Actionable Insights From APT's Retail Practice

Build Your Loan Portfolio Profitably and with Low Risk

September 30th, 2010 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on Build Your Loan Portfolio Profitably and with Low Risk)

A recent US Banker article describes how “total loans are shrinking because of soft demand.”  Many banks have turned the corner with loan losses and write downs, but now it is time to rebuild battered loan books.

Demand for loans is currently low, and banks need to be innovative to attract more loan business.  The challenge will be to find the right way to bring in more loans without increasing risk exposure beyond acceptable levels.

There are many important components to getting this right.  A key element that is sometimes overlooked is the quality of your team of loan officers.

A Rise of Strategic Restaurant Buyers?

September 28th, 2010 | Posted by JMarek in Uncategorized - (Comments Off on A Rise of Strategic Restaurant Buyers?)

We’ve written before about the major 2010 wave of financial buyers (i.e., private equity) taking advantage of depressed prices for restaurant companies.  Could the strategic buyers (i.e., other restaurant companies) now be coming out of the woodwork?

Of course, the major news on this front is the Claim Jumper situation, with Landry’s potentially stepping in over a presumed low-ball PE offer.  Darden has also pronounced themselves “open to acquisitions”, which typically means “looking right now”.


In a depressed retail environment, “dollar” stores are a rare source of consistent good news.  Recently, Stephanie Clifford of the New York Times reported that “Dollar stores have shown the biggest gain in shopper visits over the last year out of all the retailers that sell basic consumer goods.”  This, of course, is the continuation of a long track record of success.  Over the last 5 years, the three leading chains – Dollar General, Family Dollar and Dollar Tree – have added almost 4,000 stores.  During this same period, Wal-Mart added less than 700.

In part, some of their advantage is explained by the obvious shifts toward frugality.  But maybe there’s more to it.  Beyond just the price-point, shoppers and observers cite a number of dollar-store benefits, including:


Macy’s Strategy to Love the Customers They Have

September 22nd, 2010 | Posted by Guru Raj in Retail | Uncategorized - (Comments Off on Macy’s Strategy to Love the Customers They Have)

Earlier this year, Macy’s CMO Peter Sachse explained Macy’s ambition to grow sales from existing customers (rather than acquire new customers) by encouraging existing customers to make one more visit per year (rather than grow basket size).

Right or wrong, Sachse’s outline is clear and easy to understand — a necessary ingredient when trying to marshal the efforts of more than 160K associates and colleagues.

However, this strategy does beg a wide array of follow-up questions. (more…)

Analytics & Research: Turning Unknowns into Knowns

September 21st, 2010 | Posted by Dan Schreff in Retail - (Comments Off on Analytics & Research: Turning Unknowns into Knowns)

At APT, we spend a lot of time thinking about analytics and the process Consumer Goods companies use to turn “Unknowns” into “Knowns”.  A certain former Defense Secretary was famously quoted on this topic of information and uncertainty, but the fundamental insight is universal.  An organization must take a rigorous approach to qualifying and quantifying what it knows and what it doesn’t, and aggressively pursue the objective of reducing uncertainty and thereby enable it to act with confidence and authority. (more…)

Generally, we write about large-scale strategic decisions.  But, as we keep pointing out, strategic initiatives are built up from a multitude of individual actions.

With that in mind, I recently visited a store near my office to buy a pack of AAA batteries needed for a new remote control.  On a wall lined with batteries, I chose the cheapest option, a 4-pack of private label alkaline batteries for $4.99 (the national brand was $6.99) and walked to the register … however, next to the register was a stack of 40-pack AAA batteries priced at $9.99.  Although I only needed 2 batteries, how could I pass up the “obvious” bargain of 10x the batteries for 2x the price?

On my way back to the office, I came to the startlingly conclusion that this specific promotion may have been a “lose-lose-lose”: (more…)

Lab Work Eased Wells Fargo Shift to New ATMs

September 15th, 2010 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on Lab Work Eased Wells Fargo Shift to New ATMs)

Wells Fargo was featured in American Banker discussing how Test & Learn has helped predict consumer behavior and improve the decision-making process for strategically important initiatives.

Click to read more

Can Wal-Mart Measure That?

September 10th, 2010 | Posted by Varun Kishore in Retail | Uncategorized - (Comments Off on Can Wal-Mart Measure That?)

Wal-Mart admitted that it has faltered in recent months, blaming lack-luster sales on a variety of initiatives, including an attempt to streamline merchandise (an initiative that removed 300+ items that “weren’t selling”).   Though well-intended, this strategy back-fired as some customers went elsewhere for their favorite products and brands.

We’re not the first to talk about this.  Augie Ray of Forrester research writes “Wal-Mart had the ability to measure the sales of Glad bags, but they could not know the impact Glad bags had on the sales of other unrelated products until consumers started going elsewhere for Glad bags.”

Augie Ray … that’s just not true.  (more…)

Estée Lauder Juggles Testing

September 7th, 2010 | Posted by Guru Raj in Retail | Uncategorized - (Comments Off on Estée Lauder Juggles Testing)

Retailers complain from time to time about the logistical complexities of in-market tests.  But, compared to consumer goods companies, they have it easy.

A recent WSJ article discusses how Estée Lauder is employing testing to reinvent staid department store beauty counters.  In addition to the “normal” complexities of testing “new counter designs that allow shoppers to browse on their own, new promotions and express lanes for busy shoppers,” Estée Lauder also needs to coordinate with more than a dozen different department store chains, and potentially tens of thousands of recalcitrant sales staff.

Complexity aside, Estée Lauder’s tests are timely.  With continued pressure from upstarts like Sephora and Ulta, and increasing pressure from drug and discount chains, department store counters must refine their value proposition to stay relevant and keep share.

Citibank Raises Account Fees

September 1st, 2010 | Posted by retailblogadmin in Financial Services | Uncategorized - (Comments Off on Citibank Raises Account Fees)

Citibank recently increased non-Citi ATM fees and announced a new checking and savings account structure with steep fees for accounts that don’t maintain a minimum balance.  With these sweeping customer-facing changes, they appear to be leading the way in trying to make up for lost fee revenue (read our earlier article detailing how banks need a new strategy to make up for lost fee revenue due to new regulation).

Other banks are going to need to catch up to stay competitive in the marketplace.  But what’s the best approach?  If you raise rates, how will your customers respond?  Will added revenue from the new fees offset potential customer attrition?  And what’s the optimal fee level?