Brick and Mortars (Still) Can't Beat the Web on Price

by Rafi Mohammed  |    June 3, 2013 - Harvard Business Review

Change is an arduous process. Whenever I have to make a big change in my life, I tend to go through three phases. First, I simply wish ("somehow it will happen"). When that doesn't work, I'll look for a quick Hail Mary fix. (Sadly, those specially formulated seaweed pills didn't help me lose 1 to 2 pounds a day). Finally, still stuck in the same situation, I realize that I have to confront the challenge and strategize to make things happen.

Brick and mortar stores have been muddling through similar stages in dealing with the emergence of low-priced web retailers. The facts are incontrovertible: due to lower costs, web retailers can profitably sell products more cheaply than their physical store — and with a few clicks, it's often more convenient for customers to buy online.

When first challenged, brick and mortar stores responded with a nebulous rebuttal of "we'll offer better service" as a counterweight to their price premiums. That hasn't worked very well. Next some retailers have tried a Hail Mary tactic: "We'll match the best price you can find on the Internet." The logic here is that without the price-match guarantee, the retailer was going to lose the sale, so sales gained by this policy are incremental revenue (which results in gross profit as long as the price at least covers merchandise cost). The downside is customers become trained to play the game of checking prices on the Internet first, which has negative long term effects — you can't make money when more and more of your customers start paying incremental prices.

The allure of cheap web prices has recently blossomed due to mobile phone apps that direct users to a lower price on the same product, generally at an Internet retailer. Many of these online retailers offer free shipping and, for the moment at least, many don't charge sales tax (which at 9.25% in Chicago, for instance, adds up). These apps encourage "showrooming," the practice of customers checking out merchandise in physical stores and then purchasing at a discount on the web.
Brick and mortar retailers need to realize that selling the same products as established web retailers do, even with... Read the complete article

The Myth Of Showrooming Takes Another Hit

May 15th, 2013
Written by Evan Schuman, StorefrontBacktalk.com

The myth of showrooming—the suggestion that tons of shoppers are flooding stores to only use them as a physical showroom as they had always intended to purchase the product at Amazon—lives on. But a survey conducted in late April by Bizrate Insights is helping to add a little clarity. First, showrooming really doesn’t happen very often. But more interestingly, when it does, it’s more likely to be within the same chain. That’s a problem all right, but the name of that problem isn’t showrooming. It’s internal politics.

Bizrate surveyed more than 9,000 shoppers (between April 24-30) who had just completed an online purchase at one of their e-tailers. The first—and arguably most meaningful—stat is an overwhelming 78.15 percent of those online purchasers had not looked at those products in any physical store. No surprise there, but it’s a key number to remember the next time someone shouts about how showrooming is gutting brick-and-mortars.
When they zeroed in on that remaining 21.85 percent of shoppers who had looked instore before buying online, most of them (54 percent) ended up buying from the same chain. In other words, they were in a Target or a Best Buy and then purchased from Target.com or BestBuy.com.
Granted, that’s a slim margin (in the survey, it’s the difference between 11.8 percent and 10.05 percent—and it’s not clear what the survey’s margin of error was), but it’s still interesting.  Read the rest of the article

Online Retailers Starting to Appreciate Value of Brick and Mortar Stores

Posted by Techvibes Newsdesk on Mar 27, 2013

This article was written by Glen Korstrom and originally published in Business in Vancouver.

E-commerce ventures and traditional retailers are rapidly fusing sales strategies and creating a hybrid model that includes online and in-store purchases.

As street-front retailers reduce store size, opt for kiosk-style outlets within stores and increase marketing budgets for online sales, e-commerce ventures are opening more pop-up stores that last weeks or months instead of days.

Vancouver-based online suit-seller Indochino launched its first pop-up store in Vancouver in November 2011 and has since had seven other pop-up stores in cities such as San Francisco, New York and Chicago.

CEO Kyle Vucko told Business in Vancouver that his company has increased pop-up store opening times to several weeks for the one currently in Boston. Its first pop-up store lasted four days and offered customers the opportunity to book sessions for Indochino staff to take their measurements.
Vucko’s company continues to more than double its revenue each year and recently moved its 40 Vancouver staff to a larger office in Vancouver’s Railtown neighbourhood, east of the downtown eastside.

Vancouver’s other major e-commerce venture, Coastal Contacts, is also scouting around for potential pop-up stores.

It opened a new 1,000-square-foot store under its Clearly Contacts brand on Robson Street between Burrard and Thurlow streets on March 21.

CEO Roger Hardy refers to the store as a “pop-up”; its lease is rumoured to be six months.
Hardy would not disclose the length of the store’s lease, but he said it’s shorter than leases that most retailers sign and that he is simply testing out the location.

Coastal Contacts’ Lensway subsidiary operates six street-front locations in Sweden, and Hardy said the stores have helped boost e-commerce sales in that Scandinavian country.

“There’s evidence that hybrid models of retail are going to be the most successful.”

FUTURE OF RETAIL

Indochino and Coastal Contacts’ moves come as another successful e-commerce retailer, U.S.-based Bonobos, is taking pop-up stores one step further by opening Bonobos Guideshops.

• Click to read the answer and the rest of the article…

Landlords are finding it easy to fill empty big boxes

March 28, 2013
Shopping Centers Today

Remember those vacant big-box store sites that were expected to gather dust for decades? Today, the only dust seen at many of them is the kind that's getting kicked up by the procession of tenants scrambling to fill them. Minimal new retail construction, coupled with improvements in the housing, employment and lending sectors, have retailers and a host of other users re-filling boxes of all size from Billings, Montana to the Big Easy.

Though deals have yet to return to pre-recession pricing, big-box vacancy is dropping and cash flow is rising faster than many predicted just a few years ago. A prime example: the brisk leasing and sales activity of the nearly 400 vacant Borders Books spaces returned to market following the retailer's 2011 bankruptcy. Even in economically pressed Michigan, 11 of the state's 18 former Borders locations had been absorbed as of February 2013 and several other deals are working, a February report in the Detroit Free Press said. One of those is in Borders' former home base of Ann Arbor, where the bookseller's old two-level, 44,000-square-foot flagship store is being subdivided into five first-floor retail and restaurant spaces and a bank of second-floor offices.  In Billings, Montana, Jo-Ann Fabrics and Crafts emerged to take over a former Borders in Marketplace West, beating out about a half dozen other national retailers, developer and leasing agent Steve Corning said.

Last summer, Fresh Market took over a former Borders on stately St. Charles Avenue in New Orleans, while in central Philadelphia, Walgreens is  moving into a former three-floor Borders where it will mirror new-concept stores that it previously opened on New York's Wall Street and Chicago's Michigan Avenue. The store will feature a salon, salads, juice bar, fresh sushi and a doctor-attended wellness center.

The Borders blitz seems destined to continue. A few miles from the Notre Dame campus in South Bend, Indiana, Whole Foods is set to open April 10 [2013] in an old Borders, while another healthy grocery, Asheville, N.C.-based Earth Fare, has opened in an old Borders space in Noblesville, Ind., near Indianapolis. "Borders had great real estate and unlike a lot of the vacant boxes, it was a part of that same tribal gathering of tenants that went into many of the modern-day lifestyle centers," said David Palmer, head of Dallas/Fort Worth development for Dallas-based Cencor Realty Services. Among retailers taking former Borders in Texas are Nordstrom Rack, Container Store and Neiman Marcus Last Call. But not all the Borders went to retailers. A former Borders at Westfield Southcenter Mall in Tukwila, near Seattle, went to Hope of the City Church.

It isn't just old Borders boxes that are getting absorbed. The Detroit report said 17 of Michigan's 21 former Circuit City big-box locations are either occupied or scheduled Read the full article

What Exactly is a Pop-Up Store

Posted by Storefront Team at The Store Front Blog
March 22, 2013 at 8:27 am

photo credit : Storefront.com

Whether you hear temporary retail, flash retailing, pop-up store, or pop-up shop, it is all one and the same. Pop-up shops are taking over the retail world and rethinking traditional brick-and-mortar and big-box stores, but what exactly is a shop that pops up?

Sighted as early as the 1990s in large urban cities such as Tokyo, London, Los Angeles and New York City, pop-up shops and pop-up retail are temporary retail spaces that sell merchandise of any kind. That’s right, just about every consumer product has been sold via a pop-up shop at one point in time. From art to fashion to tech gadgets and food, pop-ups are exciting because they create short-term stores that are just about as creative as they are engaging. And they come in all shapes and sizes.

Specific Details:

• Term: typically a 3 days to 3 months.
• Location: high foot traffic areas such as city centers, malls, and busy streets.
• Price: much lower than a traditional store, typically paid upfront.
• Use: launch new product, generate awareness, move inventory, vet idea, increase ‘cool’ factor.

What are the benefits of a pop-up shop?

• Connect with customers: The pop-up retail format allows you to personally get to know your customers and build stronger relationships.
• Sell more: About 95% of all purchases are still completed offline. This is your opportunity to take advantage of the retail channel.
• Build awareness: Consumers and the media love the excitement generated by pop-up shops. Build awareness by going offline!
• It’s cheaper: Launching a pop-up shop is 80% cheaper than a traditional retail store
• Test new markets: Easily enter a new market and launch new products

 

So, who can start pop-up shop?

• Click to read the answer and the rest of the article…

From NRF - The State of Retailing Online Report 2013

The State of Retailing Online 2013 launches! 

We're excited to announce that the results of the first survey of the State of Retailing Online 2013 study were released on January 13, 2013 as part of the First Look track at the NRF BIG Show.  Covering metrics and key initiatives for retailers in 2013, the report findings help retailers benchmark their online business and highlight areas of focus in e-commerce this year. 

To learn more or to participate in a future SORO study later this year, please contact Fiona Swerdlow, Head of Research at Shop.org.   

 

Key Take Aways from the Report:

Key eCommerce Metrics Continue To Grow
On average, the web retailers surveyed in Forrester and Shop.org’s annual The State of Retailing Online study saw growth of 28% in 2012 over 2011. The majority of retailers also responded that the following key site metrics improved in that same time frame: site conversion rates, average order values, and the percent of sales from repeat shoppers.

Key eCommerce Metrics Continue To Grow
On average, the web retailers surveyed in Forrester and Shop.org’s annual The State of Retailing Online study saw growth of 28% in 2012 over 2011. The majority of retailers also responded that the following key site metrics improved in that same time frame: site conversion rates, average order values, and the percent of sales from repeat shoppers.

Mobile sales are Growing particularly Rapidly
While Forrester’s mobile commerce forecast figures show a minority of eCommerce sales (less than 5%) coming from phones, the retailers that responded to our survey said that, on average, they experienced a 129% lift in year-over-year sales from smartphones and a 178% lift from tablets.

Mobile has a net positive impact on Retailers’ Conversion Rates
Th irty-six percent of the retailers surveyed said that mobile sales and traffic have helped their company’s overall web conversion rate, while 29% of the retailers said that mobile sales and traffic have decreased their overall conversion rate.

Site optimization is The Key investment area For 2013
Retailers say that their top priorities in 2013 are improving their site’s conversion rates and redesigning their site experience -- in other words, optimizing their site’s overall performance. Many retailers specifi cally called out plans to focus on the checkout experience and to adjust their site to accommodate a responsive design framework.

Click here for the Table of Contents & Figures.

Click here for more details on the report and how to obtain a copy

How Santa's Helpers are spending their time and money in-store vs online!

The 2012 Holiday Shopper Unwrapped
 

How Santa's Helpers are spending their time and money in-store vs online!

In the last few days of the holidays season, POPAI brought us their insight into the 2012 Christmas shopping season.

"Tis the season to spend. This season, holiday shopping sales are expected to reach $586 Billion. From an individual consumer spending standpoint that translates to a spend of almost $1000 over the months of November and December. Gifts, decorations, cards and food top the list of pre-holiday purchases at an estimated $984. The spending won't end on December 24th either. An additional $235  is projected to be spent on post-Christmas deals and self-gifting once the holidays are over"

 Click here to see the full infographic and article

Click here to see the full infographic

Forget teens. Malls want to be hangouts for adults

By Eric Wolff
North County Times
Shopping malls want to be Starbucks.
In the same way that coffee shops transcended the idea of selling caffeinated beverages to become community hubs, malls want to transcend shopping and become the place where everyone — and not just teenagers — come to meet, socialize, or get some work done. Five San Diego County malls recently unveiled multimillion dollar renovations that introduced new, socially oriented seating arrangements, upgraded food courts and dining options, and free Wi-Fi — all intended to make malls a destination place to spend non-shopping time. Mall owners hope a rising tide of new amenities, along with a busy schedule of events, will lift all tenants.
“If we enrich their lives, they’re going to come back to us and shop with us,” said Steve Dumas, senior vice president of design for Westfield USA.
Malls have been under pressure along with the rest of retail when sales plummeted during the recession and subsequent sluggish recovery. After hitting a sales peak of $416.20 per leased square foot in 2007, sales fell 12 percent to $365.39 in 2009, according to the International Council of Shopping Centers, an industry nonprofit. Compounding matters, the national vacancy rate for super regional malls — malls with 800,000 square feet or more, including Fashion Valley and Westfield UTC — jumped from 6.7 percent in 2006 to 10.6 percent in 2009....Read the complete article

Black Friday Results Are In: The Centerpiece of a Huge Multi-Day ‘Bricks-and-Clicks’ Shopping Spree

Black Friday Results Are In: The Centerpiece of a Huge
Multi-Day ‘Bricks-and-Clicks’ Shopping Spree

By Brad Tuttle for
Time Magazine

Nov. 26, 2012

  If Black Friday was just a day when retailers were concerned solely with in-store sales, then Black Friday 2012 was something of a dud. But the idea of “Black Friday” has expanded far beyond a mere 24 hours, as well as the traditional in-store experience.

The retail research firm ShopperTrak estimates that shoppers spent $11.2 billion at physical stores on Black Friday. That represents a 1.8% decline from Black Friday of 2011. Does this mean that the importance of Black Friday to retailers is also on the decline?

Not remotely. What’s happened, then, is that Black Friday has grown so big that it cannot be contained in a single 24-hour period, nor are its sales and promotions limited to the stuff displayed on shelves and racks at the mall. Today, “Black Friday” begins on Thanksgiving morning (if not earlier) when retailers flood e-mail subscribers with special online shopping offers. It stretches on to Thanksgiving night, when stores open their doors for Black Friday door busters several hours before Friday has truly arrived. On through the long holiday weekend the stream of sales and promotions continues, encompassing every mode of shopping known to man.

As the Associated Press reported, in-store sales on Friday itself fell, naturally enough, directly as a result of so many stores opening on Thanksgiving night. Because shoppers were whipping out credit cards and cash at Target, Walmart, Toys R Us, and elsewhere on Thursday night, they (probably) weren’t loading up their shopping carts the following morning, the actual Friday of “Black Friday.”...Read the complete article

NRF Report: Election 2012 in review: The impact on retail

 

 

 

NRF Report: Election 2012 in review: The impact on retail

By Craig Shearman, VP, Government Affairs PR |

November 7, 2012

After $6 billion in campaign spending and a barrage of political ads in an election that hinged largely on jobs and the economy and which will impact a wide variety of public policy issues important to the retail industry, Americans woke up this morning to a familiar government. President Obama won a clear victory over former Massachusetts Governor Mitt Romney, with a 50-48 percent lead in the popular vote and a total of 303-206 electoral votes, but voters left Congress divided.

While some news organizations reported slightly conflicting numbers this morning, the New York Times said Republicans retained their majority in the House 232-191 while Democrats remained in control of the Senate 52-45. Some races remain undecided but are not expected to affect the majority in either chamber.
While Obama’s win was decisive, it was built on slim majorities in just a handful of battleground states, and Obama is the first president reelected since Woodrow Wilson with a smaller margin in the Electoral College than his first-term election. Out of more than 120 million votes cast, the final margin of victory hinged on fewer than 360,000 votes in Florida, Ohio, Iowa, and Virginia.
As a status-quo election, it is difficult to discern a clear message from the results. The narrow nature of Obama’s reelection margin suggests more of a validation of his campaign strategy than a vindication of his first term policies, and House and Senate leadership are likely to return to familiar scripts in the next session of Congress.
Down the ballot, Senate Democrats defended their majority thanks to strong recruits in open-seat races and a series of self-inflicted wounds among Republican Senate candidates.

...Read the complete article

Do you know who created the modern shopping mall?

Well, his name was Victor Gruen and he was a true visionary.
Odds are you’ve never heard of him, which is a shame because this
architect from Vienna  revolutionized the way people shop in America,
and around the world, and we all owe him a big thanks! Read on... 

Hallandale Beach, FL mall chosen for coveted spot on the 2012 DMM Print directory front cover!

December 2011                   

After weeks of deliberation, The Village of Gulf Stream Park in Hallandale Beach, FL has been selected as the featured property on the cover of the upcoming 2012, 33rd edition of the Directory of Major Malls (pre-orders are now being taken, with shipping scheduled by end of January 2012)!

"Every year, we search through the list of properties in our database, looking for just the right one for the cover of our newest book which has metamorphosed, just as the industry has, into providing coverage way beyond the standard enclosed mall retail project. Retail has changed dramatically over the past decade and we now see it tied in with a
variety of other venues and attractions. Therefore, we try to reflect this in
our cover images as well.  Historically, our covers have always featured an exciting new retail project or one that has experienced a major renovation very recently," explained Tama J. Shor, Publisher of Directory of Major Malls. "When we saw this recently opened retail destination in Florida with its stunning architecture and vibrant shopper activity, plus its location and tie-in to the race track, we knew we had the right mall to present on the cover on our 2012 directory and that they'd be very excited about it, too," she added.

More about DMM...

For over 30 years, DMM has offered the most comprehensive and accurate information on major open-air shopping centers and malls which are approximately 200k and above in size. Listings cover the spectrum of center types including: enclosed malls, open-air community, power, value-retail centers, as well as lifestyle/specialty/mixed-use projects of any
size. The 2012 directory has over 2,300 pages packed with data on those
properties. You can also subscribe to the powerful yet user-friendly DMM
Online!

Visit http://shoppingcenters.com/topstory12-2b,
for special money-saving offers on the 2012 Print Directory PRE-ORDER, as well as DMM Online for immediate access.

Directory of Major Malls data is available in a suite of formats including Online, Print directory, Custom databases and reports, and Licensed
datasets for GIS integration and analysis.

America's Most Visited Shopping Malls

By Joe Yogerst
TravelandLeisure.com

For most Americans, it’s just not the holidays without a mall visit. Chicago-area Woodfield prepped weeks before the Black Friday shopping blitz, debuting an Ice Palace with a light show and Santa photo-ops.

After all, its parking lots are crowded whatever the season. Woodfield gets 27 million annual visitors—more than any other Illinois attraction (only 8.69 million make it to Chicago’s Navy Pier). A heady mix of shopping, eating, and entertainment options has turned malls across the U.S. into similar tourism magnets and coined the phrase “destination malls.”

Read complete article

'Tis the Season for Shopping Local: Mom-and-Pop Retailers Hopeful About Holiday Sales

A positive outlook on the upcoming holiday season...
  
New Manta Survey Reveals Half of Small Retailers Are More Optimistic About Holiday Sales This Year Compared to Last Year...
 

 'Tis the Season for Shopping Local: Mom-and-Pop Retailers Hopeful About Holiday Sales

Manta Launches SMB Wellness Index, Reveals New Business Activity on the Rise in Q2

COLUMBUS, Ohio--November 1, 2011--As big-box retailers like Wal-Mart reinstate layaway payment plans to combat an expected drop in holidays sales, nearly half of small retailers (49 percent) say they are more optimistic about holiday sales this year versus 2010, according to a new survey from Manta, the largest online SMB community. The survey of nearly 800 small retailers, most with fewer than 10 employees, also revealed that four in 10 are heading into the busiest shopping season of the year with better sales than they had last year.   Click to read the entire article ... 

DMM helps See's Candies Take a Bigger Bite Out of their Tasty Market!

DMM and See's Candies - A Sweet Relationship!

See's Candies knows quite a bit about smart expansion. Founded in 1921, and purchased by Warren Buffet's Berkshire Hathaway in 1972, See's Candies operates over 200 stores in Arizona, California, Colorado, Hawaii, Idaho, Illinois, Minnesota, Missouri, New Mexico, Nevada, Oregon, Utah and Washington (with a Wisconsin store set to open in Spring 2011). Seasonally - primarily during the year-end holiday shopping season - See's offers its products in select markets in kiosks and pop up stores at malls and other shopping centers in an even larger geographic range, bringing the number of states covered to almost all 50! There are also shops outside the U.S. in Hong Kong, Japan and Macau.

They've been using Directory of Major Malls data for many years to help make location decisions.

Real Estate Manager, Kathleen Pelzman, explains: "I have been with See's since 1979 and Directory of Major Malls is certainly an excellent tool for our research of Shopping Centers throughout the country.  It is a huge resource for me and one I think could benefit those just starting out in retail and shopping center leasing.  I have used it for many years - first the printed directory and now online - for our continual expansion throughout the country. DMM is my #1 tool, for the majority of our research.  It provides the detail I need and the ease of navigating the website is really appreciated."

Tama J. Shor, Publisher of Directory of Major Malls couldn't be happier.

"Providing the data for great retailers like See's Candies to make the best possible permanent and specialty retail location decisions year-after-year is really gratifying to us," she says.

Visit www.shoppingcenters.com/smart,  for special money-saving offers exclusively for readers of this blog.

For the most delicious chocolates and treats in the world, visit www.sees.com!

More about DMM...
For over 30 years, Directory of Major Malls has provided the most accurate, detailed and timely development and contact information on the major open-air shopping centers and malls that are approximately 200k and above in size. Our listings cover the spectrum of center types including: open-air community, power, value-retail, lifestyle/specialty/mixed-use and enclosed malls.

Directory of Major Malls data is available in a suite of formats including Online access, CD-Rom, Print directory, Custom databases and reports, and Licensed datasets for GIS integration and analysis.

DMM Shopping Center Lists featured in WestFair Business Magazines!

September 26, 2011                      Special Offers - Click Here!

Each year, WestFair's three magazines include DMM's list of major shopping centers in New York's northern suburbs and Fairfield County, CT.
Their readers in commercial real estate, insurance, finance, construction,
maintenance and more use it to market their products and services to centers.
What can DMM data (online, CD & print) do for YOU?

Review the lists published by WestFair:

Westchester page 1  

Westchester page 2

Hudson Valley page 1

Hudson Valley page 2

More about DMM...

For over 30 years, Directory of Major
Malls has provided the most accurate, detailed and timely development and
contact information on the major open-air shopping centers and malls that are
approximately 200k and above in size. Our listings cover the spectrum of center
types including: open-air community, power, value-retail,
lifestyle/specialty/mixed-use and enclosed malls.

Directory of Major Malls data is available in a suite of formats including Online access, CD-Rom, Print directory, Custom databases and reports, and Licensed datasets for GIS integration and analysis.

Supermarkets are at home in Canadian malls

Interesting commentary on Canadian vs. US shopping center development by Jeff Green, CEO of Phoenix-based Jeff Green Partners.

Supermarkets are at home in Canadian malls

Gruskin Group™ Says Retailers Will Leverage the ‘4C’s’ to Keep Customers Engaged and Their Brand Relevant

Guest Blog post by Gruskin Group a leading retail design firm.

 

What’s Next for Retail Environments: Social Experience Retailing

Historically, conventional wisdom suggested that retail environments be updated every three to five years to remain “fresh” and plugged into the consumer marketplace.  Today, the cycle is more of an ongoing process, say experts at Gruskin Group™, one of the nation’s leading retail design firms, and “social experience retailing” where their virtual and real world strategies converge, is pivotal to how retailers will keep their customers engaged.

“The explosion of technology and the subsequent real-time access to thousands of petabytes of data through smart phones, tablets, and computers, coupled what we refer to as the four ‘C’s’—convergence, convenience, connection, and cost – are having a meaningful and collateral impact on retail.  This, in turn, has allowed fickle consumers in our ‘immediate gratification’ environment to flip the personalization promise on retailers from the very nice ‘have it your way’ offer to ‘provide it my way or it’s the highway,” explained Kenneth A. Gruskin, principal and founder of Gruskin Group.

“As a result, retailers are rolling out ‘experience store’ concepts, combining physical and virtual strategies with localization and individualization to keep customers engaged and their brand relevant to their physical and digital lives,” Gruskin noted. 

According to Gruskin Group, in order to offer this kind of social experience retailing, retailers will offer their own unique recipe of the 4Cs, which are defined as follows: 

Convergence: with the unification of social networking, commerce, and technology, augmented reality (AR) will become a key technology that will help to close the digital divide that separates our physical and virtual domains. Also, retailers will form brand sharing partnerships to provide compelling alignments that will attract customers and get them invited into their lives and communities through the integration of SER (social experience retailing) and CTR (convenience transaction retailing).

Convenience:  retail products, services, and virtual goods being provided through multiple physical and virtual channels will become ubiquitous to the end user. Localization will become “neighbor hooding” with virtual, smaller and better trained, localized brick-and-mortar facilities supporting a retailer’s embedded customer base while offering a global reach.  The supply chain distribution system will be updated to provide instant gratification by delivering goods and services immediately from anywhere to anywhere.  Further, technology and systems will empower customers to learn, explore, and make knowledgeable, informed purchasing decisions wherever they are.

Connection:  Successful retail brands must continuously establish deep, personal relationships with their customer and reflect their value and core beliefs with authenticity if the brand is to be seen as an extension of who “they” are. The brand and retail experience must be literally connected and accessible to the individual wherever they are through the web and local brick-and-mortar stores alike (which celebrate the community in which they are located).  As a result, the design of all of these retail touch points, both physical and virtual, will be more important than ever to keep a brand positioned to be visible, to maintain/improve its perceived value, and to help individuals identify and stay connected with retailers that align with their core beliefs and lifestyle.

Cost:  For the individual customer, cost will be based on their personal view of the perceived value of the product or service being offered. For the retailer, cost will primarily be a function of whether SER or CTR is the priority.  If CTR is paramount to the retailer, lowest cost and convenience will be the priority. For those with SER as the end goal, brand equity, alignment, and integration with their personal goals, lifestyle/life stage and community will be crucial.  For both SER and CTR, global/local manufacturing approaches and supply chain management will not only continue to have huge cost implications, but as customers demand personalization/ individualization of all of their goods and services, being able to manage the costs of customized, mass produced goods “on-demand” will prove to be the real challenge.

“Total convergence of the virtual and brick-and-mortar retail experience empowered by social networking concepts and technology is inevitable. And the relationship between brand equity and cost will be shaped to a large degree by how consistently retailers deploy their brand image.    For retailing, it means the next 10 years, the next 40 years, will be exciting times of experimentation and constant reinvention,” Gruskin added. 

About Gruskin Group™

Gruskin Group™ is an integrated design firm that builds unified brand experiences through architecture, brand development, visual communications, web/interactive, industrial design, interior design, strategic consulting, and sustainable design. 

Ranked by DDi magazine as one of the top 20 retail design firms in the U.S. for the past three years, Gruskin Group was named to the Inc. 5000 in 2009 and 2010.  The firm’s and its professionals’ award-winning work has been recognized by AIA, the Retail Design Institute, New York Ad Club, New Jersey Ad Club, ASID, Graphis, and the Association of Graphic Communications.  For additional information, visit www.gruskingroup.com.

A helpful site with many links to "other" retail industry links

A helpful site with many links to "other" retail industry links.
About.com Help Retail industry links

Find complete and updated retail research about global and U.S. retail industry stores and sales, including history, numbers data, term definitions, and statistics.

Industry professionals, investors, students, retail employees, and analysts can get comprehensive and aggregated research resources about multi-store global and U.S. retail chains here.


More information on Directory of Major Malls, Directory On Computer, and other products related to the shopping center/retail chain industry may be obtained from the website www.shoppingcenters.com .

The KISS of Death (a commentary on chain store sales forecast modeling)

Guest Blog post by Jim Stone, Chain Store Advisors

Jim Stone is the principal consultant of Chain Store Advisors, a consulting firm in Reading, MA.  
Chain Store Advisors works with businesses who operate chain stores including retailers, restaurants, and service businesses.  

The KISS of Death 

Most chain store modeling experts will tell you that a “good” sales forecasting model will estimate sales +/- 20% in 80-90% of the cases.

Most chain store real estate dealmakers believe that they need a model with no more than +/- 15% error 85% of the time.

Most people don’t agree on how this error is measured or what the role of human judgment should be in determining the “official” sales estimate used in calculating the projected return on investment.

Everyone wants to “Keep It Simple Stupid” because it’s hard to make decisions when you are confused about the facts or their implications.  This definitely applies to real estate planning and site selection for chain store operators.  However, most sales forecasting models are anything but simple and are often intimidating to those without strong backgrounds in statistics (which includes the CEO, CFO, and VP Real Estate).

 There is a huge push these days to use technology and mathematical models to increase the quality of business decisions.  From the rigorous discipline of “Six Sigma” in the late 80′s to the recent business analytics wins of companies such as Capital One and Harrah’s, there seems to be an unbridled confidence in the application of computers and statistics to financial analysis.

The problem is that some situations cannot be modeled with enough precision to be useful.

 Chain store sales forecasting is one example.  

The reason is simple:  historical data about the retail marketplace are not static and therefore cannot be used to reliably estimate future sales.

A Framework for Complexity

Let’s consider some different decisions that face chain store operators ranging from simple to complex.

A simple problem is one that can be reduced to an equation and applied repeatedly with very similar results.  An example would be the selection of the size of a steel beam to support a roof in a building.  The force of gravity is consistent and can be used to compute the load requirements of structural steel.  Even if the equation is complicated (to those who are not structural engineers), it is simple, straightforward, and reliable.

A complicated problem is one in which the relationship between cause and effect requires analysis and expertise.  Many business problems fall into this category such as staffing for checkout lines to minimize wait times for customers, logistics for deliveries in the supply chain, and inventory management based on seasonality of demand.  In these cases, historical data provide a reasonable basis for predictive models and can provide a solid foundation for planning and investment decisions.

A complex problem consists of a situation where the relationship between cause and effect can only be determined in retrospect, not in advance.  This is due to large number of variables that influence the outcomes, the changing values of these variables, and the non-linear interactions among the variables.

Chain store sales forecasting is a complex problem.

Although our use of statistical models in sales forecasting has outstripped its usefulness, it would be a mistake to simply revert to “gut feel.”  The chain store industry has a great opportunity to build upon the advances in technology, data, and analytical methods and create a new approach that uses the best of “art and science.”

The best tool for integrating art and science in real estate decisions is the oldest tool:  analogs.

Analogs allow decision-makers to look at a new opportunity, find similar situations from past experience, and use them as a guide to estimating the future performance of trade areas and sites.  Computers and market data can be used to present the “patterns” for comparison and the human brain can be used to assess the similarity of the analogs and adapt them to the new situation.

In chain store sales forecasting, the analog method was first formalized by William Applebaum in the 1930′s.  Since then a vast array of methods have been used to create classification schemes for markets, trade areas, stores, competitors, and customers.  The frustration of this effort is that no two entities are exactly alike, and any attempt to fit them into a scheme will result in a large number of cases near the boundaries of the categories.  For example, let’s say that we define “urban” stores as those with a a population density of 5,000 people per square mile within a 2 mile radius.  Does that mean that a store with 4,999 people per square mile is not urban?

 

The computer can easily compute population density for any location in a second; a human being can’t do this in a year.  However, a human can look at a map of an area and instantly classify it based on a variety of attributes:  its density, proximity to major highways, the presence of retail activity, traffic congestion, and relationship to surrounding cities and towns; a task that a computer program would find daunting, generating comical results in many cases.

Over the next few months we will further explore some new ways to integrate art and science for better real estate planning and site selection.

See Jim's original post and others at  Real Analogies