Big Retail Can Get Local - A 5-Step Approach

While conspicuous consumption is out, people are still buying stuff, entertaining (mostly at home), and traveling (more, shorter trips closer to home). The newly cost-conscious are still in search of interesting social environments and diverse shopping, consuming and learning experiences. What’s changing is our perceptions of who provides them.

In the '90s, Starbucks tapped into a collective search for the third place - there was home and work, and then there was Starbucks. The chain grew like topsy, and now has over 11,000 stores in the U.S. alone. It’s not surprising that the CEO of Starbucks, Howard Schultz, is trying to recreate the local coffee house experience. He is tuned into the trends of our times, and has publicly lamented the "commoditization" of the retail coffee experience. What’s surprising is the clumsy approach he has taken with 15th Ave. Coffee & Tea. Launching another brand in the same category, and trying to distance it from the Starbucks mother ship follows solid brand management theory. But it misses badly on the reality front. It seems “everyone” knows that Starbucks is behind the veil, and the effort is reflecting badly on the brand that’s badly in need of a pick-me-up. See the July 28th Harvard Business article by Peter Merholz for one of many on this topic.

What’s a national brand to do to try to get local? One approach is to give local store management greater authority to support local causes. By becoming a visible and active member of the community, big brands demonstrate commitment to the issues that matter to their customers. This puts the spotlight back on employees as an important part of the brand’s personality again.

Whether it’s sponsoring a “float” in the annual Memorial Day parade, or getting store employees to walk in the parade and hand out goodies along the route, or supporting flower planting or fund raising or other community initiatives, neighborhoods afford ample opportunity for store personnel to get involved. And let’s face it, it’s the people that are hardest for another brand to copy. Peet’s people are different from Starbucks people. Not better or worse, but different. For Starbucks to get local, it’s going to be the people who work in the stores in a particular town that make it so.

Here then are 5 steps to help national brands get local:

1. Create loose guidelines for store managers to follow
2. Give them a budget to do something meaningful
3. Let them find the local causes or events they and their teams want to support
4. Show them how to measure their impact
5. Get out of the way
   

I wonder what they’d come up with. Whatever it is, it would be more relevant, Starbucks brand-enhancing and customer loyalty-building than 15th Ave. Coffee & Tea.

Local Has Cache

Retail vacancies are on the rise in our town and others like it across the country. City Councils and Chambers of Commerce debate mostly useless tactics that will take months or years to have an impact and don't have the funds to do much about the problem. In a recent story in the Wall Street Journal, Joseph Epstein made the case for judging a city "by the number of blocks of interesting shops it contains."

I tend to agree with Epstein's friend, sociologist Edward Shils, who made the observation. I am not against chain stores - they have hard-working employees, just like the independent stores, and face similar challenges finding and retaining customers and talent. But to a great extent, their takeover of malls and street locations across the country has led to a homogenization of the urban and suburban landscape and of the customer experience. We've gained consistency and predictability at the expense of being surprised and delighted - it's the triumph of brand management over brand, which it a topic for another story.

Though lots of people are concerned about these changes, there has been little organized response, or at least little coverage of any organized response. The WSJ ran a story in June about campaigns in multiple cities across the country to save neighborhood stores. It profiled the 3/50 Project, which encourages shoppers to pick three independently owned businesses and spend $50/month at each one.

According to the organization for every $100 spent at a store, $25 more stays local if spent at an independent store vs. a chain store through payroll, taxes and other expenditures ($68 vs $43). Compared to buying online, all of that $100 comes back to the community. We buy a lot online, and shop at chain stores as well as independents, but I worry that the amount spent locally is not enough to make our town one Shils would judge favorably.

The whole idea of supporting local products and merchants appeals to consumers. Farmers markets are booming, and chain stores saw bigger declines than independents this past holiday. While sales at independent stores declined an average of 5.0% vs. 2007, retail sales overall were down a record 9.8% meaning that chains saw bigger declines: Barnes & Noble (- 7.7%), Best Buy (-6.5%), Borders (-14.0%), JC Penney (-8.1%), Macy's (-7.5%), The Gap (-14.0%), and Williams-Sonoma (-24.2%).

The Institute for Local Self-Reliance, a Minneapolis nonprofit research group, has found that community efforts to support local merchants can help to insulate them from the worst of the recession. Their research shows that independent retailers in cities with buy-local campaigns saw holiday sales decline less in 2008 than those in cities without them (3.2% vs. 5.6%). According to ILSR, there are about 100 buy-local campaigns active across the country. Could be worth bringing up at the next city council meeting instead of the next lame brand or beautification campaign.

Have you visited an independent retailer in your town lately?

Social & Fun - A Winning Combination

More retailers are getting their toes wet with social media. And that's turning out to be fun and save money.

The recession has not been easy on most retailers, and marketing budgets have been slashed. Not to fear - social media is inexpensive and contests that emphasize fun over the value of the prize are winning customer hearts and minds these days.

Whole Foods is the latest to get with the program. The upscale grocery held a contest to hit the 1 million Twitter followers mark. But unlike the Lottery, where higher cash prizes fuel a Lotto frenzy, in Twitterdom, small gestures have a big impact. So, Whole Foods offered a million grains of quinoa and $50 gift card to the millionth follower.

According to Mike Duff's story on BNET Retail, they offered up 10 more $50 gift cards — and 50 more pounds of quinoa – as rewards for Twitter pals who could came up with clever five-word summaries of their food philosophies. The additional awards will be parceled out through the end of the contest period, which is Friday, but the first of the “micro-philosophies” winning a gift cards was: “Can you pronounce those ingredients?” Others entries that the company highlighted include “Peanut butter goes with everything.” And, my personal favorite: “Just say yes to chocolate.”

No doubt, many of these followers are not and will not become die-hard loyal customers. But a good number are or will, and their care and feeding is worth far more than a few hundred dollars. Oh, and since the retailer gave away Whole Foods gift cards, the money they spent comes back to the cash register, hopefully as partial payment on a much larger grocery tab.

Earning Customer Loyalty By Serving Up Fun

For five years, Chik-Fil-A has been celebrating "Cow Appreciation Day," giving guests who come to the restaurant dressed in full cow regalia an entrée, choice of side and a drink for free. This year's celebration starts today (though the official holiday begins on July 14) and the promotion is expected to draw over 130,000 visitors to Chik-Fil-A.

While Emily Bryson York's story in Ad Age calls the promotion a "gimmick" and a "stunt," it is actually something more than that. It is one example of the fun side of the brand. The event has gained momentum since its inception, and operators expect to serve free meals to as many as 150 cow-clad customers in their stores today! They have even extended the event by hosting parties for groups to come in before Cow Appreciation Day and eat while working on their costumes.

The whole thing is very tongue in cheek, and designed to win smiles, and fans. It's more engaging than than just offering discounts, and fun for those who dress up as well as those who don't.

Chik-Fil-A's emphasis on grass-roots marketing and its focus on fun are having seriously positive effects on the bottom line: as of June, systemwide sales were up about 10% year to date, and same-store sales at malls and stand-alone locations were up 3%. That's a whole lot better than the industry as a whole, which is down almost across the board this year vs. last.

Just another example of how fun makes (dollars and) cents.

Brands that Build Consumer Confidence

An NPR story earlier this year talked about small ways people could regain their feeling of being in control of their own destinies amidst the bumps and bruises of this recession. “Washing your car yourself…buying a small amount of stock” were some of the suggestions.

Fast forward to stories about the Obama's vegetable garden and thousands doing the same thing either coincidentally or because of their example. According to a survey by the National Garden Association, 43 million US households plan to grow their own fruits, vegetables, and herbs this year, up 19% from last spring. These are boom times for Burpee seeds, Ball canning jars, and Scotts Miracle-Gro. The Wall Street Journal ran a story recently about booming sales for devices to help rooftop and balcony gardeners produce plentiful fruits and vegetables in containers. Savings on food costs are an obvious benefit of growing and canning your own. But there’s something else at work here.

By learning how, and caring for the seeds and plants that put food on the table, home gardeners gain a feeling of control, and have colorful reminders of their own competence: the bigger the tomatoes or the more flavorful or more plentiful the crop, the greater the ability. And capability ladders up to feelings of confidence - something we need more of these days, as rolling layoffs and the ongoing recession continue to spook markets and individuals.

Gardening has played role in building feelings of competence on a massive scale before. According to Wikipedia,

“Victory Gardens were vegetable, fruit and herb gardens planted at private residences in United States, United Kingdom, Canada and Germany during World War I and World War II to reduce the pressure on the public food supply brought on by the war effort. In addition to indirectly aiding the war effort these gardens were also considered a civil "morale booster" — in that gardeners could feel empowered by their contribution of labor and rewarded by the produce grown. Making victory gardens became a part of daily life on the home front.”

Businesses that can help consumers feel a greater sense of control and competence stand to win big – in sales and by building their confidence. I wrote about the boom in sewing classes and home sewing earlier this year, before seeing the morale booster angle to the story.

New concepts like Tech Shop may also fit the bill. TechShop is a 15,000+ square foot

"membership based workshop that provides members with any skill level access to tools and equipment, instruction, and a creative and supportive community of like minded people so you can build the things you have always wanted to make. TechShop is perfect for inventors, 'makers', hackers, tinkerers, artists, roboteers, families, entrepreneurs, youth groups, FIRST robotic teams, crackpots, arts and crafts enthusiasts, and anyone else who wants to be able to make things that they dream up but don't have the tools, space or skills."

From a single location in Menlo Park, Tech Shops have been added in Portland, OR, Austin, TX, and Durham, NC, and more are reportedly in the works.

The recession is eliminating jobs, draining our savings accounts and eroding our confidence. Learning a new skill could turn out to do more for our collective confidence than any politician's speech or rise in the Dow. Welding classes, anyone?