Recession Redirects Retail Innovation

The economy has been tough for lots of retailers. Personal bankruptcies are running high, and consumers have been reluctant to open their wallets regardless of the great deals being offered to tempt them.

Teens and young adults have been two of the few bright spots that have gotten a lot of press, and so have retailers that cater to them. While the rest of us have been preoccupied with what happens to the Dow on a daily (or more frequent?) basis, millennials had no stock portfolios to speak of, so the market turmoil has not affected their sense of financial security.

However, it looks like the Millennial retailing innovation engine may be losing some of its steam. According to a March 13 story in the WSJ, several retailers have decided recently to drop their millennial-focused new concepts. Pacific Sunwear, Quiksilver, American Eagle and Aeropostale all announced plans to take charges to earnings and close chains aimed at this demographic.

A closer look at these concepts suggests these closures may actually be a rejection of the strategy of slicing the Millennial market into ever finer niches. The Long Tail got a lot of press when it came out in 2006, and led retailers and others to attempt to sell less of more to increasing numbers of niche markets. Seems Millennials don't respond well to slicing and dicing.

Hot Topic and The Buckle are examples of Millennial-focused retailers that are thriving. Unlike the retailers mentioned above, these two have not been chasing new niches. Instead, they have stayed the course and continue to aim at a broad segment of the teen and twenty-something markets.

Winning retailers know innovation is key to continued relevance. Rather than go for line or concept extensions, they’re focusing on merchandise innovation within their existing footprint and formula. Forbes reported last week on an RBC Capital Markets analyst’s comments that "As we walk the malls and listen to companies report sales and earnings, it's clear that where there is exciting merchandise, there is outperformance on a relative basis."

In addition to merchandise innovation, the other area of innovation that is driving retail success with Millennials these days is the in-store customer experience. S&P reported recently that “an engaged sales force and layaway program that allows youths to buy designer denim” are a big part of Buckle’s success.

So, it’s back to basics when it comes to retail innovation. More than ever, with prices down everywhere, it’s about the product and the customer experience. Retailers whose merchants have budgets to experiment with new products and sources and who have the ability to hire and upskill their sales associates will win.

CMOs & Marketing Accountability - A Look at Home Depot

"Home Depot delivers on its brand promise," announced Liz Miller, Vice President at the CMO Council, yesterday upon releasing the results of a Council survey to gauge the consistency of 25 brands across six touchpoints. In today's Brandweek article Miller goes on to say: “The Home Depot may have struggled with its earnings this year, but don't blame its marketing.” Why the heck not?

These CMOs are clearly ignoring what customers are telling us with their feet and their wallets as Home Depot's comp store sales are down more than their competitors' so far this year. There are shortcomings in the Home Depot customer experience and there is a gap between Home Depot’s messaging and reality. Consistently delivering messaging across touchpoints should not be rewarded if it’s consistently the WRONG messaging. And how do we judge whether it’s right or wrong? By measuring how much that messaging contributes to getting the right people (customers and employees) in the store and to making the cash register ring.

In our research with home improvement customers earlier this year, we found that Home Depot’s positioning is not credible. Their slogan “You Can Do It, We Can Help” resonates conceptually, but Home Depot does not deliver. Customers go to Home Depot for two reasons only: Selection and Price. The size of its stores makes it hard to find employees, and that contradicts the notion of “help.” The sky-high racking of inventory out of reach flies in the face of self service and suggests that maybe customers really can’t do it themselves.

In fact, the company seems to recognize the disconnect, even if the CMO Council doesn’t. Earlier this week, HD announced a move that could eventually change its format from cavernous warehouses to shoppable stores. The Atlanta Home Journal reported Sunday that HD is investing over $300 million in regional distribution centers and systems to take inventory out of the stores and lower working capital requirements across the business.

While clearly being undertaken for cost savings (they anticipate freeing up $1.5 billion in working capital), the implications for store design and the customer experience are significant. Meanwhile, the CMO Council might want to reconsider what it means for a brand to deliver on its promise.

Does Big have to be the Opposite of Special?

In pursuit of profitable growth, brands expand their distribution and extend their offering but risk losing what makes them special. Starbucks immediately comes to mind as the poster child for this dilemma. Macy’s, too. Do economies of scale necessarily mean diseconomies of soul?

Part of what makes a brand special is uniqueness – offering a distinctive product assortment or customer experience or both. Another ingredient is not being widely known – so that customers feel “in the know” – or widely available, so that customers make an effort to participate in the brand.

The Wall Street Journal interviewed Urban Outfitters’ CEO, Glen Senk last month. He talked about his vision for the company, and how he’s ensuring its relevance by avoiding cookie-cutter stores and keeping concepts small and close to their target audiences. The company is designing its brands to stay special by not saturating the market. For example, no brand will have more than 250 stores.

This made me wonder whether brands that have passed the saturation point - like Starbucks - can ever become special again, and if so how. I think it has to do with going micro/massively local and tailoring the "mass" brand to appeal to one neighborhood at a time. Then came an NY Times story about Origins – one of the skincare brands owned by Estee Lauder – trying to do just that.

In time for its official opening on Sept. 16, the store is rolling out an exclusive Made for Denver line, which was designed with the high altitude and dry climate in mind. The current pilot store is testing several ways of expressing its soul – from uniquely tailoring its own products like High Elevation Hydration Cream to offering merchandise by with local providers like English Retreads, a company in nearby Boulder, CO that makes and sells handbags made from recycled tires.

“If we could bring to the new store the principles and core of what Origins is about, what would that look like?” asked Ken Stone, the vice president for retail stores. The idea behind this Denver outpost is to re-envision the retail experience.

"Can big brands afford to do this?" you ask. My question is: "Can they afford not to?"

Doing a World of Good

According to the Fair Trade Labelling Organizations International, consumers spent over 2.3 billion euros on Fairtrade certified products in 2007. This represents a 47% increase on the previous year and means that over 1.5 million producers and workers in 58 developing countries now benefit from Fairtrade sales.

Into this growing opportunity space, welcome World of Good Marketplace, a new-to-the-world partnership between ebay and fairtrade wholesaler World of Good, Inc. The business, called WorldofGood.com, enables users to fulfill their desire to own authentic, responsibly made and sold products and know the stories behind them. In millennial perfect pitch, WorldofGood.com uses e-commerce to promote social responsibility globally.

Launched September 2, 2008, WorldofGood.com brings to users’ fingertips products from all over the world that are verified as People- and Eco-Positive by independent trust certifiers. Well-known organizations like 10,000 Villages, Novica and World of Good, Inc. can participate, and so can individual artisans and small importers of fair trade goods. To build confidence in the marketplace, all of the products on WorldofGood.com have a trust certification and each product’s and producer’s impact is documented. “Trustology” is the hierarchy of trust certifications at the product, producer, and seller levels. “Goodprint” reports the impact on people, the environment, animals and the causes the producer supports so that buyers can select the kind of impact their consumption has on the world.

The concept is compelling, trend-right, and well-intentioned. The functionality is undoubtedly great, given the talent at ebay. Huge kudos to World of Good, Inc. and ebay.

However, this site is a cold e-commerce site. It lacks charm, ethnicity and visual expression equal to the aspirations underlying the concept. Producer profiles and product backstories are missing, too. A few are available in a PDF buried in the "media kit" which is really missing the point. These can, and hopefully will, be added to the commerce site soon. Emotional connections are key to drawing users in and keeping them engaged. The intellectual appeal is powerful, but will only last so long.

So, here’s my advice: take the weekend off to celebrate. Then, get back to work defining and building a branded look and feel and content worthy of the vision of this exciting new concept.

BR is Turning 30

I loved Banana Republic when I was in my 30s. That was in the '80s when the brand was new, and I thought the store and catalog were different and fun, and that the clothes were, too. We wore the clothes on a photo safari in Africa. We wore them trekking in Bhutan. And we wore them after work and on weekends around town. In the '80s, there were no casual work days – even Fridays were formal affairs, and BR was not office attire.

I’m still a BR fan (my husband decided long ago that BR was not for him). So, when I read Stuart Elliott’s article in Tuesday’s NY Times about BR celebrating its 30th birthday, I had a moment of nostalgia and wondered what would get me to love the brand like I used to.

Here are a few ideas:

#1: Ask me about me and then use what you know about me to tailor your messages and offers to me. For example, the Jackson cut of trousers fits me best. I have 4 pairs of them – each of a very different fabric. I want to know when you have new merchandise in the Jackson cut or that looks good on women who like the Jackson cut. If you would just notify me, I’d go to the store to try them on, and you would have a chance for add-on sales.

#2: Make me feel like an insider. For example, I’m not sure if the cut I like is named for Jeanne Jackson, the long-standing BR chief merchant, president and CEO between '95-'00. Thinking so makes me feel like an insider. Give me the back story on the product, invite me to store openings or events – you don’t need to use expensive props (the way the BR store decor of old did) to conjure the romance. Knowledge is still power - just share some of it with me so I can be in the know.

#3: Make the brand special. Is BR too big to be special? Not necessarily, but the product, the web experience, the stores are nice but they’re mass upscale. Like Starbucks, the consistency is great but mass produced. Maybe you could use the breadth of the assortment and the variety of markets you serve to create distinctive BR experiences aimed at different target audiences.

What would you suggest BR do?

I look forward to seeing what the BR team comes up with for the next 30 years!

Where We’re Comfortable Buying Consumer Electronics Now

Americans have a lot of consumer electronics in our homes! NPD reported at RetailVision last week that 85% of households now have Home DVD players and printers, 84% have desktop PCs, over half have MP3 players and flat-panel TVs, and just under half have a notebook PC. The data show consumer electronics have become fairly ubiquitous in today’s American homes. And as technology has become more pervasive, we have become more comfortable owning and buying it.

At the same event, the Consumer Electronics Association presented results from a recent survey about consumer buying preferences. They found that 25 % of people would be willing to buy consumer electronics products from Starbucks, 30% from Ikea, 40% from Bed, Bath and Beyond and almost 60% from Home Depot. So, what does this mean for category leader Best Buy? It means increased competition.

Last year in researching the home center market we learned that people go to Home Depot when they feel pretty confident about what they’re doing. Given the high household penetration of many consumer electronics products, it’s not surprising that most consumers would buy CE products from Home Depot.

Should Best Buy be worried? Hardly. For Home Depot to make a go of it, they’ll have to change a lot. Top priority would be to get more employees in the stores to answer people’s questions. The folks at Home Depot are friendly enough and if you can find them, they are actually helpful. Problem is, for cost reasons, employees are few and far between at most Home Depots. Even though we’re comfortable buying CE, we still have questions, or unique situations that require talking to someone.

And like a good category leader, Best Buy isn’t standing still. Earlier this month, they announced plans to open 8 Best Buy Express kiosks (CE vending machines) in September at major airports around the country.

Look for them to continue innovating the customer experience.

Manufacturers Can Help Build Retail Brands

This week’s AdAge CMO Strategy article boldly announced the coming of retail branding, suggesting that retailers have been mere distribution points for their branded goods manufacturers’ wares up till now. Hogwash.

Sam Walton knew about branding. Every day low pricing, store greeters, tough vendor negotiations, early morning employee Rah Rah sessions, and the company travel policy are all examples of a clear and powerful Wal-Mart brand. Howard Schultz knows about branding, too. And like it or not, Starbucks delivers a powerful brand experience – who hasn’t met up with friends or held an entire meeting at a Starbucks while sipping overpriced but consistently prepared hot and cold drinks? Cheers, the bar where “everyone knows your name,” was a brand, too.

The balance of power in the retail value chain shifted a long time ago to the retailer. Sam Walton knew it, and so do other shrewd retailers: "He who controls the customer experience also controls the customer relationship."

Now, the customer experience occurs at multiple touchpoints, not the least of which is the use or consumption of the product. It just so happens that many (though not all) of the touchpoints leading up to and following product use are controlled by the retailer.

Part of the “news” the AdAge story covers seems to be the increasing number of retailers developing and offering the own branded assortment. But this isn’t news, at all. Gap started out selling Levi jeans. Safeway and Whole Foods have had store brands for years.

Another part of the story is about retailers recognizing the importance of customer loyalty and creating innovative loyalty programs. No news here, either. Heck, when I was a cashier at AlRose in Century City, our store layaway program served as a powerful loyalty program - credit for people who didn't have access to credit cards. That was in the ‘70s!

So, what is the real point here? Branded manufacturers have a role to play in partnering to innovate across the value chain. An example of a brand that recently did this is Coca Cola. Last week’s Business Week article attributed much of the design team’s success to their prioritizing innovations that worked within the constraints of Coca-Cola's complex partner relationships.

No doubt, manufacturers can help retailers build stronger, more differentiated brands. Doing so will help them secure their own brands, too.

The Changing Role of Stores

Contrary to conventional wisdom, the rise of e-commerce and our heightened sensitivity to junk mail have not meant catalogs’ demise. In fact, in a new study issued yesterday, The Direct Marketing Association reports that for multichannel marketers, “the paper catalog is still the largest revenue generator among all channels with an average of nearly 50 percent of sales in both 2007 and 2008, although web sales continue to grow.”

Here’s the big news the press release forgot to mention – stores now generate less than half of all multichannel retailer sales – and if catalogs’ share of sales is holding steady and the web’s share is increasing, then store sales represent a decreasing share of total sales. Wow!

When I was running the catalog and web channels for Illuminations, I wanted the company to change its view of its channels. I recommended we use the stores to bring the brand to life, and that we rely on the direct channels to drive profitable volume. Unfortunately, my CEO was a die-hard store guy. Wally viewed the catalog as a marketing expense for driving store sales. Today, the data suggest that stores are increasingly a marketing expense as same-store sales decline while year-over-year online sales grow.

Take Gap, for instance. The San Diego Union Tribune reported last month that Gap had an 11 percent decline in same-store sales in the first quarter of this year, but a 21 percent increase in online sales. Victoria's Secret has seen the same trend. Its catalog and Internet sales were up 11 percent in the first quarter while same-store sales declined 8 percent. JC Penney, too. The retailer had an 8.7 percent increase in Internet sales in the first quarter of this year, in contrast to a 7.4 percent decrease in sales at stores open at least a year.

So, what does that mean about the retail experience? Expect more retailers to offer the option to buy online and pick up in the store to get you to go to the store in the first place. And expect more dramatic and engaging in-store experiences - like REI's climbing wall - as retailers work harder to make the trip worth your while and maybe get you to pick up an extra item, like a carabiner, while you’re there.

J. Crew Bets on Luxury-For-Less

It’s a gutsy move. While Americans are worrying about the economy, Mickey Drexler is building out J. Crew’s brand portfolio. He’s repositioning J. Crew as affordable luxury, and launching two new luxury-for-less concepts: Madewell which is aimed at women and The Tribeca Men's Shop.

Fortune Magazine’s story today on “The King of Cool” outlines how Drexler hopes to use these moves and a few others to better serve the children of the baby-boomers, who are three years away from getting into their 20s. He’s not the only one who sees an opportunity as Abercrombie & Fitch (ANF) and American Eagle Outfitters both recently launched more adult brands, too.

But Drexler is counting on his finely-tuned sense of what we want now. Monolithic brands are out – authenticity is in with upscale consumers. So, in addition to opening Tribeca Men's Store in the site of the long-closed Liquor Store bar in NYC and repositioning J. Crew, both stores will feature a few iconic product brands that add to their credibility and appeal. J. Crew will offer men's shirts in fabrics made by Thomas Mason, the textile manufacturer that many Jermyn Street haberdashers use. And the Tribeca Men's Shop assortment will include vintage Timex watches.

Drexler is one merchant who appreciates the power of branding. His choice of how to grow the J. Crew brand and business now is a classic contrarian move. I, for one, would never bet against him.

Meet Your New Product Designer - It's Your Customer

The first wave of web impact has been based on the efficiency of online markets. Online auctions sell used (as well as new) stuff, E-commerce saves time, and Match-making sites actually have produced loads of happily married couples. The next wave of transformation? Some are betting on product and service innovation through crowdsourcing. Jeff Howe coined the term in a 2006 article in Wired magazine. It's essentially the application of open-source principles to fields beyond software.

Wednesday's Morning Edition on National Public Radio featured a story about this trend, and showcased RYZ Wear athletic shoes. In consumer E-commerce crowdsourcing, companies like RYZ Wear, Threadless.com and JPG Magazine rely on customers to design their products – like tennis shoes, T-shirts and photography magazines - and vote on which ones are keepers and which are not. The ”crowd” takes on responsibility for product design and development and market research, allowing for dramatically lower R&D, inventory and marketing expenses.

Crowdsourcing is at work in longer lead-time products like PCs, too. In February 2007, Dell launched IdeaStorm, essentially a Web 2.0 suggestion box. Customers told the company what features and functions they wanted to see on future laptops. This month, Dell rolled out nine new laptops, all of which incorporated design elements proposed, promoted and debated by the IdeaStorm community.

The service version of crowdsourcing is newer and less proven. Case in point - Elements Restaurant, which will open in Washington, D.C. in 2009. Nearly 400 members of the Elements community have helped develop the concept, the look, the logo and even the name. A July 26th Washington Post story quotes Linda Welch, 49, the Washington businesswoman who launched and is funding the Elements project, as saying "most businesses are started because you have a great idea, and you take it out to the public to see if customers like it. This is the opposite. We're finding out what people want and doing it." Elements will be the first "crowdsourced" restaurant, conceived and developed by an open community of experts and interested parties who earn a piece of the profits in exchange for their contributions to launching the business according to an a la carte menu - pun intended. An interesting model, to be sure.

Howe has a book coming out next week on the topic. It’s called Crowdsourcing: Why the Power of the Crowd is Driving the Future of Business. No doubt, he will have more examples of innovation by the crowd. It will take time to determine how this wave of web-induced transformation will fare.

The strategist in me is skeptical; the customer side of me is hopeful. Kudos to those on the forefront of figuring it out.

Can The Body Shop Retake the Moral High Ground?

Long before it was fashionable, The Body Shop was one of a handful of environmentally and socially responsible retailers. Along with Patagonia, Benetton and Ben & Jerry’s, they led the dialog on sustainable development and do-good consumerism.

Fast-forward about 30 years – the company’s highly fragranced stores are now owned by L’Oreal and in need of finding a meaningful point of differentiation. In Saturday’s issue of The Globe and Mail, Marsha Strauss reports “ Body Shop wants to climb back on its soap box and stand out from the crowd.”

So, what are they doing? Going back to their roots and reminding the world of their green cred. Problem is, the world has caught up with, or surpassed The Body Shop on sustainability. In pursuit of growth, The Body Shop took their credentials for granted and failed to invest in leading the conversation.

Now that sustainability and green are increasingly mainstream among retailers, how does a one-time leader reassert itself and its relevance to a new generation of eco-conscientious consumers? It’s going to take more than new slogans on posters in stores, which is what the retailer apparently is planning this fall. Based on Strauss' description, I doubt Body Shop can pull it off.

3 Lifestyle Trends & 3 Companies Leading the Way

To stay up on trends in retailing and branding, my daily reading includes general business pubs, advertising industry and branding newsletters, retail industry pubs, tech industry blogs and newsletters, reports from consumer researchers, and more. Now that global warming and resource limitations are acknowledged as real, and with gas prices sky high, the environment and sustainability are mainstream topics for discussion everywhere. These 3 caught my eye this week.

Trend #1: Pre-cycling - With increasing consumer interest in sustainable living, those engaged in precycling aim to avoid products that create more superfluous stuff. This could mean everything from buying bulk in order to avoid excess packaging. Many stores now sell reusable grocery bags, and Costco has become even stingier with boxes at checkout. But the news in precycling is the disappearance of disposable water bottles from homes and events. Kids' sports teams all insist that players bring their own Nalgene bottles. Office workers bring them, too. The company has quietly been producing reusable containers of all kinds and wittily urges consumers to “drink responsibly.” Nalgene gets my vote for poster child of pre-recycling.

Trend #2: Biodynamics – Before there were organic products, there were Biodynamic ones – made from plants that are 100% pure and free of chemicals and pesticides and that are harvested at very specific "peak" periods during the growth cycle. A biodynamics pioneer, Jurlique harvests the plants and flowers that go into its products from its certified organic and biodynamic farms in South Australia. They sell skin, body, hair and baby care products in their own stores and through selected retailers around the world. In company's vision statement, written long before this type of thinking was cool, Jurlique asserts that “beauty is defined by sustainable connections – to oneself, to the community, and to the earth.“ Nice.

Trend #3: Learning & Living – Anyone can collect objects – if they have the money. But it takes time to learn a new skill. Last year, in the U.S. one in five people took a class in-person for fun or to learn something new. And one of the most popular categories is gardening. Is it related to our growing awareness of global warming? Could be. Terrain at Styer's is a new retail concept from Urban Outfitters that combines green lifestyle merchandise with gardening lectures, classes for do-it-yourselfers, and landscaping services for those who want someone to do it for them. The company is launching the concept with 7 domestic locations. While the full assortment may not survive as the concept scales, it is a bold attempt to assemble all of the elements of a green lifestyle.

Does Green Mean It's Safe?

Today's Brandweek features a story about Safeway bringing organic food to the masses. The Q&A with Safeway top marketer, James White, discusses the retailer's latest moves in organic and green products, and tries to clarify the difference its O and Eating Right brands.

It seems to me that the article misses the main point: As a society, we have lost faith in our institutions to keep us safe. From the FTC to the FDA to OSHA to EPA, the regulators are asleep at the wheel. People are looking for someone to fill the void and reassure us that the products we buy and the food we eat are not going to hurt us. Frankly, this is a big part of Whole Foods' historical appeal.

But Whole Foods is embattled on multiple fronts right now: from the acquisition of Wild Oats to the latest e.coli-related recall to becoming more value-oriented. As a result, the "seal of approval" aspect of its brand is in the background.

Safeway has a huge opportunity to become the new seal of approval signaling what's safe to buy, use and eat. Maybe that was the thinking behind the company's name in the first place! Can it afford to invest in both O and Eating Right to deliver the message? Should there be an umbrella brand that carries the overall message, and to which both O and Eating Right are linked? That can all be figured out.

The key is for Safeway to be honest in its claims, speak to consumers in plain English, and put the seal of approval brand(s) only on products that really are good for us and not just less bad versions of what's already available. Are they up to the task?

Flip Flops at the Grocery Store

Wnbc.com reported today on a company that wants to “be able to tell its customers the stories behind the products, of how they came to be and how sustainable they are.” Another story about Whole Foods? Nope - try Wal-Mart!

Whole Foods is busy trying to overcome its “Whole Paycheck” image. People used to use the nickname after shopping at Whole Foods, as if it were a badge of their own economic status. Now that whole paychecks are going to pay for the mortgage and gas, and with food prices sky high, people are shopping at Whole Foods less often and spending less when they do shop there. Whole Foods’ response? Introduce more lower-priced, store-branded merchandise and do more in-store promotions.

Meanwhile, Wal-Mart is moving to a more aspirational messaging platform. For years, Wal-Mart has focused on fuel savings, less waste, more efficient packaging and reduced electricity, all in pursuit of cost savings. Turns out that all that resource efficiency is also very green. The article points out that the company is now striving to extend its success with resource efficiency to the products on its shelves. The good folks in Bentonville know that the cost savings across the value chain from greater resource efficiency are substantial. In today’s tough economic environment, the master of EDLP is embracing green-ness as goodness.

However, finding the great deals is what people brag about now. Whole Foods may intentionally or unwittingly be reintroducing Hi-Low pricing and convincing consumers that there are still bargains to be had. What's old is new again, in green cred and in retail strategy!

Five Things We Want in a Brand Now and Who Delivers

We have high hopes for brands. In fact, brands are all about hope. We want them to show concern for less fortunate people, provide us great service, give us good advice, care about the planet, and help us take care of ourselves. In looking at the brandscape recently, I found a few surprises. Here's a summary, and a few comments on each one.

The brands that deliver now:

1. Social Conscience:
   Benetton uses its ads to make a case for ending hunger, fighting AIDs, and more. The images are usually bold and often shocking. It's attention-getting stuff. TOM’s Shoes takes a different approach by building social responsibility into its business model, not just its marketing. They give away a pair of shoes to a child in Latin America or Africa for every pair they sell. Customers can get in on the Shoe-Drop events, too.
   
   
2. Great Service:
   You’ve heard the urban legend about Nordstrom taking back defective tires, which they've never carried. They’ve been the poster child for customer service. Zappos.com strives to be the online service leader, and through their policies, training, and depth of inventory, they are doing just that. They carry all the major brands, shipping is free, shipping upgrades are used to surprise and delight customers and returns are accepted, no questions asked.
   
   
3. Good Advice:
   In the old days, financial advisors did all the talking. Remember EF Hutton's "When EF Hutton talks, people listen"? But the slogan belied a one-size-fits-all approach to advice. In a perfect Web 2.0 take on what good advice is, Schwab acknowledges that people today want someone to listen them, and give advice that's relevant to their situation. Schwab's tagline, "Talk to Chuck" says it all.
   
   
4. Green Cred:
   From its support of the Surf Rider Foundation to effectively creating the market for organic cotton to working with their suppliers to produce recycled raw materials, Patagonia was the first brand with Green Cred. And by using Patagonia's products some of that cred rubbed off onto customers. Now, Nalgene is the way to make a statement about your Green Cred. Their polycarbonate and HDPE bottles are the way we'll keep bottled water companies from draining our springs and avoid all those water bottles ending up in our landfills.
   
   
5. Good For Your Body:
   Thanks to fruit smoothies, Jamba Juice became known as a provider of healthy snacks. Here’s a surprise: Taco Bell’s Fresco Menu is lighter fare than most items on the Jamba Juice regular menu, and its “Why Pay More?” campaign makes it good for your wallet, too.
   

Wanted: Retail Differentiation

In a July 30 story, Fortune reported that “adjusted for inflation, retail sales dropped 2.6% from a year ago in the second quarter, marking their third straight quarter of contraction.” Sounds like retail is technically in a recession. The article went on to list the growing number of retailers seeking Chapter 11.

There is a logical pattern to the order of retailer bankruptcies during this downturn. The first to go sold stuff we don’t really need. Examples here are Sharper Image, Lillian Vernon, Fortunoff. All went into bankruptcy in February this year.

Round 2 has affected retailers who sell stuff we can get other places we like better. Examples include Linens ‘N Things, Bennigan’s, Steak & Ale and Mervyn’s. These stores just entered bankruptcy last month.

In these uncertain times, the only sure thing is being a place your customers want to shop. Retail differentiation matters now more than ever.

Secondary Ticket Sales - What An Experience!

Forrester recently estimated that US online secondary ticket sales will grow at a 12% CAGR over the next five years to $4.5 billion by 2012. That’s a lot of tickets! Now, my family is a baseball family. We have season’s tickets, which entitles us to 81 home games a year – far more than even our baseball-crazed household can attend. As a result, I’ve had personal experience with several different ways of selling tickets to total strangers. Here’s my take on the options.

E-Bay wins hands-down. And I don’t mean Stub Hub, which was acquired by E-Bay. I mean good, old-fashioned E-Bay. (Has E-Bay ever been described as "old-fashioned" before?) Nothing can beat it for ease of use, intuitiveness of processes and tools, and success rates!

Stub Hub is in a word … lousy. It’s hard to use, their seller notification doesn’t seem to work nor does their tool for tracking action on your listings. We don’t know why Major League Baseball chose them as their one and only sanctioned means of reselling tickets. From the cheap seats, we think it's a good thing for E-Bay to keep its brand separate from Stub Hub.

Craigslist is such a mess, I have never tried to sell tickets (or anything else) there. I keep looking at it, and wondering how anyone sells anything there given how disorganized it is. Craigslist sellers, please tell me how you do it!

There’s always person-to-person sales outside the venue. That’s become harder to do as cities have cracked down on scalping. I do get a kick out of haggling with the scaplers themselves – you know, the guys who stand on street corners and are both buying and selling tickets to an event. They are a hoot, and they’re business people, like the rest of us. They have the seating plan committed to memory and know the going rate for any seats at any time leading up to an event. I had to laugh when one of them didn’t like the below-face value price I was asking for 2 tickets and exclaimed “Lady, you’re scalping!” No duh.

So, for my money, when it comes to selling to strangers, it’s E-Bay all the way.

The New Face of Do-Good Consumerism

It used to be that the same names always came up when anyone talked about socially responsible companies: Patagonia, The Body Shop, Ben & Jerry’s, maybe Benetton, and that was about it. What made them socially responsible differed from company to company – but having a conscience was an essential part of their relationship with employees, owners, and customers.

Today, we expect big companies to be good citizens of the world – Chevron, Nike, Gap, Starbucks, Pepsico and others produce annual reports on their acts of corporate or social responsibility. The reports are posted proudly on company websites, and the companies are truly making progress in cleaning up their act. But being a good citizen is generally a response to external pressures - it's not part of most companies' DNA.

Then, there’s 2006 startup, TOM’s Shoes. TOM’s is a business that's also a social movement. The name – TOM’s stands for TOMorrow’s Shoes – and their “One-for-One” commitment to give a child in need a pair of shoes for every pair sold, make customers feel great for buying a pair of TOM’s shoes. There are blogs, block parties, and foreign country shoe drops in addition to TOM’s own stores and retail accounts where customers can share the feel-good TOM’s experience.

Retailers like TOM’s have made it a central part of their business proposition to creatively and tangibly take on big social, economic or environmental issues while also providing products that U.S. consumers want to buy. These companies have figured out that taking action on a human scale and letting the customer in on the act is cool, and creates a reason to be brand loyal.

And as Carol Phillips points out in her Millennial Marketing blog, this type of do-good positioning really resonates with millennials. As Phillips points out "One of the most cherished Millennial values is 'making a difference'. This makes cause marketing a natural choice for many Millennial marketers."

What is your favorite do-good brand?

Bring us your poor, your tired, your broken down merchandise

Seems like a lifetime ago customers brought broken merchandise back to the store or a designated repair center to get it fixed. Those days are long gone. Now, retailers allow customers to bring in their ruined merchandise and exchange it for new products or a store credit. Some will even issue a refund.

In their 2006 MIT Sloan Management Review article, James Stock, Thomas Speh and Herbert Shear lament how product returns have come to be viewed by companies as a necessary evil, a painful process, a cost center and an area of potential customer dissatisfaction. They show that many successful organizations have realized that an effective product returns strategy can provide a number of benefits, such as improved customer service and customer knowledge.

There's the famous urban legend about Nordstrom taking back supposedly defective tires - which they've never carried. Even more impressive as well as true - since 1986 American Girl has had a Doll Hospital. They invite customers – 5 to 9 year-old girls – to bring or send in their broken dolls to have them repaired. And that’s not all. The doll comes home wearing a hospital gown with a “Get Well Soon” balloon in her hand. That’s amazing – breathtaking, in fact.

Where have all the store employees gone?

While a big part of the Internet’s appeal is that customers can use it anytime anyplace, that doesn’t mean all retail should be self-service. In pursuit of lower costs or eliminating customer lines or wait times, some retailers have hollowed out their stores to the point where there are virtually no employees.

Home Depot has customers doing their own check out. Macy’s installed scanners so customers can do their own price checks on the sales floor. At Target, the digital camera desk is frequently unmanned, and there's no staff in the electronics aisles. Each decision has its own logic, and makes sense in isolation. However...

... As a Best Buy district manager told USA Today, "A lot of this [consumer electronics] stuff is commoditized. So what is the difference? It's our people. It's got to be…As the economy tightens, everyone is going to be lowering price to the lowest possible point, so service becomes the most important differentiator between retailers. It's the reason why a consumer would choose to shop at one over another."

Whether or not you like Best Buy, you gotta give them credit for understanding that shopping in a store is a social experience, and an opportunity for a retailer to strengthen its relationship with its customers.