A story in Retail Traffic Magazine brings some optimism for resurgence in new retail development projects in the near future. The trade publication reported on the August edition of National Retailer Demand Monthly by RBC Capital Markets and Lease Trac.
In the report, RBC says that the retailers it tracks will open 11 percent more stores in the next two years than they projected at the end of 2011. That is 78,325 stores and 0.6 percent higher than in June, just a few months ago. The most ambitious channel among traditional retail is dollar stores such as Dollar General and Family Dollar. Some apparel stores, and especially those in active wear, are also in the mood to expand. The story cites World Wear Projects, which will open 650 stores by mid-2014, and Teen Discount Zone, who is looking at opening 400 in the same time period.
What is driving the emerging trend? The story says that the current lack of new construction projects is encouraging retailers to sign leases now while demand is rising and supply of quality space is falling. Sooner or later the lack of supply will force new construction. According to experts, this quarter has seen the start of such a trend and that the economic climate of 2013 may favor a rush of new projects.
The story also cites data supplied by The CoStar Group which predicts completions of retail space at about 37 million square feet in 2013 and growing to almost 73 million square feet in 2014. That would be the high water mark for retail development since the trouble started in 2008.
An increase in leased properties for the purpose of opening a store, or renewed new retail construction projects are great news for the members of the at-retail merchandising and marketing service industry.
The GMA Executive Conference has produced an interesting study which zeroes in on some best-practices by leading companies who are winning the battle at retail. Progressive Grocer points out that the study was a joint effort between GMA, McKinsey & Company and Nielsen. They contacted almost 220 CPG executives from household names in food, beverage, and personal/home-care categories.
The study identified four key areas in which successful companies tend to outperform the competition. The winners are three times more likely to invest in growth areas such as the Hispanic market. They use analytics for price optimization and promotion 50 percent more than their competitors. They place much more importance on strategic retailer relationships. And finally, they double the effort to develop talent and strategic planning.
The study singled out shelf performance as an area where CPG companies can gain market share, specifically in the area of assortment optimization. Many companies struggle to make this critical balance. Strategic investments in tools, relationships and training are seen as table stakes to be in a position to perform at the shelf level.
The members of the at-retail merchandising and marketing service industry help CPG manufacturers with these key areas in-store, everyday. NARMS members are entrusted with the awesome responsibility of enhancing the retailer relationship by executing sales and share building activities in the store. Their ability to bring a consistent approach to multiple locations in a short period of time contributes the kind of vital shelf-level information that can fuel advanced analytics.
The members of NARMS have invested in their own table stakes in technology, reporting systems and training to act as the conduit between manufacturer and retailer as they investigate and venture into growth areas.
A hot topic in the retail trade media is the concept of hyper localism or highly specific target marketing right down to a specific consumer. Some industry executives and experts think this may eventually extend to custom pricing based on who buys the product. A recent blog on Online Media Daily discusses the topic of geo-targeting and introduces several new terms that may become standard in seeking the kind of targeted shopper data that could drive an evolved at-retail merchandising and marketing approach and activities.
Although the blog focuses more on how to acquire the data to effectively geo-target, it is not hard to see how NARMS members fit into the picture. At the start of the process, POS data is identified as the natural starting point to help define where brand marketers should direct advertising and marketing dollars to improve customer conversion rates and improve ROI. A higher value on POS data will further drive the use of hand-held technology, mystery shopping and audit services.
As this data is crunched, resulting advertising and in-store initiatives will take on different characteristics and feature multiple approaches based on local shopper behavior, all within the same campaign. Trading partners will value the service company that can help them tailor their message market-by-market and perhaps even store-by-store.
As the blog point out, this precise type of geo-targeting is not new to the financial, insurance and automotive industries, but is on the cutting edge in CPG marketing and is now focused on digital media advertising. These campaigns deliver a highly targeted message designed to drive consumers to the store or to buy online. The consumer will expect to be met in the store by consistent supporting elements of the campaign.
Effective at-retail merchandising and marketing practices are essential on the front and back-end of geo-targeting and hyper-localism. The members of NARMS combine state -of-the-art mobile POS shopper marketing data collection, reporting systems and training along with years of experience in operating a highly mobile and decentralized workforce to not only help collect the vital data, but also act on it.
A few years ago, talk of RFID technology was all the rage at retail. The radio frequency identification tags were mandated and implemented by several major retailers at the case and pallet level as a supply chain and warehousing tool. The promise was that it was just a matter of time before RFID tags found their way to the sales aisle to improve inventory practices, reduce slippage and lower out-of-stocks. But cost per unit, infrastructure cost and privacy concerns slowed the widespread use of the technology at the item level.
In a recent guest column in DSN Retailing Today, Mark Hill of Avery Dennison makes the case that wide-spread item level RFID implementation is not a matter of cost, but a matter of return. Hill says that the real ROI of RFID comes at the item level. Several large retailers such as Walmart, J.C. Penney and Macys have done the testing, fully understand the benefits and are moving quickly toward roll-out.
The benefits of item level RFID come in the areas of inventory accuracy, increased sales, improved loss prevention, reduced inventory levels and vendor fraud. The column says that a typical retail stock level that is 65 to 80 percent accurate at the SKU level, can be 99 percent accurate using RFID technology.
For members of the at-retail merchandising and marketing service industry, widespread implementation of item level RFID technology can have major implications. An enhanced ability to know exactly where product is can make our services even that much more valuable and efficient in the store. First, there is the roll-out phase which certainly could require additional at-retail support. Next, while RFID can help to better understand out-of-stocks, it cannot physically merchandise shelves, cut-in new items or build displays. A working knowledge of RFID technology and its potential uses at store level could be a tremendous advantage for the NARMS member in the near future.
If you have been watching the Olympic Games in London, your eyes have been trained on peak performances taking place in world class venues. Watching such great swimmers as Michael Phelps, Ryan Lochte and Missy Franklin perform at the Olympic Park Aquatic Centre has been a real treat. While worldwide television audiences tune in to watch these compelling races, they also see an important element, but rarely give it any thought.
A small company in Ohio is responsible for making the racing lanes being used in London. In fact, they have supplied the lanes to nine different Olympics starting with the 1968 Mexico City games. It is interesting to note that these lanes are designed to not only divide the pool, but also help to quell the wave created by the swimmers.
There is a strong parallel that can be drawn between these racing lanes and the services provided by the members of NARMS. Everyone who walks into a Target or a Kroger store sees what the members of the at-retail merchandising and marketing service industry do, but rarely notice it. They are the invisible visible force at retail.
Visible in that the results of high quality, professional in-store execution of sales building promotion and operational initiatives are immediately noticed by the shopper, the store manager and the brand. Invisible because the purveyors of this are really only noticed if these activities do not happen or if something goes wrong.
Our activities have always been important, but may be even more important now that a missed step can be picked up on by consumers on social media and can create a wave that can damage brand and market share. The members of NARMS have been dividing the lanes and calming the waves at retail for years.
The National Retail Federation (NRF) has released their Hot 100 Retailers list that can be viewed in the August edition of Stores Magazine. The story features a link to a sortable chart of retail companies that reported the greatest increase in domestic sales between 2010 and 2011.
As with most ranking lists, some strong trends did emerge. The drivers for the companies who made this annual list appear to be organic food, high-end trendy fashions and e-commerce enhanced by mobile technologies.
Sprouts Farmers Market takes the number one spot and underscores the importance of organic foods in food retailing. There are 20 supermarket chains that made the chart including Lowe’s Market Place, Kroger, Whole Foods Market, Trader Joe’s, Aldi, Publix and H-E-B.
Upscale, high-end fashion chains took up three spots in the top 10 lead by Michael Kors at number three and followed by Lululemon Athletica and Under Armour. The common denominator among the three is an ability to create a brand image that is not dependent on price promotion.
Four retailers in the top 10 fall into the mobile technology and e-commerce camp. Verizon Wireless comes in at number two on the list, Apple is at number nine and AT&T is at number 10. Amazon, who sells a wide variety of technology and content, is number seven on the list.
The Stores Hot 100 retailer list from NRF makes a great tool for members of the at-retail merchandising and marketing service industry who provide the kind of in-store support that help these companies grow. To dig deeper into the list, click here.
For several weeks now, leading indicators of retail sales have been prognosticating a healthy back-to school (BTS) season, over and above the sales results from last year. Back in late June, we reported on a Price Grabber survey that said 46 percent of shoppers plan to spend more this year. Two more sources came out with news this week to support the optimism.
A story in DSN Retailing Today reports on an NPD study that says, although spending will be later than usual, 31 percent plan to spend more than they did last year. Only 22 percent made that claim a year ago. NPD attributes the later shopping pattern to the warm weather throughout the country. In their study, 37 percent said they will finish BTS shopping by August 1 and 58 percent said that would take until September 1. Department stores will see a big bump with 26 percent of the spending done there, 26 percent at footwear stores and 16 percent online.
The National Retail Federation (NRF) also came out with predictions for the season. They say the average consumer with kids in grades K-12 will spend approximately $85 more this year on their children for the BTS season. BTS spending will reach $83 billion which is the second highest spending event for consumers behind the traditional winter holidays. As far as where those dollars go, NRF says that $264 will be spent on clothes, $217 on electronics, $129 on shoes and $95 on school supplies. They too predict purchases will be more spread out throughout the summer.
The lengthened BTS season means a couple of things to at-retail merchandising and marketing service companies. Out-of-stocks will be a challenge in key BTS categories. Better sales will mean more price and promotion competition and thus more in-store promotional materials and displays. There will be an added focus on the department, shoe, apparel and electronics channels. Talk to your retailer and manufacturer customers now about their ongoing at-retail BTS challenges and needs.
More and more items are popping up in the trade press addressing the phenomenon of Showrooming. At one time the showroom meant a place to go kick the tires on a new car or perhaps see some furniture or a bedroom set as they would appear in your own home. But Showrooming in the present tense means something quite different. It is now a consumer behavior in which shoppers use their mobile phones in physical stores to compare prices, scan QR codes and read online reviews while they check out the product. The consumer then uses the smartphone to order online or go to the store with the best price.
A recent column on Mashable takes a look at an Empathica survey of 6,500 internet users, half of which are smartphone owners. The column also includes an interesting infographic. The findings of the survey are stark. Fifty-five percent of the smartphone users said they use their mobile phone to compare prices, 34 percent scan QR codes and 27 percent said they read online reviews.
How are retailers reacting? Some are embracing it by offering promotional incentives for checking in or scanning merchandise. Others are trying to prevent it by removing barcodes to prevent scanning and price comparisons with other stores. Either way, this has become a very real issue for retailers and their manufacturer partners.
For members of the at-retail merchandising and marketing service industry, Showrooming is a consumer behavior that needs to be monitored. More and more, our trading partner customers are going to be dealing with the phenomenon that appears to be part of the new normal for shoppers. No matter what the response is, in-store execution of merchandising strategies will play a major role in embracing the reality.
The last few weeks in retail news have seen some troubling developments for iconic retail chains in various channels. Best Buy, JCPenney, Supervalu and the Tesco Fresh & Easy concept are among a group that is struggling to maintain market share and profitability as shoppers exercise a dramatic shift in behavior. Two reports released this week by Capgemini and ShopAtHome.com underscore some trends that drive the behavior. The big picture is that consumers no longer differentiate between the at-retail and online experience and are attracted by retailers and manufacturers who are seamless in integrating a multi-channel approach.
The Capgemini report surveyed 16,000 digital shoppers worldwide. More than half of the respondents expect physical stores to take on more of a showroom role as shoppers use them to see and feel the product, but then buy online. But it does work the other way. More than half also said they are more likely to spend more money in the physical store if they used digital channels to research products prior to the trip.
According to the ShopAtHome.com study, consumers are becoming increasingly more dependent on the retailer to carry the promotional message online. The report says that 62 percent of shoppers who use their site search online for store-centric deals, 24 percent for product specific promotions and 14 percent for brand name product discounts.
These two pieces of research suggest that the retailers and manufacturers who successfully remove the gap between physical, digital and mobile retailing will emerge as the big winners. Shoppers are telling us that they want complete integration in the way that they now shop.
For members of the at-retail merchandising and marketing services industry, it is important to stay on top of these trends so you can hear the challenges faced by your retail and manufacturer customers and act as a conduit to a seamless merchandising approach.
Another piece of research appeared this week having to do with the impact of game changing buying groups. The Trouble in Aisle 5 joint study by Jefferies, a global investment bank, and AlexPartners finds that traditional food-at-home, which is already facing trouble, is likely to see its challenges accelerate over the next few years.
The findings are based on a survey conducted in May of 2,000 adult grocery shoppers over the age of 18. One thousand of these shoppers were across all age ranges, and an additional 500 Millennials aged 18-31 and 500 Baby Boomers aged 48-66 were included.
At the heart of the oncoming challenges is changing demographics. The study cites U.S. Census Bureau projections that Millennials over the age of 25 will make up roughly 19 percent of the U.S. population by 2020, up from just over 5 percent in 2010. Household spending for this group is expected to raise more than $45,000 from just over $28,000. Food-at-home spending by Millennials is set to jump by $50 billion annually through 2020. Baby Boomers, on the other hand, are expected to decrease food-at-home spending by up to $15 billion.
This transition is expected to bring about a shift in buying patterns. Millennials are far less dependent on brands. Twenty-three percent are less likely to value food brands when making buying decisions and 18 percent are less likely to shop at traditional grocers.
According to AlexPartners, the shift will require increased flexibility and an even more intense focus on the consumer for established food manufacturers and retailers. No doubt, the same requirements will be needed from the at-retail merchandising and marketing industry if we are to help our clients find innovative solutions and growth in the challenging times ahead.