Actionable Insights From APT's Retail Practice

Keeping Your Dollars Away From Dollar Stores

March 21st, 2013 | Posted by Dan Schreff in Retail - (Comments Off on Keeping Your Dollars Away From Dollar Stores)

A recent Convenience Store News article written by APT SVP Jonathan Marek details strategic actions that convenience stores can take to maintain market share despite the competitive incursion of dollar stores into the convenience space. Click here to read more.

How Apparel Leaders are Succeeding in an Omni-Channel World

March 20th, 2013 | Posted by Leah McFarlane in Retail | Uncategorized - (Comments Off on How Apparel Leaders are Succeeding in an Omni-Channel World)

Apparel retailers are adapting to the changing retail landscape as customers shop a store through multiple channels. Here are six key trends that are helping apparel retailers gain incremental sales in an omni-channel retail environment:

1.      Coordinating Online and In-store Activity
E-commerce and mobile applications provide another touch point with customers, but there isn’t always coordination of promotional activities and merchandising actions across channels.  It is important for retailers to align their in-store and online strategies in order to maximize traffic and margin.  Retailers can learn more by measuring the impact to online when running in store promotions, measuring the impact to stores when there are geo-targeted online promotions, and using basket level insights to see by channel what promotions are most effective.
2.      Mobile
Mobile applications are no longer simply another platform to sell products; they are also a way to educate the consumer on the latest trends and product availability. Some apparel leaders are releasing style guides in the form of mobile apps to generate buzz around new products and styles. Retailers are also aligning mobile applications with inventory locations, allowing customers to determine whether stores have products in their size at the location before they head to the store.
3.      Customer Targeting
Increasingly, retailers are customizing promotions, emails, and circulars to customers based on demographics, customer segments, and past purchasing history. Leading retailers are testing certain marketing and promotions with a representative group of their customers to determine which customers respond best.  Using this information, apparel retailers can tailor their marketing material and promotional offerings by customer segment.
4.      Target Online Advertising
Online advertisements are not simply driving customers to shop online; they are also increasing in-store sales.  With the ability to geo-target online advertising like paid search and the right granularity of data, retailers can measure the impact of online advertising on in-store traffic and sales.  Furthermore, retailers can determine which products and markets will see the greatest returns from geo-targeted online ad spend.
5.      Inventory Fulfillment
Retailers have options when it comes to online order fulfillment and inventory management practices.  Increasingly, retailers are moving from exclusively fulfilling orders from the nearest distribution center to making strategic shipments from brick and mortar locations for some online orders.  The risk of fulfilling orders from stores is if assumed inventory doesn’t match reality due to issues like shrink, this could exacerbate out of stocks that may negatively impact sales.  Retailers can limit the risk of in-store out of stocks with better inventory management systems or newer inventory tracking technologies like RFID.
6.      Integrate Banners
Many retailers operate multiple banners and historically customers have not been provided opportunities to cross shop in a brick-and-mortar environment. However, retailers are more frequently integrating banners online allowing customers to purchase products from multiple banners in a single transaction.  This integration is part of a trend towards a customer-centric approach to selling. Integrating banners may encourage more online shopping, decrease the barrier to purchase due to shipping fees, lead to larger online baskets, and may provide e-commerce cost savings.

Remodels: Shifting from “Yes or No” to “Where and How”

March 12th, 2013 | Posted by retailblogadmin in Capital Expenditures - (Comments Off on Remodels: Shifting from “Yes or No” to “Where and How”)

Due to delayed spending on remodels during the “Great Recession,” some restaurant leaders today are confronted with how to address an aging fleet of restaurants. In general, capital programs are both a necessity to maintain brand standards across a restaurant network, and an opportunity to drive incremental cash flow. When executed correctly, with the appropriate emphasis on accurate and actionable measurements, remodels can drive significant shareholder value. (more…)

The Importance of Testing: Lessons from J.C. Penney

March 7th, 2013 | Posted by CGreenbaum in Retail | Uncategorized - (Comments Off on The Importance of Testing: Lessons from J.C. Penney)

The failure of J.C. Penney’s pricing strategy offers a cautionary tale for retailers about the importance of testing new ideas before rolling them out. In early 2012, J.C. Penney rolled out a new pricing initiative, which involved a heavy media campaign and the elimination of discounts and sales. Since rolling out this change, same-store sales have dropped 22%, J.C. Penney stock continues to hemorrhage value, declining by over 50% since last January, while competitors like Macy’s have been gaining significant market share.

“We didn’t test at Apple,” Ron Johnson, J.C. Penney’s CEO, who recently joined from Apple, said of testing his pricing changes at a subset of J.C. Penney stores. In an article covering J.C. Penney’s decision not to test their pricing initiative, The Wall Street Journal wrote, “Mr. Johnson and his team diagnosed Penney as having ‘analysis paralysis.’ The CEO slashed the number of meetings to review data, store results and other metrics that managers had used to stay on the same wavelength.”

“I think not testing was a mistake” said J.C. Penney board member Colleen Barrett. Leading retailers, including Walmart, CVS, Walgreens, Target, Abercrombie & Fitch, and Victoria’s Secret routinely rely on robust data analytics and testing when they make important business decisions. Testing new initiatives de-risks the process of innovation by avoiding major mistakes like the J.C. Penney pricing debacle.

Ultimately, robust analytics allow retailers to get to know their customers better. J.C. Penney lost touch with their customer base, which demanded discounts and value merchandise. J.C. Penney moved upscale too quickly, changing store formats, assortments, and pricing to appeal to new customers. In doing so, they simply alienated their once-loyal customer base. J.C. Penney stock continues to free fall, underscoring how retailers need to test new business programs in order to avoid disasters like these.