Is Local Better?

We live in Mill Valley, CA, four miles north of San Francisco in Marin County. In our town, there’s a definite bias toward supporting local merchants and products. Smith & Hawken got its start here, and so did Banana Republic. At the holidays, even the parking meters take a vacation so shoppers can park free like they do at the mall up the highway. In terms of store names and ownership, Mill Valley commerce is diverse, and that adds to our town's character and personality.

But Ad Age got my attention when they reported yesterday that "it’s going to be a private label Christmas." Most private label merchandise is sold in chain stores – near us, that includes Safeway, Whole Foods, Molly Stone’s, Target, and Costco (no Wal-Mart nearby). In general, people buy private label goods because of the savings relative to branded goods. Consumers typically don’t know where private label products come from – part of their lower cost stems from avoiding the expense of telling the story of the individual products.

Based on its research, IRI predicts that big-box stores like Wal-Mart and Costco could be the big winners this holiday, possibly drawing shoppers from department and specialty stores by convincing consumers they can save enough on food to cross the aisle and shop for gifts, as well. Guess that makes the local specialty stores downtown more vulnerable than usual this holiday season, and the local grocery stores, too. Besides free parking, I’m guessing there will be more holiday festivities this year to draw people to the local shopping district.

But what does local really mean? Does it refer to the store’s ownership structure? Or its involvement in the community? Can a big box store be local? Is there a distance that defines what’s local? Is it the distance from the customer’s home to the store, or from the source of the products to the shelf, or both?

In the fresh food category, Wal-mart defines local as grown in the same state as it's sold. Whole Foods considers local to be anything produced within seven hours of one of its stores, and says that most of its local producers are within 200 miles of a store. For Seattle's PCC Natural Markets, local is anything from Washington, Oregon or southern British Columbia. Frankly, of the three, I think Whole Foods gets it closest to right.

According to a story this week by Julie Schmit for USA Today, “the ‘locally grown’ label is part of retailers' push to tap into consumer desires for fresh and safe products that support small, local farmers and help the environment because they're not trucked so far.” And for some consumers, being locally grown is now more important than being organic.

Farmers' markets are seen a source of local fresh produce, meats and cheeses, and they're on the increase. Last month UDSA reported that the number of farmers markets in the United States has nearly tripled over the past 15 years to 4,385. We have seven a week just in Southern Marin County.

USDA and others are careful to point out that locally grown food is not necessarily safer than food from farther away. But it seems consumers are not satisfied with government assurances about the safety of the food supply, and they like the greater ripeness that sourcing locally affords. In some respects, “Organic” and “Green” have become short-hand for “Safer” and "Better." Sounds like “Local” is the newest addition to that list of reassuring words.

Look for a push for standard definitions and certification of “locally grown,” and a move to track and report on the handling of fresh food from source to shelf as people increasingly think about what’s on their plate and how it got there.

And back in Mill Valley, I expect merchants large and small to continue trying to figure out how to capitalize on our passion for all things local.

Too Much Email!

I am a boomer and for the last 10 years, email has been my favorite way to communicate in writing. However, nowadays, my email box is exploding – as the holidays approach, it’s looking more and more like my offline mailbox: stuffed, mostly with mail I am not interested in, much of which I never requested. I have my SPAM protection set to the highest level Yahoo affords, and it catches the truly offensive stuff. But I am receiving more, and more is getting through. Sound familiar?

According to the Pew Internet & American life Project, 92% of email users define spam as “unsolicited commercial email from a sender they do not know or cannot identify.” A quick look in my Junk folder from today shows I have received email from senders whose names are more like reiterations of the subject line than a sender. I received an email from “Oprah Breaking News” with the subject: “Oprahs #1 Superfood”, and one from “Flat Stomach Pill” about “Get Japanese Skinny! New Discovery shows...” OK, so there’s a pattern here - more than one marketer thinks I’m interested in weight and nutrition. I'm a boomer woman - no big insight there.

Point is, these emails hide the sender’s real identity – for all I know, they could actually be from the same sender. This type of sender naming convention makes it hard to block since it is email specific – I can only block it after I know the sender, i.e., after I’ve received the email. Odds are, the next email from that sender will be promoting another unwanted product or service, and the “from” will reflect that offer.

The Oprah email and others like it are designed to imply an endorsement, but I'm pretty sure Oprah has nothing to do with the Superfood email sender. How many emails have you received offering a gift card from a well-known store, but that is not from the store? I wish I could block these emails.

Unsubscribing is apparently a high-risk activity. While reputable emailers have a working unsubscribe function, they‘re not the ones to worry about. Yahoo recommends that to avoid spam, users should “never respond to the spam email's instructions to reply with the word 'remove' unless you trust or know the sender. Many spammers use the 'remove' or 'unsubscribe' links as a ploy to get you to react to the email. This may alert the sender that your email address is open and available to receive mail, which greatly increases its value. If you reply, your address may be placed on more lists, resulting in more spam.”

So, what alternatives do we have? A few family and friends have resorted to spam blocking software. But a recent Forrester study found that as unsolicited commercial e-mail volume increases, consumers are beginning to turn to social networking sites, texting and other communication channels. I’m not a technophobe – I’m experimenting with Twitter, I’m on Facebook, much to my teenagers’ dismay, and I’m text messaging. But so far, for me they just don’t compare to a long, full-text, late-night email.

Now That Cash Is King (Again)

It's official: Bloomberg reported earlier this month that the record expansion that began in 1992 is over and consumer spending fell at an annual rate of 2 percent in the third quarter. Consumers are shell-shocked – and spending dramatically less these days – as we bear witness to the continuing crisis in the credit and housing markets.

The drop in consumer spending is definitely affecting retailers. “Americans tend to resort to cash in troubling times” according to credit expert Howard Dvorkin and reported earlier this week in Money Magazine, “and they spend 30% less when paying cash than when paying with a credit card." So, retailers are seeing lower transaction volume and lower average tickets. E-tailers are being hit worse, since cash is not an option for purchasing online.

Even the most gung-ho Web enthusiasts are spending less online according to a 10/24 report on Yahoo! Tech News. Desperate to goose their sales, e-tailers are sending email more frequently. Internet Retailer's recent survey of 174 Web retailers, including those that operate stores, found nearly half have increased the number of monthly e-mails they send compared to a year ago.

At the same time, or as a result, consumers are becoming annoyed with e-mail in general. As unsolicited commercial e-mail volume increases, Forrester reports that consumers are turning increasingly to social networking sites, texting and other communication channels. Ironically, while e-tailers are more dependent on email than ever, they are also reducing its effectiveness and speeding the adoption of Web 2.0 social networking tools.

The payments industry is also hurting as a result of the shift to cash. All credit card company stocks are down sharply.

What changes should consumers expect to see in the purchase experience as a result of declining retail sales and credit card volume? Here are my predictions:

• More sellers and merchants accepting PayPal online and off, creation of new PayPal payment tools and solutions like the PayPal Pay Later option introduced in May, and introduction of new solutions like eBillMe
  

• Return of the layaway plan, the ultimate loyalty program. While Wal-Mart phased it out in 2006, Kmart, TJ Maxx, Marshalls and Burlington Coat Factory, have reintroduced layaway plans this year, and I suspect others to follow

• Emergence of sites like recently launched eLayaway.com, luring consumers with iPod Touches for “as low as $42.23 a month”

• Banks and credit card companies offering double points for gas, groceries, and other sweeteners to get us to use our cards!

• E-tailers conducting more frequent, richer promotions to entice online shoppers to continue spending/shift more of their spending online

Do these changes have staying power? Mastercard, Visa and American Express are not standing still. Look for them to fight back with new payment products of their own. Same goes for Facebook, Twitter, and Meebo, et.al.

Between new payment products and Web 2.0 social networking solutions, we have some good tools to take our minds off the economy and the election, at least for a few mintues.

Reinventing the Mall Experience

Up until recently, there has been a logic to the pattern of retail bankruptcies. In February of this year, Sharper Image, Lillian Vernon, Fortunoff – sellers of stuff we don't need - declared bankruptcy. The second wave included Linens ‘N Things, Bennigan’s, Steak & Ale and Mervyn's - sellers of stuff we could easily get at places we like better. All three entered bankruptcy in July. That same month, Fortune reported the third straight quarter of contraction for retail, according to Northern Trust economist Paul Kasriel. So retail technically was in recession.

With the entire economy now having joined retail in the dumpster, all retailers are vulnerable. The recently announced liquidation of Mervyn’s is just one more proof point that "Value" has become tablestakes and survivors will be the retailers that get the greatest productivity out of their assets – people, product, brand, and store.

As CNNMoney.com senior writer Parija B. Kavilanz, reported on October 16, “with thousands of stores closing in the economic downturn, the increase in empty space at the nation's shopping malls is leaving a hole in the hearts of once-vibrant communities.” And in some malls, store occupancy rates are reportedly falling below 75%, according to RCS Retail Real Estate Advisors.

For mall operators, it's time to find creative uses for all that space and ways to drive mall visits. Back in March, Kavilanz reported that CBL & Associates Properties, which owns about 80 malls nationwide, gave "a directive to its leasing folks to go out and pursue non-traditional retail uses both for its enclosed and open-air malls.”

According to the International Council of Shopping Centers (ICSC), spending on entertainment and self-improvement services tend to be fairly recession-proof. So, we are now seeing malls embrace those categories. They are experimenting with new movie theater concepts including some featuring oversized "love seats for two," wine and cheese bars, and medspas for a quick afternoon Botox fix. The number of mall-based medspas alone has jumped to about 2,500 from just 450 in 2004!

And, in what now looks like great foresight, Westfield Mall leased 145,000 square feet on the fifth and sixth floors in its San Francisco Centre to San Francisco State University to use for its downtown campus. This brings visitors to the mall during non-peak hours, and reviews on Yelp suggest the concept is a winner.

One thing is clear: The mall experience can't be just about shirts, slacks and shoes anymore.

The good news? Maybe our malls will become less cookie-cutter like and have more variety and more local appeal. There’s a chance that local tastes and preferences will be reflected in the new tenants and uses that malls attract. Anything that gets away from the homogeneous mall experience of the last 10 years would be an improvement!

Haggling Over Price Not Everyone's Favorite Way to Shop

We have a friend – I’ll call him Richard - who negotiates with everyone on everything. He even once got a car dealer to throw the tie he was wearing into the deal. No joke. For him, it was sport, and he did it in a way that was natural…for him.

No doubt, there are lots of people like Richard who enjoy auctions and haggling over price. Ebay got its start as an auction site, and the idea of the garage sale has fueled the company’s identity from the outset. I have bought and sold a lot of stuff on Ebay – I bought a brand new MacBook on Ebay while standing in the Apple store waiting my turn for service. I bought a Bestey Johnson dress there, and I’ve sold lots of tickets to Giants baseball games there, too.

But I don’t enjoy haggling over price – I find it somewhat degrading, particularly for the seller. And I don’t like online auctions, either. They take too long to play out, and odds are that someone will bid more at the last second, meaning I’ll have to go find and buy the item somewhere else, anyway.

I prefer Ebay’s fixed price feature for both sides of a sale. And apparently I’m not alone. Brad Stone reported in a recent article in the NY Times, on the brewing e-commerce war between Ebay and Amazon. In the article, Ebay’s leadership admits that its unwillingness to embrace the fixed price side of e-commerce is a strategic miss that has contributed to the company’s current difficulties.

That got me thinking about ways retailers can sell more by letting the rest of us in on the price savings that some die-hard negotiators, like Richard, manage to finagle. Shangby.com is an interesting new site that does this by appealing to both people who enjoy haggling, and those who want to buy at a fixed price what has already been negotiated by a fellow shopper. CEO Steve Bell estimates that less than 10% of shoppers will bargain with a supplier, and Shangby provides tools that support the negotiation process including a live video conversation with the manufacturer or merchant facilitated by a Shangby concierge. For the other 90+% of shoppers, the site makes the merchandise available to all comers at the negotiated price and highlights the savings that the price represents.

So, the best-priced merchandise on the site is all stuff that a shopper actually bought, not just stuff that a merchant thought s/he could sell. And all shoppers benefit from the haggling one shopper took the time to do.

When I met with Steve, I asked about scalability. Turns out Brad Stone asked him the same thing as he reported a year ago in the NY Times . The folks at Draper Richards and G-51 saw enough potential to get past that issue, and funded the business.

Shangby’s value proposition seems to me mostly about undercutting Wal-Mart on price. Perhaps because of its focus on price, the site and format shortchange the cultural experience that I believe is possible here. In fact, I first told Steve Bell what I later told WorldOfGood.com – that there was a great opportunity to bring the romance of different cultures to life through the site and to feature more evocatively and less commercially the stories behind the merchants and the merchandise

That said, there is a kernel of an idea here that any e-commerce site, including Ebay, should appreciate.

Being Big and Local – An Exercise in Creativity

My in-laws once owned a drugstore in Seaside, California, where my father-in-law was the pharmacist and chief merchant. He used to special-order merchandise for his customers, and knew them by name and their orders by heart. Back then, big chain stores and department stores did the same thing, and each store was run by a powerful store manager.

Over the last two decades, most retailers have been wresting that control away from store managers and shifting it to centralized departments in the name of cost controls and consistency of experience, but something may have been lost in the process.

In previous posts, I’ve speculated about the challenges facing big brands at a time when consumers want their shopping experiences to feel “special” and not mass-produced. That was before the economy took a nose-dive. Now, I think people are outright scared, and they want to know that the people they deal with understand and care about them. At the same time, leading retailers are pursuing initiatives to “get local."

So, is the pendulum swinging back in favor of store managers? It surprises me to say so, but I have to answer "maybe."

Macy’s recently announced its My Macy’s initiative to "design and merchandise stores to reflect local tastes. The program will shift more decision-making to the local level, tapping ideas from customers and sales associates." According to a Chicago Sun-Times story last week, in Chicago the initiative aims to woo back loyal Marshall-Fields customers, lost when Federated acquired their favorite retailer and retired the brand. In Pittsburgh, it’s aimed at reengaging fans of Kauffman’s, which was also obliterated by acquisition, according to a September story in the Pittsburgh Tribune-Review.

Keeping those names may have been the best way to retain loyal customers in those markets. It’s an expensive proposition to bring in local merchandising managers and buy and warehouse region-specific inventory to recreate the home-town feeling those brands gave customers.

In a variation on this theme, some retailers will introduce a few high-profile items into their assortment to speak to local tastes and needs. That’s one direction Origins is exploring. As I mentioned in a story last month, Origins has created unique products that address the effects of Denver’s mile-high atmosphere on a woman’s skin and is testing them in a few of its company-owned Denver stores. If they test well, Origins could offer them to area retail accounts to help them get local, or keep them for itself to give customers in Denver a reason to come to their stores.

What can retailers do to go local without incurring the inventory and personnel costs of store or market level merchandising and logistics?

Best Buy recently opened a store-within-a-store focused on musical instruments and music lessons. The concept could do a lot to promote the company’s "local-ness," depending on how it’s implemented.

The company has a great opportunity to get local across a whole host of categories by becoming a channel for local instructors. Some instructors might even choose to sell instruments or teach in the store. The key to appealing to them is to acknowledge they are small business owners with a passion for their area of expertise and arguably less interest or ability in marketing.

This approach could apply to several categories of current Best Buy merchandise – from cooking to computer programming to web design classes. And it could make the music lessons idea work, too. In the way it supports and showcases local class providers and promotes their connection to Best Buy, the company could ensure that the providers’ “local-ness” rubs off on its own brand.

The beauty of this approach is that it does not involve payroll or inventory expenses. It hinges on a creative approach to execution. And that should be music to any CFO's ears!

Good Service – Is It Too Much To Ask For?

As the economy falters, more people are working harder for every dollar, and parting with it ever more reluctantly.

The Deloitte Research Leading Index of Consumer Spending tracks consumer cash flow as an indicator of future consumer spending. The index has been falling since October 2007 and fell again last month. "Consumers in nearly every income group are being more cost-conscious," said Stacy Janiak, Deloitte's U.S. Retail leader.

In this environment, what’s happening to customer expectations? Our tolerance for shabby service is going down. According to RightNow’s third annual Customer Experience Impact Report issued earlier this month, we expect more as we spend more carefully. They found that in 2008, a record high 87% of consumers stopped doing business with an organization after a bad customer experience, up from 68% in 2006. They also found that even in the current down economy, 58% of U.S. consumers say they will always or often pay more for a better customer experience.

What are the implications of rising customer expectations despite a tight U.S. economy? First, companies should think twice about cutting customer service. Second, they should look at who is getting high marks for customer service and understand what they are doing right. Last, they should look inward and evaluate what they can be doing better to meet rising customer expectations.

So, which brands get customer service right? In March 2007, Business Week published its first-ever ranking of 25 client-pleasing brands. The Top 5 on Business Week’s list include: USAA, Four Seasons, Cadillac, Nordstrom and Wegman’s. All those are commendable and expected.

More recent, interesting and revealing are the findings from the third annual National Retail Foundation-American Express Customer Service Survey conducted by BigResearch in January 2008. The survey of 8,800 consumers found L.L. Bean delivers the best customer service in all retail formats. Internet-only retailers Zappos.com, Amazon.com, and Overstock.com came in second, third and fourth. I haven’t purchased from L.L. Bean in years (preppie is not my look anymore and my kids aren’t into it, either), but am a fan of Zappos and Amazon, and customer service is a big part of why.

Zappos makes it easy and risk free to buy from them. By not charging extra for standard shipping (in either direction), they eliminate some of the biggest barriers to online shopping – the hassle, disappointment and cost of returns. When I’m unsure what size shoe I need, I buy two pairs. That way, I get the right size, I get a return postage-paid envelope and all I have to do is drop the extra pair in the mail and wait for the refund to hit my credit card. And, they do surprise free shipping upgrades.

CEO Tony Hsieh tells customer service stories that rival the urban legend about Nordstrom allowing a customer to return tires (which the store never sold). One story is about a customer who was traveling on business and didn’t know where to call to have pizza delivered to his room. He called Zappos and asked for help. The Zappos customer service rep got the necessary information, placed the order and had the pizza delivered. Of the company’s 10 core values, #1 is: Deliver WOW through service.” And they do!

And Amazon is a definite favorite in our house. The site is fast and easy to use, and they have an ever-expanding assortment to choose from. Because we buy so much from them, all our shipments are upgraded to next day at no extra charge. This week’s Sunday NY Times profiled Amazon’s long road to surpassing Ebay in market capitalization. “While E-Bay was buying into classified advertising, online payments and Internet telephony, Amazon spent hundreds of millions of dollars building its brand as a trusted retailer — hiring customer service representatives and returning money to customers when transactions went awry.”

Together, this data is a wake up call for retailers and others. The economy is tough and getting tougher, and brands known for great customer service should be better able to ride it out.

Improving the TB Rays Fan Experiene: Lower Ticket Prices, Increase Fun

Last week I wrote about the Tampa Bay Rays' turnaround. The team’s performance was stunning this year, going from worst to first in their division, and beating the White Sox in the American League Division Series. And as Alan Schwarz of the NY Times wrote last week, the turnaround was carefully crafted and patiently pursued. Home game attendance this year was up 12 points to 53%, but the team played to a house that was only half full. I ended that story wondering whether this year's performance and other changes are enough to guarantee that the team plays to a fuller house next year.

The baseball insider in my family (my 13 year old son) is sure the Rays' attendance problem is due to the stadium, and that they are going to go ahead with plans to build a new one. Apparently, fans in Tampa and St. Petersburg agree that the stadium is the problem. In an August 29 article, St. Petersburg Times reporter John Romano shared some of the suggestions he received from fans about what it will take to boost home game attendance. Far and away, the #1 complaint mentioned was about Tropicana Field’s location and facilities. Price came up a lot, too, and as the economy grows shakier, all teams as well as StubHub should be concerned about season’s ticket renewals.

While my son and the fans may be right about why Rays home game attendance remains so low, the brand marketer in me wonders if a new stadium is really the Rays’ best solution. As mentioned in my story last week, the Rays have already made many of the changes on the retail CEO turnaround checklist – new management, new talent, new name, new logo and look, improved facilities.

I believe the team still has more cost-effective ways to increase attendance (and revenues) than building a new stadium. Blaming the stadium is an easy out – a new stadium should be a last resort – it’s expensive and disruptive.

The fan experience sitting in a stadium that’s half empty can't be good. We never go into empty restaurants – we assume the food must be bad. Getting butts in seats at Tropicana Field may be more important in generating the kind of excitement that builds an enduring brand franchise than generating revenue off each ticket sale.

According to Team Marketing Report, the Rays’ ticket prices and the cost of a fan visit to the ballpark are among the lowest in Major League Baseball at $17+/ticket in 2008. I suspect the average may not be as meaningful as the actual prices – the least expensive seat at Tropicana Field is on the Upper Deck and costs $14 at "prime" games, a Baseline Box Seat at a “prime” game cost $38 last year and a Lower Infield Box Seat cost $70. Those are expensive tickets, no matter what the Team Marketing Report says about relative prices to other teams. In Tampa and St. Pete, the relevant comparison may be the Yankees A+ Team across town, where $6 buys the best seat in the house.

Rays management can sell and do more to facilitate the sale of partial season’s tickets rather than requiring fans to commit to 80+ home games a season. They can lower ticket prices and rely more on concessions, merchandise sales and parking fees to generate the same or higher average spend per fan visit. They can do goofy stuff at the game to engage the crowd and humanize the Rays brand. In short, they can create a more affordable, fun and compelling fan experience that will build loyalty, increase the amount spent per attendee per game, sell more tickets and fill the stands.

So, before taking the plunge on a new stadium, the Rays might want to take a page out of the Durham Bulls playbook, and make the Tampa Bay fan experience more like what the Bulls offer in terms of price as well as the fun factor. If that doesn’t work, there’s always Plan B.

Tools to Help Us Pick Out Products - Do They Work?

Most stores’ tech investment has focused on lowering labor costs and inventory expenses for management. Here are three new tools intended to improve the shopping experience for consumers by helping us choose merchandise that’s “right” for us.

Tool #1- Scentsa: I love perfume. I always have. There are 8 different fragrances in my medicine cabinet right now, and I bought half of them myself. I always appreciate receiving perfume as a gift because I find the perfume department overwhelming, and once I test one fragrance, they all begin to smell the same. So, I’m not very adventurous when it comes to fragrance I select for myself.

The latest issue Stores magazine has a story about a state-of-the-art custom program developed especially for Sephora stores called Scentsa Fragrance Finder. Scentsa will be tested in 20 of its 190 stores. Clients can use Scentsa to locate a fragrance favorite or discover a new one. It sounds perfect for me! I envision it working like Amazon’s recommendation engine – people who like Jo Malone's Vetyver also like Acqua di Parma's Colonia Assoluta. I haven’t tried Scentsa in person yet, but hope to get to a Sephora soon to check this out. Score one for Sephora.

Tool #2 – COOL: As food safety issues have cropped up (pun intended) in the US, China, and elsewhere this year, consumers have become understandably anxious to know that the food they eat is safe. With the weakening of the regulations designed to protect consumers, we rely increasingly on growers and retailers to pick up the slack. Some consumers buy organic produce as a way to screen out harmful food.

Another approach meant to improve our shopping experience – country of origin labeling – (COOL) went into effect this month. As the Wall Street Journal reported last month, supermarkets and other big food retailers are now required to display country of origin labels on meat, produce and certain kinds of nuts. Though supposedly intended to create accountability in the food supply, it’s clear that protectionism played a big part in the push for mandatory food labeling. And it's unclear that knowing the country food is from makes it any safer, and there are plenty of cases of e.coli in domestically produced food. As a result, I’m not sure this one’s a winner.

Tool #3 - Digital Ad Displays: I am not the primary shopper in my house, but I do a substantial minority of the shopping for our family. In some categories (groceries) I am a mission shopper – I want to get in and out, I know what I need, and I generally stick to the list. In other categories, I wander around looking for inspiration. Sometimes I find it in the merchandise displays, sometimes I’m inspired by what other customers are buying. Plenty of times, though, I wander around touching the merchandise but uncertain or unmoved. Sound familiar? If so, the latest incarnation of in-store digital ad displays may help.

Businessweek.com reported last month that “stores and restaurants are now starting to use the technology for real-time promotions, instantly tailoring their sales pitches to match individual customers' selections or variations in product availability.”

While I’m not looking for any more ads in my life, I can see how the right type of ad could be helpful when I’m wandering around a store empty-handed. According to the In-Store Marketing Institute, “70% of [purchase] decisions are made in-store.” So, ads that can inspire us, for example by showing us how to put a look together effortlessly, can help us choose and help stores make a sale. A short “how-to” could be just the thing.

Tampa Bay Rays Makeover Delivers

It’s October. And in my house, October means we’re watching even more baseball than we do the rest of the season. Major League Baseball is in its high season.

Like Retail, baseball is full of statistics. MLB tracks everything. And that got me wondering about the handful of stats lay bare the connection between the Tampa Bay Rays performance on the field, the fan experience of the team, fan loyalty and the team’s financial success. In measuring team success on the field and with fans, three statistics tell the story: a team’s win/loss percentage, its home-game attendance and merchandise sales.

Of the teams left in the pennant race, the Rays are clearly this year’s biggest story. For the past six years, the Rays have had one of the worst win/loss records in baseball – between 2002 and 2007 they averaged .388. They have also consistently been in the dumpster when it comes to attendance – worse at home than on the road. At home, their attendance over the same time averaged only about 33% of capacity.

Faced with six years like this, what would any self-respecting retail CEO do? Get a new chief merchant? Overhaul the brand and the merchandise? Run a new ad campaign about being "new and improved"? Remodel some stores and close others?

The Rays did most of the above over the last offseason. They hired a new manager, nearly doubled their player payroll and made several key trades and free agent signings, changed the team name (from the “Devil Rays” to the “Rays”), introduced a new logo (from a fish to a ray of sunshine) and new team colors (dropped green, leaving Oakland as the only team in major league baseball with green in its palate). And major stadium renovations and upgrades were also undertaken in both 2006 and 2007.

And lo and behold, 2008 has been a different story. The Rays are in the playoffs with the third best win/loss record this year. At .599, they are behind only the Angels and the Cubs. And this year for the first time, they played their home games in a stadium that was consistently more than half full. In addition, team merchandise sales are up 75-100% compared with last season and another 25-30% since the Rays secured a postseason spot according to Mark Fernandez, Rays senior vice president and chief sales officer.

Though congratulations are due the team for this huge improvement on all fronts, attendance did not improve as much as the team’s performance on the field did. Their win/loss ratio at the end of the regular season was up 48% over 2007, but home game attendance was up only 30%. Moreover, attendance in the second half of the season when it was clear the Rays were in contention for the pennant race was up only 24% over last year’s second half.

So, what will it take to get Rays regular season home game attendance above 50% next season? The team’s playoff performance should have some carryover effect. What do you think the Rays should do this coming offseason to further boost attendance in 2009?

Best Buy Looking to Musical Instruments & Lessons for Growth

In my house, we have a lot of stuff from Best Buy. In the last year alone, we bought a red Samsung front-loading washer and dryer, a floor model 72” Mitsubishi TV, wireless routers, storage drives, Go-Phones, a car stereo, and countless XBOX 360 and PS3 video games there. (Actually got the game players at Costco and Amazon.) We’ve also had the Geek Squad to our house a few times.

Besides the fact that we have too much stuff, what are the common themes here? We go to Best Buy for electronics, convenience, somewhat technical stuff and/or when an in-person comparison of alternatives, a live demonstration, or the opportunity for techie questions and answers is important.

So, where does a big brand that dominates its traditional category look for growth? In Best Buy’s case, probably lots of places within (e.g., airport kiosks, as E-commerce Times reported in August, for one) and outside the cut-throat consumer electronics category.

The South Florida Sun-Sentinel reported today that Best Buy is opening the first of six 2,500 square foot store-within-a-stores in South Florida carrying more than 1,000 guitars, bass drums, keyboards, recording equipment and other instruments and accessories. The current plan is to sell instruments and teach music in a total of 85 Best Buy stores.

How big a stretch is it to parlay Best Buy's business selling mostly consumer electronics and accessories, including home-recording equipment and pre-recorded music, to selling and servicing musical instruments and offering music lessons in the store? Our work in the music category suggests that while the business is ripe for consolidation, this is a pretty big stretch for the Best Buy brand.

About 10% of adults and kids took music lessons last year. When asked what makes a class great, most people say it’s the instructor, and 65% of people say the best way to find an instructor is through word of mouth. All of this makes the business of selling instruments and classes look like an interesting place for a roll up. No doubt, that’s what attracted Best Buy when scanning the landscape for growth opportunities.

In our house, we have a collection of six electric and acoustic guitars and a mandolin (in the picture), mostly from Guitar Center and Bananas, and everyone in our family plays. My kids take lessons from Jesse – he comes to our house. He’s a musician, a friend, a teacher, and a lot of fun to be around. Importantly for my teenage kids, they think he's cool.

Will Best Buy be able to attract the great local guitar teachers, like Jesse, who tend to be musicians themselves? Will consumers buy classes and instruments through mass channels that are not steeped in music cred already? Will they take music lessons in the store? Or will Best Buy have to become a referral service for local instructors who teach away from the store? How would they mitigate the inherent liabilities?

The homogeneous consumer electronics big box experience is not a good fit with the personality-driven business of musicians who teach and wanna-be musicians who take classes. The store-within-a-store is essential to any chance of success. Probably needs a separate entrance, too – like Macy’s Herald Square is considering for it’s teen business as reported by Fortune last week.

I think it’s a long shot that Best Buy will be successful on the music instruction end, and it’s the instructors that give the store selling instruments its authenticity. I’m all for experimentation – and they can’t all be hits. Though I don’t like betting against Best Buy, this is one idea I think will be a miss.

Katie Couric Brand Born Again?

First, I have to disclose that I’m a boomer and a political junkie. I get my TV news from The Daily Show, don’t normally watch the evening news on any network and haven’t watched Saturday Night Live in years.

However, this week, I’ve watched clips of the CBS Evening News and SNL on YouTube, a lot! And apparently, I was not alone. According to a NY Times story from earlier this week, by Tuesday of this week "the first Couric-Palin interview last Wednesday had been viewed more than 1.4 million times on YouTube, while the parody of the interview on SNL was streamed more than 4 million times on NBC.com, viewed in full more than 600,000 times on YouTube and in shorter clips many more hundreds of thousands of times."

And both Katie Couric and SNL have Sarah Palin to thank for it.

In July, rumors were flying that Katie Couric would leave the CBS Evening News after the election. She was reportedly unhappy about her show’s sluggish ratings. At $15 million per year, her contract, which expires in 2011, is the richest in television news by millions. The network was going to have to find another show for Couric, or pay her to do nothing at all. All that’s changed with this week’s interviews with Sarah Palin and John McCain. At least, it should have changed.

Starting this week, she’s having audience success. And according to a story by Paul J. Gough in Reuters Tuesday, CBS Evening News viewership is up - 14% on Wednesday and 8% on Thursday; website traffic is up, too, though CBS still lags ABC and NBC in the evening news department.

Jon Klein, the president of CNN’s domestic operations, said of the Palin interviews “it was brand-building for a woman who is still one of the very best journalists out there.” So, what is it about the experience of watching Katie Couric that is improving? Is she doing a better job interviewing guests? Are multipart interviews more compelling because they’re more in-depth? Do we like her better when her discussion partner seems less intelligent than we think we are? When her interviews make us laugh?

I think it’s the humor. We’re seeing it in advertising, millennials have told us so, and John Stewart is the most trusted news anchor in the country. Katie Couric’s resurrection is the latest evidence that audiences of all types pay attention to humor, even when the subject is a serious one. These are dark days - here’s hoping Katie Couric can continue to help us understand them and make us laugh.