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.

Twitter-Powered Retail Business Models

A lot of people are on Twitter these days. Most are trying to figure it out, wondering whether and how to use it. For many, it’s a way to meet people online who share common interests. A friend of mine is thrilled with the contacts she has made with others in her field across the country and around the world and gushes “I never would have met these people if not for Twitter!”

But to me, the interesting news in Twitter-dom is the potential of the medium to enable new local business models and new formats. Thanks in part to Twitter, Meals on Wheels no longer just refers to home-delivered meal services to people in need. As reported in the Wall Street Journal last week, “New technology has been a game changer, allowing trucks to pick and move to where the customers are on short notice."

Here are three concrete examples that illustrate a range of new ways Twitter is helping locavores find and eat great food.

#1 - TAKE OUT WITH NO SET MENU:
With no retail storefront, no waiters, no tables or silverware, dishes, or hardly any overhead - KitchenetteSF serves fresh takeout-only lunches Monday through Friday from the garage door of their warehouse in the Dogpatch neighborhood of SF.

Their chefs have worked at some of the best kitchens in the Bay Area: Foreign Cinema, Chez Panisse, Incanto, Eccolo, Betelnut, Fog City Diner etc. Menus are posted on the kitchenettesf.com blog at the end of each day for the next day’s lunch.

“Whatever we find that is super fresh and delicious is what we’re serving. Everything will be organic, local, street food inspired, spontaneous, affordable, handmade from scratch, and delicious (we’re eating this for lunch too!)"

The easiest way to know what’s for lunch today is to follow KitchenetteSF’s tweets so the menu comes to you. And over 1,000 people are following the tweets of this self-proclaimed “spontaneous organic covert nourishment” innovator.

#2 - COMBO SIT DOWN-MOBILE:
Last month, Chez Spencer in SF added a mobile component to its bistro repertoire with Spencer on the Go!—according to Urban Daddy the first food truck to serve white tablecloth French fare. With 1,001 Twitter followers as of today (6/15/09), the converted taco truck serves customers in SoMA on weekend evenings, and will soon be a regular at the Ferry Building farmer’s market during the day on Tuesdays and Thursdays.

#3 - MOBILE ONLY:
Kogi BBQ is run out of a truck serving Korean-barbecued meat inside Mexican-style tacos in Los Angeles. The company operates the kitchen in superhip, late night hangout, The Alibi Room, but the truck is its direct to consumer business. KogiBBQ currently has over 31,000 followers on Twitter.

According to the Wall Street Journal, more truck operators are following Kogi’s example and have begun using Twitter to post messages on followers’ cell phones, alert customers of their whereabouts and even ask for tips on parking spaces. These things are not hard to do - they just take creativity and follow through.

Today, creators of movable feasts are using high tech to drive up close and personal local experiences. Could the Helms Bakery Truck, the Good Humor Man, and the Oscar Meyer Weiner Mobile find new life in a Twitter-powered world?

Home Town Feeling

I was married in my mother’s wedding dress. She got it at Bullock’s Wilshire, and I had it hemmed there 33 years later. The fantastic art deco, totally L.A. facade housed a high-touch store that was an institution in its day. Bullock’s Wilshire is gone now. So are Bullock’s, Robinson’s, I. Magnin and a whole host of local department stores I grew up with in Southern California.

I was sad when they disappeared. Starting in the early ‘90s, retailers began centralizing corporate functions to wring costs out of their far-flung store operations. Store managers lost control over inventory, and their stature within their organizations began to diminish. Like the computer game Pac-Man, department stores gobbled one another up in search of economies of scale.

In hindsight, it looks like they should have taken a closer look at the intangible assets of the acquired businesses. The goodwill on the company’s balance sheet was largely overlooked in favor of short term cash flow improvements. Too bad. Now it looks like the pendulum may be swinging back.

The Chicago Tribune reported Sunday on Macy’s move to resurrect some of its “retired” brands, including Marshall Fields in Chicago. According to the story, "the steps are part of a pilot program in Chicago and a few other markets where the department store chain is attempting to customize its stores to local tastes after a two-year effort to 'Macy-ize' the hundreds of regional department stores it bought in 2005."

As a team from Bain & Company pointed out in their 2006 article in the WSJ, success at local customization “hinges on getting the balance right: Too much localization can cause costs to spike; too much standardization leads to stagnation.”

So, what are the dimensions that lend themselves to localization? Merchandise assortment, sizing, pricing, store design, and naming all make sense to tailor to the people and the place. Restaurants and grocery stores have known this for ages: McDonald’s serves bratwurst in the Midwest and pineapple in Hawaii.

Banana Republic loads up on small sizes in West Coast stores that cater to Japanese visitors. Origins is another example of a brand that has tailored some products for specific geographies, like its High Elevation Hydration Cream sold in the Denver-area stores. Estee Lauder, Inc., owns Origins, and a huge number of other cosmetics brands (Clinique, Estee Lauder, MAC, Aveda, Prescriptives, Bobbi Brown, and more). Most are offered in the cosmetics department of most department stores – it’s hard to tell one store from another.

What’s unique about the Macy’s situation is its robust portfolio of department store brands that have deep roots in distinct local markets. Selectively bringing back some of those brands can lend real local credibility to the chain and go far to break up the tedium of homogeneous shopping that characterizes today’s malls. As the ‘shop local’ movement accelerates, look for Macy’s to resuscitate more of these retired brands.