Fascinating commentary from Economics News Site – Mish Shedlock

Deflation Pressures Intact

This may be one reason why government bonds refuse to sell off despite the surge in the equity market. The Wall Street Journal reports that companies like Clorox is keeping prices stable on items like its new and improved trash bags. Campbell’s Soup is cutting prices on select beverages (like V8). Burger King is selling double cheeseburgers for a buck. And, what’s this about RIM starting up a smartphone price war? According to a new holiday season poll taken by Deloitte, 74% of respondents intend to only buy items on sale or with discount coupons. The same survey indicates that holiday shopping will be flat year-over-year this year, which at one point would have been amazingly bullish but at this stage is likely a setback for the stock market. Keep in mind that Wal-Mart is now expecting 1.0%-2.0% sales growth into January 2010 whereas a year ago that expectation was in a 5.0%-7.0% range.

If there is some good news for retailers, it is that they are heading into the shopping season with fairly lean inventories — that won’t prevent but should help limit ultra-steep markdowns this year.

Martin Comments:

United States retail will very tight excepting niche markets, we are finding that understanding the patterns and behavior behind the analytic sales numbers is critical to success.

Retailers have a better grasp than ever of the retail scene through a variety of analytic tools, what they do not know, is:

WHY DO CUSTOMERS DO WHAT THEY DO AND HOW DO I MOST EFFECTIVELY INFLUENCE THAT BEHAVIOR IN MY FAVOR?

This is working very well for our retail partners,

Employ strategies and tactics that effectively alter the shopping behavior of your customers – the primary shopper, and those who shop with them and their circle of influence.

You will see what increases revenue in the store today.

Patterns caused by underlying behavior, make your sales numbers what they are, you really need help understanding the underlying thinking of your customers and market.

The most successful retailers in the industry are constantly reinventing themselves to stay one step ahead of the competition, according to the STORES Top 100 Retailers ranking.

The report, which is an annual snapshot of the retail industry, ranks companies by revenue and groups them on one chart regardless of the segment or segments in which they operate. STORES is the monthly magazine of the National Retail Federation.

“It’s not enough anymore for retailers to carry the same merchandise as their competition,” says Susan Reda, executive editor of STORES. “From their own brand of food to an exclusive line of tools, today’s retailers will get ahead by differentiating their merchandise and offering products that consumers cannot find anywhere else.”

Arkansas-based Wal-Mart again tops the list as the nation's largest retailer with 2006 sales of $348.65 billion, an 11.7 percent increase over the previous year. In fact, Wal-Mart’s 2006 revenues were greater than those of the next five largest U.S. retailers combined. According to the article, Wal-Mart has remained successful by introducing a line of organic options and focusing on ways to conserve energy and materials.

Home Depot and Kroger retained their second and third spots, respectively, though both companies saw their share of struggles in 2006. Home Depot, which managed to see an impressive gain of 11.4 percent in revenues in 2006 despite the departure of its CEO Robert Nardelli, has been striving to change its corporate culture and maintain strong sales in the face of a current housing slump. Kroger, whose sales rose 9.2 percent to $66.11 billion, remains the subject of takeover talk, though company executives deny the company has any interest in such a deal.

Costco, which advanced a notch to the number four slot, is also pushing the envelope by increasing its private label offerings with a new line of food conceptualized by Martha Stewart. Costco's sales increased 13.6 percent in 2006 to $60.15 billion. Mass merchants Target (#5) and Sears (#6) are both attempting to differentiate themselves but are moving in different directions.

Target, which advanced a spot in the ranking with a sales increase of 13.1 percent to $59.49 billion, will continue to add more private label food items in its stores. Sears, which dropped two spots despite a 7.9 percent sales increase to $53.01 billion, will be rolling out its Craftsman tools and Kenmore appliances to more Kmart locations this year.

Drug stores are also represented in the top ten retail companies. Walgreen, which rose one spot to number seven, is aggressively adding free-standing store locations and focusing on front-end merchandise. CVS, a new entry to the top ten this year at number nine, acquired Caremark Rx and has promised to “transform the way pharmacy services are delivered.”

Other companies in the top ten include Lowe’s, which dropped one spot to number eight, and Safeway, which retained its spot at number ten.

“SAP is a proud sponsor of this year’s STORES’ Top 100 list and recognizes how important growth and innovation are to the retail industry,” says Jim Mattecheck, senior vice president and general manager, Retail, SAP America Inc. “Successful companies continuously find ways to offer a differentiated shopping experience that inspires customers to shop with that retailer again and again. SAP has a proven track record of helping retailers achieve their goals. In fact, more than 4,300 retailers worldwide are SAP customers.”

The most noticeable change to this year’s Top 100 is the inclusion of restaurant companies. The ranking, based on corporate revenues rather than system-wide sales, added six restaurants to the list this year including: McDonald’s (#16), Yum! Brands (#35), Starbucks (#42), Darden Restaurants (#53), Brinker International (#73), and Outback Steakhouse (#80).

“Consumers have changed, but their needs have not,” says Susan Reda, executive editor of STORES magazine. “Americans still have to put dinner on the table every night, but now they are looking to restaurants to fill a larger portion of that need rather than relying exclusively on traditional supermarkets. Successful restaurants understand how to cater to today’s consumers, and there are some ideas they’re trying that traditional retailers may want to borrow.”

Retailers need to wake up: Maybe Mr. Traub earns too much money to really “GET IT”
22% of Americans owe more on their homes than they are worth!
Mr. Traub needs some reality therapy! Your customers just got a lot poorer, that is the reality, now..
What are you going to do about it? Do you know what retailers gained last month? Do you really really know why?

Retailers need to work harder to persuade shoppers to start spending again in what is the most difficult time in the sector’s history. That was the message from famed former Bloomingdale’s president and CEO Marvin Traub at the World Retail Congress today.

Traub, who is credited with turning Bloomingdale’s into a world leading retailer in his 40 year career with the US department store, told the congress that “we live in an atmosphere of ongoing pessimism”, which meant that “our customer is turned off”.
“There has been a transformational shift in consumer sentiment as consumers re-evaluate how and why they spend,” he said, adding “our industry is consumed by the fear and guilt which have gripped shoppers”.
Describing today’s market conditions as “the most difficult and challenging time our industry has ever faced”, Traub said that retailers need to reach out to shoppers by working harder to ensure the products and experiences they offer do more to persuade them to get back into the mindset of spending.

“There is a changed attitude to consumer spending,” he said. “Our job is to create a more positive attitude for consumers and for our stores. We live in a world of exponential change and retailers need to react.”
He said that too often the customer service in stores is poor, which leads to low levels of conversion of store visits to sales. “When I visit stores I am frequently concerned by how poorly some staff interact with customers.”

Traub warned that the luxury market, on which his success with Bloomingdale’s was built, needs a fundamental rethink. “In recent years prices of luxury goods have grown to levels which are unsustainable,” he warned.
He pointed to Matthew Williamson’s tie-up with H&M as an example of how luxury brands could develop more affordable secondary ranges that are accessible to more shoppers.
“At all price points, today more than ever, retailers will need a value proposition,” he said.

So, Get into war mode, and prepare to dig deep, Who is your market? What are consumers thinking? WHERE ARE THEY HEADED?
Yes, I do have ways to find out! DO YOU?
ARE YOU MORE LIKE DETROIT THAN YOU ARE PREPARED TO ADMIT?

You must gain RELEVANT clarity, what is it that really drives sales in your stores, restaurants etc? If you really knew, you would not be reading this!

Retailers struggle to cope with an accelerating decline in consumer spending. Major retailers, across all spectrums, are experiencing dramatic declines in same store sales:

Williams Sonoma - 38% (forecast)
Gap - 14%
Target - 6%
Macy’s - 7%
Home Depot -9%

Some of the strategies being seen in the marketplace include:

Cut costs - not prices.
Home Depot is resisting the market’s move to deep discounts. Their belief is that in today’s economy, these promotions generate little incremental traffic. Companies would rather maintain margins and move aggressively to cut costs. This includes closing stores, layoffs, slowing the opening of new stores, reducing inventory, etc. For example, Macy’s has consolidated its divisions, closed 11 stores and reduced its workforce by 7,000.

Localization
Macy’s is rolling out a My Macy’s strategy. Individual stores will have more freedom to select merchandise that better reflects the needs and tastes of their local market. Home Depot has similarly added a new emphasis on localization to take advantage of local tastes to wring every possible sale out of the market.

Focus on staples
Discount stores like Costco and Target are beefing up on heavily discounted staples like milk, eggs, baby products and bread. Hoping that these discounted necessities will draw more shoppers into the store.

Private labels
From Wal-Mart to Nordstroms, sales of private labels are growing and the share is coming out of the name brand companies. Retailers are pushing manufacturers to come through with substantial price deductions. And, if they don’t get the price cuts, the stores make room for more private label products on their shelves.

Is there a solution?
It’s clear that there is no single strategy that will save a retailer in these very difficult times. Instead, companies are forced to completely re-evaluate their business processes as well as their structural approach to the marketplace.

The most important goal is to survive the downturn in a way that does not damage the company once consumer spending returns. But, it’s a razor’s edge. How can you be the right retailer for a recession and a destination store when shoppers return?

_________________________________

Martin Hoffmitz
VP, Client Partnering
BehaviorWorx Inc.
#202 - 222 Islington Avenue
Toronto, ON M8V 3W7

Email: martin.hoffmitz@bwxi.com

Office: 416.251.0111 x250

Cell: 647.287.4491
Fax: 416.251.9489
Web: www.bwxi.com
_________________________________

Jack Mackey, talks about the game battle ship, and how it might relate to a better retail strategy:

If you could somehow see through, around, or over the shield, and your opponent could not, you would have a real competitive advantage. Otherwise, it's just a game of chance. My point? In the real world, in this stingy economy, the odds of keeping your customers cannot simply be left to chance.

You need to know more

Without information about your customers, you are just guessing about what to do. You need to see through, around, or over the shield between you and your customers. With reliable information about customers, you can act smarter to win their loyalty. You have to "win" customer loyalty because you have a lot of competitors trying to do the same thing. If your competitors know more about customers than you do, your odds of winning, or even surviving, just got worse.

To lead the field, you need a deliberate customer retention strategy, one supported by actionable customer intelligence.

Strategy comes from the Greek word strategos--which, roughly translated, is the art of the general, which is the art of positioning forces on the field of battle. An effective strategy requires an understanding of the market (field of battle).

Gathering intelligence refers to collecting data about customers and past customer experiences. In his book, On Intelligence, Jeff Hawkins (founder of Palm Computing) says, "Intelligence is measured by the capacity to remember and predict patterns in the world." So beyond remembering what happened in the past, intelligence answers questions like: Where are the opportunities to improve customer retention and increase customer likelihood to recommend next month?

Strengthening customer strategy

Almost all of the largest firms survey their customers to learn which elements of the customer experience drive customer loyalty.

But there is a much higher level of value. Winning companies start with customer satisfaction, but they are now moving to a much deeper and more profitable level.

They are asking: What delivers more profits?

They are finding the answer in Customer and Market Intelligence

An effective customer intelligence system provides you with:

· Knowledge and tools to increase customer counts;

· Knowledge and tools to increase Visit frequency and selection over competitors

· Knowledge and tools to increase purchase per visit

· Knowledge and tools to increase referral of business to the customer's social network

What drives the actions that drive your revenue, and how to most effectively act on that insight

This is actionable customer intelligence that is specific to each of your locations.

If you can walk in the mind of customers and your potential customers, you will know what to do that will have the highest impact on sales.

In a time of diminishing resources, you need better intelligence, in order to take intelligent action.

These days, intelligent action means - Give me more profits, while spending less!

How did we help a national chain spot a 45 million dollar revenue opportunity that was right under their noses?

How did we help a national women's retailer increase change room sales by 28%

The answers were contained in customer and market intelligence


_________________________________

Martin Hoffmitz
VP, Client Partnering
BehaviorWorx Inc.
#202 - 222 Islington Avenue
Toronto, ON M8V 3W7

Email: martin.hoffmitz@bwxi.com

Office: 416.251.0111 x250

Cell: 647.287.4491
Fax: 416.251.9489
Web: www.bwxi.com
_________________________________

Lessons from the last recession.

In a time of retail declines, the above line should be your mantra. It is well worth noting:

A study conducted by McGraw-Hill Research found that companies who maintained (or increased) their marketing throughout the 1981-82 recession saw an average sales growth of 275 percent over the next five years!

But those companies who cut their marketing saw paltry sales growth of 19 percent over the next five years.

Today let's talk about the first of the aforementioned three mantras, once again, drill this into your head and into your team:

More Customers…More Often…Buying More…

So let's take More Customers, and in the following two entries, I will talk about More Often, and then Buying More.

Day One: More Customers

More Customers will come from 3 key areas

1. Existing Customers

2. New Customers and Conquest of Competitor Customers

3. Conversion of Non Buying Store Traffic (Browsers)

A Magnet - What is it that attracts more customers through your doors? Promotions, Advertising, Sales and Discounts, Value and Excitement.

So, you need to build or enhance the "Magnet" that brings people to your stores and your brand.

Your magnet will need to be extremely targeted, it will need intelligence, imbedded within it, so that you can earn critical selling knowledge from all your new traffic, and you will need to be able to establish a "hook" a relationship that will let your effectively reach out to your new customers and market, in order to use your newly minted knowledge and relationship to bring these people back and sell them more in the future.

Today, there are better ways to harness the internet to generate excitement and draw. Retailers on the winning edge are using a new layered strategy to attract, engage and sell more.

A smart retailer will engage a strategically planned and well executed strategy to use intelligent contesting, linked to knowledge generating feedback and engagement tools, linked to rewards incentives and offers.

The result is a much wider exposure to the entire POTENTIAL Market. If this is executed effectively, you have:

An amazing, low cost MAGNET that sucks in large numbers of all the groups that could buy from you, and then you move to the:

COMPASS
Once you have attracted this huge new audience, you engage them with knowledge generating feedback and engagement tools, that forms the compass and the magnet that lets you craft the best offers, promotions, values and deals that will motivate purchase action at the most profitable level for each relevant group.

MAP
Once you have the audience and the knowledge and the relationship, you can create a map, that lets you figure out the best way to, clear inventory, fast, because you DO NOT WANT INVENTORY LEFT THIS YEAR. Keep in mind that weak retailers will be saturating the market through this season and into the coming year. Next you will want your map to help make sure that you will dominate your market. THERE WILL BE LESS AND LESS ROOM FOR ALSO RANS.

Yes, there is great danger and risk ahead, but there is also incredible opportunity for those who see the opportunity and run with the right plan.

That is the intro to MORE CUSTOMERS. NEXT, I WILL COVER MORE OFTEN.

Martin Hoffmitz

Increase retail sales now, clear inventory fast, and get ready to Sell for 2009.

YOU WILL EITHER BE RETAIL ROAD KILL OR YOU WILL BE A SURVIVOR.

Read the following article and then let's figure out how to be one of the Survivors.
The dead mall problem

Experts say Atlanta, Las Vegas, and retail hubs in California and Florida are at real economic risk if thousands of more stores shutter in 2009.

NEW YORK (CNNMoney.com) -- As the recession leaves more retail casualties in its wake, rising store bankruptcies and mall closures could have devastating economic consequences.

As more stores exit malls, vacancies in regional malls could rise past 7% by year-end, a level not hit since the first quarter of 2001, according to real estate research firm Reis.

Major cities across America will be affected, said David Bribery, Chairman and co-CEO of Atlanta-based The Shopping Center Group, a retail real estate services firm.

Both Birnbrey and Susan Wachter, professor with University of Pennsylvania's Wharton Real Estate Department, warn the social and economic impact of empty stores can be devastating.

"One of the biggest consequences [of store and mall closings] is the loss of a sense of community," Birnbrey said. "I am a big believer that malls are an essential part of Americana. A mall is a place where people gather and socialize."

In addition, many municipalities are heavily dependent on retailers for the tax revenue and jobs that they generate.

For example, Montgomery County, Pa., gets as much as 50% of its tax revenue from the local King of Prussia mall, said Wachter.

The impact will be felt on local police service, schools and roads, said Birnbrey.

The village of North Randall in Cuyahoga County, Ohio, is on the verge of extinction after a challenging economic and competitive climate has crippled business at the Randall Park Mall.

The shopping center, once the largest enclosed mall in the greater Cleveland area, is closing after 32 years. [Read story]

The pain could be far reaching. "The Midwest, California, Florida, Atlanta and Arizona are very vulnerable to a retail recession," said Wachter.

Forecasts look bleak

The International Council of Shopping Centers (ICSC), in its most recent forecast, expects that 6,100 chain stores will shutter this year, the highest level since 2004 "as the U.S. recession continues to take its toll on the retail sector and its job market."

In 2009, the ICSC estimates that store closings could exceed 3,100 in just the first half of the year. However, the number of potential closings rises exponentially when the firm takes into account both public and private sector businesses.

The ICSC projects that about 148,000 retail establishments - both public and private - will go out of business this year and another 73,000 stores will close in the first half of 2009.

The ICSC projects that about 625,000 retail jobs will be eliminated this year "with little change in the pace for early 2009."

Fewer retailers means less competition and fewer places to shop. "Right now everyone is euphoric over the big sales," Birnbrey said. "Once the holiday season is over then we could get this monopolistic situation where the [retail] survivors realize that they don't need to be as competitive on prices."

Is America too 'overstored'?

But not everyone sees a dead mall as a negative development.

"Our country has six times more retail space per capita than any other county," said Ellen Dunham-Jones, director of the architecture program at Georgia Institute of Technology.

"We're just cannibalizing our existing stores by building more stores even when sales aren't increasing," she said. "We were long due for a retail correction and we're going through it now."

Dunham-Jones said big-box enclosed malls have become a dying breed as more shoppers prefer going to shop at strip malls or "lifestyle" open-air malls.

"The good news is that this isn't the first time we'll see dead malls," she said. In an upcoming book, "Retrofitting Suburbia," co-authored by Dunham Jones, she's included case studies of more than 100 places across North America that have turned dead malls or big-box stores into thriving community centers.

What's needed, she said, is for the public and private sector to be opportunistic and develop the 100 acres of prime mall space for mixed community use like schools, libraries and new housing.

John Norquist, a former mayor of Milwaukee who now lectures on urban planning, agreed with Dunham-Jones.

"There's no disgrace in a dead mall," Norquist said. "In Milwaukee, we had one department store, Boston Store, in the downtown area. When that went away and the rest of retailing went into the suburbs, we focused in developing the empty space into housing and I gave fast permits."

Norquist rationalized that more housing would eventually attract more retailing. "Milwaukee opened up for [retail] business in 2001 and it's continued to grow," he said.

But Wharton's Wachter remained unconvinced. She said any talk of redevelopment in this environment is "unrealistic."

"Everything that has been suggested needs funding. There's no money for these adaptive reuses [of retail space] for communities," she said.

Blirnbrey's criticism was somewhat harsher. "It's human nature to put a positive light on a bad situation," he said. "It's just a case of hope springs eternal."

So, time to think creatively, changes on the scale we will See in 2008-2009 represent danger, risk and opportunity.

What are the winners in retail doing and planning?

Job ONE - CLEAR INVENTORY

Smart retailers are looking at creative ways to attract more business FAST, and get the 2008 inventory out the door NOW, the retailers that succeed are using a variety of special offers, offers that drive larger purchase and some interesting creative "gifting strategies" that operate on two levels;

SMART - Increase attraction and traffic for immediate, larger purchase.

SMARTER - Develop a "sticky" relationship, linked to in-depth knowledge of all traffic, in order to extend attraction for purchases in the 2009 upcoming season.

(I have recently helped develop a number of creative strategies, that operate on multiple levels to achieve these goals)

JOB TWO - GET READY FOR 2009 - FOR THOSE LEFT STANDING

If you listen to the above suggestions, and you are still standing, you will be able to leverage the large scale relationships and knowledge of large groups of new traffic and customers, added to your existing customer base to reach out INTELLIGENTLY to sell more and more effectively as 2009 gets rolling.

The competition will be FIERCE and you will need to have a head start.

You will need to be smarter in reaching and understanding your market, mark my words, the market is changing fast, stop wasting money on poorly targeted marketing, that wastes encredible sums of money for questionable results that are short on accountability.

Bottom Line: YOU DON'T HAVE MONEY OR TIME TO WASTE

Survival will be a product of fast, knowledge based, targeted actions that do the job economically.

I am seeing the results of this in the marketplace, the changes are breathtaking and very profitable for Retailers that seize the opportunity. Think Walmart, but you can gain the advantage and profit for a fraction of the cost with the newest tools available.

Get on it NOW, time is wasting.

What questions should a retail organization that wants to win more customers, be asking themselves? Let's take a look at the following article that tracks retail sales this last month first, then we can pose this question in the right light.

(12-04) 15:53 PST -- A surge in day-after Thanksgiving shopping wasn't enough to save retailers from weak November sales, signaling the industry is likely headed toward one of the worst holiday seasons in years.

Among the many retailers that reported sales figures Thursday, Wal-Mart Stores Inc. remained one of the few bright spots, with a sales gain of 3.4 percent last month compared with the same month a year ago. But virtually all retailers faltered, even such stalwarts as Costco Wholesale Corp., which posted a sales decline of 5 percent.

Heavy discounts lured consumers to malls and shops on what's dubbed Black Friday, generating reports of sales increases both nationally and locally. But that couldn't offset what was overall a disappointing month, exacerbated by early holiday promotions that cut into profit margins along with a late Thanksgiving that shortens the shopping period.

"It's going to be a very, very challenging period and a lot of companies are not going to make their numbers because consumers are still not going to be spending," said Dale Achabal, executive director of Santa Clara University's Retail Management Institute.

Consumers will continue to be cautious until the economy improves, Achabal said. "Until that happens, an awful lot of consumers are not going to spend because they're not certain about their own personal situation," he said.

Discount and warehouse-style stores tended to do better than department and specialty stores, as is typical during a economic slump. But Target Corp. had a 10 percent drop in same-store sales.

Same-store or comparable sales are considered a reliable indicator of a retailer's health because they compare stores open at least a year, thus excluding the impact of store openings and closings.

Sales at Nordstrom Inc. sank 15.9 percent compared with the same month last year, while sales at Neiman Marcus Inc. dropped 11.9 percent and sales were down 13.3 percent at Macy's Inc.

"Those double-digit declines like that you just don't see very often. Clearly those apparel and department stores retailers had as tough a month as they've ever had," said Frank Badillo, senior economist at TNS Retail Forward, a market research and consulting firm.

Gap Inc., which is based in San Francisco, reported a 10 percent decline in comparable sales for the four weeks that ended Nov. 29.

"In anticipation of a challenging holiday season, we made the decision to attract customers with more aggressive offers than last year," Gap's chief financial officer, Sabrina Simmons, said in a statement. "While this resulted in November merchandise margins below last year, our strategy allowed us to successfully clear through inventory in the month."

Among 40 retailers reporting results Thursday, sales declined about 2.5 percent, according to TNS Retail Forward. Badillo said that number compares with a relatively healthy 4.3 percent gain last November over 2006, which makes the comparison even tougher this year.

Retail sales slide
Most retailers reported that sales declined for the month of November compared with this time last year.

Company Change*

Abercrombie & Fitch - 28.0%
Costco - 5.0
Gap - 10.0
Kohl's - 17.0
Macy's - 13.3
Neiman Marcus - 11.9
Nordstrom - 15.9
Target - 10.4
TJX Cos. - 6.0
Wal-Mart + 3.4

* Compares sales at stores open at least a year with November 2007.

Here are the National Retail Mall numbers, for more scary numbers:
http://tinyurl.com/5h8pjd /

Whenever we engage customers and browsers at the store level, in order to measure great service and sales interactions that result in: More customers visits, more frequency, and social network referral and higher purchases during the visit, we find one factor rises above the rest, and becomes a "SECRET WEAPON" for the smart retailers.

What is the "SECRET WEAPON"?

Retail Managers,
Retail Managers build, train and motivate the team that faces customers every day.
What Talents and Behaviours Create Winning Retail Stores?


Mental Toughness,

Retail Managers are in the trenches every day, trying to balance the team against the never ending work load, while keeping the team focussed on the customer, the browser, and selling.

Mental Toughness is the behavioral quality that does not let obstacles stand in the way, Mentally tough Retail managers understand at a very deep level, that "Getting the Job Done - Is Job One"

Successful Retailers use behavioural profiling tools to hire for Mental Toughness, and then they reinforce these traits with appropriate managerial sikills to give them the "toolset" to be effective.

But without the underlying behavioral "sets" no amount of "tool training" will stick.



Creativity,

Winning Retail Managers face a never ending set of changing demands, and the work flow is never steady. They need to face these challenges with Creativity, again this is a behavioral trait that can be

augmented with the right training, but don't make the common retail mistake of trying to turn a "sow's ear, into a silk purse" Too many retailers don't bother to step back and get excellent at hiring the right

traits in the most critical person in the customer facing chain, the Retail Managers, who make all the difference.

Listening to the Customer, and your Browser,

A great Retail Manager needs a great "nervous system" a tool that actively listens to the voice of the customer, and your store browsers. In addition, it helps to be able to listen to the voice of employees with a neutral and fair tool that employees feel safe talking to.

Head office needs this tool as well, how do you really know what is happening on a day to day, hour to hour basis?

How can you understand which stores are creating the excellence experience? How can you possibly know what part of your team is breaking down, in time to take effective action?

So, if you want to win, you need the right people at the critical point of differentiation, and you need the right tools.

15 years of helping retailers make a difference has taught me that in tough times like these, the winners will win, by making a difference, and these are the best ways to get started now.

Martin Hoffmitz

November retail sales have been scary for most retailers. Working with a range of retailers, who are doing business from Great, to Terrible, I thought it might help to consider some common actions and strategies that the winners are using.

Winners

Winning Retailers focus on much more than the customer.

I know that received wisdom is that winners focus on the customer, but that worked when the retail tide was high, now the tide is going out.

Warren Buffet said that

"It is only when the tide goes out, that we see who has been swimming naked"

I think we may be seeing a lot of naked retailers in the coming months, so.. grab a towel or a bathing suit now.

Winning retailers are FAST. They know that the knowledge that they have of customers is only the beginning, they understand that winning at retail means much more in turbulent times.

Successful retailers understand that they need a grasp of far more than just customers. They want a grasp of:

Customers
Browsing non buyers
Low Brand Users
Competitor's Customers
Targeted New Customers
Social Groups and Family
Social Networks and Rating sites

Now, with a grasp of the wider market and POTENTIAL market, they want even more…

Timeliness
Trend Analysis
Market Dynamics

Wal-Mart is winning because they have a much better idea of who the customer and the market is, and they are mastering timeliness and Trending.. (they know where the markets, trends and consumers are going, long before you do.

That is why they are winning

Let's take a closer look at that.

Wal-Mart Stumbled badly in the last two to three years. Wal-Mart realized that they needed a better strategy to understand and get ahead of the market

Wal-Mart has built the most effective tool for understanding the marketplace and their place in it.

So, tool number one. Wal-Mart measures the "flow" of customer and consumer spending. What does that do?

Wal-Mart know long before you did, that the consumer, which includes all of the extended groups I have mentioned, was experiencing increasing financial stress.

By measuring "Flow" Wal-Mart saw far earlier, what others missed.

Consumer spending was increasing closer to the normal pay period for most workers, and decreasing near the end of the pay check cycle.

Wal-Mart calls it "stress'

Stress has been increasing for quite a while now…

Wal-Mart analyzed the nervous system they had build talking to the extended groups that they have engaged, and they identified clear stresses, and trending for a changing mood shift on the part of customers and consumers. The economic STRESS would trigger changing psychology of shoppers and that would set up a major trend shift and new market dynamics.

So Wal-Mart ANTICIPATED the market and the consumer, and they took action ahead of every other retailer out there, and they are reaping the rewards.

Wal-Mart realized they needed to target a wider group of "core" items and get really aggressive on pricing and pricing perception in the marketplace and mind space of the consumer.

Wal-Mart used their new "nervous system" to get the new message propagating into the marketplace and the mind space of the consumer, think of it as "react" from intelligence and then "propagate" intelligent response into the marketplace.

Winners have a better grasp of Customers and the entire market, they also have tools to influence and reach out to them.

What about LOSERS?

Let us take a look at a recent set of articles on SEARS

http://www.google.com/hostednews/ap/article/ALeqM5imTOVIR8LCwd1qFDdcoVToPkd4UgD94QNTO00

http://news.google.com/news/url?sa=t&ct=us/9-0&fp=49381eb0070dbe74&ei=LEA4Sc-iE47SgwP84dGMDw&url=http%3A//www.marketwatch.com/news/story/sears-stumbles-good-times-bad/story.aspx%3Fguid%3D%257BB7BB384F-9DB9-4FBB-9C87-6CEC995BC677%257D%26dist%3Dmsr_1&cid=1276835763&usg=AFQjCNGdT75UHPkoDBzNGDp-faNpXW4RcA

Sears does not understand the market, the customer or any of the other dynamics and they are struggling.

Let's take some pithy accurate quotes:

"But for Sears, the problems go much deeper. Even in good times the company has had trouble standing out from its rivals.

Sears essentially gave up on pleasing its customers awhile ago. Early on, it was considered more of a real-estate play -- or even a quasi-hedge-fund vehicle for Chairman Eddie Lampert -- than a retailer. It slashed marketing and store spending while raising prices. Rundown stores, disappointing inventory and higher prices chased business away and got people out of the habit of shopping there."

"The deck is stacked against Sears. And its challenges go deeper than a weak economy."

http://seekingalpha.com/article/108881-sears-holdings-squandered-opportunity

"Sears continues to operate as a sub-par retailer and uses excess cash flow to repurchase stock. As the economy has faltered, so has cash flow. Adjusted EBITDA year-to-date has fallen to $700 million, from $1.5 billion last year. The only positive has been the reduction in share count. Sears earned $1.5 billion in 2006, or $9.58 per share. If it somehow is able to earn that much again when the retail environment improves, earnings per share would be nearly $12 per share because of the lower share count. With the stock at $31 today, you can see that the stock would trade back above $100 in that scenario.

But how will that happen anytime soon if Sears continues as it has? It won't, which is why Peridot Capital has been steadily selling Sears stock over the last year. It used to be a very large holding, but is now one of our smallest. Eddie Lampert evidently was convinced he could do more with the retailer's operations even after the low hanging fruit had been picked. That was a bad decision."

"To me, Sears is in the same exact position as General Motors (GM) right now. It is operationally inferior to its competitors, but refuses to dramatically alter its business plans to adapt to the market. Yesterday the Big 3 CEOs testified in front of Congress, explaining that the economy is the source of their problems. They need annual auto sales of 13 million units to earn a profit, far from the 10 to 11 million run rate we are now facing."

"I don't need to tell you that GM's business model is the problem, not the economy. If the U.S. auto market shrinks due to higher job losses and tighter credit standards, managers need to make changes to ensure they can survive in such an environment. In that case, a stronger economy would mean higher profits, not just survival."

"The bottom line is, if your company adapts you will likely be a survivor. When times are bad the weak die out and the strong not only survive, but they come out of the downturn even stronger than they were before. In today's market, when nearly every stock is down tremendously, there are fewer reasons to invest in Sears or GM when you can buy a stronger company like Target or Toyota (TM) on sale. When Target fetched a 20 P/E I preferred to buy the more undervalued Sears. Combine disappointing execution by Sears and a 50% drop in Target stock, and given the same choice I will take Target at a 10 P/E, which is what I plan to do."

So, I will finish by suggesting that you Mr. Retailer re think how you know and plan to grow far more than your immediate customer base.

Be a WINNER and get ahead of the curve, retail has been far too reactive for far too long.

Now you need to get proactive if you want to survive.

If you are still in business in 2009, we can continue these conversations.

Merry Christmas.

________________________________

Martin Hoffmitz
VP, Client Partnering
BehaviorWorx Inc.
#202 - 222 Islington Avenue
Toronto, ON M8V 3W7

Email: martin.hoffmitz@bwxi.com

Office: 416.251.0111 x250

Cell: 647.287.4491
Fax: 416.251.9489
Web: www.bwxi.com
_________________________________

Well, Merry Christmas for Retailers, here is one of the best economic commentators on the internet, who has been almost dead on for the last 3 years, telling retail Presidents CEO's and Executives what to expect this year. Yes it is very scary.

Retailers, you are in for an ugly year, the victory will go to the aggressively prepared. There will be many losers.

Don't let that be you.

Bloomberg is reporting U.S. Initial Jobless Claims Rose to 542,000 Last Week.

First-time claims for U.S. unemployment insurance unexpectedly rose last week to the highest level since 1992, a sign the labor market is deteriorating as the economic slump deepens.

Initial jobless claims increased by 27,000 to a higher- than-forecast 542,000 in the week ended Nov. 15, from 515,000 the prior week, the Labor Department said today in Washington. The number of people staying on benefit rolls the prior week rose to 4.012 million, the most since December 1982.

Job losses in the U.S. have totaled 1.2 million this year as the economy entered a downturn exacerbated by the worst credit crisis in seven decades. More firings will weigh on the economy and consumer spending, putting pressure on President- elect Barack Obama and Congress to agree on legislation that will stimulate growth.

The four-week moving average of initial claims, a less volatile measure, increased to 506,500 last week from 490,750 a week earlier. So far this year, weekly claims have averaged 404,000, compared with an average of 321,000 for all of 2007, when the economy added a total of 1.1 million jobs.

Citigroup Inc., the fourth-largest U.S. bank, will eliminate 52,000 jobs over the next year, twice the target announced last month, as loan losses surge and the economy shrinks, the company said Nov. 17.

Carmakers are also shedding workers. Ford Motor Co. plans temporary shutdowns at nine North American plants this quarter, idling as many as 23,000 workers, as it slashes production after an 18 percent drop in U.S. sales this year, the company said Nov. 12.

Layoffs Not Yet Factored Into Unemployment Rate

Announced job cuts have been piling up so fast I do not understand how anyone could be surprised by the number of claims.

Those layoffs at Citigroup (C) and Ford (F) are not yet factored into the unemployment rate. Nor are job cuts at Goldman (GS), JP Morgan (JPM), GE (GE), and scores of other financial institutions. Nor are the huge jobs cuts at retailers that are coming early next year after what is going to be the worst Christmas shopping season ever.

The retailer layoffs have not been announced yet, but it is easy to predict they are coming. When the layoffs are announced and the jobless claims rise yet again, the safe prediction is that economists will once again be surprised by the announcements.

As layoffs and job losses mount, this will add to the downward pressure on retail.

You will need to know your Customers and your market in much greater depth.

You will need to GET AHEAD OF THE CHANGING PSYCHOLOGY

You will need to HAVE INFLUENCE IN THE BUYING DECISION

You will need to use your knowledge to CRAFT the best market offering and value mix

Your knowledge and relationships will allow you to win business and customers.

I have recently worked with a large national retailer who had the smallest drop in sales within their category, because they know the market, the customers and the changing mood.

Your greatest challenge, will be seizing the opportunity.

_________________________________

Martin Hoffmitz
VP, Client Partnering
BehaviorWorx Inc.
#202 - 222 Islington Avenue
Toronto, ON M8V 3W7

Email: martin.hoffmitz@bwxi.com

Office: 416.251.0111 x250

Cell: 647.287.4491
Fax: 416.251.9489
Web: www.bwxi.com

Now it is upon us, I have been speaking for over two years on my fears for a major consumer led downturn, and Best Buy has also lowered the sales guidance for the coming year.

Many retailers will now be in panic mode, what will Christmas bring and what will we do? Well, are you a man, or a mouse?

A rising tide lifts all boats, for the last 14 years, we have been in one of the longest business up cycles in modern history. Sales gained year over year, store on store.

You may have noticed, that that is changing very rapidly. Any business gain that you now have will come from one of two sources:
1. Finding new markets or niches to service
2. Conquest of the customers of your COMPETITORS

You and your organization will naturally go into "safety mode" that is the natural response to slowing markets for most retailers. What will differentiate the winners from the losers over the next 12 months?

The winners will decide to cut back fiscally, while intelligently spending in selected areas, that will help them to grow their business. In order to grow your business, you will need to find new market niches and services and steal customers from your competitors.

Eat or be Eaten.

If you are not doing it successfully, will your competition be sitting still?

I will give you an example, one retailer was competing against one of the most successful jean retailers in North America. They had to discover who the customer, the in store non buying traffic and the competitor customer was, what she wanted and they had to know a lot more about her fast.

By using an integrated, extended engagement and feedback program, they discovered some very profitable insights.

This retailer thought that they had to be the "Jean Experts" in order to outpace the competitor. Through the extended engagement and feedback program, they learned about the in store non buying traffic and the competitor customer.

Surprisingly, she was not as interested in "Jean Expertise" as this retailer thought. She wanted something less tangible but far more important for sales.

She wanted "Brand excitement" and "A Compelling Story" attached to the store and brand experience.

Now, being "Jean Experts" was very costly and frustrating, as a constantly changing front line workforce had to be continually trained and monitored as "Jean Experts"

So, this smart retailer, used the in depth insights into the real time experience of:
1. The Customer
2. Non Buying in Store Traffic
3. Potential Target Market (including competitor customers)

Smart retailer developed a simple ad campaign, supported by a variety of in store marketing and display tools, to tell a compelling human story around different jeans, linked to emotional experiences in the specific jean.

Did it work?

Like wildfire.

In the last quarter, this retailer gained sales, while everyone else in the market segment lost ground.

By really knowing the customer , the store traffic and the potential customer, this retailer took control of a bad market.

By not retreating, but looking for opportunity, this retailer is winning in tough times.

Now, for extra credit, this retailer can measure in real time, the impact of the new experience in the store and with the staff.

Everyone is happy, and a Merry Christmas will be had by all.

Lesson: Knowledge is Power and

Do not let the market condition dictate defeat.

_______________________________

Martin Hoffmitz
VP, Client Partnering
BehaviorWorx Inc.
#202 - 222 Islington Avenue
Toronto, ON M8V 3W7

Email: martin.hoffmitz@bwxi.com

Office: 416.251.0111 x250

Cell: 647.287.4491
Fax: 416.251.9489
Web: www.bwxi.com

I wonder how many retailers are ready for the changing face of retailing? What do we know about our customers, browsers, and our competitors customers?

Here is a powerful reminder that a real time link to the mind of your customer and market place are critical to your survival in the months to come.

In "Toops Scoops: Culture of the Recession," FoodProcessing.com reveals a change in attitudes that could prove costly for those who assume the patterns of the past few decades are a guide to the future.

Consumers spending less on wellness, more on consumer electronics.

What has the recession wrought? Nearly half (44 percent) of U.S adults report their diets are becoming less healthy as food prices rise, 52 percent buy fewer organic products and 48 percent spend less on health and wellness overall, according to a new study from Faith Popcorn's BrainReserve (http://www.faithpopcorn.com), New York cultural trend tracking firm.

Sonar surveyed 1,011 consumers online (50 percent men and 50 percent women over 21 years of age) between May 29 and June 6 for BrainReserve's “Culture of the Recession” survey. BrainReserve then analyzed the results against 17 cultural trends that it regularly monitors, reports Marketing Daily.

As other recent surveys indicate, Americans are cutting back on everything from food and beverages to out-of-home eating/entertainment to day care. Two-thirds (66 percent) are cutting back on overall spending, while 84 percent are making changes such as reducing shopping trips. Fully 90 percent of women and 79 percent of men (84 percent overall) are “buying less stuff,” and 90 percent are considering opting for a simpler life. .

You should go to the link or to FoodProcessing.com to read the full article.

Christmas is coming, so many retailers will make or break the year in the next 6 months, it will be financially dangerous to get caught out as the winds of the consumer mood change.

I have been saying for months that the mood of the consumer is changing from a WANT mindset to a NEED mindset.

This will heavily influence traffic patterns, choices of retailers, brand selection, basket size and the expectations that most consumers have for the retailer they give their business to.

We help our clients stay close to customers and the market.

For our clients, the market and customers are speaking loud and clear.

Buying patterns are changing and that change will accelerate.

There are better ways to get ahead of your market. I am seeing Retailers who get it, making a difference in their markets.

Martin Hoffmitz

By the very nature of what we do, building Web 2.0 tools that engage retailers customers, browsers and potential new customers in interactive, knowledge based two way relationship. We gain knowledge and influence with ever expanding relevant groups, for our Retail client's growth.

There is a real sea change coming and I don't think retailers are more than 5% ready for it.

Consumers are in the fifth inning of a financial squeeze that will change the psychology of the average consumer. We are seeing huge volumes of evidence from the feedback we gather right now.

Consumers will swing from a "Want" mentality to a "Need" mentality. Retailers that I work for are begining the preparations now. I do not think that most Retailers are even putting this on the map. Retail is very reactive, but I know that reactive organizations will be playing market place catch up within six months, and they will regret it, sorely.

Martin Hoffmitz

If sales are weak, you need to undestand and act fast: Christmas is coming, will Santa or Scrooge be visiting your retail concept?

Janet L. Yellen, president of the Federal Reserve Bank of San Francisco, Speaking July 7 at the University of California at San Diego Economics Roundtable, noted the decline in US consumer spending.

"However, shoppers again cut back in August, reducing sales at the nation’s retailers for the second month in a row.

The US Commerce Department reports that retail sales fell by 0.3% in July. Most economists expected sales to increase by 0.3%. Sales in July fell 0.5%, the weakest showing in 5 months.

Sales declined in electronics, appliances, clothing, building supplies and at department stores."

Now is the time to act, Consumers are moving quickly from a "wants" to a "needs" based shopping mentality.

We are finding that Retailers that have a good knowledge and relationship with the three keys to the future, are faring better than those who are clueless.

Three Keys:
1. Customers
2. Browser/visitors - no purchase during the initial visit
3. Targeted Acquisition Customers (New and your Competitor's Customers)

The Three Keys unlock Three Opportunities for growth and profit:
1. Relationships
2. Knowledge
3. Influence

First: Gain large scale one to one relationships with each of the first three groups. Make sure these large scale relationships will give you deeper knowledge and insight into the real nature of each of these groups.

Second: Build knowledge and insight into the wants, needs, desires and psychographics of these groups.

Third: Your investment starts to really pay off as you take action to improve your Customer Experience and use the relationships, knowledge and influence you have built on a large scale to influence all of the groups that matter to your financial well being and profit.

RESULTS: MORE CUSTOMERS MORE OFTEN BUYING MORE

Beause you know and own the relationships, you have the influence, (through web 2.0 market conversation and conversion tools)

You GROW when others struggle.

Martin’s Comments on the August 13, 2008 article in the NY Times:
Retail Sales Feed a Mood of Decline
By ...   more »

Could you also share what were the measurement methods used for Cleo? How many touch points were measured? Were all the touch points measured all at one go or in phases? Were different methods used for different touch points?

Martin's Answer: Our approach is game changing for retailers that want to aggressively build sales.

We build and interactive, "real time" NERVOUS SYSTEM for your business. Imagine continuous, engaged conversations with your:

CUSTOMERS -engaging invitations issued on the receipt.

BROWSERS - in store POS and handouts in the store.

POTENTIAL CUSTOMERS - tagging of all advertising and direct mail.

What if you could measure all of this, all the time, in REAL time, and do it affordably, with measurable payoff?

Imagine being able to measure the thoughts and shopping experiences of very robust groups of all these potential buyers and then using that insight and relationship, to:

Increase store traffic

Increase Browser Conversion

Increase Per visit transaction and wallet share

Steal competitor customers

Increase referred friends

Increase visit frequency


Simply, and at a lower cost than ever possible.

That is what a REAL TIME CUSTOMER NERVOUS SYSTEM can do for the aggressive retailer.


Call for more information:
Martin Hoffmitz
Vice President, Client Partnering
BehaviorWorx Inc.
#202 - 222 Islington Avenue
Toronto, ON M8V 3W7
Email: martin.hoffmitz@bwxi.com
Office: 416.251.0111 x250
Mobile: 647.287.4491
Fax: 416.251.9489
Web: www.bwxi.com

Who will the retail winners be in the next four quarters?

That is the question that really matters. To you.

...   more »

With changing markets, it will be absolutely critical to know, and own, knowlege based, relationships with your customers and all those others, that make up your growth potential.

Browsers, competitor customers and potential new customers. In the next few quarters, you will be fighting like never before, for every potential sale.

How prepared are you?

Do you know how you can move fast to win in this fast changing market?

Now more than ever, you need knowledge, relationships and influence with your entire market: ...   more »

Businesses that neglect to invest in customer service are putting their customer relationships at risk, according to the second annual TD Canada Trust Customer Loyalty Poll.

Ninety five per cent of Canadians said their customer service experiences can make or break a relationship with a particular brand or company, up 10 per cent from last year.

The study found that good customer service has a ripple effect; in fact, 89 per cent of people will share their positive stories with their friends and family.

Tis speaks to the importance of strong online customer service programs to complement and amplify the instore experience


See: http://www.newswire.ca/fr/releases/archive/June2008/19/c5708.html

Cash registers hummed in the United States in May as retail sales shot up by one per cent, double what economists had been forecasting.

The U.S. Commerce Department said Thursday that the retail activity for the month is the biggest increase since November 2007.

The increase came after the U.S. government issued 57 million rebate cheques to consumers to stimulate the economy.

Economists said the rebate cheques should give the economy a short-term boost.

"We expect this level of retail activity to ease somewhat after the rebate cheques get spent, with consumer spending retuning to softer levels in the second half of the year," said Millan Mulraine, economics strategist at TD Securities, in a commentary. "Nevertheless, this heightened level of consumer spending will certainly provide some much needed boost to the U.S. economy in [the second quarter]."

The U.S. government reported that sales at general merchandise stores, such as department outlets and discount stores, grew by 1.2 per cent — their best performance since March 2007.

Auto sales were up by 0.3 per cent in May, but that was a turnaround from April's decline of 2.1 per cent.

Rising gasoline prices helped push sales at service stations up by 2.6 per cent.

Factoring out gasoline prices, overall retail sales would have risen by 0.8 per cent.

Cash from the US government stimulus checks helped push U.S. retail sales up at twice the rate expected in May. A full percentage point gain in retail sales in May was reported by the US Commerce Department. Higher gasoline prices gave a lift to service station sales last month, but even with those stripped out, sales rose 0.8 percent, the biggest gain in a year. Consumers purchased clothing from sporting goods to electronics.

A wide variety of retailers enjoyed a good May, including the biggest increase at department stores and other general merchandise stores in a year. Discounters like Wal-Mart and Target, saw the largest increase in 14 months. People who could afford it bought electronics or clothes.

The May increase was double what economists had been expecting. This indicated that the economy is receiving a major boost from the $50 billion in economic stimulus payments the government sent out in May We do not accept what Ian Shepherdson, chief U.S. economist at High Frequency Economics said that consumers have returned to their free-spending ways despite weak consumer-confidence readings and the credit crunch.

Via our research in Customer Experience Measurement we are seeing cautious consumers who are shopping for value and believe it or not, a pleasant in-store and online shopping experience.

We favour what Nigel Gault, an economist at Global Insight, a forecasting firm said "The May retail sales report has dramatically changed the landscape,", wrote in a note. "Consumer spending has held up much better than gloomy sentiment surveys would suggest." Smart retailers take note!

As the attitudes of consumers toward value and spending change, we expect to see consumers looking for value to a much greater degree over the next six months.

Issues of greater competition for consumer dollars will move to the fore.

Retailers are far more concerned than ever, about understanding the reasons for buying with them versus the competition, with an eye toward tipping more of the balance in their favor.

Retailers are beginning to work harder to grab and keep every consumer dollar from competitors.

See: http://afp.google.com/article/ALeqM5iLEvyX9FwCjOgVTYPI8yvv3NwBKA for a complete report.

Saskatchewan's booming resource economy helped push retail sales in the province up by 13 per cent in 2007 to $13 billion, or double the growth of 2006, according to a new report released Monday by Statistics Canada.

The province's retail sales growth rate was more than double the 5.8 per cent national rate of expansion last year. Across the country, retailers sold an estimated $412 billion worth of goods and services in 2007.

US-based consumers expect to be able to exchange ideas online with retailers, manufacturers and other consumers by 2015, as part of their shopping experience, a survey by retail industry research and consulting firm TNS Retail Forward. 30 percent of US respondents feel enthusiastic about joining online shopping communities to increase their buying power, 11 percent are likely to do it and 75 percent expect such communities to be formed by 2015.

The report revealed that US consumers are especially keen on engaging in dialogues with manufacturers through websites and online surveys on the way products can be improved. 38 percent believe this is an appealing idea, 16 percent claim they feel inclined to do it and 80 percent expect it to become reality within seven years. 14 percent of respondents embrace the idea of social networks that provide information about the hottest stores and retail trends, 5 percent would be interested in participating and 80 percent believe there will be such websites in 2015.

There are many cutting edge ways to not only get feedback, but initiate interactive "magnetic" relationships that learn, relate and attract more customers, more visits, and more spending.
Behaviorworx is one of the most successful companies helping winning retailers, to increase profits from interactive relationships, far and away better than the "survey" of yesterday..

Source: http://epnn.com/content/view/16755/419/

The big shopping centre anchor tenants are working hard to bring back customers lost to cool specialty shops and online retail venues

For example J.C. Penney, Macy's, Bloomingdale's, Saks Fifth Avenue and Kohl's have changed their retail merchandise mix and in-store environments. Note the celebrity-designed fashions, mobile marketing and better fitting rooms.

It is all about youth culture as well. Get the kids to come in without turning off their parents. Here is the logic. Consumers are cutting back on spending. The reasoning: But, even as parents tighten their belts, they still spend freely on their children. If kids can get their parents to drive them to stores, the parents will end up shopping for themselves, too.

This trend supports our assertion that online experience marketing – targeting kids who are more web savvy is a powerful way to build revenues.

Understanding the needs and experience of each target group is critical to success, and successful retailers are going one step further, introducing a range fo cutting edge tools that give them real time feedback and continuous engagement from their customers, and the marketplace.

They need a "retail magnet" and a number of suppliers are taking the latest engagement and feedback trends to the next level of success..

"Many retailers have been struggling in recent months as cash-strapped consumers pull back on nonessential items like furniture, clothes and jewelry due to soaring food and gasoline prices.

They will need low cost, low risk growth strategies, with a measurable benefit to the company.

"The consumer is focused on buying what they have to have, not what they want to have," said Howard Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consulting firm.

Historically, macro-economic forces have not slowed down TJX's value-oriented customer. A slowing economy can motivate consumers to shop off-price. We expect this trend to continue in 2008."

That is good for Walmart and Costco, but where does that leave everyone else?

Here is our perspective. The bulk of the work we do is with multi unit operators, We gather feedback and create engaged two way relationships with buying customers, browsers and potential new customers. Most of our clients have physical locations (bricks) We gather feedback from web customers as well (clicks). When customers become finicky about what they are spending, engagement is critical.

Engaging a broader community: customers, browsers/low brand users, competitor customers and new customers is critical. The trick is to engage a larger share of the existing and potential market for clients goods and services. Our particular angle is engaging this broader group into an interactive, fun, rewards based, LONGITUDINAL relationships. UP TO 75% OF OUR FIRST TIME RESPONDENTS GIVE PERMISSION TO ENTER INTO A CONTINUOUS INTERACTIVE RELATIONSHIP FOR KNOWLEDGE AND PROFITABLE ACTION (CONTINUOUS MARKETING AND TARGETED PROMOTIONS). People buy what they buy but think about where and when they buy. They want fun and rewards, while they have a voice in the brand and the experience.

Building interactive, knowledge driven relationships with vast numbers of your customers and POTENTIAL customers can be used to more effectively shape your offering and promote the traffic you are seeking. Because this effort is Web2.0 Centric all this becomes very measurable with data that can help you squeeze out profits from the tight current market conditions.

Reference: http://www.reuters.com/article/reutersEdge/idUSMAR66661120080506?sp=true

If Burger King’s profit soars through the roof, how would that make you feel?

As an executive and a decision maker at a medium to large retailer, hospitality or restaurant company, it should make you very envious.

What do they know that you don’t?

Consumer spending is like fishing with the tide. The tide of dollars is either flowing your way or it is not. Do you know which way the revenue tide is flowing? In addition, a wise fisherman will be where the fish are.

How do you catch more of the tide… and more fish?

1) You need to know more about the currents in your market and the timing of those market currents.
2) You need to know more about the fish, what attracts them, and how you can catch more of them.

Wouldn’t it be nice if you could get the fish to “jump into your net” with just the right knowledge of their habits, likes, and dislikes?

You can bet that Burger King and other successful retailers know a lot more about the currents and the fish than you do.

Are you going to fish or cut bait? Does Starbucks (sales were down 8% in the last quarter) know the tides? Or have they lost track of what really matters?

It is important to know your customers intimately, but you must know a lot more. Burger King knows its potential customers, and its competitors’ customers, very well. That is where the growth is coming from.

Do you know who is eating your lunch? Do you know how to eat instead of being eaten? As the economy tightens in the coming year, you had better be able to answer these questions. The days of easy growth are closing fast. Your competitors will be looking to grow their market share, and it may come from your hide.

If you can acquire a deep knowledge of your market and potential market with strong, actionable, interactive relationships, you can harness that knowledge to grow your business.

Here is an example: A retailer we work with discovered, as we engaged with tens of thousands of their customers and browsers, that a larger portion of the traffic in the stores was much older than the retailer’s younger demographic.

Why?


Martin Hoffmitz
VP, Client Partnering
BehaviorWorx Inc.
Tel: 416.251.0111 x250
Mobile : 647.287.4491
Fax: 416.251.9489
Email: martin@bwxi.com
Web: www.bwxi.com

As I stand in the seemingly endless line at the grocery store check out, I look at the displays around me to occupy my mind. There’s candy, gum and an endless number of magazines delving into the supposed secrets of the stars. These things have occupied the check out shelves for years. Same old, same old.

One thing that is new, however, is the rack of gift cards. I can buy a gift card for just about anything my heart desires … a day at the spa, a movie night with the kids … not to mention the retailers. There are so many of them, that I begin to wonder who’s buying them? Surely people don’t have that many gift-giving opportunities. They must be buying them for themselves. But why?

From the retailer’s perspective, its an obvious win. The customer purchases a gift card and is locked into doing business with that retailer until the balance on the gift card has been spent. But for the customer? It would seem that this same point would argue against gift cards. But people love them!

One recent phenomenon has had a tremendous impact on the number of gift cards in circulation, especially those for the large grocery chains. Charitable organizations of all kinds have entered into agreements with retailers whereby they purchase the gift cards at a discount and then sell them to their community of people at their face value. Everybody wins! The retailer writes off the discounted portion as a charitable donation against taxes, the charitable organization receives an ‘easy’ donation, and their community members contribute to the charity at absolutely no cost to themselves. The retailer, in fact, wins doubly as this group of people is tied into doing business with them alone.

Gift Cards can be a real solution for marketplace saturation and differentiation.

Mystery Shopping

After 12 years selling Mystery Shopping to Corporations in Retail and Hospitality, I understand why the employees and managers at the stores being shopped hated these programs.

A 200 unit chain might pay between $100,000.00 and $200,000.00 dollars per year for a program that provides one site visit per MONTH.
Yes, one visit, that was all they would spend on average. How would you feel being judged on one drop in to your office at random by the CEO of your company?

Lesson 1 - One visit per month is NOT FAIR it does not represent the real experience of thousands of customers over tens of thousand of interactions. As a real window into the world of customer experience, it is very crude.

Who are these people? We often joked about what our corporate clients would think if they met the average shopper. I want to preface this by saying that most good Mystery Shopping companies do their very best to screen and train shoppers, but really, Shoppers average between $5-$11 dollars for a visit that often takes a total of 1-1.5 hours of training, screening, prep, travel and reporting time.

Would you jump at the chance?

We ran studies that estimate that 10 percent of the shoppers were diligent, and that as much as 60 - 70 percent of the information that the rest supplied was of poor quality at best.


In addition to that, they are not customers. What do they know or care about the brand?

Lesson 2 - Listen to the voice of customers and potential customers, yes that includes your competitors customers.

If I were an employee or manager, I would resent it. Big time. And they did.

It was the best we had at the time though.

Today there are better methods, that employees and managers actually enjoy and look forward to.

Really.

Today we get interactive and reach out to customers, browsers and competitors customers in ways that astound operations teams.

Gift Cards: Are Retailers Looking a Gift Horse in the Mouth?

“Why are gift card sales growing so fast and how can retailers get the most value to customers while avoiding the pitfalls?” asks Martin Hoffmitz, Vice President, Client Partnering, at BehaviorWorx Inc. “Gift cards are growing fast because they address a customer need – one stop, easy gift buying that takes the ‘letdown’ factor out of gift giving. Customers love the convenience but hate surprises.”


The Trojan Horse of Gift Cards in Retail

Do you remember the story of the Trojan Horse? It was a seemingly insignificant gift that changed the course of a war.

Let’s review: The Greeks could not take the walled city of Troy, and so they decided to build a large wooden horse and gave it to the people of Troy as a tribute. The attacking Greeks pulled back and left behind the gift – a gift filled with enemy soldiers. The people of Troy brought the gift horse into the city, not knowing what was hidden inside. That night, the soldiers came out and defeated the people of Troy.


Strategy and Intelligence Changed the Course of War

Make no mistake: The changing economy and tight spending trends will make 2008 an intensified war for many retailers.

Winning retailers will be thinking strategically, which will allow them to get ahead of the pack.

Take gift cards: They are changing the face of retail. Millions of dollars worth of gift cards sell during the Christmas season. They are then redeemed during Christmas and into January, even February.

This means thousands of new relationships, and a changing selling season. Are retailers reacting to the new trend and the opportunity, or are they getting ahead of the trend and using it to better serve the market?

Our interactions with thousands of customers, as well as their networks of friends and family, indicate that there are five areas for profitable actions:

1. Gift cards are an invitation to a whole new customer base. Since retail customers give gift cards to friends and family, retailers are exposed to a whole new group of potential new customers.

2. Gift card givers are retailers’ “brand ambassadors”. They give preferred gift cards from favourite retailers because they believe in them.

3. Gift card recipients are primed for a first new experience with a retailer. They are open to a WOW experience that will build future preference and loyalty.

4. Gift card recipients are very interested in creative ways to thank the givers. This means that e-cards, bonus points or other forms of positive feedback can strengthen the impact on the buyer (existing customer) and the receiver (potential customer).

5. Gift card recipients want redemption flexibility. There exists an entire industry for buying and selling gift cards because recipients don’t want that particular gift card. Why don’t retailers take advantage of a multi-million dollar marketplace by creating their own exchange opportunities?

Aggressively successful retailers will seize the opportunity provided by gift cards. Instead of trying to storm the walls of an increasingly tough market for 2008, they will use the Gift Card Trojan Horse to slip inside the walls and open the gates to greater market share, while their competitors sleep fitfully, dreaming the dreams that worked so well in 2007.

Toronto-based BehaviorWorx Inc. Launches New Customer Experience Feedback Program for Retail Gift Card Programs this Holiday and Beyond

Toronto, Ontario, Dec. 19 – BehaviorWorx Inc. is a self-described Customer Experience Measurement (CEM) company. The core of the business involves measurements gathered through online surveys, customer panels, interactive games, sweepstakes and instant-win prizing, which results in continuous interactive relationships that clients use for market intelligence and interactive marketing. Like everyone else, they have heard about the recent controversies surrounding time limits on gift cards that are creating distrust for the buyers of these cards. Their new CEM Gift Card Feedback Program provides interactive feedback from gift givers and recipients to help retailers increase the value and differentiation of their branded retail gift card.

“Why are gift card sales growing so fast and how can retailers get the most value to customers while avoiding the pitfalls?” asks Martin Hoffmitz, Vice President, Client Partnering, BehaviorWorx. “Gift cards are growing fast because they address a customer need – one stop, easy gift buying that takes the ‘letdown’ factor out of gift giving. Customers love the convenience but hate surprises.”

In addition to gift cards, what do retailers need to do to succeed in 2008?


RISKS – OPPORTUNITY AND REWARDS

2008 represents unprecedented risks and opportunities for forward thinking CEOs during the upcoming year. CEOs tell us that they are very concerned about changing markets, customers and economic conditions for the upcoming year.

Risks

The risks are about to wash ashore in the upcoming year. The incredible year on year sales growth cannot be taken for granted and CEOs that try to navigate from past market conditions will find that the tides have turned.

2008 has two upcoming trends that need serious depth of knowledge and attention to action in the marketplace for retailers of all stripes: keeping up with changing customers, and changing economic conditions.

Retail CEOs noted that the consumer is more and more fickle, with fast changing tastes, perceived needs and fashion trends accelerating the movements of the Butterfly Customer.

Loyalty cannot be taken for granted. With loyalty programs fast becoming a part of the retail background, retailers need new thinking and new tools in order to prosper in 2008.

Customers and browsers are telling us that loyalty is fading fast, think “PREFERANCING”

If you don’t, your customers and marketplace competitors will.

Consumers are looking for value, relevance, excitement and adventure.

They keep an eye on all your competitors and make day to day purchase selections based on their hierarchy of needs, wants and desires, measured continuously against you and your competitors’ ability to meet or exceed those needs.

Where do you rank, on that scale, and do you have a real time read on the pulse of customers, browsers, and competitor customers?

If you do have a shadow of an idea of your ranking, do you have any idea how you can change it and take fast relevant actions?

If not, you are at serious risk of retail irrelevance in short order.

Retail irrelevance will accelerate quickly into 2008 as consumers are being economically squeezed by increasing debt and lower buying power. Economists estimate that real inflation is running at 7-8 percent, and food/necessities cost increases are accelerating. (Have you noticed the heavy discounting before Christmas? You have been warned.)


Opportunities

Opportunities are going to be coming fast and furious, but retailers will need great radar to read the changing economic winds for 2008.

Consumers will still want value, relevance, excitement and adventure. They will want it all, but they will have to highlight value and relevance far more than in the past.

Attracting new customers, increasing frequency of visit (by increasing excitement), and building the sale and basket at each encounter will become far more important.

Everything you do will need to be measured through the eyes of existing customers, browsers/low users and competitors’ customers.

Retailers that neglect the customer, as well as the potential customer and market, will pay with reduced market share.


Rewards

2008 will be challenging. Retailers that begin to understand the customer and the potential marketplace now will reap immense rewards as they gain on competitors with the changes in the economic situation.

Successful retailers will be thinking about market share. It won’t come from increased spending, with the economy and consumers straining under the housing, and credit retrenchment. It will have to come from competitors’ market share. Nimble retailers will be out and ready to poach market share from competitors.

The real question is: Will it be you from them, or them from you?