DETAIL ON RETAIL - ISSUE 1 by DETAIL ON RETAIL

No.1 SEP / OCT 2010

€25 / $40

THE SINCERE SALESMAN

RETAIL IS FOCUS ARTICLE

PEOPLE

THE ENGINE ROOM

Desigual CASE STORY

DESIGN

GLOBAL TREND FORECASTING

OPERATION

INSTANT ICONS ARE REMARKABLE RETAIL DRIVERS

PRODUCT

James Dyson

Womenionics

QUALITY LOCATIONS A TOOL GUIDE

DISTRIBUTION

WHAT WOMEN WANT

BRAND

THE NEW FRONTIER FOUND IN TRANSLATION

INGREDIENTS IN RETAILING NORDIC FOOD

BRAND DISTRIBUTION PRODUCT OPERATION DESIGN PEOPLE RETAILING IS A

SEXTET

Does a magazine have a vision beyond subscription selling? This one does! Detail on Retail intends to make retailing a top priority to your bottom line. Why? Because retailing is the commercial battlefield where well-known brands and newcomers will fight to win the favour of demanding multi-channelling consumers of the future. Why now? Because consumers focus on the holistic experience, not just the product or the brand promise. Whereever we went to discover lasting trends: the academic world, the practical business reality or even among designers, the message is indisputable: Retailing is going to conquer the business agenda, and competences are not up to snuff. Even among quite a few professionals, the old perception still thrives that retailing is a business of its own. It´s not. Retailing is the heart and core of every b2c business. It is not just about brand identity or multi channelling or product quality or stats or a great shop or people, dedicated to selling and service, retailing is about all that at the same time. Retailing is a sextet interacting playfully and professionally with the audience. You need to master and balance a unit consisting of six instruments: brand, distribution, product, operation, design and people. If selling is not the coolest thing in your company, or if you haven´t yet put full focus on the virtual and live shopping experience, now is the time. We´ve composed a meal full of inspiration for you, and knowing how busy you are, we have made sure that it only takes you ten minutes to consume the summaries and get a few valuable ready to use ideas up front. Whenever and where ever you find it convenient, Milan professors of Bocconi give you a lecture on business balance and the new frontier of retailing; Barcelona based Desigual is sure to tickle your growth dreams; James Dyson will probably make you wonder when was the last time your company launched an evergreen, and from Sydney and Chicago the message is clear: The female consumer potential has finally moved from WHY to HOW. Sexless shopping is out. The recipe is included. So is a piece of sound advice from the shop floor: The best you can do is to make sure that no decision in the company is made without considering the retailing consequences and if you can´t help complicating selling, let the dealers know why. All we want at Detail on Retail is for you to direct the commercial and creative powers of your brand towards the only moment that counts: when the consumer meets you and decides whether to like what you offer or leave. All the best business, Helle Katholm Knutsen Editor in Chief

Editor: Helle Katholm Knutsen Writers: Helle Katholm Knutsen ÷ Mandy Saven ÷ Amanda Stevens ÷ Heiner Tennie ÷ Peter Bur Andersen ÷ Thomas Asger Hansen Art direction and design: Nina Lachmann Sinding / Squaws Photography: Vanni Burkhart ÷ Claes Bech – Poulsen ÷ Rainer Hosch Proofreading: Andrew Singer Production: Par No1 / Sanita Kalnina Paper: Munken Polar / Silk Founded and published by: Peter Bur Andersen ÷ Helle Katholm Knutsen Subscription: www.detailonretail.com ÷ www. mcgraw-hill-sales.com ÷ Advertising: ,MBVT #FSUIFMTFO t Address: ) KCSP 1MBET t DK-1200 Copenhagen K E-mail: info@detailonretail.com Phone: +45 61 61 16 56 Bank: HANDELSBANKEN ACCOUNT 76431171446 IBAN DK 3676430001171446 BIC HANDDKK CVR. 21724734 VAT NO. DK21724734

All contents that appear in the magazine, whether text or graphics, is property of Detail on Retail and may not be reproduced, published or distributed, in whole or part, online or offline, without the express written permission of our publisher. Contact info@detailonretail.com for further information.

SUMMARIES

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Fast track to understanding this issue of Detail on Retail Detail on Retail summaries are not just appetizers. They offer our readers a fast track to inspiring knowledge and ideas of which a few are likely to stay with you and eventually affect your retailing identity. Even if you can spare only a few minutes, it is our ambition to give you food for thought. In every issue we serve you a deep focus article on mega trend level, based on academic findings, our specialty â&#x20AC;&#x153;found in translationâ&#x20AC;? in which we explore undiscovered retail potential, at least one great case and interviews/articles digging into the SIX themes that form your retail identity: brand, distribution, product, operation, design and people.

PRODUCT: Instant icons They create a commercial impact that spreads to the brand, to other products, or to a new category of products.

DESIGN: Iconic shops What is that â&#x20AC;&#x153;special somethingâ&#x20AC;? that sets certain shops apart from the competition and makes them stay remarkable? GDR has been trend forecasting for 10 years looking for ideas globally that remain â&#x20AC;&#x153;stickyâ&#x20AC;? and successful. Executive editor at the renowned consultancy, Mandy Saven has cherry picked a few examples for your inspiration.

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FOCUS: Fashion and luxury Findings from SDA Bocconi in Milan, one of EuropeÂ´s top business schools: The tricky questions facing post crisis fashion and luxury are relevant to most retailers and excellent food for strategic discussions. Balance is the business discipline needed, and the brilliant retailing of the coming years has to bring together totally different worlds of competences. Among the messages from Milan, concerning the six areas of retailing competence, are: Make sure your brand identity burns through wherever you retail it. Multi channel customers are three to five times more profitable than single channel shoppers. No more premium prices for poor quality. Tracking consumer behaviour is a must. Increase differentiation power by design. And never underestimate the effect of linking performance with the purse.

PEOPLE: Pour your heart into staffing It is the best way to connect you with potential employees that share your vision and values. Recruitment experts are not free of charge, but a mistake can even be more expensive. If you have in-house recruitment skills, hereÂ´s a professional 5-step guide to follow. A piece of sound advice from the shop floor to the top floor: Gather knowledge and ideas directly from the scene of the shopping experience and make sure to apply them.

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FAST TRACK SUMMARIES

CASE: Desigual Listen to the rhythm of growth: 80 percent on average during the years of crisis. The vision is Fun & Profit. The inspiration springs from Barcelona. Desigual has 5000 points of sale in 65 countries. The crew of 1700 numbers 65 nationalities. The company has the capacity to move 100.000 garments per day, presents 1000 new designs every week, and sold 10 million garments during 2009. The expectations for 2010 are even more impressive, and the spirits are high. Not just because of the profit. It actually all started with the belief that fun and profit are not only compatible, but necessary.

DISTRIBUTION: Locations Choosing the right location is one of the most important elements in a retail strategy. To be on the safe side, or in this case, safe site, you should know your demographics, the neighbours, the traffic patterns, the street types, product clusters and more. Here is a tool.

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MAKING STATEMENTS SINCE 1872 COPENHAGEN

BRAND: What women want Here is a shortlist of what you need to do to capture the hearts and minds of today´s most powerful consumer: Spend time with her. Dig into her “lives”. Put her in your product picture. Involve her in a cause. Invite her friends. Remember her “milestones”. Involve her in your product development. Reward her for being loyal and for recommending your brand. Tell her the good news. Let her frustration be your ticket to increased market share. And focus on TIME: Make machines work faster, shorten the lines, make her get lost in time, make sure you have a fast and a slow track/experience/dinner/holidays. Do your bottom-line a favor: get to know your female customer. Now.

MILAN

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LONDON PARIS DUSSELDORF AMSTERDAM STOCKHOLM OSLO ANTWERP HELSINKI NEW YORK

OPERATION: The engine room The engine room of retailing is where you separate facts from feelings, identify best practice and improve decisions and behaviours. Make sure that your KPIs measure what you believe is important for your business – don´t make what can easily be measured important. It is all about discovering and nurturing a culture that seeks and celebrates improvement.

FIT: Nordic Food The 26th April the lighthouse of cold climate cuisine, NOMA was nominated the best restaurant in the world. For five years the Nordic Food idea has been fit for retailing on a large scale and here you have the key ingredients: head for the quality crowd, educate consumers and employees together, focus on choice and tasting, celebrate seasons and involve consumers in co-producing the shopping experience. Remember: the spirit of the place cannot be imitated.

TOKYO DUBAI

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SUMMARIES FAST TRACK

Icons INSTANT

ARE REMARKABLE

RETAIL DRIVERS

From being perishable details supporting the mighty brand, products are regaining their position as the substance behind the brand promise and drivers of long-term consumer interest. The global push for increased consumption has for years meant, reducing product life to promote fast replacement. This has diminished quality to achieve lower cost and fast repurchase. The development is not going to stop. No doubt, fast fashion retailing is moving beyond the apparel sector and becoming a dominant business model – but the Tiffany/Wallmart phenomena is still going strong, and consumers are picking the fast as well as the slow, sustainable option. Products with iconic qualities are built to last for generations, but because they are both cool and complicated, they generate instant global interest.

“Failure has become my ally. My inspiration has always been frustration. I still want to improve things that irk me, just as a clogging vacuum cleaner led me to rip off the dirty bag and replace it with a cyclone.” James Dyson 8

!!!

THE BEAUTY OF INVENTION by Helle Katholm Knutsen

â&#x20AC;&#x153;Say goodbye to the bagâ&#x20AC;? was the powerful slogan which, almost 25 years ago, introduced James DysonÂ´s G-Force vacuum cleaner to a market which had not seen fundamental innovation for 100 years. Today it is on exhibit in museums, still going from strength to strength in traditional trade as well as designer shops worldwide, and still creating curiosity. Apart from completely reinventing well known products, Dyson deeply believes that education is the root to success, and his foundation promotes engineering in schools and universities. Detail on Retail asked Dyson to share his recipe for success. Failure, he said.

To come up with new ideas you need to be stubborn but pragmatic, and creative but practical. Above all you have to be patient. There is no quick and fast way of getting something to market. It takes a lot of failures and swear words! My inspiration has always been frustration. I still want to improve things that irk me, just as a clogging vacuum cleaner led me to rip off the dirty bag and replace it with a cyclone that wouldnâ&#x20AC;&#x2122;t lose suction. What drives you at a deeper level â&#x20AC;&#x201C; with what would you like to contribute to making the world a better place?

Education is the root to success. I have set up a foundation that works to promote engineering in schools and universities. We need more people developing new ideas and making them reality. Itâ&#x20AC;&#x2122;s how weâ&#x20AC;&#x2122;ll comWhy do you call your designbat issues like sustainable power and ers â&#x20AC;&#x153;engineersâ&#x20AC;?? improve quality of life. The foundaActually, we call many of them de- tion runs an annual award to encoursign engineers. At Dyson we consider age students and recent graduates to something beautiful only when it come up with inventions which solve works properly. You quickly fall out everyday problems. The prize money of love with something thatâ&#x20AC;&#x2122;s easy on allows the winner to take ideas bethe eye, but doesnâ&#x20AC;&#x2122;t do the job. For me yond the drawing board and into function always comes before form. production. Dyson engineers develop the technology inside the machine as well as In which way is design and designing the outer shell. The Dyson functionality connected the DC26 is the smallest vacuum clean- way you see it? er, not through design, but through Industrial design should mean that painstakingly miniaturizing each of function is the driver of everything the 275 parts. This is the work of en- you make. Thereâ&#x20AC;&#x2122;s a place for design gineers. which prioritises form, but it isnâ&#x20AC;&#x2122;t in my line of work. Iâ&#x20AC;&#x2122;m interested in the What drives you to continue way things work best. The engineerthe design process through ing and materials lead the design. more than 5000 prototypes Iâ&#x20AC;&#x2122;m pleased that people like the way â&#x20AC;&#x201C; a divine patience, a need for our machines look but the reason we the result to be absolutely have a feature like the clear bin is so perfect orâ&#x20AC;Ś? you know when to empty it.

THE BEAUTY OF INVENTION PRODUCT

for the technology inside the machines. All Dyson people take a machine apart and put it back together I don’t believe in trying to hide com- again on their first day. There is no ponents in my machines. The engi- better way to describe technology neering and materials lead the de- than to speak from experience. sign and displaying the technology helps people understand what is ac- Why are mistakes and wrong tually happening. The clear bin was ideas so important when insomething that really raised a debate. venting new products? I ignored market research which told Thomas Edison once famously said me to hide the dirt and make the “I have not failed. I’ve just found clear plastic opaque. Following my 10,000 ways that won’t work”. Over instinct paid off. the years, failure has become my ally. It is a way to see how you can make Your vacuum cleaner was an things work better. The Dyson Airinstant icon and has what blade™ hand dryer took over three the authors of the book “In- years and countless failed prototypes stant Icon” call a huge “culuntil it was ready to launch. Your products look very “technological” or maybe playful in a boyish way – why is that?

tural effect” – not only commercial. Would you elaborate a little on that?

DCO1 was the first vacuum cleaner to use a cyclone to filter the dust FROM THE AIR. The technology housed within existing vacuum cleaners up until this point had remained virtually unchanged for over 100 years. Suddenly, here was a machine that actually worked, and you could see the results. People liked the fact that they could physically see the dirt they had sucked up - it helped to change their perceptions of vacuuming. If our machines have had a cultural effect, it’s been a side product of getting the technology right. Look at the Mini - it looks good and works better.

How would you describe your company culture and your values?

they are different and better. We have demonstrators in shops all over the world who explain the technology and encourage people to try new things, like the ball. Is it very important to you that your products have long lives and thus are sustainable?

Of course, although I’m not into making token green claims. The Dyson digital motor is a big leap forwards, not just for motor technology, but for energy efficient design. The motor enables us to produce more powerful machines that use less energy. This opens up possibilities for the ways in which we use everyday appliances. Even lighter, smaller and greener. All of our vacuum cleaners come with a 5 year guarantee. That’s testament to the reliability of our machines.

Although I started on my own, I do prefer working with other like minded people. I work closely along side Do you think we will see 350 Dyson scientists and engineers. more of these long lasting They learn from me and I learn from products in the future? them. At Dyson we’re constantly working on new ideas and solutions to probWhich products/categories lems. Our intellectual property is our are you going to improve in lifeblood. So all I can say is watch the future? this space. Secrecy is a fundamental part of our design process at Dyson but we work Have you experienced probon lots of exciting ideas. I am con- lems with copying of your stantly thinking of solutions to ev- products – and would you eryday problems. The Dyson Digital elaborate a bit on the difMotor is one of our most recent de- ference between the original velopments. We’re going to be using and the copies? What does it mean to you to it in many of our new machines. At Dyson we constantly strive to have your products exhibited Developing new technology takes engineer new technology and make at MOMA and other great time. Our competitors tweak colours things work better. We spend 30,000 museums? but we’re looking for radical solu- hours every month, rigorously testI am flattered; it shows an acceptance tions to everyday problems. For us ing our vacuum cleaners and filing that the value of an object is based there’s no substance to a marketing patent protections as we go along. If not only on aesthetics but also on the campaign without solid technologi- the technology is not protected then way in which it works. It’s not just cal advancement. anything else is a wasted effort. We down to me. I work with 350 likeplace great importance on protecting minded engineers. In which environment would our patents, and spend a lot of time you prefer your products to and money on it. Other bagless maWhat does it take to sell be exhibited and sold? How chines rely on filters and lose suction your products? Who would important is the physical exover time whereas ours don’t. be good at that? And how would you train him or her?

An understanding and enthusiasm 12

You can hunt where everyone else hunts. Use the same tactics as the rest of the pack. and even after, share your prey. Or you can go out on your own. Trust your intuition and rely on your guts and experience. Discover new territories to conquer and means to rule them. Some call this choice, red and blue ocean-strategy. We call it just plain logic.

perience – the trying?

It is best when people can try our machines and see first hand why

PRODUCT THE BEAUTY OF INVENTION

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INSTANT ICONS

loads of publicity and a long and active shop life

by Helle Katholm Knutsen

During a holiday in Barcelona, Jens Martin Skibsted saw the works of the original architects Josep Caldafach, Lluis Domenech and Antoni Gaudi. The experience left him with a thrill and an urge to draw deeply expressive bicycles. The idea of a bicycle company, based on design was born. Years later, he decided to go for it. He needed a designer who was not restrained by trade and market conventions. Skibsted´s ambition was to turn the urban and environmentally brilliant bike into a lifestyle product. Cars communicated - bicycles didn´t! The progressive designer Marc Newson accepted the challenge, and Biomega was presented at the Milan 2000 design show, almost 10 years after the Barcelona vision. The attention was overwhelming. Still is. Skibsted and Newson had created an instant icon: Immediately famous and predestined for a long life.

A phone, a polo shirt, a bicycle, a dust buster, a car, a house, a piece of music, a theatre play, a shop… In all areas, you might find instant icons possessing iconic evergreen power and proving this power immediately by creating loads of curiosity and generating tons of publicity. They are effective retail interest drivers and although they do not all turn out to be blockbusters, they create consumer interest in the portfolio they are branding. It´s the trendsetters, the editors, the curators, and the consumers who decide to turn a product into an icon – but that fact shouldn´t prevent brands from strategically aiming to create unique attention. 14

When the beating of the waves of environmental issues and the quest for quality and lasting values start seriously affecting consumer attitudes and behaviour in all sectors, almost all product categories will need to be reinvented. From being considered a mere detail supporting the mighty brand, the product is going to regain its position as the significant substance behind the brand promise and the driver of consumer interest. Think of urban mobility. According to Jens Martin Skibsted, founder of Skibsted Ideation, the instant icon strategy is ideal when it comes to challenging the speed to market threat, getting your voice heard through the marketing noise, and addressing the sustainability demand.

cial success but truly took off as an instant icon). The book “Instant Icon” by Jens Martin Skibsted and Sune Aagaard and the Skibsted & Griffith paper: “In pursuit of the Design Icon” sum up the benefits of an icon:

SKIBSTED IDEATION IS THE SI IN KIBISI - A SYMBIOTIC HYBRID OF DESIGN, ARCHITECTURE AND IDEATION . THE PRODUCT AND DESIGN KNOW HOW IS KILO DESIGN. THE BIG IDEAS AND LARGE SCALE PERSPECTIVE IS BIG ARCHITECTS. THE IDEA DRIVEN INNOVATION AND BRAND AWARENESS IS SKIBSTED IDEATION.

1. It increases brand recognition, reputation and loyalty – even if it is sold only in a minor quantity. 2. Through it´s complicated development process (often involving invention of new technologies), valuable skills and knowledge are gained that can be applied for the whole portfolio. 3. It gains great exposure thus reducing promotional spending and increasing revenue across the entire portfolio.

Puffs of universal meaning

Reducing speed to market is increasingly important to a majority of industries, not only fast fashion. To be first is fine, second will do, the rest are too late. And in no time, a new first is required. Icons are different. They lead long and active shelf lives. Setting their own agenda and slowing down the news-need by gradually giving off puffs of universal meaning and never ceasing to appeal to critical consumers. Consider the iPhone and the Segway (which is not yet a commer-

4. The push for increased consumption has meant reducing product life to promote fast replacement and lowering quality to achieve lower cost and promote repurchase rather than repair. The icons are the opposite: designed to last for the life of the user and be passed on to future generations.

”Icons in architecture, art and music existed long before the concept of industrial design. Most innovations during the industrial revolution originated from the Western world, primarily Europe and US, lending a very Western interpretation to product design and development. It is from this pool of industrially designed products that the first generations of iconic products – like the Beetle (Volkswagen type 1) - were born. As more regions become industrialized, more design literate cultures will emerge ready to consume iconic design. Asian giants such as China and India will become very significant. They will impact greatly on the cultural cues that need to be met to create a design icon.” Skibsted/Griffith paper.

PRODUCT INSTANT ICONS

“WE BELIEVE THAT THE PRODUCT SHOULD BE THE CARRIER OF ITS BRAND IDEA RATHER THAN SOME DESIGNER’S FORM AND FORMULA.” Jens Martin Skibsted

THE BEAUTY OF INVENTION PRODUCT

The drawbacks of going for the instant icon are

1. You might be taken over by competitor icon producers because of the comprehensive development process – and iconic status is never the result of arriving to the market in the footsteps of others. 2. It is difficult! It can be easier and less risky to be a follower. The first mover advantage is resource intensive. 3. It is expensive to create a genuinely original product. 4. Once you are known for creating an icon (and you will be), expectations are that you must do it again – and you might not. 5. Pursuing an iconic product may distract attention from the core values of the organization. As for the last point, Skibsted stresses that expressing the core values is exactly what designing icons as well as other products is all about.

phase of the project. Both these stages are often out of the control of the designer.”Three types of design Skibsted & Griffith point out an abilities are needed to create an interesting paradox: “Many compa- iconic product, according Skibsted: nies make the mistake of mixing the meaning of the icon and the block- 1. A philosophical designer/design buster… Culturally successful prod- leader or champion, often an entreucts (icons) can become, but are not al- preneurial character who innovates ways blockbusters…It is a difficult task conceptually and carries the vision to produce an icon and it is equally of the project. difficult to produce a blockbuster. To produce both is extremely difficult… 2. A technical expertise – design enoften failure occurs not because of gineers, technologists and scientists trying to make an icon, but through as well as specialist designers. trying to make a blockbuster at the same time”… Pursuit of a block- 3. An aesthete who can create the inbuster is the result of a conservative, dividual character, personality and risk averse, non-innovative culture. feel of the product. He/she is likely to This culture does not support the de- innovate on look, feel, and function. velopment of an icon.” Depending on the size and structure Philosophical, technical and of the organization, these abilities aesthetic design competences can be found in one individual, the About the role of designers in the members of an in-house team, conprocess of creating icons Skibsted & sultants or a mix of these. The more Griffith state: “Designers alone can- different individuals you involve, the not create iconic products as their more important it is to ensure that creation does not just happen in the the vision of the project is not lost in design phase. It happens in a multi- translation. tude of phases, such as through the company vision and in the ideation Pursuit of blockbusters are characteristics of conservative cultures

IN SHORT, WHAT INSTANT ICONS DO FOR RETAILERS: CREATE STRONG IDENTITY AND GREAT STORIES. RUB OFF ON THE ENTIRE PORTFOLIO SUPPORTING SALES. GENERATE CURIOSITY AND TRAFFIC. SUPPORT LONG-TERM RELATIONS AND LOYALTY One of the world´s leading colour designers, Italian Beatrice Santicciolo, is creator of the sophisticated shades of iPods, Swatch watches and Biomega bicycles from Skibsted Ideation. “The queen of colour” works with powder, spices, stone, sand and colours to reach a magical mix – like “Bio Blue” for the Copenhagen Bike, designed by Jens Martin Skibsted.

“Iconic – means objects that can stand the test of time. Able to live through out trends and epochs… maintaining individuality far beyond the individuals who created them – living a life on their own.” Marc Newson

The DOR sources for “Instant Icon” are the book

the Design Icon” by Selena Griffith, School of Design

“Instant Icon, about products creating exceptional

Studies, College of Fine Arts, University of New

value – and how they are born” by Jens Martin Skib-

South Wales, Sydney: selena.griffith@unsw.edu.au

sted and Sune Aagaard and the paper “In pursuit of

and Jens Martin Skibsted: info@skibstedid.com

PRODUCT INSTANT ICONS

INSTANT ICONS PRODUCT

CONFERENCE:

CO UTURE RE T AI L

HOW TO BUILD STRONG FASHION BRANDS THROUGH RETAILING. T h e Internet is l i n k i n g c on sumers to b r ands in ev e r ne w w ay s and I nter ne t s h o p - p i n g is growing more popular by the d a y. Bu t t h o u g h t h e i m p a c t o f t h e I n t e r n e t i s i n c r easing, a physical store still provi d e s t h e b e s t m e a n s t o c o m m u n i c a t e w i t h y o u r c u s t omer and o ffer them a more auth e n t i c b r a n d e x p e r i e n c e. S h o p p i n g i s a s o c i a l e n c o unter and the physical store prov i d e s e x c e l l e n t p o s s i b i l i t i e s f o r e n h a n c i n g t h a t v e r y experience. Bu t what are the trends in modern fas h i o n r e t a i l i n g ? H o w i s t h e w o r l d o f s h o p p i n g e v o l ving? How do you use your retail s p a c e t o b e s t s u i t y o u r c u s t o m e r a n d h o w d o e s t h a t a ffect y o ur bran d? Fi n d out at the upcoming conference “ F a s h i o n C o u t u r e – h o w t o b u i l d s t r o n g f a s h i o n b r a n ds through retailing” in Copenha g e n t h i s w i n t e r. To g e t m o r e i n f o r m a t i o n o n t h e c o nference al on g wi th other fashi on r e late d new s v is it fas h ionfor u m . dk.

FOR MORE INFO visit fashionforum.dk

PHOTOGRAPHY CREDIT: PRADA

ICONIC RETAIL PRADA’S EPICENTER FLAGSHIP STORE IN NEW YORK DESIGNED BY RENOWNED ARCHITECT REM KOOLHAAS

ICONIC RETAIL by Mandy Saven

For a retail store to acquire ‘instant icon’ status in the minds of information-rich and time-poor consumers, it needs to possess a ‘special something’ that sets it apart from the competition. This special something can take the form of an unforgettable interior design solution, fantastic visual merchandising, a bold and creative architectural treatment or a wellconceived service offer that places the consumers’ needs firmly at the heart of the experience. An artfully curated product selection can also keep shoppers coming back for more. The incorporation of added-value in-store experiences like workshops, lectures and social networking opportunities – a strategy proving increasingly popular as stores attempt to transform themselves into ‘cultural apothecaries’ – can further elevate a store’s status in the retail mix.

Since GDR began trend forecasting for the retail industry some 10 years ago, we’ve seen retailers attempt to woo the shopping public through numerous bold, progressive and sometimes surprising product and service initiatives. Some ideas failed to gather traction, while others have remained ‘sticky’ and successful, even in the face of economic challenges.

flagship store or concept store can even lure consumers away from their home computers and entice them into a physical space that offers not only great product selection, but also entertainment and inspiration.

In terms of best practice examples, the following concepts are categorised by many as true icon stores. In many cases, from the moment they So, what is their magic formula? In opened, they were a hit with the our experience, there is no single for- shopping public and attracted trendmula that will guarantee longevity. setters and tastemakers from all Yes, there are certain boxes that need walks of life. All continue to generticking – great product, exceptional ate buzz and ongoing interest, a true service and superb presentation will sign of success. get retailers half way there, assuming they’ve got pricing and location right. But the rest of the elixir is something a little less tangible and comprises creativity, flexibility and sometimes the guts to try something category-breaking and profoundly innovative.

PHOTOGRAPHY CREDIT: COURTESY OF APPLE

Consumers are fussier and more demanding than ever before, and smart brands and retailers need to provide them with the best possible shopping experience. A well-conceived face support, free advice and wifi or work on creative projects. The store also offers a highly curated product When the Fifth Avenue 24-hour Ap- selection for customers to try before ple flagship store opened, it garnered they buy and purchases can be made instant icon status and was feted by through handheld devices carried by many as the most architecturally knowledgeable staff members, elimiambitious store to date. The striking nating queues. Apple stands out from 32-foot glass entrance cube created other iconic brands – that sometimes a visually arresting and memorable unwisely rest on past laurels – by new city destination – and addition- continuing to vigorously innovate ally provided natural lighting for the and develop its portfolio of pioneersubterranean retail space. The focal ing products and services. A trip to point of the shop floor is the Genius an Apple flagship store is not just a bar (a concept later copied by other shopping expedition; it is a chance retailers keen to offer similar sup- to genuinely engage with the brand’s port solutions in a stylish, accessible world, interact with experts and in way), an iPod bar and The Studio, turn, walk away feeling richer. where customers can access face to Apple flagship store – New York

Mandy Saven is Executive Editor at world-renowned

comes straight from the world’s leading innovators

trend forecasting consultancy GDR Creative Intelli-

in design, architecture and creativity and only the

gence. Based in London, GDR delivers the leading

most conceptually innovative new projects will be fea-

edge of creative innovation to the world’s largest

tured in GDR reports and presentations. From this

consumer brands, including Marks & Spencer, Kraft,

vast network of creative global sources, the com-

P&G, The Crown Estate, Nike, Nokia, Virgin Atlantic,

pany distils and interprets meaning for its clients,

Diageo, Starwood Hotels and Jones Apparel Group.

creating a roadmap into mid term future trends,

GDR’s clients receive quarterly Global Innovation Re-

best practice industry solutions, cross sector in-

ports and presentations, which cover innovation in

sights and opportunities for developing competitive

retail and leisure interiors, packaging, POS, visual

advantage. In addition, GDR provides clients with

merchandising, technology and service design. These

‘creative matchmaking’ services as and when needed.

are accompanied by ideation sessions where GDR’s

Here, top design talent from around the world is

trends and insights are directly applied to specific

cherry-picked and introduced to key decision makers

brand and retail strategies. GDR’s source material

from global brands.

DESIGN GDR - ICONIC RETAIL

GDR - ICONIC RETAIL DESIGN

10 Corso Como – Milan

Is widely recognized as the world’s first concept store and often considered the most influential department store in the world. Founded by former fashion editor Carla Sozzani and based in Milan, the space is a veritable treasure trove of all things edgy and beautiful. Designed to mimic a ‘magazine layout’, the venue encompasses an art gallery (bringing fash-

ion and art together in a very modern and consumer-friendly way), a boutique retailing desirable clothing and products, a café and an exclusive three-suite hotel known as The 3 Room hotel. This fusion of hotel space and retail store was seen as truly revolutionary when it launched; today we see the trend continuing with many fashion brands launching their own hotels. 10 Corso Como also pioneered the notion of ‘slow

retail’ and from its inception, aimed to encourage shoppers to slow down and enjoy the in-store cultural and leisure offerings. Rather than resting on past success, the brand continues to innovate and forge exciting retail partnerships. Recently it teamed up with department store Liberty of London to launch a capsule collection of garments and accessories, and a second outpost opened in Korea in 2008.

Anthropologie – US & UK

PHOTOGRAPHY CREDIT: Vanni Burkhart

DESIGN GDR - ICONIC RETAIL

More like a collection of independent boutiques than an international chain store, Anthropologie is the sibling brand of American giant Urban Outfitters. Anthropologie presents a masterclass in visual merchandising – surprising and delighting the customer at every turn. No material is out of bounds – from used teabags that are arranged as an unusual art installation to foliage positioned as a flowing skirt on a mannequin. Anthropologie

uses detail and emotive vignettes to create a proposition that is completely unique to each store and utterly charming. The product mix includes clothing, home furnishings, bedding and antiques but it could be argued that the chain is so successful not because of great product – which it has in spades – but due to the fact that it sells a ‘lifestyle’. Here, shoppers can immerse themselves in culture, history, travel and feel an almost palpable sense of adventure. Yet, the cultural cues are loose and non-prescriptive;

allowing customers to find their own paths. To keep the offer fresh and diverse, all Anthropologie staff reportedly travel and attend cultural events. According to Fast Company, Anthropologie has never advertised, yet its customers stay longer in the stores than most chain shoppers. Their average visit lasts a staggering one hour and 15 minutes. With large expansion plans, the chain has recently opened two new flagship stores in London, which follow the same template of connecting commerce with culture.

GDR - ICONIC RETAIL DESIGN

involved in the project, but also due to the reported sum of $40 million that was invested in the 23000 sqft of Prada’s Epicenter flagship store in New York – designed retail space. Although criticised for the fact that it could by renowned architect Rem Koolhaas – is a retail, gallery have pushed the envelope a tad further, the space has and experimental space where the luxury brand can play become a consistently alluring destination for the ‘design with ideas and extend its reach to fans. Brand ideas are tourist’. Following Koolhaas’ New York flagship, Prada communicated through a programme of in-store instal- has continued its innovative retail architecture with Herlations, displays, film screenings, performances and lec- zog and de Meuron’s Prada ‘Epicenter’ in Tokyo. Here, tures, blurring the lines of retail, culture and intellectual the company’s radical approach to fashion-store archicuriosity. When it launched, the Epicenter store immedi- tecture includes a 6-story glass crystal structure. ately generated buzz – partly due to the famous architect Prada Epicenter Store – New York

PHOTOGRAPHY CREDIT: COURTESY OF PRADA

DESIGN GDR - ICONIC RETAIL

GDR - ICONIC RETAIL DESIGN

MERCI IS A PHILANTHROPIC FASHION AND HOMEWARES BOUTIQUE THAT INSTANTLY GARNERED PUBLICITY AND ADMIRATION FROM CONSUMERS AND THE MEDIA.

Merci – Paris

Although not a commercial venture, and not as established as some of the previous examples – it only opened in March 2009 – Merci is a philanthropic fashion and homewares boutique that instantly garnered publicity and admiration from consumers and the media. The space retails items donated by renowned celebrities and designers – including Paul Smith and Stella McCartney – with 100% of store profits going to children’s charities in Madagascar and India. All clothing is specially made or customised for Merci and accompanied by a tag printed with a simple ‘thank you’ message to its contributor. Customers can purchase second-

hand books from the ‘Used Book Café’. Leading writers, critics and celebrities have donated volumes – each stamped with the contributor’s name inside. The store also features a haberdashery with resident designer, in-store florist, perfume bar and Cantina café. Merci further cemented its global design credentials by partnering with US clothing brand Gap in September 2009 to create a month-long pop-up shop in New York that retailed limited-edition and one-off pieces created and donated by designers. Again, all profits were donated to charity. In the future, we believe that this store is ‘one to watch’ and we predict great things to come from this young ‘icon’.

PHOTOGRAPHY CREDIT: COURTESY OF MERCI – PARIS

GDR - ICONIC RETAIL DESIGN

F 30

Bocconi is one of Europe´s top business schools and a highly respected global source when it comes to research within luxury, fashion, experience, design and retailing in mature as well as new markets. Detail on Retail went to Milan to talk to four professors about the changing business and retailing agenda. Their overall message is clear: Value is the “new” mantra. Get behind the concept of value for money and the balancing act it requires by digging into the tricky questions from the book “Managing Fashion and Luxury Companies” and our four FOCUS interviews.

Bocconi Milano: Business is more than ever an act of

bal ance

FOCUS BOCCONI: BUISNESS IS MORE THAN EVER AN ACT OF BALANCE

Professor of Management, Stefania Saviolo: More USE for money. SDA professor, Marketing, Davide Reina: “Brilliant retailing” is the new frontier. SDA professor, Marketing, Chiara Mauri: Tracking customer behavior is key in the boiling multi channel competition. Associate professor, Gabriella Lojacono: The designer is the window to the world.

VALUE IS THE NEW MANTRA by Helle Katholm Knutsen,

GET BEHIND THE CONCEPT OF VALUE FOR MONEY AND THE BALANCING ACT IT REQUIRES BY DIGGING INTO THE TRICKY QUESTIONS FROM THE BOOK “MANAGING FASHION AND LUXURY COMPANIES” AND OUR FOUR FOCUS INTERVIEWS. The phenomena fashion, luxury and design are found within almost any category of products or services and all of them are facing radically changed consumer values and behaviour: a trend that is going to rule for a very long time. If you´re not already a player in one of them, you might consider your potential, now that the rules are changing.

FOCUS BOCCONI: VALUE IS THE NEW MANTRA

After a heavy dose of “morning-after” guilt, consumers are making amends by choosing simplicity and functional benefits and denouncing ostentatious luxury. Core consumers within luxury are not trading down; they are simply buying fewer products. Sensible, critical spending (combined with a certain luxury fatigue) and reluctance to contribute to the waste mountains of the world seem to be the two major trends joining forces with longevity, quality and service. Sound familiar? It sure does, but putting good old virtues into a truly global context is a complicated act of balance.

TRICKY QUESTIONS FACING FASHION AND LUXURY Globetrotting shoppers are bored with uniformity, middle market is shrinking more than ever, and service and genuine innovation is a rare commodity. The old recipe: “never mind the waste as long as it is cheap” is beginning to feel painfully wrong. These are just a few of the challenges facing management in fashion, luxury, experience and design oriented companies. Customers perceive the products as part of a wider system in which the retail experience is fundamental. In the years before the crisis, this helped make retail an effective growth-buster. This trend has continued, but new and sharper combinations of competences are now required.

and Luxury Companies.” The questions are relevant to anybody working to invent or reinvent a true-to-thecore contemporary and innovative retail identity and form an excellent starting point for strategic discussions for management teams. Customers do not perceive the products as stand alone, but as part of a wider system in which the retail experience proves fundamental. This is why retail has been one of the key investment areas for all fashion and luxury firms in recent years and has indeed, been an effective growth buster. However, this strategy has started to provoke an increasing boredom among the globetrotters of the world.

If your brand is not apparel, accessories, real estate, food, literature, furniture, cars, architecture, travelling, cosmetics, mobile phones, hotels, fitness, movies, games, experiences, design, health care or another more or less fashion affected modern business area, you might consider yourself insulated against the overall trends threatening fast fashion and lukewarm luxury - Give us a few minutes, you might reconsider. Another thing: if you tend to look for retail inspiration only inside your own specific line of business, you might find it refreshing to listen to the academic voices from the homeland of Gucci, TOD´s and Zegna. Not only because of their wealth of experience, but because fashion/luxury companies and researchers will most likely be among the first to catch a whiff of the post crisis consumer agenda, due to their extremely well developed sense of smell. To demonstrate why the fashion and luxury sectors understand and share the key issues that many related industries are going to tune in on during the coming years, we have listed some of the intriguing questions raised and discussed by Stefania Saviolo and her colleague, Erica Corbellini in their book ”Managing Fashion

How can you be all over the place and still be a surprise to travelling shoppers, who might actually be your most important customers?

Fashion & luxury has taken the so called Tiffany/Wallmart effect to its extreme. During the years before the crisis, prices went sky high on luxury items and extremely low in parts of fast fashion. How do you as a brand make your choice between the price dogfight and the human touch market?

to manage this act. Is this balance going to be one of the core keys to success in most kinds of businesses, and how do you manage a conservative and an innovative culture within the same brand?

To a certain degree, fashion & luxury lost its lustre and are on the lookout for new ways to rediscover the soul of service and the beauty of quality. How do you manage to go back to basics/heritage and still be innovative?

Fashion & luxury has been expanding in every field and action: from fashion houses to vertically integrated conglomerates, from apparel makers to retailers, from specialized brands to total lifestyle brands, from independent companies to financial groups – all the time trying hard to exploit the intensified complexity of the market. How can you be sufficientlycompetent in all these areas at the same time?

Fashion & luxury has made stores overflow with nearly identical merchandise, advertising has raised the noise higher and higher, the number of sales points has increased at an incredible rate and left an increasing number of consumers literally fed up with the uniformity.

Fashion & luxury has been there and done that, as far as brand extension is concerned and has started to reinvent retail for a future in which sustainability and ”against throwawayism” Which roads lead out of this might overtake the importance of sea- so-called consumers´ utopia? sonal (or even weekly) trends, while Fashion & luxury is becoming sensithe hunger for genuine innovation tive to the issue of how the ultra cheap grows. clothes are in reality manufactured. It has made itself an obvious future tarHow do you balance speed/ get for when worrying about waste is news with lasting values/ eventually on everybody´s lips. quality?

Fashion & luxury has been known to refine the balance between creativity and commercial control – or in quite a few cases suffered for not being able

Is fair trade thinking going to spread?

See www.muji.com for inspiration.

BOCCONI: TRICKY QUESTIONS FACING FASHION AND LUXURY FOCUS

MORE USE FOR MONEY! CELEBRATING BLUE FLUTED MEGA

Since

Don´t lean on the illusion that the new, huge markets (the BRIC countries: China, India, Brazil and Russia) will save you from reinforcing your value proposition and reinventing your retail. The new consumers are going to “sophisticate” before you know it and they will be discerning and globally oriented. Quality and climate consciousness, spiced with multi channel and choice are key ingredients, when preparing the green and kicking concepts of the future. According to professor Saviolo, sometime over the next couple of years, customers will remain reluctant but then the fascination will seriously intensify to other areas of interest than the ones that have driven past time consumption: think of nature, female values and well-being. “There are many elements to consider in the concept of value, but the one I would pay special attention to is usability. Use for money. The customer perception of value is king. Up until now, value has been associated with preciousness, materials and symbolic content (the brand, the status). I strongly believe that value more than any other single aspect is going to be associated with use or functionality. Of course, during the selection process other elements are extremely important: image, storytelling, product knowledge, but all activities must take the issue of usability into consideration. Remember, the products

generally don´t speak,” says Saviolo. –“Looking at the balancing act management is facing, I think one of the major challenges is being exclusive and accessible at the same time. You need an international presence via many channels, but at the same time, be at just the right place at the right time.” No more premium prices for poor quality

“Bello e ben fatto” embraces the demands as far as products are concerned. It means “beautiful and well made” and the expression is an old Italian quality stamp as well as a new overall recipe for future business, according to professor Stefania Saviolo. Forget either or. It has to look good and be useful for a relatively long period of time. Many brands and retailers lost the “ben fatto” dimension as the world market went berserk, and consumers for a euphoric while were willing to pay premium prices for poor quality, accepting that the money was spent on brand cathedrals and celebrity marketing and not on training sales people to establish and worship long lasting relationships with customers. Still, the balance/the dualism is what more than anything else characterizes the high fashion/luxury way of doing things, and any company/brand which seriously considers building a fashion and/or design oriented culture had better learn about the balancing

act. An act that one manager that came from white goods to an HR-job within a luxury company described as: Wearing stilettos while walking on eggs. He was referring to is the basic balance between a true to the core creative culture and a cost effective, dynamic global business model. The dream and the tough demand to deliver

“The balance is simply to be considered the core competence,” says Saviolo.“Balance between tribes of designers from different nationalities and tribes of commercial, globally oriented experts. Between consistence and change. Long term and short term. Conservative and innovative forces. Traditions and necessary news. Icons and trendy stuff. History and future. Recognition and surprise. Tangible and intangible. Cathedrals and cash cows. The dream and the tough demand to deliver. You name them…” (Or as one great business book, “Built to Last” put it many years ago: Preserving the core while stimulating progress.) “The balance is affecting all decisions within a fashion/luxury/experience/design business, and going back to mastering the act of balance – “Bello e ben fato” - is what might eventually bring the luster back to luxury and the credibility back to fashion.”

Value has to be developed at every price point and not just for the expensive products. Customers are looking for authentically conceived and crafted products, heritage and quality and lasting permanence. Besides, for quite a while still, consumers are on the lookout for affordable ways to lift their spirits and find permission to spend. They don´t mind high prices as long as the product quality and design make them great to use for a relatively long time.

Stefania Saviolo professor of Management in Fashion and Luxury Companies at Bocconi University and School of Management (SDA). Saviolo is the director of the Masters in Fashion, Experience and Design Management and her areas of expertise include brand management and international business. www.royalcopenhagen.com

BOCCONI: MORE USE FOR MONEY FOCUS

that we can´t find in Milan, so I can bring home something unique,” says Saviolo continues: “What we are wit- the professor. –“There are retailers, nessing is the result of a retailing wave for instance Louis Vuitton in Paris heading for easy growth by opening that have already built retail envia vast number of shops and forget- ronments especially for tourists, but ting that fashion/luxury shoppers are there are many missed opportunities tourists. If they buy in the new shop out there.” in Moscow, they forget about the one in London. Shops and brands are Choice is strongly appealing now facing empty spaces with too “Apart from poor quality and nonmuch merchandise, too misty core existent service, retailing has created messages and too many, moody sales yet another problem, which makes the people. Firing the people waiting for fashion/luxury business – or more specustomers, though, would only add to cifically the live part of it out of sync with the feeling of desertion, and the lack consumer demands,” Saviolo points out. of traffic would be even more evident. “Mono brand boutiques have taken over Many shops and even brands are go- the high street domination and crowded ing to close down and the rest shall out the multi brand distributers. The have to face the new agenda, which most frequent reasons for choosing a includes treating your customers the mono strategy is lack of ability within way they deserve. In many shops in the multi brand shops to communiItaly today, sales personnel act like cate complicated/emotional products/ animals, I am sorry to say. On the messages and the fact that too often, other hand, this leaves room for huge multi brand means mess and the single improvement, doesn’t it? As a matter brands tend to get lost. To the conof fact, what is needed is a significant sumers, however, multi brand means improvement of product knowledge choice, and choice is strongly appealand professional training of sales ing. Especially when you don’t have people so they become almost per- the time to go to ten different shops sonal shoppers to any customer who- in search of a jacket. You can add to pays the shop a visit. Note that tour- the lack of time the fact that a rapidly ist bit too. Time is the issue.” (Read decreasing number of customers are more in the “What Women Want” ar- so loyal that they only buy from one ticle about the common problem for brand. Consumers buying on inspiraall the most powerful shoppers of the tion, which is a fact within traditional world). Saviolo does not have a clue fashion/luxury as well as other business of what is going on shopping wise in areas, are easily bored – and one of the her own neighbourhood, but ask her things that bore especially the younger about the cities she visits regularly, ones are conservative shops, ignorand she won’t hesitate to offer you ing the lifestyle of especially women.” all sorts of inside tips. “By the way, I (This problem is connected no doubt to go to GAP in Paris to buy clothes for the significant lack of gender or ethnic my kids, because this is the only shop diversity in the current luxury leader

A significant service improvement is required

ship pool, according to recent global SpencerStuart research, which Bocconi was a source for: “Leadership in the Luxury Industry. Are the rules changing?”). Solving the time issue is not enough

“This development leads us only one way, towards time saving, inspiring, multi choice, free-from-ignorant/arrogant-personnel shopping - the Internet!” concludes Saviolo. Even though she acknowledges the internet still has a long way to go in terms of creating excitement and true experiences. Solving the time-issue is not enough if the pleasure-dimension is missing. “Customers do not want to let go of the live experience, but it has to be exactly that: Alive. Retailers/brands must be capable of finding new street-live-experiences, celebrating choice and service and avoiding mess and moody sales people,” Saviolo recommends.

“When Anna Wintour, the editor in chief of Vogue, casually remarked that she was wearing a three years old dress, she gave social permission to all the female fashion-shoppers of the world that from now on, it was ok to relax a bit and go for longevity,” Saviolo states and continues. “Recent Bocconi research from the Western fashion/luxury markets as well as from China shows that traffic is declining and customers are playing it safe: demanding icons/ investments and value/usability for their money. And importantly, the value has to do not only with the product, but it must be experienced in the shop and shopping process as well.”

The sales people of the future must have deep product knowledge and be an almost personal shopping consultant for any consumer who is kind enough to pay the shop a visit. 36

FOCUS BOCCONI: MORE USE FOR MONEY

“BRILLIANT RETAIL” IS THE NEW FRONTIER Retail is not a “free for all” sector anymore. Leaders in the industry will be the “Brilliant Retailers.” Companies will need to be able to effectively mix various competences like architecture and marketing, anthropology and branding, psychology and product innovation, advanced statistics and store management. That is why the Retailing Observatory at Bocconi SDA is bringing together a wide range of competences and connecting them to form a new concept of retailing, which is broader, richer and more flexible: a new discipline and practice that embodies art and science, in order to manage a more complex, more global and faster environment. Bringing together is not about controlling together, though. “If you internalize the creative competences they are soon going to dry out and do what you expect them to, which is not what you want from creative people,” says Davide Reina, SDA professor in Marketing. Davide Reina is no typical professor. Up until a few years ago, he was a high-level retail practitioner and now he benefits from the advantage representing two worlds, the academic and the commercial, combined with a deeply founded interest in the artistic side of retailing, architecture, and in the science of studying human beings, anthropology and psychology. Retailing is combining a multitude of competences

“Retailing is one of the fastest growing industries in the world, but the competences have not increased accordingly,” says Reina. “Lots of retail managers have studied economics but lack the experience part, and the old image of retailing being simply “shop management” still prevails in many lines of business. Retailing needs to be seen in a much broader perspective covering and combining

a multitude of competences. When I´m talking about issues within retailing, I don´t mean the giants like Carrefour and Tesco. Those are the global deliverance machines, and I doubt that anybody knows more about their business than they do themselves. It is all the others, who "Never

overestimate

the

role of the store manager, and never underestimate the effect of linking store managers´ and sales personnel´s performance with their purses. I am totally flabbergasted by the reluctance to improve business with an idea so simple and obvious."

the shop sales person as the brand – not just a guy who was accidentally hired to do a boring job. It might not be logical to blame the brand for bad behavior but in reality, it works that way. There is an old Indian saying, “If you cannot smile, don´t open a shop”. What I´m saying is, you will not keep smiling if your effort is not reflected in your salary.” Retailing Observatory and a lot of walking

“In the Retailing Observatory, we are currently reinforcing our work, which focuses on four areas,” Reina explains. 1. We perform academic research, thus empowering company intelligence by analyzing different industries.

are threatened. Those who have built up global networks of branded 2. We track emerging trends/new stores over the last ten years and, for frontiers, always striving to be onea while now within the present crisis step ahead – for instance, the offline/ scenario, have had to learn the hard online issue and subsequent canniway what it is to manage when your balization and synergy. stores are literally bleeding every day. A common reaction and a mistake in 3. We make different worlds/platsuch a situation, is to focus too much forms of knowledge come together. on store managers performance, but the fact is that if the retail strategy 4. We observe and evaluate unconand structure is bad, then the store ventional concepts out there in the manager will perform accordingly.” marketplace like www.eataly.com and a chocolatier presenting his Bad behaviour is blamed on products like jewellery: www.marcothe brand lini.be Proving a practitioner, Reina brings the subject down to shop floor level: To study retailing in reality means a lot “Let’s face it, working in a store is a of walking. Actually, innovation in retail terrible job in many ways. At the end is based on good legs and good observaof the day, the shop’s personnel are tion. Ninety percent of the concepts you tired and just want to go home. How come across are just conventional and do you convince them to clean up the imitative, but ten percent are brilliant, mess and get the store ready and ap- effective, and truly innovative.” petizing for the next day? Connect- Reina believes that we will see areas in ing their salary to the store’s net sales the cities where unconventional shops and profit is the only way that works. are found – away from the brands that Remember that the customer sees are always the same in any big city cenBOCCONI: RETAIL IS THE NEW FRONTIER FOCUS

ter. This is happening right now in Milan â&#x20AC;&#x201C; in areas like â&#x20AC;&#x153;Navigliâ&#x20AC;? or â&#x20AC;&#x153;Isolaâ&#x20AC;?, â&#x20AC;&#x153; â&#x20AC;&#x201C; Unconventional shops are located in unconventional places. This is it. Only culture matter

and

identity

â&#x20AC;&#x153;I believe that glocal is a big risk for retailers, for the idea of â&#x20AC;&#x153;glocalâ&#x20AC;? is a presumptuous one, assuming that one culture could dominate the others, thanks to some partial and

opportunistic adaptations to local context. The new world is one in which every culture has dignity to express, propose, and sell, and in which customers will reward sound and clear identities. In such a world, new emerging cultures will affirm new kinds of retailers, proposing new styles, symbols, tastes. That is why I believe very interesting things in retail will come from China and India, during the coming years. In

fact, it is very likely that these countriesâ&#x20AC;&#x2122; style, their idea of beauty and elegance will begin to influence the EU and US. We will create a sort of reverse process than the one we have observed for the last twenty years, one in which Europeans and Americans are instead, charmed by Indian and Chinese styles, and begin buying their brands and products.â&#x20AC;? The low image of retailing is due to the historical and to a certain degree still prevailing perception that retailing is first and foremost, shop keeping. Managing one or more shops however, requires execution. Retailing is a completely different ball game.

Retailing is one of the fastest growing industries in the world, but the competences have not increased accordingly. Davide Reina.

FOCUS BOCCONI: RETAIL IS THE NEW FRONTIER

- -

TRACKING CONSUMER BEHAVIOR IS KEY IN THE BOILING MULTI CHANNEL COMPETITION Mauri says: “There are more issues being raised here then there are being solved for the time being. We do know a few things though and multi channelling is a new territory that the Retailing Observatory will focus heavily on in the upcoming years. We know that the more the consumer knows about your brand, the more he/she is a multi-channel customer. This proves that getting customers to really know about you is essential. And to do that, you need solid insight about them to be able to learn how to catch their interest and get them motivated to get to know you. This means that tracking consumer behaviour is essential. Otherwise you won´t know either, which channel is playing which role in the buying process. The customer might learn about your offer through channel A and buy through channel B, which means that B gets the money, and A might not be considered important in terms of resource allocation.” Professionalizing channel experience management

“Another thing we know,” says Mauri is that according to recent data, consumers shopping in several channels can be three to five times more profitable than single channel shoppers. Taking the multi channel advantage is obvious (if you can provide a seamless shopping, delivery and service experience). Besides, you need to shift from a profit-and-loss focus on the individual channels to a cross channel focus on high value consumers. Usu-

ally channel management is not a big chapter of the marketing and competitive strategy; channels are added and managed more as logistical pipelines rather than as points of contact between firms and customers.”

The area that DOR has asked Chiara Mauri to elaborate on is multi channel distribution.

Hot topics

Critical issues raised by this awareness are:

1. Do channels overlap or cannibalize? 2. Does coherence between channels pay off? 3. How could you help customers to transfer from the “poorest” channels to the richest channels in terms of brand communication? 4. How could you work on channel coordination? "Innovation is often considered in terms of product development, but the service and shopping experience is just as important. So is a deep understanding of consumers and their increasing

These are the hot topics the academics are considering; Are you?

FOCUS BOCCONI: TRACKING CONSUMER BEHAVIOR

ers from all over the world. Her answer was

expert on corporate design culture.

brief, literally: THE BRIEF. Company profile

We asked her how the traditional Italian furni-

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tering the stage - keep track of heritage and

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fundamental values while working with design-

signers …Nothing is taken for granted!

In Lojacono´s recent study “B&B Italia: Product Design at the Core”, she delves into the history of one of Italy´s most successful furniture and interior decoration companies.

nology you can see. We ask designers to come here with ideas. The idea is a dream that could be realized; a project is the execution.”

of design companies. – They must work with external designer to keep the avant-garde position, and to manage that, they must be extremely good at planting the company values into the process of realizing the design idea.

Among the more unconventional convictions of Mr Gorla are that products for young people must be Apart from home furnishing, B&B designed by young designers and “The single product can play one or works with hotel and retail interior that products for elderly people by more roles in the portfolio, explains design together with famous archi- older designers. Consider that… Lojacono. – It can contribute to turntects like Renzo Piano, Norman Fosover, to image – the reason for it can ter and Patricia Urquiola. All brands can increase difbe to develop specific competences The very heart of B&B is CR&S. The ferentiation power by design and/or technologies, and it can be a product development department, complementary service product. No which is not only responsible for The brief for designers defines the re- matter what role, the designer is concooperation between designers and lationship between the designer and sidered the window to the world, and the designs eventually selected for the brand. It is meant to secure that the design companies rely on what the market, but also for marketing. designs, all though thought and de- the designer sees. Learning about Head of CR&C, Mr Gorla says about veloped by creative people from dif- design is extremely important, as B&B’s design culture: “Our products ferent cultures from around the globe, there is not one business area in the were born global thanks to the inter- still represent the B&B core. The cus- world that cannot increase its difnational inspiration of our external tomers have to recognize the sender ferentiation power by design”, says designers. Each piece of furniture even when the message is created by Lojacono. Asked what she personally must be contemporary. Furthermore, an external designer. This balance is considers vital for good design, she it must be technological. We talk difficult, but according to Lojacono, answers, Passion, stimulation of joy about hidden technology and tech- it is key to understanding the success and enthusiasm – and happiness.

“When companies realize then that their competitive advantage progressively shifts from products to experiences, they become aware of the important roles played by the places where consumers meet them, that is, channels and points of contact.

5. What does it mean? Does it mean for example, that same product assortment in all channels or different assortment in different channels?”

Associate professor Gabriella Lojacono is an

multi channelling," Chiara Mauri, Director of Osservatorio Retailing, professor and researcher.

THE DESIGNER IS THE WINDOW TO THE WORLD BOCCONI: THE DESIGNER IS THE WINDOW TO THE WORLD FOCUS

Does the combination of selling and sincerity grate on the ear? Then it´s because you have met too many of so called super sales men who hold the pistol to the head of the customer, giving her an offer she can´t refuse. He changes jobs eternally and his customers never come back. According to Thorkild Bloch Nielsen, he is not only a disrespectful fool who is making life miserable for himself, he is guilty of giving selling a bad reputation, even though it´s the “the coolest job on earth”.

THE SINCERE SALESMAN THE SINCERE SALESMAN PEOPLE

THE SINCERE SALESMAN by Helle Katholm Knutsen

Bloch Nielsen is the owner of a prominent Bang & Olufsen dealership downtown Copenhagen. Iconic video and music equipment is his home ground. He insists, though, that his sound selling advice goes for any product or brand as long as we´re talking a certain quality. In shops where price is the only message, all you need is to “dispatch“, that is get rid of the customer asap. The message of Bloch Nielsen is simple: “If you don´t care about children, don´t become a teacher. If you are not sincerely interested in other people, for your own sake stay away from selling. Apart from scaring potential customers away, you´ll feel miserable.”

Detail on Retail asked for eight points to remember and constantly practice to become a sales man who welcomes his customers back and enjoys his job. Here you are: Get to know yourself. Be sincere. Don´t ever lie. Sincerity builds confidence. If you can´t ask or answer sincerely, search for another subject. The customer knows if you´re not honest. Listen, listen, listen. Most of all to the body language of customers entering. Open your mind. Be attentive, but don´t attack. Don´t pretend to know everything. If a customer tells you that she has just returned from her honey moon on Iceland it´s because she wants to talk about it. Talk to her. Remember selling up whenever it´s relevant. I bought a pair of cool brown shoes a while ago, and the sales man remembered to ask if I needed a belt to go with the shoes. I definitely did, as I normally wear black shoes. Find the courage to ask if the customer would like to buy the products. Gather knowledge of the customers life and at the end; use the soft slingshot. Remember that what goes up must come down. When you´re on top of things there´s a hole ahead. When you´ve had a bad experience with a customer there´s a good one ahead. Don´t bite the hook. Don´t let resistance get to you, you can´t prevent it from coming your way from time to time. Educate your customers to sell. Start by equipping them with all the great stories they need to know when their choice might be challenged. Put great efforts into after sales. Now you´re not selling anymore, you´re educating and building trust. Make sure to let your boss know that you appreciate a word of praise now and again.

PEOPLE THE SINCERE SALESMAN

Bloch Nielsen: “It´s still true that sales men, when couples enter the shop, find it hard to avoid either neglecting or offending the female customer. You know who decides, don´t you? If the husband has been given the opportunity to choose, the range of choices has already been limited. If the male customer is ready to buy and you have offended the wife, she´ll just give him a look and your deal is down the drain. They won´t come back either. So listen carefully. To both of them.”

“If you don´t care about children, don´t become a teacher” Bloch Nielsen´s advice from shop floor to top floor:

“You might not feel that you have the possibility to regularly spend time with customers or even dealers, but ignoring knowledge and ideas directly from the scene of the shopping experience is throwing gold away and this is bad for the bottom line. The best you can do is to make sure that no decision in the company is made without considering the consequences for retailing and if you can´t help complicating selling, let the dealers know why. It´s actually rather simple once you get into the habit. I had a hard time explaining to customers why our televisions took longer time turning on than others – until I happened to find out that it was to save energy which is obviously a sympathetic approach and a great story to share.“ THE SINCERE SALESMAN PEOPLE

POUR YOUR HEART INTO STAFFING by Peter Bur Andersen Three very important elements secured success at Starbucks:

A major challenge in modern retailing is staffing. How and who to hire? How to develop product knowledge and selling skills? How to maintain motivation and commitment to the brand in the front end of the business? Detail on Retail has asked Denise Tennie, one of the most skilled

organisation, does not show a genuine interest in coffee then he is not the right person for the job. Hence, they attract, select and recruit employees 1. The overall vision and customer ser- that are the good and even possibly vice mission. great coffee connoisseurs of tomorrow. 2. The product knowledge expected of any Starbucks employee.

persons within the field of retail recruitment, to come up with a â&#x20AC;&#x153;5 step guideâ&#x20AC;&#x153; for our readers to use to insure you that the most powerful and talented people join your sales force. Brands too often rely on poor and subjective assessment at this level of their organisation, instead of allocating the proper resources into the process and rewarding good performance with money. In the long run, it ends up being very expensive.

3. The culture of creating the highest possible responsibility and sense of involvement throughout the chain as such.

Before we introduce the easy-to-use 5-step guide from Denise, letÂ´s revisit some best practices from a global retailer. The book â&#x20AC;&#x153;Pour your heart into itâ&#x20AC;&#x153;, by Starbucks founder Howard Schultz, provided the case we needed. It is a stunning and very inspiring story about Schultzâ&#x20AC;&#x2122;s journey from an excellent salesman to a heroic retailer. One of his most remarkable achievements was based on his ability to create true ambassadors from the individuals running his chain of coffee shops.

Ideas from shop floor to top floor

Company culture at Starbucks includes a high level of involvement from the shop floor. No idea, no proposal is considered less important. Every suggestion is treated with equal People serving people interest and actually, a simple idea The overall visions of Starbucks is from the shop floor to the top floor rooted in the desire to get ordinary made Starbucks the number one repeople to value excellent quality coftailer of Jazz music. fee at affordable prices. The Italians have understood this concept for centuries but in North America and the northern part of Europe itâ&#x20AC;&#x2122;s been the likes of Starbucks that introduced this vision with their retail concept over the past 10-15 years. 3 areas where companies tend to fail according to Heiner Tennie

Howard Schultz furthermore, formulated the Starbucks customer service orientation as â&#x20AC;&#x153;we are not in the coffee business serving people, we are in the people business serving coffeeâ&#x20AC;&#x153;. In other words, Starbucks wants sales persons who do whatever it takes to be part of the people business. Be part of a retail universe.

1 when they place an advertisement, the people who respond are often unemployed or unsatisfied with their current jobs but might not be the best qualified candidates for the vacant job.

Product knowlege is a prerequisite to secure impeccable service. Starbuckâ&#x20AC;&#x2122;s understands that if an applicant for any position at any given level in the

2 often the companies do not have a clearly defined concept of the job and of the profile of the wanted candidate. 3 the companies do not discuss the necessary passion in depth and do not secure the matching personality and the match with the team.

PEOPLE POUR YOUR HEART INTO STAFFING

HOT DIAMONDS

A 5-PHASE GUIDE TO RECRUITMENT IN RETAIL ENVIRONMENTS

By Heiner Tennie

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First of all let it be said, if you donโ t possess the necessary skill-set to recruit on a large, international scale, with high employee turnover and often low perception, then leave it to the experts. They will help you secure that only those with the adequate skill-set comes into consideration. This saves time, money and often prevents your company from a great deal of headache โ financially and operational. If, however, you do possess the skills and competences, you are in good hands with the following process, exclusively developed to readers of Detail on Retail:

PHASE 1

DEVELOPMENT OF JOB DESCRIPTION AND CANDIDATE PROFILE รท

Assessment of the specific requirements for the job.

รท Definition

of salaries and budget expectations.

รท Development

of a profile to carry out the job (goals, tasks, responsibilities, reporting, personality traits).

รท A

precise description of your own corporate culture, structure and general information on your company.

PHASE 2

THE PRE-SELECTION PROCESS รท Pre-selection

of suited candidates through personal interviews (certified systems). In-depth assessment of knowledge, competences, experiences and personal goals.

รท Comparison

of the entire assessment of the potential candidates to โ soft factorsโ , such as own corporate culture. Limitations of candidates in regard to geography, mobility and lifestyle.

PHASE 3 QUALIFYING CANDIDATES

รท Second

and third interview to test assessment results and findings.

PHASE 4

THE FINAL SELECTION PROCESS รท Reference

check of the last 2-3 candidates. Contract negotiations.

PHASE 5 INTEGRATION

รท Plan

the integration of chosen candidate in your organisation carefully and thorough coach and solve the natural entry conflicts to secure long-term satisfaction.

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THE POWER OF FUN

450 2010 E

301 2009

162 2008

85 2007

49 2006

2005 30

2004 19

2003 12

2002 8

Sales in Million Euros

THE STORY ABOUT THE FUN & PROFIT THEORY Lots of companies claim that having fun while steamrolling the competition is part of their corporate culture, but why is it that the result too often turns out to be rather similar to the rest and too serious in a boring or even intimidating way from a consumer’s point of view? In Desigual, the colourful Barcelona-born cat on the walk, the bottom line is seriously black, but the rest is as colourful as you could ever imagine. They paint and party with the customers and jump for joy. And turnover. 52

Barcelona 1983 The story begins like this: “Thomas Meyer, a Swiss twentysomething year old and founder of the brand, had two second hand clothing stores in Barcelona. The idea of creating a new garment came from some stocks of used jeans that didn´t sell at the anticipated pace: a jacket made from fragments of jeans with brass buttons and leather appliqués on the cuffs. ”The jacket becomes a must-have, the name Desigual (idea by film director Isabel Coixet) is chosen, and the slogan “No es lo mismo” (It´s not the same) starts speaking for itself. The message is well-received by apparel consumers, but in 1988, a drop in sales and lack of planning

CASE THE STORY ABOUT THE FUN & PROFIT THEORY

(“youth, inexperience and blind faith in the project”) leads to financial strangulation. This on the other hand opens an opportunity to rethink and streamline. Soon focus is directed to developing sales through a multi brand channel. The bold, uninhibited designs continue to gain followers.

In 1992, Thomas Meyer and Manel Adell meet on a sailboat crossing the Atlantic Ocean. While taking turns at the wheel a friendship is anchored. The mid 90ies: the Spanish market is going strong, and the next steps are France and Portugal. In 1995, Desigual decides to open its own network of stores starting with three in 1996 (only open during spring/summer). A design team is developed to fit the size and the objectives of the growing company. Until 2001, the company focus is, improve product quality, improve relationships with customers and comply with promises. 2002: Manel Adell joins Desigual, and the year delivers record growth: 67 % to 8M euros. The first Desigual outlet outside Barcelona is opened, and the first Barcelona shop, designed with the desire to become retailers, is launched - 40 m2. Later that year the first big bet on retailing the brand takes place: 400 m2, designed by Marti Guixé. In 2003, the Paint Party Strategy is launched, shops are decorated by friends, collaborators and

7,869

4,811 2009

2010 E

2,869

2,039 2007

2008

1,606 2006

2005 1,124

2000 328

Points of sale

customers of Desigual. The first kid collection is launched in 2004, and in 2005, 300 naked people form a queue outside a Desigual Barcelona store waiting to get dressed and celebrating the abolition of the law against public nudity. Crazy? In 2006, the story goes on: “Our rhythm of growth continues to be impressive and we manage to improve all our business figures.”

In May 2007, Desigual gathers 3000 people in Barcelona´s Paseo del Born to kiss and opens a huge store in London, Regent Street. In 2008, 7000 are kissing in Plaza de la Luna and according to the story: “We grow much more than we could have anticipated: 80 %.”2009, Desigual opens store in Soho, NYC and is represented in 500 multi brand stores in the U.S. 2010: the Fun & Profit theory is considered confirmed. Desigual is 26 years old.

In the book Buy-ology by Martin Lindstrøm, the branding expert reveals the “stunning news:” “When subjects saw smiling faces, they poured significantly more drink from the pitcher – and were willing to pay twice as much for it – than when they viewed angry faces… In other words, smiling faces can subconsciously get us to buy more stuff, suggesting that store managers who instruct their employees to smile are on the right track.” Now, consider if this sales potential doesn´t need to rely on instructions to sales people – but instead, is the very soul of the company. Then you might begin to understand the Fun & Profit theory.

THE STORY ABOUT THE FUN & PROFIT THEORY CASE

OUR STRONGEST LEARNINGS COME FROM BARCELONA Coming back to Barcelona in year 2000, Manel Adell founded Starlab, a private company converting deep science into broadly applicable technologies. In 2002, he joined Desigual and started playing a major role in turning an 8 Million Euros Spanish apparel business into a 300 Million global brand. Detail on Retail asked Manel Adell to share his points of view within the six competence areas of retailing. Meet the balance between idealism and pragmatism - In person.

and the needs of a first class supply chain but this helps all our “stockists” as well. This is only looking internally, though. With the consumer perspective, I think all channels fulfil different needs and if we want to Where in the landscape of reach a wide target audience we need fashion are you positioned? to work with all of them. What is reWhat is fashion anyway? We actual- ally different is the market structure ly don’t relate very well with fashion- regarding distribution. We have to ists as we try to create our own story. be really flexible there. There is not But don’t read me wrong; we do look one solution. The growth of internet at what goes on in the market and sales will also have an impact albig trends are in our rear mirror. In though I expect it to be slow. Change order to simplify the story I could of habits take time. BRAND: tell you we are a well-differentiated Which brand values charproposition, a strong identity at af- How do you keep the store acterize the way you work fordable prices. And those two things personnel in your 7000 multi within the Desigual culture? hardly ever go together. Most brands brand stores close to you? Our brand values are very close to that feel different charge a big pre- With difficulties!! But if they love our our company ones and to our culture. mium for it, we do not. There we are products we have the first half. Desigual is about being positive, lov- “Desigual” again. ing & enjoying what we do. Having PRODUCT: fun as we control profit. Growing as DISTRIBUTION: Where are your products professionals, as we grow as persons. Customers lead cross chan- made? Most of the messages in our garments nel lives. How do you provide Most of the production is made in are not about fashion, they are about them with a consistent, yet Asia and North Africa although we life. Not about a rehearsal of how surprising experience when are also expanding our sourcing to it could be, but about how it is, to- they surf your channels? some new countries right now. We day, now. It is not about bodies, it is BIG challenge, although I could say aim to source globally. about people! The company can only the red thread is our product it is not bring to the market the energy of its enough. With close to 7000 retailers In which way do you keep members, but all that positive ener- stocking our products worldwide we close to your customers? gy together is tremendously power- cannot pretend to control the details How do you work with the ful. Oh !! I should not forget to add, of the shop experience. Some of them concept of quality in a fashwe do not like rules and norms very are even better than us, but we do ion industry where Desigual much. We are explorers! strive to lead with example in our presents 1000 new designs 200 Desigual stores and our close to every season? How important are the val- 600 shop- in- shops it is our trained We always say that our quality apues to people involved interpeople and merchandising that make proach cannot be the same as lets nally and externally? the difference. say a Lacoste polo shirt just to menExamples/stories are important to tion an example. They have a lot to illustrate how the values are alive. I Which channels do you con- standardize over many years. Their think if you travel to any corner of sider to be the strongest in garments remain pretty much the our company and as we grow glob- the mid term future? And same in many aspects. We have little ally, you could travel to many places why? or nothing, which is standard so our worldwide, every employee will tell All channels have their own territory target is to be loyal to the designer’s you we are about “fun and profit.” and we like them all, in fact, we have idea and to our general standards. Not everybody will experience it the learnt that they complement each Our innovation ratio is very high and same way but the general principles other more than they compete. Our we have to remember each Desigual are there: we need commitment, rec- own retail is of course leading our garment is different and some bring ognition over a good job, space to learning about consumer preferences patchwork and many more processes 54

grow, celebration of successes, learning from mistakes and having fun at work while we must be pretty good at being focused on the numbers side of the business for the long run.

CASE OUR STRONGEST LEARNINGS COME FROM BARCELONA

“DESIGUAL WAS BUILT ON THE IDEA THAT ENJOYMENT AND BUSINESS AREN´T JUST COMPATIBLE AND COMPLEMENTARY, THEY´RE ALSO NECESSARY. ONE OF THE MOST IMPORTANT DECISIONS IN THE PROJECT HAS BEEN TO DECIDE WHO IS ON THE BUS, WHO GETS OFF THE BUS AND HOW WE COORDINATE OUR SKILLS AND ENERGY TO MAKE THE TRIP A GREAT ONE, FROM A FUN AS WELL AS A PROFIT POINT OF VIEW.”

Manel Adell

than most garments in the market. Do you work with crossTherefore, we take the consumer sector insights? perspective and try to give best pos- Not enough and we should. sible quality at our price level. Seems PEOPLE: to work. OPERATION: How closely do you follow the sales in the single shops and how fast can you react to problems or possibilities arising?

Daily! It is a must in retailing. How intimately do you know your customers?

We have close to a million amig@ card holders, our loyalty program, and this gives us some information. But with over 10 million garments sold (voters!) and over 60 million people entering our stores each year, it means our customers are pretty much the general public. Age wise we are a very open proposition and therefore we’d like to think every body is a potential customer and we mean everybody! I guess you never actually know your customers intimately, as my marketing director said to me: some people sleep together and do not know each other! We have a wide audience and we do not aspire to know everybody. We are happy to understand some general trends - hopefully those relevant to us. DESIGN: In which way do you teach new designers how to express the Desigual values?

How important is it that Desigual has 25 nationalities in the organization?

Very. It is cross-cultural exchange that makes us a more flexible and adaptable to change the organization, and as you well know, it is not the strongest that survive.

It is definitely as you describe it. As a person you can show sensitivity to local customs and even adapt mildly to some local aspects ( we do produce longer skirts for Middle East! ) What do you do to manbut in the end we have just one idenage such a multitude of cultity , one personality. We can never tures? dilute that one, as we grow global. I We try to over communicate. Al- think we are learning locally but actthough it seems never to be enough, ing globally and our strongest learnI think we focus more on company ing comes from one city: Barcelona values and the emotional health of of course. Fortunately, thousands the organization than most compa- of tourists visit us from all over the nies in our sector. world so we have had a global exposure even before we started going In what way do you attract global. Back to the point, if our valand choose among potential ues are pretty global in the first place employees? why should we worry about adaptOur project is now getting some ing them! In my view, it would be more visibility and our critical mass a mistake. is now significant enough to attract the best. The first years were more Another interesting thing difficult. Today our project has be- from the book - .”..we´ve adcome a reality. opted the jump as a reflecDo you work mainly in-house with for instance, training and communications or do you prefer external partners?

Everything relating to communication of company and brand values, we tend to do ourselves. This goes for both internal and external communiThey work as a team. cation. Sometimes we do have external sparring partners or specialists What do you do to inspire that help us but training and comyour designers? In my case, I try to create an environ- munication functions are never delement where people can express them- gated to a third party. We find it hard selves and a culture that rewards enough to do a good job ourselves so ideas that connect with people. The we do not imagine third parties imdesign team is lead by my partner proving what we have to say about Thomas and he plays the key role in ourselves. I can think of some help leading and guiding inspiration and on discussing the “How to say it” but the creative energy of all design team not on the “What to say.” members.

In the book ”Desigual just 26” you call… Desigual a combination of the atypical and the native... and go on: “our roots are in Barcelona...” It´s the global/local issue I am interested in. Being yourself where ever you go. What do you say?

tion of our journey...” Could you give me a few examples of that?

In the business sense, we have jumped forward quite a lot. Going into retailing was a jump. The first flagship store in Paseo de Gracia in Barcelona was another big one. I guess one of the biggest though was signing the lease at Regent Street in London. We were not such a big company then but we did believe we had a story to tell … and we jumped! It was a good decision and we learned so much with that decision and we still learn from it. So I guess jumping is about believing in yourself, trusting you can do it, and putting all your energies into the jump, not always with a clear picture of what comes after.

CASE OUR STRONGEST LEARNINGS COME FROM BARCELONA

Impressive “rhythm of growth.”.. rhythm... the Desigual story seems to be like a piece of music...how do you use music anyway? what role does it play?

gether although this is a major challenge. By the way, we did a training for the management team by being placed in the middle of a classical orchestra where we learned the difference between playing at the same I think we use it a lot in our parties time ( just following the notes) and but we have also explored quite a bit playing together ( sharing the melody, in the atmosphere we create in our listening to your neighbours, commustores. Personally I am back at play- nicating as you play…) This was a ing the piano and everybody in the big impact training. You can play the family is now playing an instrument… notes perfectly and the song still does we even try to play some pieces to- not sound good. It is only when your

heart and all of your senses come in that the melody explodes! In what way do you make errors work for you?

I guess the main aspect is learning from them but in many cases, we have used them as inspiration for new ideas. Errors make us human. There is too much search for perfection and I guess it is nice and fresh to recognize that we are not always perfect.

BRICKS OF DESIGUAL

Fun and profit is the DNA. Positive energy is tremendously powerful. Desigual is unique identity at affordable prices. Channels complement more than they compete. We aim to source globally. We follow sales daily. 25 nationalities in the company keep us flexible. We over-communicate internally! With 60 million people in our stores every year, our customers are everybody. Don´t fancy to know your customer intimately; some people sleep together and still don´t know each other. If your values are pretty global, why adapt them? There is too much searching for perfection. BIO Manel Adell is currently partner & CEO at

for over 35 markets worldwide. Among others, he

Desigual, a position he took up in 2002. In the last

managed the Asian establishment of the brand and

7 years, Desigual has increased sales from 8 M to

was in charge of the start up of Tokyo and Singa-

300 M, has gone from 40 to 2000 employees and

pore subsidiaries. In the year 2000, retuning home

has grown from a domestic wholesale operation to a

after 10 years abroad, he became founder and part-

global, retail focused, cult brand in the fashion indus-

ner of Starlab Barcelona, a private company con-

try. In 2010, the company expects turnover growth

verting science research into commercial technolo-

rate to be above 50%. Manel started his profes-

gies. Starlab´s main client is the European Space

sional career in the marketing department in the

Agency. Manel holds an MSc from ESADE in Barce-

soft-drink industry, reaching the position of market-

lona, an MBA from IMD in Lausanne, Switzerland

ing director for a division of Cadbury-Schweppes

and attended EPFGC from Stanford University in

Spain. He was later Expansion Director at Bang &

California. Married to Carina. They have a son

Olufsen (Denmark) with commercial responsibilities

Pau 14 and a daughter Helena 12.

OUR STRONGEST LEARNINGS COME FROM BARCELONA CASE

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ON THE SAF E SITE

A tool guide to quality locations

ON THE SAFE SITE A TOOL GUIDE TO QUALITY LOCATIONS

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Even if academics are unable to accurately predict the future effect of e-commerce on city centre shopping, there is no doubt that live shopping and information gathering before e-shopping (the showroom effect) will remain important to most consumers and thus brands/retailers for a long time to come.

By Peter Bur Andersen

Authentic retailers – American Apparel, Diesel, Tiffany’s to mention a few – have an ability to always find the right location for their stores, which is why they continue to grow and are considered truly successful. Choosing the right location is without a doubt one of the most important elements in a retail strategy, because it affects long-term brand building and business and it is extremely capital intensive. Finding the safe site is complex because of the many factors that must be considered Detail on Retail offers you a simple tool for proper location assessment for city retailer. All you need is to adapt the 10 factors to your individual business.

ALL YOU NEED IS TO ADAPT THE 10 FACTORS TO YOUR INDIVIDUAL BUSINESS

ZZZ FEUH HX UHWDLO ON THE SAFE SITE DISTRIBUTION

1 City Inhabitants

Too many brands struggle to identify the placement of their future stores in any given city before verifying and discussing the rough demographics. Demographics help you pre-determine where to look for locations and where not to. It’s simple, it’s convenient – and forget it if you have been told that local awareness beats passers-by (population).

2 Street awareness

When you have identified the rough demographics, it’s time to map the potential streets or malls in your target city. In most larger cities, you will experience 3 levels of awareness. When it comes to locations: 1 well known internationally e.g. Bond Street, London, Rodeo Drive, LA or ChampsElysees, Paris. 2 well known nationally e.g. Leopoldstrasse, Munich, Oak Street, Chicago or Na Prikope, Prague. 3 well known locally e.g. St. John’s Wood Road, London, Alte Schönhauser Strasse, Berlin or Ch. de Wavre, Brussels. Depending on the prerequisites of your brand, you can now easily determine which best suites your needs and make your scoreboard fit these needs.

3 Street type

Closely related to the awareness facts, but depending on your product offering, it is extremely important to include street type as a factor. In many cities there are clusters offering specific products. E.g. in London, you would go to High Street Kensington if you are into Sports Gear and Apparel, while if you wanted a new kitchen or white goods you would need to find some other street. To be on the safe side, always include this as a parameter in your assessment tool.

4 Nearby neighbours

As part of the equation, nearby neighbouring brands play an important role in your final determination on where to place your stores in potential streets or malls. Include in your tool your preferred associated brands, both within and outside your sector. This will help you simplify and visualize your decision. To one brand it might be never be placed more than four shops away from an American Apparel store.

5 Car traffic

Many brands neglect the importance of having car traffic listed as a major driver of foot-flow to their stores. Shopping is very much about convenience and many people prefer on occasion to be able to drive pass the store. They appreciate the possibility of nearby parking. If your sales depend on this, make sure to integrate traffic in your considerations.

DISTRIBUTION ON THE SAFE SITE

6 Pedestrian traffic

Key to sales is the number of people passing by your store. True retailers know that if the number is high enough, huge savings can be made in your overall marketing costs. This is especially important in an international setup, where cultural differences can weaken your global communication platform the further away from home you are. 4000 passers- by a day, with a visible storefront, is a minimum.

7 Buying power of passers-by

Make sure to integrate the percentage of people passing by your store who can actually afford to buy your product. According to our experience, 50% of the people passing by should be able to afford your products.

8 Visibility of store

In your selection tool, you should secure maximum visibility of your store. There is a staggering difference between a corner or city square and a mid-block off a main traffic flow. Even the right city, a spot on street and carefully selected neighbours cannot rescue turnover if you end-up with poor visibility. Some retailers choose to hire specific architects to just do their store front, while the rest is done by a “house” architect.

9 Facade size

MOVING ADVERTISING IN BUSSES AND TRAINS WITHOUT SPENDING THE ENTIRE BUDGET

The size of your façade is another crucial factor to your success. Many brands, do not understand the importance of being able to communicate a total selection from the outside. Remember that shoppers are reluctant to enter narrow stores with little fenestration.

10 Accessibility

Last, but not least, you will need entrance from the street and if at all possible, avoid stairs directly at the entrance. If you are in fashion or any other sector with high visitation, you should totally avoid stairs.

DOES YOUR BRAND HAVE AN INTERNATIONAL PROFILE AND POTENTIAL? IF YES, THEN THINK TWICE BEFORE OPENING DOORS IN A TOWN OR VILLAGE

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Bigger than the internet. Bigger opportunity than China and India combined. How big does this trend have to get to turn into big business?

WHAT WOMEN WANT

Women and men are equal and different Women are three consumers in one Female influence over bigger ticket items is increasing 80 per cent is not a niche Meet the expectations of women and you will exceed those of your male consumers Female consumers have unique needs DonÂ´t think pink Sex is the lazy, short-term way to sell Freud gave it a try and Faith Popcorn got the business framework right 10 years ago! Female consumers all over the world are still waiting for the facts of womenomics to influence products and retailing. ItÂ´s time to move from why to how.

WHAT WOMEN WANT BRAND

Women control 64% of the 13 trillion euros annually spent on consumer goods around the world, and the number is constantly increasing. Still many companies are missing the opportunity. The three main categories of dissatisfaction are financial services, health care, and consumer durables such as cars, electronics, and appliances. The latest book is â&#x20AC;?WOMAN WANT MOREâ&#x20AC;? by Michael Silverstein and Kate Sayre, respectively senior partner and partner at Boston Consulting Group. In Harvard Business Review the subject of the book is summarized by the authors like this: â&#x20AC;?Women represent the largest market opportunity in the world. But despite womenÂ´s dominant buying power, many companies continue to market mostly to men and fail to explore how they might meet womenÂ´s needs. Companies that can offer tailored products and services â&#x20AC;&#x201C; going beyond â&#x20AC;?make it pinkâ&#x20AC;? â&#x20AC;&#x201C; will be positioned to win when the economy begins to recover.â&#x20AC;?

A new playing field.

According to the owners they simply found out that an increasing share of their shoppers turned out to be women and decided to ask those shoppers what they wanted. By the way, the male consumers either liked it too or hadnÂ´t really noticed the change. Why are so many brands and shops missing the opportunity, acting as if fancy cars, DIY, and electronics are none of her business? And why do many advertising and marketing companies still think youth has all the money, when in fact 40 plus are the great spenders, more specifically the women of that age group? Get behind some of the myths obstructing the business opportunities and make sure you know the ten winner ways to bond with female consumers. by Helle Katholm Knutsen

The conclusions of the book are based on a global survey in 22 countries, and the authors ask the overall (and wellknown, one could add) question: â&#x20AC;?As a market, women represent a bigger opportunity than China and India combined. So why are companies doing such a poor job of seeing them?â&#x20AC;? Exactly the same question was asked by the American trend-guru Popcorn ten years ago in her book â&#x20AC;?Eveolutionâ&#x20AC;?, but obviously not so many had faith in her. A few years after Popcorn, Tom Peters called the potential of getting to know your female consumer â&#x20AC;?bigger than the internetâ&#x20AC;?, and exactly the same messages can be found in the work and books of Australian authority and founder of Splash Consulting Group, Amanda Stevens. Still, there are signs of getting it right in some traditional male areas. Why do some filling stations suddenly seem transparent, clean and presenting a more appetizing choice of products?

! ! ! # !! " ! " !

women The myths of marketing to by Amanda Stevens

Women are earning more, spending more and making and influencing a greater range of purchase decisions than ever before. They are choosing the grocery brands, controlling major purchase decisions in the home and selecting the lender that her family makes a mortgage payment to each month for 20-30 years. So what is stopping marketers from speaking to the most lucrative and influential consumer? All the answers to this question are tied to the misconceptions and misunderstandings that still exist around marketing to women. The body of research that forges the argument that marketing to women should be different from men is still new and challenging for many people. As a result, mythology prevails women and men are fundamentally different. If you choose to view the issue from this perspective, you will Since the 70`s women have fought for have a far more powerful platform for and won some major achievements in marketing to women; you will feel the area of equal opportunity. And less guilty and more confident about here lies the source of the most com- speaking directly to your female cusmon myth about marketing to women. tomer – looking her in the eye and Women have worked so hard for speaking right to her, rather than feelequality – doesn´t treating them dif- ing that your brand has to pass her ferently reverse the achievements of secret notes. the women´s movement? Why would a brand want to market specifically to Myth 2: Women earn a lot women rather than marketing to ev- less than men. eryone? Yes, women want equal opportunity While women´s salary rates have inbut that doesn´t change the fact that creased it is still assumed that across Myth 1: Women aren´t really that different to men.

BRAND THE MYTHS OF MARKETING TO WOMEN

the board, women earn significantly less than men. It is true that in many industries women still earn less than men for the same job. However the scales are tipping and the gap is closing faster than ever before. It is this trend in comparative increase in income over time that deserves particular attention. Think about it – if the average male salary is increasing at 5% over time and the average female salary is increasing at 10 %, which market would you want to be exploring? More important than salaries, however, is female spending power. Women are three consumers in one – they are buying for themselves, they are buying for their families and in more and more cases, they are buying for their workplace or business. Myth 3: Women don´t make big ticket decisions.

Despite the increase in female workforce participation rates, women still account for more than 80% of primary grocery shoppers. Ask ten married men what brand of washing powder, soap or cereal is in the cupboard and you may get a few blank stares. But it is the female influence over the bigger ticket items that is attracting the attention of marketers of products that have traditionally been purchased by a predominantly male target audience. Women are buying 10000 dollar home stereo systems, they are buying luxury sports cars for themselves, and they are purchasing power tools for a DIY home renovation.

came clear that the structure of the research skewed the results to say the I am often asked the question: “Why least. Firstly, the qualitative research would we want to develop a niche was conducted with men and women marketing campaign just for women in the same focus groups. Secondly, and how would we measure it?” The the primary quantitative (survey) answer lies in one simple fact: women question was, “Do you think, because make up more than 50 % of the pop- you are a woman, you have special ulation and make more than 80 % of needs from a bank?” Gee, talk about all purchase decisions. That is not a research that makes you feel comfortniche. And by the way: how do you able to share, reveal and give meanmeasure the return of investment of a ingful input. Women have unique multi-million dollar football sponsor- needs and are often seeking special ship? treatment. Not in an elitist sense, but in a way that a brand says: “We unMyth 5: Marketing specificalderstand you, your life and your ly to women alienates men needs”. Myth 4: Marketing to women requires a “niche” approach.

Unless you are marketing products such as tampons or mascara, chances are you are marketing to both men and women. A while ago we worked for Wizard Home Loans to develop and launch a new feature called “Pregnant Pause”, a maternity leave option for your mortgage which allows you to put your payment on hold for a period of time when you go on maternity leave. While clearly marketed at women, it resonated just as strongly with men. As the saying goes… Meet the expectations of women and you will often exceed the expectations of men. Myth: 6: Women are uncomfortable being marketed to.

Myth 7: Marketing to women is about painting it pink.

If pink is so universally identified as female, surely producing a logo, brochure or TV ad splashed with a bit of pink would connect with women? If only it were that easy. An effective, enduring marketing to women strategy requires an in-depth understanding of the many complexities of the female market and the multidimensional holistic and most importantly a long-term approach that is embraced across all areas of your business. Quite a commitment, but the rewards are obvious. Myth 8: Marketing to

“Our research has found that women women is easy – sex sells! don´t want to be treated any differently from men”, a research manager Sex doesn´t sell. In fact it never really for a major bank challenged me with. did. It´s a lazy way to market. After asking a few questions, it be-

founded and heads Splash Consulting Group www.splashroup.com.au. She is the leading authority in Australia and New Zealand on the science of selling to women and the brand mother of SheMarketing. Based on intensive research, Stevens and her team have mapped the differences between male and female shoppers and translated them into driving forces within sales, service and marketing to women. Stevens works within all of the seven hot industries: travel, technology, banking/finance, health/pharmaceuticals, property, fitness/weight loss, and insurance. She was one of the key note speakers at M2W in Chicago in April.

Amanda Stevens

THE MYTHS OF MARKETING TO WOMEN BRAND

female Ten Winning Ways to Bond with

The SheMarketing Maximation Model ™ can be explored in Amanda Stevens’ book “SheMarketing, The science of Marketing to Women”.

customers

Peripheral Media Activities

Emotive Rapport Building

Find new ways to speak to women, turning down the volume and frequency approach. Even when resting, a woman´s brain operates at 70 % activity (men 30 %) and she has a 10-20 degrees wider peripheral vision than men. Women don´t enter your shops and web sites to hit and run. They want knowledge, enrichment, ideas and surprises.

The emotive centre in the brain (amygdala) is proportionally larger in the female brain and more active during decision making. And NO! This does not mean that all women love soppy music and pink pastels. Focus on human images, relationships, the inner circle of the woman, the good news, the humour. Use the power of visualization to put the female in the picture. She wants to imagine herself enjoying your product.

Multi-dimensional Selling Proposition

Because of the more random, weblike structure of the female brain, women are more likely than men to relate incoming messages to the different aspects of their lives. Don´t pigeonhole her into one particular role – or one USP. Give her a multidimensional message. Dig into the different “lives” of your female customers. Woman want a multi-dimensional shopping experience. 72

Charity & Awards Programs

Simply communicate your core brand values by letting your customer base know what your brand stands for, who you care about and who you are helping. Eight out of 10 women will choose and be loyal to a brand that is active in the community and supporting causes that are important to women.

BRAND TEN WINNING WAYS TO BOND

Connect the causes to the shopping activity. She wants to be involved in your fundraising. Community/Network

There are hundreds of thousands online communities for women where they connect with each other, ask for advice, share stories, exchange ideas, and build a sense of commonality. Marketing to women in the company of other women is an extremely powerful way to build loyalty. A two-for-one ticket deal is great. Encourage her to bring a friend or two. She wants you to offer her to learn, connect, share and exchange. Proactive Communications Program

In research groups, women often talk about “milestones” – life stage changes such as getting married, promoted, single, and having a baby. Why do you think that Pandora jew-

ellery brand took off like a global wave? Because they got this right. Find out about these “milestones” and take the opportunity to proactively communicate. She wants to hear from you. Open Channels of Feedback

Ask your female consumers to be your advisors and they will soon become advocates. You might say: I can´t be reading women´s minds all the time. Well, ask them what they are thinking so you don´t have to. Recruit eight or 10 women from your customer base and invite them to be your advisory board. You will get loads of mystery shopping insights. She wants to share her ideas and experiences with you. Rewards & Recognition

The number one reason women leave a relationship is lack of recognition. The greatest shortfall in most mar-

keting plans is their focus on acquisition strategies at the expense of retention activities. It sometimes seems that an award winning television advertisement is more important than the bottom-line profit. Positive surprise is generally a strategy that is most effective with women. A rewards program is a great way to recognize customer loyalty and to stay in touch. She wants to know that you want her to stay.

your excellent product/service. Anticipatory Marketing Activities

In almost any industry there is an obvious chance to stand out by anticipating the future needs of women (before they have to ask). You simply listen to the frustrations of women, even those not directly related to your segment or industry. Have an informal dinner with your female advisory board from time to Referral Program time. Translate the frustration into For any brand marketing to women, business-opportunities. She wants to establishing stronger word of mouth talk. is the single greatest opportunity for quick, cost-effective market share growth. And that´s flat. Ask her who recommended your kitchen shop, hear the story and send a bunch of flowers to your “ambassador”. Rewarding referrals is an inexpensive and true loyalty-booster. She wants to spread the stories about TEN WINNING WAYS TO BOND BRAND

You can find many advanced studies on how to design a sales-focused retail performance management system. Here is a simple one that works.

THE FRONTEND RETAIL ENGINE ROOM 74

By Peter Bur Andersen and Thomas Asger Hansen What you want is: 1. Facts instead of feelings 2. Ways of identifying best practice stores and behaviours 3. Data for improved decision making and investments in product mix and sales campaigns

The Key Performance Indicators It is our experience that you should distinguish between three levels in the benchmarking process: 1. Store 2. Sales/Campaign activity 3. Product mix

At an absolute minimum, any professional retailer should have an operational benchmarking system at their store level. This will enable calculating the aggregated potential for improvement for the entire store base. It is accomplished by simply comparing each individual store with the best performing store in each Key Performance Indicator (KPI) and then adding up all the possible opportunities for improvement. It is an extremely interesting set of numbers, which can act as a prime motivator for the entire retail operation. The exciting fact about this exercise is that a good management team over time is able to nurture a culture that seeks improvement and the sharing of best practices

What is the relevant KPI structure for your business? It is necessary to look at your individual business in order to establish the optimal KPI structure. We will however, present a quick resume of the structure, some important considerations, and a few definitions without going into too much detail concerning all aspects of the individual KPIs. Store level Key Performance Indicators The storeâ&#x20AC;&#x2122;s main front-end KPIs drive the setting of goals and coaching of staff performance. From these indicators, you can derive numerous sub-indicators to suit your particular business processes.

Absolute measures will do fine in many cases, but typically, ratios and conversion rates should be implemented. Most KPIs may be measured as conversion rates against the number of visitors and actual sales. The conversion rate is the percentage of activities that actually lead to a sale. The basic KPIs most used are 1. Visitors, i.e. the number of people entering the store or visiting your web shop. 2. Sales, . i.e. the number of transactions as an absolute number. 3. Data Capture Rate, i.e. percentage of visitors from which you obtain contact details for relationship marketing. 4. Ticket size (or basket size), i.e. the average revenue per transaction. 5. Items per transaction, measured as an absolute count.

THE FRONT-END RETAIL ENGINE ROOM OPERATION 75

The benchmarking process If you have relatively few visitors per day age time consumed performing each Best Practice must be considered an (or per sales resource), you might want activity, as this consumption occurs ideal to strive for, and a KPI benchto break down the sales parameter and - whether or not the activity results in marking process can drive the momeasure conversion rates relative to a sale. Time consumption is used to tivation to reach new performance different levels of the selling process. calculate other KPIs and along with levels. Then sales activities can be categorised the conversion rate you can estimate the profitability of a given retail activas follows: Therefore, you need to continuously 1. Contact, i.e. the salesperson greets ity. monitor and communicate the KPIs the customer and has a qualified diaas the improvement effort unfolds, Revenue and Gross Margin logue. 2. Demonstration, i.e. the salesper- Revenue KPIs are used as a measure because you want as little time beson demonstrates a product for the of how the store is doing on the vol- tween actions and result as possible. ume of sales. You should think of the This will maximise the learning opporcustomer. 3. Offer, i.e. the salesperson calculates revenue as composed from different tunities. a price based on the customer’s needs product categories, and a breakdown into the revenue shares for each The benchmarking process can efand wants. 4. Trial product (only some businesses product category will as a result, give fectively be supported by a company feature this possibility), i.e. the customer us valuable information regarding the “dashboard,” which may serve as a management tool and a communicasales volume of the categories. gets a trial period with your product. tion vehicle for stores and the entire Each of these activities may or may The revenue on a sale might be re- sales operation in general. The dashnot lead to a sale. But again, your in- duced either through discount given board can be digital or on pin-walls in terest is in discovering behaviours or as reductions on the actual or recom- the various locations. circumstances you can replicate and mended sales price, or as services or It is our experience there are two basic “dashboard success factors”: products included free of charge. multiply. This reduction occurs only with an ac- 1. “Real time” performance relative to In theory, you can calculate conver- tual sale. You should register the rea- the KPI and unit of analysis (e.g. week sion rates for all categories and lised gross margin as the difference measures are updated instantly when activities, but unless you have a in percent between the cost price and the week is over). store with automated data capture the sales price. on various levels, you need to fo- The gross margin realised for the dif- 2. Focus and simplicity of the graphic cus on one or maybe two at a time. ferent products or product categories user interface or the design of the has an enormous impact on store scoreboard, i.e. the dashboard demonstrates overview and eliminates profitability. Activity-level Key Performance confusion. Indicators Activities are any specific effort you Product mix Over the years, much consulting time put into place with a specific goal of You must define the relevant number has been bought in trying to attain selling a service or a product. It cov- of product categories for your busisuccess with KPIs. Here is the boters e.g. marketing campaigns, sales ness with much care. Your goal is tom line of our experiences: to get operational data that tells you promotions, and in-store events. 1 Ensure a close link between the busiwhat you want to know. The ideal ness objective, KPI, and the behaviour number varies from business to busiTime consumption or process that you monitor. ness and should be defined with due This is a dimension that is often per2. Make sure that the KPI is accepted respect for margin and sales volume ceived as difficult to manage, but it by the organisation as a true meaof each possible category. is actually not that difficult to put into sure of something important that you place. You are interested in the aver-

THE SHORT VERSION IS, MEASURE WHAT YOU BELIEVE IS IMPORTANT – DON’T MAKE WHAT YOU CAN MEASURE IMPORTANT! 76

OPERATION THE FRONT-END RETAIL ENGINE ROOM

can actually influence! Define the right level of aggregation. 3. Make the KPI understandable for those who see it. 4. Ensure compatibility with the incentives structure. 5. Design a flexible KPI if possible.

One last piece of advice is to avoid the common pitfall of flashing a chart that has been composed by collecting all the best KPI performances of various stores and wanting to impose the complete set of top performances as a shared goal.

The short version is, measure what you believe is important – don’t make what you can measure important!

This will disturb most teams, since it is obvious that it is an artificial construction.

Improvement comes from focusing on single KPIs selected for a certain store where the staff, has been involved in discussing how this KPI could be improved by change. There is a fine line between ambition and deterrent.

Good luck with your KPIs!

Retail KPI structure

It covers the 3 benchmarking levels.

TRAFFIC Store visitors www.visitors

STORE LEVEL INPUTS Revenue Cost of goods sold Labour costs Marketing costs Fixed costs

STORE LEVEL OUTPUTS Revenue index Realised gross margin Labour ratio Marketing ratio Contribution ratio

ACTIVITY

ACTIVITY LEVEL OUTPUTS Conversion rate Average contribution Contribution share Revenue

LEVEL INPUTS Date & time Activity type Product category Cost price Sales price Estimated time Consumption per activity

PRODUCT MIX LEVEL INPUTS Total sale / category Total cost of goods sold / category Total number of sales within each category

AGGREGATED STORE LEVEL OUTPUTS Average ticket size Total sales activities Total number of sales Number of items per sale Conversion rate

PRODUCT MIX LEVEL OUTPUTS Average ticket Gross margin Revenue share Revenue

THE FRONT-END RETAIL ENGINE ROOM OPERATION 77

The identity lies in the detail

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Solution for client: Shop display with storage

PHOTOGRAPHY CREDIT: CLAES BECH - POULSEN

Retailing the Nordic Food potential FIT is a special dish on the Detail on Retail menu.

Its goal is the same in every issue: to provide you with a voyage into retailing potential, not yet realized or maybe, just not fully flourishing. A business area is examined every time. Feel free to translate the finding into any business you like. Sometimes the best ideas you lay your hands on are found in totally different trades and even outside of what is traditionally considered the commercial world. If your focus is retail, you imagine shopping in all kinds of places: an airplane, a restaurant, a bar, a doctors´ waiting-room, a place in space, a canteen in a company, a kiosk, a fitness center, moving in the street, a hospital, an exhibition. If there is an arena, whether imposing or humble, live and virtual, shopping is an option. So is sharing or just enjoying a meal. Where customers move, there´s a chance of engaging them and making a deal. Many customers actually enjoy having a shopping-break or making the most of the times they spend waiting, sitting with the seatbelt fastened, or having a haircut. In some cafés and restaurants, there is not one single item not for sale. Traditional walls between product areas are being torn down and anybody can sell anything as long as customers have faith in the business people behind the shelves. In other words, new retailers and those who are reinventing their retail strategies have a myriad of meeting points to choose among – and to share. Retail is the language they need to speak. It is spoken whenever a customer meets a brand. Beautifully or badly. With efficiency or indifference. Other languages are necessary in the business world, but retail needs to be spoken in all The job that Nordic Food projects areas where you are getting hot. Close to the shopper - In touch or even touchand retailers are about to perform ing. Some call it the moment of truth. The better a company is capable of focan be highly inspiring to decision cusing everything it does on this specific meeting, the better for business. Conmakers in other product areas, sider how many employees in huge companies never ever meet their customer. needing to rediscover their brands, Companies and customers too often live separate lives. When they finally do products, sourcing and/or retailing meet, they are lost in translation. strategies in a local/cultural Detail in Retail is designed to smooth, inspire and professionalize that perspective. meeting – and to explore new retailing potential.

by Helle Katholm Knutsen

FOUND IN TRANSLATION RETAILING THE NORDIC FOOD POTENTIAL FIT

THE SPIRIT OF THE PLACE CANNOT BE IMITATED The 26th April 2010 Restaurant Magazine London nominated NOMA in Copenhagen the best restaurant in the world. The gourmets of the globe have been there and the seven-year old Nordic Food temple has proved to be a lasting star. The story of how Nordic Food was rediscovered has spread to the best chefs, food writers and gourmet globetrotters. But how about the quality consumers in general looking for a refreshing supplement to sushi and pasta? For five years, the idea has been ready to multiply on a large scale. So who is waiting for whom? Detail on Retail has talked to some of the key players involved to help get the retail pot boiling. You can download key questions for a brainstorming from our website. A bit of background to start with: In 2003, the gastronomic innovator, Claus Meyer gives birth to the idea of creating a pure Nordic restaurant. He chooses chef René Redzepi and they open noma, the first restaurant to start realizing the potential of the Nordic Kitchen idea and combining it with high-end gastronomy and unique service. A symposium held later that year, attracts philosophers, politicians and other opinion leaders from all over the world. Inspired by the development of the Spanish Cuisine and the dissemination of the Italian slow food movement, this passionate group of people launch the idea of bringing new life to the taste, the healthiness and, not least, the broad awareness of the Nordic Kitchen: its heritage, its products, and innovation potential.

1. Quality combined with sustainability is slowly turning into a megatrend – regardless of the crisis. More and more consumers are seeking authentic quality. Companies as well as consumers are supporting carbon dioxide neutral consumption and decent treatment of animals as well as people behind the products. 2. The star chefs are setting the fine food agenda and those exploring the Nordic Kitchen are considered among the best and most innovative in the world. 3. The combination of health and deliciousness is now achievable in the consumer´s mind. 4. Among the most noteworthy long-term consumer trends in recent years is the progressive shift of consumer interest and spending towards experiences rather than single products. 5. With the global market gingerly climbing out of the collective psychosis of the crisis, consumers will be looking for something new, and preferably with a great heritage. 6. Last but not least, along with an increasing focus on origin, ”genius loci,” the spirit of the place (reflecting the particular alchemy of history, trades, and people which distinguishes one place from another), country and region branding takes on a greater significance, most of all because it cannot be imitated. There was a time when globalization was feared to mean loss of distinction, not least on the commercial scene, but trends point in the opposite direction now; Cultural identity and global multiplication go hand in hand. Heritage and innovation

Tasty trends

There are several trends supporting the prospects for Nordic Food – the serving as well as the selling for more or less fundamental home cooking.

The manifesto following the 2004-symposium included ten intentions: 1. to express the purity, freshness, simplicity and ethics that we would

FIT THE SPIRIT OF THE PLACE CANNOT BE IMITATED

like to associate with our region 2. to reflect the different seasons in the meals 3. to base cooking on raw materials which characteristics that are especially excellent in our climate, landscape and waters 4. to combine the demand for good taste with modern knowledge about health and well-being 5. to promote the Nordic products and the variety of Nordic producers - and to spread the knowledge of the cultures behind them 6. to promote the welfare of the animals and a sound production in the sea and in the cultivated as well as the wild landscape 7. to develop new possible applications and traditional Nordic food products 8. to combine the best Nordic cooking procedures and culinary traditions with impulses from the outside 9. to combine local self-sufficiency with regional exchange of high-quality goods 10. to cooperate with representatives of consumers, other cooking craftsmen, agriculture, fishing industry, food industry, retail and wholesale industry, researchers, teachers, politicians, and authorities on this joint project to the benefit and advantage of all the Nordic countries.

INGREDIENTS IN RETAILING NORDIC FOOD

Where do you meet enough people to spread an idea? Where people shop! Spreading an idea like revival and innovation of Nordic Food has to start taking deep root in opinion leaders throughout the Nordic countries and regions. This is happening as we speak. Now the time has come to grow, and the idea has to be grabbed by retailers, big enough to spread the news and sensitive enough to look after the unique qualities. It´s all about balance – as stated by Bocconi professors in the Focus articles. Detail on Retail found ingredients to retailing concepts in Northern as well as Southern latitudes. Affordable quality

Lotte Holm, professor and sociologist at Department of Human Nutrition, Faculty of Life Sciences at The University of Copenhagen: “Up till now the Nordic Kitchen remains a high-gastronomic kitchen known to elitist circles only… It has gone over the heads of the general-public… Whether it eventually reaches a broader audience is hard to predict. It depends on the big producers and the retailers to keep the pace.”

Have a look at an Italian initiative – www.eataly.it. Eataly is a newcomer in the world of quality food (studied by Bocconi Retailing Laboratory). It was founded to disprove the preconception that food quality has to be the privilege of the lucky elite. One tool is needed to recognize quality, they say: Knowledge. Eataly offers affordable quality by reducing the distribution chain to a bare minimum – and they give all the credit

instead of the poor choices we have today. Obviously locals as well as visitors are going to benefit from all this.” Madeleine´s Food Theatre is known for meals never served before. The chef, Mette Sia Martinussen and Nikolaj have created a synthesis of food, show and sense sharpening – and they also develop every day and attention to the small producers, food in their laboratory. NY Times growing together. Idealistic? Maybe – food writer Kate Searles wrote about but it´s turning into big business. Madeleine´s: “Given that dining out is many an urban dwellers chief form Ingredients: of recreation, I´d say there´s a gaping Quality education. Madeleine-shaped hole in the foodie Keep thoroughly selected producers universe.” close and help them grow big. Head for the quality crowd – not just Ingredients: the niche. Make food culture experiences part of your retailing concept. Holes in the foodie universe Make sure your sales people feel and The Food Culture Zone is led by Niko- perform like hosts – happy to invite laj Davidsen, the performance instruc- and serve guests and eager for them tor and producer at Madeleine´s Food to. Theatre, alongside dozens of other jobs. Food Culture Zone intends to re- People want traceability and vive Denmark as a growth area by vir- choice tue of cultural tradition, local quality Lisbeth Dalgaard owns Dalgaard Sufood, hospitality and fantasy – offer- permarket north of Copenhagen - A ing unique food culture experiences to quality food market taking the expethe visitors of the country. “You have rience part of customer relations very to embrace the meal experience – not seriously. Lisbeth doesn´t agree that just focus on the food,” says Nikolaj. price focus has come along because “We have identified a huge growth po- of the crisis – it was there all the tential putting the quality meal into a time except in the case of a few exlarger experience. We´re talking about cesses. That does not mean however, a new trade all together: combining that people are not willing to pay for food, tourism and culture with being quality. If they are confident, qualthe world’s best host. Just think about ity is what you guarantee. “I believe offering really great highway meals private labelling is up for resistance

INGREDIENTS IN RETAILING NORDIC FOOD FIT

in the future. People are more and more interested in traceability and choice,” says Lisbeth. Among the characteristics of the Dalgaard Supermarket are: - more choice than most – 26,000 items - building trust in quality every day - close customer contact – questions are always answered - cooking (take away) and tasting is an integrated part of the business concept which means that products are continually tested and tasted internally – creating a genuine food culture - focus on fast as well as slow “tracks” as consumers want both in different situations

recipes etc... Design the shopping experience as a light meal and yourself as a host, knowledgeable and eager to share.

ating the shopping experience now and in the future. Challenge the consumers shopping behaviour. Make them ask themselves what they are actually choosing. And, it does not Why should people hate have to be very complicated. Think shopping for food? about re-educating shop employees and consumers to the beauty of eatAnne Rahbek is business developer ing different products through differand consultant for Claus Meyer, Mas- ent seasons, maybe even at the same ter of Food Culture from University of time, using the same instruments, Gastronomic Science (Italy, founded as an integrated part of the shopby The Slow Food Movement) and ping experience. There is a hunger leads a government-funded project for real, good food among the conconcerning Supermarket of the Fu- sumers, but still most food offers are ture, as part of Meyer Consulting strictly about price. You need to illufood-innovation consultancy. The minate the value creation and move idea for this project was originally money from traditional marketing to inspired by Eataly in Torino, where experience-education and other iniAnne spent a few months working. tiatives to fight the bad image of the Ingredients: In spite of her heavy educational shopping for food experience, and Choice – a multitude of temptations background, Anne makes it a point this effort is inextricably connected and stories. of honour to simplify the subject. She to food quality,” Anne says. She ends Consumer close in a personal way – starts by stating an interesting result this condensed version of a geyser of local and open minded. of consumer food research in general: ideas: Build the use of the products into the What consumers love the most is to eat. everyday of the corporate culture. What consumers hate the most is to “Put the focus on what you Trading and tasting. Social tasting- shop – for food. GET – not just what you PAY trying arrangements experiences, and not only on single prodFast and slow “tracks.” “So go on, make the shopping ucts but on the food treat.” Conviviality, smelling and tasting

experience great and make sure the food is delightful,” says Anne.

Olivier & Co. (O&CO) is a ten-year old business concept, built on the taste, effect and stories of the fruits of the old olive tree. It all began with relationships among gourmets. Tradition, traceability and transparency are key words together with discovery, conviviality, tasting, smelling and getting together. Producers are kept close, and so are chefs, taste professionals and franchisers. O&CO has succeeded in bringing the olive experience into their shops – even the one in cool Copenhagen – and shopping is a tasting experience out of this world.

“Among the key elements are education and communication. Don´t just think traditional training, though. We have staged quite a few experiments among which, is inviting a couple of star chefs to cook in the supermarket using seasonal products. Consumers immediately recognized the genuine quality of not only the food bites, but also the answers provided when they ask all sorts of questions. They especially appreciated the general food – not just one brand approach – and you actually sell by not selling, being your customers advisor instead of a salesman,” Anne explains. “I recommend value based Ingredients: supermarkets to see the consumer Put people at the centre of the stories as a co-producer, not just a passive Exploit the potential of the products stranger choosing among a fixed row – taste, health, enjoyment, style, use of goods – but deeply involved in cre-

FIT INGREDIENTS IN RETAILING NORDIC FOOD

Ingredients: Seasonal product celebrations. Reconnect the value chain, and exploit the wisdom of taste, innovation, product development and branding in our Nordic food across this value chain. Fight standardization with true diversity. Put part of marketing money in experience-education. Involve consumers, producers and other stakeholders in co-producing the shopping experience. Put the focus on the food treat and what you get – not just what you pay. Don´t complicate things. Start the pot boiling. Share knowledge to make consumers demand knowledge.

Detail on Retail Recipe for Retailing Cold Climate Cuisine: BRAND: Translate the Nordic Food values and stories into specific retail (publicity, traffic and sales) drivers, for instance seasonal products celebrations/ tastings. DISTRIBUTION: Make

all channels play to promote quality education. Balance consistency and unique channel qualities. Remember all six senses – including the economic. PRODUCT: Select producers carefully and when they have proved their stability, let them date your customers regularly to promote traceability and authenticity and growth. OPERATION : Track consumer behaviour day in and day out and involve consumers directly in shop development. DESIGN: Take the opportunity to rethink the traditional supermarket concept and the balance between efficiency and enjoyment. Customers want both. PEOPLE: Integrate employee and customer education via events, experiences and two-way communication.

NEXT ISSUE FOCUS: Complaint management Customer complaint management has become an integral part of business, from a customer service standpoint. Companies can extract priceless knowledge, because complaints contain the direct voice of the customer. CASE: Extremely sharp or incredibly wild With both the mono-brand model and multi-brand model co-existing in most retail sectors we take a deeper look into the why’s and when’s of these strategic choices. FOUND IN TRANSLATION: Retailing health potential Detail on Retail examines the mega-trend called health retailing and raise vital questions to industry experts. BRAND: Catching on-the-move consumers with new tech media Cross media marketing is big and growing. Social networks, QR Codes and intelligent brand associations are essentials for retailers moving forward. DISTRIBUTION: Reinventing the mall Why are malls more often a miniature mirroring of high streets? Who will reinvent this consumer-boring retail landscape and how?

JAN/FEB 2011

PRODUCT: One shoe kicking the brand into heaven Product-line extension is troublesome and sometimes risky business. Danish sports- and fashion-wear company HUMMEL are one to watch. Meet the owner, Christian Stadil, in an exclusive interview.

AMBITIOUS BRANDS CAN SCAN HERE

OPERATION: Digging into the traffic to sales KPI Improving Key Perfomance Indicator’s is the single most effective way to grow retail chains organic. Detail on Retail digs deep into sales conversion rates. DESIGN: The power of sound and moving images in shopping environments Jean-Michel Jarre has met with Detail on Retail to an exclusive interview on the potentials of using sound and images in retail. PEOPLE: Remember decent behavior? If latest recession has done any good in the world of retail it might well be the return of decency. Detail on Retail investigates the attributes of service.

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