is actually based on biology. As mammals, we feel comfortable in groups. We like to influence others and be influenced by them. This tendency is heightened even further through Internet where we not only receive content but also produce and share it. Social networks have become the greatest worldwide revolution in the last few years with tremendous impact.
The theoretical basis of this influence is the so-called ânetwork effectâ which Robert Metcalfe applied to Internet in 1980: the more people are included in a network, the more everyone benefits, obtaining positive externalities.
In this context, we-commerce unleashes individualsâ latent potential when they become organised. Together they can achieve things which they couldnât on their own. In fact, shopping is a human activity with a high degree of social content and repercussion.
One of the primary success factors of any we-commerce firm is very likely generating trust to quickly become important and reach the so-called âtipping pointâ (Malcolm Gladwell, 2000): the point at which it becomes the reference and, as a result, achieves critical mass in the number of consumers.
We-commerce has novel traits, but it also has a paradoxical component in terms of the commercialisation strategy used.
Several we-commerce companies describe their sales model as âdirect purchaseâ. However, the majority of aggregators that group interested buyers together neither sell nor re-sell products. By contrast, they expand the sales channel by acting as intermediaries between the purchaser and seller.
In a society which often claims that it wants to âeliminate the middleman,â this example demonstrates that some clichĂ©s are poorly formulated.
Two final thoughts
First: Regardless of whether we call them individuals, purchasers, shoppers, consumers, citizens or, better still, people, they will become increasingly aware of their power and their social and commercial influence. The examples cited above are nothing more than the seed of whatâs to come.
Second: Many low-cost products and repeat purchases (e.g., detergents, cheese, bread, etc.) cannot be sold via the we-commerce model. However, I can foresee families soon putting a price on their loyalty. It will no longer be a question of âhow many points do I get for every 10 euros I spend at the supermarket?â but, rather, âWhat rebate will you give me if I spend 90% of my annual family budget at your store?â. Â The metric for this already exists and can be calculated: âcustomer lifetime valueâ.
Source: CĂłdigo 84, nÂșÂ 168.
Tags: business model · efecto red · grupos de compra · internet · modelo de negocio · network effects · outlet on-line · retail · shopping groups · sistema vertical de distribuciĂłn · social media commerce · vertical distribution system · we-commerce
In 2012, many pharmacies in Spain have drastically reduced their inventory. The Government, their main customer, accounts for over 70% of sales and is not only negotiating lower margins but also paying later and later.
Keeping stocks down is very appropriate in financial terms, but not necessarily in terms of the impact on customers, who see how their usual pharmacy has become less convenient: Â many products have become available only upon request and customers must return another day to pick them up. Product presentation has also become less attractive.
Such inventory decisions are common in retail. Mercadona, for example, significantly reduced its range in 2009.
This topic has enormous scope, affecting not only the financial and commercial aspects of an organisation but also the management of complexity within it (purchasing, logistics, and training, etc.). Put another way, it directly affects the balance sheet, the Profit and Loss account and the overall competitiveness of a retail company.
Tools for the assortment policy
It is well known that assortment in a retail company has two variables: breadth and depth. The first refers to the number of major product categories that a store (physical, web or app) makes available to the customer. The second refers to the number of options that the store offers within any given category (for example, the number of kinds of milk on sale).
By playing with these two variables one can describe many retail formats. A convenience store, for example, is characterised by offering a broad but shallow choice: a little (usually only best-selling products) of a lot of different categories. In contrast, a specialist shop offers many options (depth of choice) in only a few product categories, aimed at many different kinds of customer.
Several methodologies have been used, such as “efficient assortment” or “category management”, which has been promoted by AECOC* for years. Their usefulness is high when it comes to improving or adjusting an existing situation, but is nevertheless low when it comes to creating an innovative retail formula.
(*) AECOC, Spanish Association of Commercial Coding (AsociaciĂłn EspaĂ±ola de CodificaciĂłn Comercial
On the other hand, the method by which category management has been actually carried out has led to it going into a steep decline, at least in the mass market sector. Suppliers led, developed and funded while those directly concerned, the retail chains, went about making range decisions using different criteria, not always in line with the patterns of their suppliers.
As a result, the current playing field presents a remarkable challenge: choice, a crucial element in commercial and financial policy, is addressed in a disorganised manner.
Customers change their preferences for both type and amount (for example, ‘three for the price of two’ promotions no longer seem to work as well as before), suppliers want to launch new products, but the likelihood of achieving sufficient market coverage is very low and retail not always are in tune with the customers or with the suppliers.
There have been numerous studies which have shown that an excess of depth of choice does not usually create a better quality of life for customers but instead generates more complexity, more doubts over what to choose… and ultimately less revenue, as noted by Prof. Barry Schwartz in his book, ‘The Paradox of Choice,’ 2003.
A study carried out by Sheena S. Lyengar (‘The Art of Choosing,’ 2010) looked at the reaction of supermarket customers faced with two alternative choices of jam.
The largest number of products attracted more customers (fascination effect), but Â resulted in fewer sales. The human brain does not like complexity, doubt, Â or paying conscious attention to things. Aspects such as these represent effort and aggravation in the purchasing process.
This finding is especially relevant since, according to research by Dixon, Freeman and Toman, Â reducing the required effort creates more loyalty customers than, for example, giving them a fascinating shopping experience.
As Prof. Bran Wansink (Cornell University) noted, Costco in the USA has only 4,000 items in its range. The lack of choice is deliberate: “We’ve chosen for you,” says the chain.
The compass points towards the customer
The current challenge of choice, especially as applied to moments of innovation in retail, can be solved better if we start not from our current assumptions but from customer-centricity.
More specifically, a new approach is born if you start from a very simple question:
- Shop, what do you mean to my life?
In other words, what is the shop to the customer? And also, what is the shop to the customer? Note that we are not using the verbs ‘to do’ or ‘to have’ but others: ‘to be’ and ‘to feel’.
One task that can have a high impact on a retail business is known as to edit. Once common in fashion retail, it can now be found in any sector.
To edit involves devising the sense that a given choice might have, through items provided by different suppliers. Â It’s like composing a musical score using notes provided by third parties. Â For example, designing a collection of accessories that expresses a Mediterranean character from a selection of existing items from various suppliers.
This type of activity is typical of a curator.
This rol is key to any museum exhibition, Â the curator determines the sense of the event by choosing works that he or she did not personally create. The curator will also arrange and sequence them according to his or her determined criteria. As a result of the work of the curator, visitors will enjoy a consistent experience full of emotions and perhaps of learning, achieved in a chronological sequence, as a vivid storytelling.
One example is that which Gary Friedman, President of Restoration Hardware, cites as the company’s philosophy of business and, as such, of choice: âWhen we fearlessly fight for what we believe in and remain hopelessly optimistic about life, love and the future, we create an authentic connection with all in our path. Most importantly with ourself.â
Another example is that of Ferran Amat, owner of the iconic shop VinĂ§on in Barcelona, when he cited falling in love with products as a criterion for choosing them. In an interview he said that they were all products he would have in his own home.
This term reflects its etymological origin in Latin, curare (to care for, to worry about); that is to say, those who are responsible for a matter or process, having talent, subject knowledge and management ability.
This role is now more relevant than ever in a retail company because we live not only in the information society but also with the burden and oversaturation of inputs with the associated risks of lack of attention and mental distraction of customers.
In short, adding more and more items is not necessarily the answer. The customer ‘reads’ and understands choice on a non-conscious level. I have no doubt that assortment communicates more and better than posters, displays or ’stoppers’. Because it does so intuitively.
But for choice to communicate and sell efficiently, I propose the following three steps:
- Inspire yourself with the answer to the question, “Shop, what do you mean to me?” Answer if possible without using the usual topics: price, product, quality, service, location etc. Here the role of curator is essential, because it is the source of the assortment policy: to select the right products for the shop. The result will be an “edited” choice, which logically must be in tune with the shop as a brand.
- Organise assortment — and as such the layout of the shop floor — based around a well thought out Â Semantic Structure of Assortment: a type of tree of consecutive criteria, grasped intuitively through empathy with customers. It’s not recommended to ask them directly via market research; it would be paradoxical to use a conscious method to understand an implicit process.
- Express it in a way that does not create chaos or visual pollution in the human brain. To do this, it is helpful to visualise the subcategories so as to highlight the most relevant in terms of what was mentioned in step 1.
In this way, choice will be in tune with customers. They’ll feel good about what they experience in the shop and of course about its functionality.
So, the breadth and depth of choice in an innovative shop — or at least a differentiated one – will be the result of a kind of philosophical human process; … and therefore very commercial.
Customers aren’t robots with wallets, but people who live their lives in the most harmonious and positive way possible.
References (by order of appearance)
Schwartz, Barry. The paradox of choice: why more is less, 2003, Ecco edit., ISBN 978-0060005689
Iyengar, Sheena. The art of choosing, 2011. Twelve Edit. ISBN: 0446504114
- Dixon, Freeman & Toman, âStop Trying to Delight Your Customersâ, Harvard Business Review. Agosto 2010.
About Restoration Hardware:
Source: CĂłdigo 84, nÂșÂ 167. December 2012
Tags: Barry Schawartz · Costco · Efforts · Esfuerzos · Sheena Iyengar · VinĂ§on · assortment · category management · concept store · convenience store · curaciĂłn · curation · curator · editar · estructura semĂĄntica del surtido · gestiĂłn por categorĂas · lealtad · loyalty · semantic structure of the assortment · surtido · tienda de cercanĂa · tienda especialista · to edit
Image: inside the store (provided by the company)
On September 20, Victorio & Lucchino (V&L) established its first shop for men in nr. 28, Lagasca Street in Madrid. The inauguration made a splash in the media and in the public. The Spanish real-life magazine Hola.com made the event its main story: âVictorio and Lucchino open a store for the XXIst century manâ. The reason is simple: it profoundly reshapes the shopping experience, in such a way that from now on, plenty of men shall feel relieved when outfitting for the coming season.
The essence of the Victorio & Lucchino brand
In the late 70s, JosĂ© Victor RodrĂguez and JosĂ© Luis Medina joined efforts to create a brand, which has become over time one of the most representative and high-profile in the Spanish fashion industry.
When designing garments, they become inspired first by their homeland roots, which they then deconstruct and project into the future. They do so with a style that identifies them: aspirational, determined, seeking both perfection and good taste. Lastly, they add âa winkâ.
What their garmentsâ label used to claim isnât pure coincidence: Â â40% love, 25% charm, 35% joyâ. Â V&L soon became a leading brand among women.
However, after reaching a strategic agreement with the company Manufacturas Andreu in 2010, V&L took on the challenge of selling directly to men. For over a decade, this partner had been supplying V&L its line of Â fashion accessories.
Together with the key executives of the firm, Andreu and Xavier Aspa, we started devising the new retail formula by the end of the year.
Inspired by men
The company is clearly customer-centric. From the very beginning of the project Â it was crystal clear that the retail innovation should be grounded in the understanding of the -not very passionate- relationship between most men and fashion.
The insights gathered in qualitative market studies indicated that in general, the male population regarded clothes shopping for a particular context (professional or leisure) an unwelcome chore, namely because it requires, at least, three kinds of efforts: it is time-consuming, coordinating clothes is challenging and, finally, trying them on is a hassle.
Therefore, the V&L concept was thought up to provide a greater life quality to those men who value a classy look according to their personal taste, and with a little mischief.
The playing field
At the time the project was being conceived, we saw that the fashion retail sector was undergoing radical changes, particularly in three areas:
- Consumers have increased their expectations regarding product, services, price and environmental impact.
- At an economic level, thereâs economic instability, demand has decreased and margins are dwindling.
- Digital technologies are becoming ever more available, thus allowing for new online purchasing habits.
More and better of the usual methods are no longer enough: new, innovative retail business models are called for. This is not meant to be trivial, but an entrepreneurial must.
The team was absolutely determined about one thing: we shouldnât only create a shop, but a new retail formula, devised in such a way that it would attract customers back again and again. For this purpose, it was necessary to ground the purchase experience in these two axis:
- The shop should reflect the values of the V&L brand, its creativity and magic. The setting would be essential.
- The shopping experience should be empathic, smooth and customised. New and powerful technologies were called for, subtly inserted in the shopping process, heavily supported by the back-end and leveraging on cloud computing.
Image: inside the store (provided by the company)
The setting and its technologies
The shop has 150 m2 distributed in two floors, with a very high ceiling.
The ground floor represents a spacious living room, expressed with the particular imagination, style and liveliness of the two Sevillian designers. The products are displayed therein, separated by user context. There is an area dedicated to formal wear for work, another one for casual moments, and a third with a rather more country touch.
The shop maximises customer convenience by tailoring their shopping experience and reducing their efforts in a fun way, namely through two steps: the Pinpoint and the Canvas.
The Pinpoint experience
New customers are invited to enjoy the service of diagnosing their aesthetic preferences in the PinPoint area, a little study which reproduces the designersâ atelier.
There, customers can find out -with the help of a tablet and a stylist- what style matches their personal taste best for every context (work and leisure). Later, their body measurements are taken.
All this information is stored in the cloud for when it may be needed again. This way, return visits will take significantly less time (it wonât be necessary to start from scratch) and shall even be more accurate (the computing system knows the customerâs taste and updates it with every new purchase).
The Canvas revelation
Once the profile has been outlined in the PinPoint section, the customer is ushered to the Canvas, a 40ââ multi-touch table-tablet standing in an iconic space within the shop. There, and guided by the sales assistant, the machine proposes three outfits, taking into account the personal preferences and what they are needed for. The customer himself can also handle the oversized tablet in order to adjust the results.
The program can also recommend other combinations on the basis of a given garment the user might have selected, as it is capable of recognising every item in the shop by just placing it on the screen. A complex system of algorithms matches customer taste with garment tags.
The Canvas reduces the risk of a poor choice and the customer rests assured that the items he buys match, that they suit his style and all this without trying on many things.
This is a good example of how technologies shouldnât be used for their own sake, but rather as a means to an efforts-free shopping experience for customers.
Two years, one orchestra
During the two years in which the project was developed, Andreu and Xavier hired outstanding professionals, each one an expert in their own discipline. MartĂnez + Franch (m+f=!) were entrusted with the retail innovation consultancy, while the conceptualisation of the interior was developed by both designers of the brand and the architecture firm âMadrid in Loveâ. The technology was built to order by Raona based on the Pixel Sense structure, a combination of Samsung and Microsoft products. Another key asset has been the fashion designer Gala Canut, responsible for the collection and style.
In addition, the company paid special attention when selecting the sales team, according to their human empathy and aesthetic sensitivity. Their training took long and was meticulous.
Andreu and Xavier havenât only conducted the orchestra, but they have taken special care of every detail and played as many tunes as necessary to accomplish their results.
The shop will be considered a pilot for one year. In other words, it will be a space to learn until it Â can be confirmed it works with high profitability and customer satisfaction. In the next stage, the chain shall expand in Spain and internationally.
More than just a shop
Victorio & Lucchino Men is a fascinating store and a fully innovative retail ecosystem, created to yield sustained cash flow. It is a complete business model (front-end plus back-end) that expresses the V&L brand with the five senses. It is based in customer centricity with a single purpose: sustained loyalty. That is why we have added the prefix -eco to the word system.
Source: CĂłdigo 84
special edition for Aecoc Congress
Tags: Victorio & Lucchino · business model · centricidad en cliente · customer centricity · experiencia de compra · fashion · innovaciĂłn · innovation · insight · lealtad · loyalty · moda · modelo de negocio · retail · retailing · shop · shopping experience · teatralizaciĂłn · theatricallisation · tienda
Stefan Siegel, founder of Not Just a Label
Surprise in Brussels
July 4, 2012, Brussels. The speaker that followed my talk was Stefan Siegel, founder of Not Just a Label (www.notjustalabel.com). Dressed elegantly, in a slightly avant-garde manner, he explained his company to an audience of professionals from different sectors of the garment industry. The conference, organised by PROsumer.NET (1), explored the retail innovation trends in fashion products.
I was entirely captivated by his business model and his management style, being the latter visionary, holistic, passionate and pragmatic, all in one. In 4 years (despite the economic turmoil) his company has become the most influential platform of contemporary fashion clothing and accessories in the world.
What is “Not Just a Label”? (NJAL)
Just like myspace propelled many singers and bands into stardom, NJAL is playing the same role for promising fashion designers.
In other words, NJAL is the main global directory of young, talented vogue creators. It is the worldâs online landmark showroom. It is the hub or meeting point for the offer and demand of stylish couture on a planetary scale. The content it visualises is that of art shaped into fashion.
The two Siegel brothers, Stefan and Danie, started the venture in 2008, leaving behind orthodox and well-paid jobs. Stefan had fashion experience while Danie had worked with information systems.
Artists who would like to appear in the directory can apply online, and are later analysed by experts. If their work is very good, they are accepted and listed free of charge. Out of these, only the very best shall receive the status of Black Sheep, achieving thus an even greater visibility.
It is a shop, too
NJAL is much more than a showroom where up-and-coming designers can display their collection and profile for free. Since 2009 it is also a market where the Black Sheep can sell directly their unique or limited edition products, made by the artists themselves. The company, that arranges the entire transaction, keeps a commission on the sale.
In 2011, NJAL was awarded the Drapers Etail prize to the best fashion sales web in the UK, because it allowed ânearly unknown designers gain global exposure and commercialisationâ.
What customers attain by shopping there is a range of creative products, preselected by famous experts, locally manufactured and handmade by the designer, in limited series or as unique items, each one with their own story and inspiration. All this considering that end customers and authors are in direct contact all the time.
Altogether, a new philosophy and shopping experience of luxury goods is born, grounded in authenticity and sustainability.
This is a good example of how an online shopping experience can be just as rich as that of physical shops. Note, however, that this isnât achieved by trying to emulate digitally what happens offline.
Several pieces; one system
NJAL discovers and selects the best designers of trendy fashion in two ways:
- By analysing and filtering online applications. Only the very good ones are accepted.
- By proactively visiting the foremost design schools in the world and the young designer catwalks. This way, they can add 200 artists a month to their showcase.
NJAL looks after its burgeoning youth, by accelerating their career through the following services:
- List of job requests, as applied for by designers.
- List of job offers: companies can inform a very exclusive group of artists about their vacancies.
- Request for quote. This allows the potentially commercial interaction between companies and around 1,000 designers by means of a button next to their profile and collection.
- Managerial services for those designers with greatest potential.
- The sale of articles by the most talented in a transparent way.
The firm also undertakes workshops in design colleges, in order to present the latest trends in vogue.
Finally, NJAL also provides consulting services on fashion trends for large companies.
From the support of new designers to the sale of luxury products.
A well-managed dilemma
NJAL masters the management of an important dilemma:
a) The accomplishment of reputation, prestige and credentials by means of:
- Showcasing the best, as it offers a selected and filtered content.
- Using VIPs on occasion, like for instance when selecting products for retail.
b) The attainment of critical mass. This is achieved by democratising good design, providing free exposure to many talented artists, and obtaining in exchange usability and relevance.
âLego-typeâ business model
NJAL is the paradigm for “a Lego business-model society” (2)
The firm now performs and combines smartly different activities or micro-functions (âLego piecesâ) that were once developed by other players in the sector.
One of the key tasks is that of curating or commissioning fashion design, currently in the hands of Diane Pernet, a leading voice in the industry. These filtering and organisation functions shall be more and more crucial in the overloaded information world where we live.
NJAL assumes the role of an orchestra conductor: it directs some and yet, has them do.
With these kind of assembled âpiecesâ, the system allows authors to shine with their own light and causes the traditional modus operandi of the fashion sector to become obsolete.
In a nutshell
NJAL has devised an ecosystem where every element plays different roles, which compose a sustainable business model when integrated. As a result, the company gains the preference of many stakeholders: talented creators, design colleges, fashion companies, specialised media and the public who fancies products with limited commercialisation.
As Diane Pernet asserts, what really matters in an online business is the combination of content and contacts.
(1)Â PROsumer.NET is the network of European Technology Platforms for design-based consumer good industries and related research.
(2)Â Authorâs own terminology to refer to the possibility of configuring new and non-standard business models by reallocating microfunctions between different players.
Source: CĂłdigo 84, (Burbujas de OxĂgeno)
Tags: business model · comercializaciĂłn · commercialisation · design · designer · diseĂ±ador · diseĂ±o · fashion · innovaciĂłn · innovation · luxury products · microfunciones · microfunctions · moda · modelo de negocio · networking · productos de lujo · retail
Image: Container for spices sold in bulk, designed by Carolina Caycedo, which was awarded in the category “Young Design” awards Liderpack of 2011
On February 1, 2012 the Liderpack Jury granted an award to the best Spanish packagings. The most refreshing category was âYoung Designâ, consisting of junior creative proposals. One of them was a pack for spices sold loose. It was compact, small and practical, developed by Carolina Caycedo, a student at Elisava School.
We not only acknowledged its style (it was a contemporary revival of the paper cones made by the typical spice stallholders) but also its practicality (it could be opened and closed after use). We valued it because it answered current shopping trends: buying loose.
The packaging is more than just a pack: it is the outfit of a product. As such, it has a double purpose: the functional one, which is protecting the product; and the emotional one, which is evoking the productâs virtues.
Letâs reflect on 6 aspects that all packagings should comply with:
The brand expression
The packaging represents a customer promise. It is like an âimagination shuttleâ, for it allows consumers to feel in advance all the sensations and satisfaction the product will convey (1). In other words, the packaging is one of the best means to express the brand sense, especially if done in an implicit and intuitive way.
Due to the power of pack designs, executives are advised to withhold from overstating their promise, that is, from evoking more expectations in consumers than what reality has to offer. Tempting as that may be, customers would feel frustrated and ultimately, deceived.
In pharmaceutical jargon, galenic innovation is that which innovates not the product itself, but its applications by making them easier, faster or more convenient to use.
This point is of particular relevance to packaging: a customer-centric approach translates in more product functionality, be it while buying it or using it. The easy-open is a clear example of galenic innovation.
Over time there have been great developments in this area, even in material packs for factory assembly lines.
Knowledge brings love
Information shouldnât be looked down on, no matter how obvious. Without facts, a product cannot be compared. The info is all the product has to say about itself: in writing, visually and by any other element, that could be semiotically analysed.
Science has made some promising progress in packagings by making them smart. They can now indicate the status of their contents, like for instance, if there has been a break in the cold chain.
Another aspect that shouldnât be overlooked is the text legibility. If a text is hard to read, due to its size or its colour, the pack shall not help at all in creating consumer trust towards the brand. We should bear in mind that seniors are the market segment that enjoys reading the most… and both Spain and Western Europe are areas with a great proportion of elderly people.
With oneâs feet on the ground
The cost of mass consumer packaging should be considered with care. Not all markets can allow for the pack expenditure of confectionerâs shops in Japan, to give an example, where the packaging amounts to 30% of the product price.
Nonetheless, one should know where to save money and where not to. As an illustration, take eyeglasses. If these already included from the manufacturer an RFID chip -or similar system-, opticians could not only prevent theft in their shops, but also offer their customers unassisted and open access to their entire frame assortment.
Thereâs life beyond the shop
The packaging should be thought for two distinct moments (when it is bought and when it is used). From a customer-centric standpoint,Â we could add it has also been designed to reduce efforts, either for transport (nature invented watermelons regardless of efficient logistics) or kitchen cupboard organisation.
All in all, we could even take a step further. If the packaging allowed for a replenishment option, that is, once the product has been used and thrown away in the appropriate container, it would automatically activate a device that adds its name in the next shopping list. The order could then be launched later, at the userâs convenience. This is just another example of how online and offline blend together.
No one who ever dares to launch an environmentally unfriendly pack will win the WorldStar, the worldâs most renown packaging award.
This environment consciousness is vivid among citizens. The use of sustainable materials and their minimisation are roads from which thereâs no turning back. One day, consumers shall expect the environmental footprint of a product to be indicated on the shelf, just as they now canât do without the price.
Thereâs another upward trend: the purchase in bulk. One can observe this in many sectors (groceries, flowers, pharmacies, wine, etc.). It is an environmentally conscious practice and a customer-centric exercise: shoppers buy the exact amounts they need every time, increasing their notion of expenditure control.
One might think this trend derives in the death of packaging, although with the loose sale a new ecosystem emerges:
- A simple or reusable packaging.
- It requires a new container-pack that can adequately protect the product in the shop.
- The section where customers can buy loose is a packaging on its own, too, with its scenery and sensoriality.
- In many cases, a flexible labelling system shall be necessary, in order to add information to the sold product.
In a nutshell
“Packaging management isn’t only about classy, low price and quality containers. It is a multifaceted business management method, that involves not only rational considerations (price, functionality and technical efficiency) but also emotional ones (the understanding of consumer needs and the subtle reflection of the company brand sense).”
It is a technique and an art at the same time.
(1: as mentioned in previous bubbles, imagination plays a leading role as a sales stimulus)
Source: CĂłdigo 84, (Burbujas de OxĂgeno)
Tags: Liderpack · brand sense · centricidad en cliente · customer centricity · envases · galenic innovation · granel · innovaciĂłn galĂ©nica · loose · packaging · sentido de la marca · sostenibilidad · sustainability
Itâs no laughing matter. A vast amount of non-academic literature states categorically that most of the shopping decisions take place in the store.
Barbara Grondin (1) claims that 50% to 70% of shoppers are influenced by at least one of the different in-store media: posters, displays, hangers on the shelves, stoppers, etc.
Millward Brown (2) mentions that around 70% of brand decisions are made in the shop.
Jeff Froud, Strategic Planning Director at OgilvyAction (3) points out that 72,4% of visitors in a shop take at least one of these decisions:
- What amount to purchase (52%)
- What brand to choose (39%)
- Whether they purchase a new category they hadnât considered before (29%)
- Whether they leave empty-handed (13%)
The shop impact may vary depending on: the kind of product (going shopping -for leisure- is different from doing the grocery shopping -as a chore-), the customer context (for instance, when they just received their wage), or the personal profiles. Without a doubt, the impact will also differ according to the visitor experience the shop has prepared. This aspect is usually overlooked in many studies.
In any case, regardless of the numbers, what happens in the shop is of foremost importance.Â Amancio Ortega (Inditex) already pointed this out: âThe store is the best way to build a brandâ.
The relevance of in-store displays
Displays are one of the top means to boost sales in the shops. Their relevance is such, that Liderpack grants awards to the very best every year in Spain. They come in all sorts, shapes, assembly systems, finishes…
And their purpose is multiple:
- To impact visitors by making them aware of something that otherwise would be ignored.
- To persuade them to buy something unplanned for.
- To achieve a cross-sell: buy this, along with that, too.
- To achieve an upsell, that is to say, elevate the product level of what the buyer intended to purchase originally: choose this (and more expensive) option.
On the whole, the aim of displays is to sell more, here and now.
Who could be drawn by such goals?
Itâs not a foolâs question. One would answer head-on that both the shop and the supplier have an interest.
However, most of the displays submitted to the yearly Liderpack Awards belong to suppliers, who are very interested in promoting their brand in third-party shops.
The smart retail company (the chain) isnât very keen on selling supplier-branded products… nor those of its own brand. What it really is eager about is selling the shop, or in other words, that buyers choose their shop over any other.
The best chains arenât concerned so much about the average sale per receipt as they are about their customersâ frequent return. Thereâs mathematical evidence to back this statement. In the supermarket advertising of Aqui Ă©, the company advised their shoppers to buy more frequently instead of too much, because their groceries would then be fresher, healthier, more flavoursome and in consequence, they wouldnât go to waste.
When customers decide to do their shopping in a given chain, they select a product with a very big packaging: the shop. Inside this shop-packaging there are other smaller packs: the sections (with more or less appeal). Within this section-packaging thereâs another smaller one, called shelf. Finally, the tiniest of them all is the itemâs own packaging, what we colloquially know as product.
When customers reach this point, they have already gone through the three mentioned packagings, all of them chain-branded. It is easy to understand the implicit power of the own brand, when not using the ideological concept of private label. And it is also easy to grasp why more and more suppliers choose to sell directly to consumers, i.e. to be in retailing.
Until such a strategic decision isnât embraced, companies opt for B plans, such as:
- Shop in shop, just like those of Roca in some of their dealersâ stores.
- Areas with atmosphere, like the ice-cream shops that Unilever has set up in collaboration with some chains.
- The use of posters, or even better, displays, because they can include the products.
In-store display trends
I believe we shall see the following trends in displays:
- Sustainability should be something considered upfront, right from the briefing stage. Whatever is temporary must contemplate its recyclability, for there is only one planet.
- They must be attractive in order to break the customerâs lack of attention, which in turn is a consequence of todayâs hyper-stimulative way of living. Nonetheless, shouting louder is no longer the right path. The word impact has a suspicious undertone; It would be much better to attract, stimulate and seduce instead. It would also be convenient that shops werenât visually polluted by displays. When a rowdy store is put in order, and its assortment is arranged in relation to a semantic sequence of customer-oriented criteria, the turnover increases around 7%, according to my experience in several cases.
- Make customers interact with the display. One way would be through mental interaction via story-telling, in which customers get carried away if their imagination is properly stimulated. Thus, they co-create the message and adapt it to their taste. A second way could be through a multi-sensorial physical interaction like the Sony display, for example, that won the 2010 Award. The visitors could try any of the photo cameras on exhibit and once they did, an interactive screen would come up with product information. Customers could then choose to expand whatever info they required.
- Because of the human nature, communication is bidirectional, but today only a minority of displays allow visitors to get in touch with the company, for example, by giving their opinion or suggestions or similar. In this respect, many museums are one step ahead of everyone else, for they offer visitors the possibility to write about their experience in guestbooks when leaving. What customers say to other customers is much more convincing than what a company can publicise about itself. If the brand is good, it needs to persuade less and can work more on facilitating customer interaction through different platforms.
- In my opinion, an in-store connection with someone at a distance is another growing trend. Through the display and via internet, customers can ask for help, information or advice. If half of the Spaniards already use smartphones, why canât a shop display be connected to the internet?
- A display with these afore mentioned features could easily be turned into a market research tool, developed in real-time, which could provide insights on what the public likes about a product or doesnât understand about it -and of course, this would be done without having to ask anything to the person whoâs experimenting with an exhibited product.
- All in all, the display can facilitate the sort of shopping process that people do now: just like with cars or carpets, their experience often starts on the internet and ends in the store. Sometimes, customers are in the store and check something via their phoneâs internet, with the possibility of finishing their shopping at home and online. This multi-stage vision of the buying process (by fusing online and offline) will prompt a great degree of innovation in retail.
Where will the purchase decisions be made?
Given that barriers between the digital and the physical have nearly disappeared in customersâ eyes, it would be sound to create displays that could merge:
- Presence + distance
- Functional information + boosting imagination
- Bidirectional communication (from/to shoppers)
- Understanding of what aspects of the product really attract the customer.
From now on, the decisions shall be made in both types of shops: molecular and digital. Shall the percentage of shopping decisions made in-store become one day an urban legend?
Source: CĂłdigo 84, (Burbujas de OxĂgeno)
Tags: Barbara Grondin · Jeff Froud · Liderpack · Millward Brown · communication · comunicaciĂłn · decisiĂłn de compra · displays · envases · interacciĂłn · interaction · internet · packaging · proceso de compra · purchasing decision · purchasing process · shop · tienda
583 million results in 0.47 seconds. Thatâs what you obtain when searching âshopping experienceâ in Google. It is a hot topic, an expression on everyoneâs lips… and as a result, paradoxically dangerous.
Here we shall see the evolution of the concept shopping experience in academic literature and conclude with some practical thoughts.
The playing field
This experience takes place in the store, where many shopping decisions are taken. How many? Iâm not sure, as I doubt that a fully validated percentage even exists. If it did, it couldnât be applied in the same way to people who are doing their shopping (chore) as to those who are going shopping (leisure). In addition, there are two kinds of buyers who represent different situations:
- Those who are replenshing, well aware in advance of what they want to repurchase. They know their products so well, that they spot them at first sight on the shelf, just by their shape or colour.
- Those who make up their mind on the go, based on what they see, read or perceive in the shop. Whatever these end up buying will be much more influenced by what they have experienced in the point of sale than the previous ones. In particular, what shall be influenced is their motivations, beliefs and attitudes.
From 1973 to the early 90s
Philip Kotler (1973) was the first one who claimed that the atmospherics of a shop was a marketing tool. When the design is consciously thought up, it produces emotional effects on the visitor and this increases the probablity of a purchase.
Then, companies in retailing understood the importance of interior and exterior design as a way to stimulate the willingness to purchase. That is, they intended to influence customer behaviour and this aim was their prevailing mindset.
As a marketing tool, the ambience has three main contributions to make:
- If properly differentiated, it draws attention to the shop.
- It is the message. The shop communicates something to the visitor.
- Itâs a way of bonding with the shop and its assortment, which increases the immediate intention of purchase.
From the early 90s to nowadays
At that time, it started to become clear that which today is an actual clamor: markets and audiences are increasingly fragmented, and therefore itâs difficult to achieve an effective communication with limited resources. Using the shop as a means of communication could become more cost efficient.
In this context, the main goal was to identify what has most influence on the shopping behaviour.
We can highlight two of the most relevant investigations in this second stage:
Donovan & Rossiter (1982) studied the works of Mehrabian & Russel in further depth, in order to investigate the responses that certain stimuli would cause on visitors. These are some of their conclusions:
A high degree of novelty and sophistication in the shop creates stimulus and interest.
In appealing surroundings, a high level of interest derives in a larger probablity of positive reaction. Conversely, if the interest and attention of a customer are activated in an unpleasant ambience, the reaction is negative.
That behaviour might also determine the time in the shop, the eagerness to explore, the readiness to talk or interact with other people, the predisposition to spend more money than forseen, the intention to return and the customer satisfaction.
Baker et al. (1992) completed the previous model by classifying the variables of the shopâs interior ambience:
- Atmospherics: music, light, fragrance.
- Social: presence of sales assistants, furniture and customers. An empty store discourages customers… in the same way that a crammed one would.
- Design: both functional (wide corridors, e.g.) and aesthetic.
All these points are of proven relevance, but their combined use hasnât yet been sufficiently ascertained in order to foresee a given outcome out of each mix.
The shopping experience today
The emphasis is currently put on a shopping experience that expresses the differential sense of the chain brand. Firstly, to draw customer attention, and next, to feel the values of the chain at their fullest.
On the other hand, today the shopping experience cannot be complete without taking into account the internet. Similar guidelines to those of brick and mortar shops can be applied, even if less senses are involved.
It is basic that the shopping experience shows the same brand sense as the retail firm, both in the offline and online shops. The interaction experience must be nearly equal, because digital and physical media are every day more intermingled. (87% of people who buy a car in a dealer have checked them all out on the internet previously).
At the beginning, the first companies that enhanced their customer shopping experience were in the retail business already.
Later, suppliers who saw that many of the purchases were decided in situ awakened and chose either of these two paths:
- To strive to draw visitor attention towards their products in third party shops. Consequently, all sorts of displays and exhibitors have thrived, including sophisticated ones with augmented reality. An avalanche of digital media is now available, yet its focus is in many cases more appropriate for the second stage we mentioned (communication by improved impact) than for enhancing actual brand experience.
- Other suppliers, conscious of the power of multisensoriality but seeing the limitations of acting upong third party shops, have decided to launch their own retail outlets, both offline and online. The examples flourish in every sector and corner of the world. In the mass consumer sector in Spain there are several yogurt shops opened by Danone, and Nestle launched the webside diseloconchocolate.es (tell him/her with chocolate, in English).
In any case, itâs important to remember that communication flows in both directions. Customers now can and want to say things to companies. Thinking about only improving the unidirectional communication just comes to show an obsolete and ineffective management approach.
In collaboration with my former student Aline Adam (MSc Esade).
Bibliography, in order of appearance:
Kotler, P. (1973). âAtmospherics as a Marketing Toolâ, Journal of Retailing, Vol. 49, Nr. 4, pp. 48-64.
Donovan, R.J. Rossiter, J.R. (1982). âStore Atmosphere: an Environmental Psychology Approachâ, Journal of Retailing, Vol. 58, Nr. 1, p. 42.
Baker, J. Grewal, D. and Parasuraman A. (1994). âThe Influence of Store Environment on Quality Inferences and Store Imageâ, Journal of the Academy of Marketing Science, Vol. 22, Nr. 4, pp. 330
Source: CĂłdigo 84, (Burbujas de OxĂgeno)
Tags: Baker et al · Donovan&Rossiter · Philip Kotler · ambiente · atmospherics · comunicaciĂłn · comunication · experiencia de compra · internet · marco mental · mental frame · retail · sensorialidad · sensoriality · sensory · shopping experience