Actionable Insights From APT's Retail Practice
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Coffee for a Year for under $200: Is it Profitable?

October 31st, 2012 | Posted by CCorman in Promotions - (Comments Off on Coffee for a Year for under $200: Is it Profitable?)

Bruegger’s Bagels, a QSR with over 300 locations, has once again launched its Bottomless Mug Club. During this annual promotion, Bruegger’s offers guests unlimited coffee for a whole year for less than $200. This promotion is certainly unique, but is it profitable? The simple answer is that this program must be profitable for some guests and not profitable for others. However, in order to fully understand the economics of a promotion like this one, restaurant executives need to consider the following (more…)

Are Physical Stores Worth the Cost? Spanx Thinks So…

October 29th, 2012 | Posted by CGreenbaum in Retail | Uncategorized - (Comments Off on Are Physical Stores Worth the Cost? Spanx Thinks So…)

Rents may be rising, but physical stores may still be worth the added cost. Spanx, the shape-ware behemoth, is placing a bet on brick-and-mortar stores, at a time when many major retailers are leaning on their e-commerce channels for growth. Beginning this month, Spanx will be squeezing into the retail space by opening their first storefronts in three high-end malls across the Northeast and Mid-Atlantic. (more…)

New Concept Blends Quick Service, Fast Casual, and Casual Dining

October 24th, 2012 | Posted by CCorman in Restaurants - (Comments Off on New Concept Blends Quick Service, Fast Casual, and Casual Dining)

In an effort to combat declining year over year sales, Mimi’s Café is revamping one of its locations into a new “French Revolution” prototype, which will combine the brand’s typical bakery-café feel with a bistro. The new concept blends elements of quick service, fast casual, and casual dining.

This three-pronged approach may appeal to cost- and convenience-conscious guests, who will now be able to access a broader selection of both menu items and dining experiences in one location. Additionally, Mimi’s may draw incremental traffic from diners looking to satisfy different tastes on different occasions. (more…)

How Should Grocery Stores Combat Rising Commodity Costs?

October 24th, 2012 | Posted by Dan Schreff in Retail - (Comments Off on How Should Grocery Stores Combat Rising Commodity Costs?)

The worst drought in decades has sent American corn prices to a record high. The skyrocketing price of corn will heavily impact grocery stores, as field corn is in three quarters of the foods consumers buy in supermarkets. Though these increases in cost may be outside of grocers’ control, their impact on profits does not have to be.

To remain profitable in spite of rising costs, executives have considered many decision-making strategies. These decisions are often based on customer surveys, correlation studies, or simply “gut feeling”. Unfortunately, these approaches often lead to inaccurate answers. The only accurate method of minimizing the risk of major decisions is real-world testing. (more…)

Myth Busted: Leading Retailer Challenges Previously Held Beliefs

October 23rd, 2012 | Posted by CGreenbaum in Uncategorized - (Comments Off on Myth Busted: Leading Retailer Challenges Previously Held Beliefs)

Merchandise leaders in the apparel industry are renowned for their valuable instincts about the latest styles and customer preferences. However, many have started challenging commonly held ideas about product and merchandise strategy and the results are startling. Recently, a leading apparel retailer challenged their merchandising strategy and generated $1.5MM in incremental profit by testing some of their previously held ideas.

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Drive-Through Service for Grocery Stores

October 19th, 2012 | Posted by Dan Schreff in Retail - (Comments Off on Drive-Through Service for Grocery Stores)

Should grocery stores do the shopping for their customers? Some large grocers think the idea is worth testing.

Online grocery delivery has been around since Ahold’s Peapod home delivery service began in 1996, but it has yet to gain significant market share (in 2011 Peapod accounted for only 1.3% of Ahold’s sales).   Although online grocery shopping is designed to maximize efficiency for consumers, many still prefer the in-store shopping experience. (more…)

Dealing with the Drought

October 17th, 2012 | Posted by CCorman in Restaurants - (Comments Off on Dealing with the Drought)

A recent article in the LA Times highlights the adverse impact the Midwest drought is having on restaurant profitability. Due largely to the ripple effects caused by the spike in corn prices, food costs have risen or are forecast to rise nearly across the board. To combat this cost increase “restaurants are revamping menus, reducing portion sizes and even considering staff cuts. In the months to come [restaurateurs] say, watch for smaller steaks, fewer tortillas per entrée and maybe even menu-wide price increases.” (more…)

How Restaurants Should Profitably Innovate

October 15th, 2012 | Posted by CCorman in Restaurants - (Comments Off on How Restaurants Should Profitably Innovate)

Restaurant executives often struggle with the question: should we continue to do what we know best or should we launch new, innovative initiatives? In a recent QSR Magazine article titled “Innovation or Core? Try Both,” author Denise Lee Yohn suggests that restaurant executives shouldn’t have to choose between their traditional core competencies and higher-risk ideas – in fact, she argues, “not only is it possible [to do both], it is necessary.” (more…)

Video Killed the Bank Branch?

October 3rd, 2012 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on Video Killed the Bank Branch?)

A recent American Banker article posed the question of whether some bank branches will be completely replaced by an ATM with video technology. The idea is that more complex transactions which cannot be completed at the ATM today could in the future be completed by a call center employee or a specialist in a remote office using video technology.

It would appear there is now more than one way for the branch to die. Customers continue to migrate towards online and mobile banking, and they may use increasingly sophisticated ATMs rather than set foot in a branch. In reality, neither will fully replace a branch, but this new technology offers interesting possibilities that banks should consider.

First and foremost, banks should start thinking about how this technology could impact staffing needs. Video ATMs could reduce the cost of servicing more routine transactions. We have worked with banks to measure the impact of ATM technology investments, such as remote check imaging. In some cases, this has reduced the need for tellers, and video ATMs could push this trend further.

This can allow banks to achieve bottom line savings, but they should also seriously consider shifting resources towards more specialized staff. The biggest benefit of adding technology in branches is that it often frees up resources to focus more on relationship management and increasing sales. As banks try out these new video ATMs, they should also try changing the staffing mix or adjusting staffing levels to find the right balance. Training programs are also important to help staff build this skill set.

Banks should also be highly targeted in how they invest in this technology or any new technology for that matter. This is an incredibly expensive investment, and, too often, we find that banks invest across the entire network. That is a waste of capital, and we have seen time and again that only a subset of branches will warrant this investment. Banks will need to determine if the investment makes sense based on a variety of factors, including branch traffic, size of the customer base, the competitive environment, demographics in the area, etc. When banks try out these new ATMs, they should therefore try them across a broad variety of branches that represent the full spectrum across these characteristics.

New technology is exciting and can help banks gain a competitive edge and find new ways to attract customers. However, without carefully testing the new technology’s business impact, it is all too likely that banks will overinvest and not realize all of the potential benefits.