Retail insights April 2013

Retail Insights What’s making retail news this month

Jack Rabbit A New Convenience

Innovation is crucial in today’s fast paced retail environment where consumers are empowered through an ever growing range of retailers and products to choose from.

The convenience industry in particular has struggled in a highly competitive market, with growing pressure from supermarkets, introduction of the carbon tax and changes to tobacco packaging. As such, there is growing pressure on convenience retailers to evolve in line with such changes.

Once regarded as expensive alternatives to supermarkets, convenience stores are quickly becoming a quick and easy source of basic groceries and fresh food, presenting convenience retailers with the challenge of meeting these changing consumer expectations. One retailer that has set out to change the perceptions of traditional convenience retailing by offering a highly differentiated and memorable in-store experience is Jack Rabbit.

Jack Rabbit Food Stores is a new convenience store concept, with the initial first store located in Taree, NSW. Jack Rabbit set out to revolutionise the convenience sector by introducing a modern day convenience store that reflects recent consumer trends and creating a destination with quality products and a community atmosphere. The concept is less reliant on tobacco and traditional convenience store items such as confectionary and drinks, instead fo-

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April 2013

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cusing on the fresh food category and increased share of wallet.

While convenience stores have traditionally focused on similar products as supermarkets, Jack Rabbit aims to create a point of differentiation by offering customers fresh and healthy food, reminiscent of a café rather than a convenience store. In an effort to appeal to females, hand washing stations are positioned in the store. Jack Rabbit also serves barista made coffee, bread baked in store and freshly made sandwiches, as well as a top up grocery offer.

The brand also aims to connect with customers in more interactive ways including via Facebook and Pinterest and has also developed a mobile ordering application. The app allows customers to order coffee and food so that it is ready when they arrive to the store. Jack Rabbit is currently testing the distribution effectiveness in rural areas in order to envisage any shortcomings and aims to open in metropolitan areas in the future.

Having set out to change perceptions of convenience, Jack Rabbit demonstrates the importance of innovation in response to changing consumer expectations and a rapidly evolving retail landscape, serving as a best practice example for all retailers.

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Australian News Bites Discount department store Target has teamed with a US mega-brand to launch an Australian first this month. The new initiative saw Target join forces with The Walt Disney Company to launch the Disney Princess Virtual Wall. The short-term wall is an Australian-first for both companies and allows fans to point their smartphones onto the unique Disney Princess virtual wall fitted with QR code technology.

The QR code then redirects the user directly to Target’s dedicated Disney Princess mobile site to browse and purchase product. The digital application aims to create a more immersive consumer shopping experience and will enable fans and consumers to better connect and engage with the Disney Princess experience. Ragtrader, 14 March

Highpoint Shopping Centre in Melbourne is the first major shopping centre to boast both Zara and Topshop stores after opening its new fashion mall in March. Zara is one of the headline tenants signed up for the $300 million redevelopment of the Highpoint Shopping Centre, one of the largest malls in Australia. A David Jones department store is the anchor tenant for the new fashion precinct, joining the existing Myer store, while the British retailer, Topshop, opened its second Melbourne store. Another key tenant to open is Samsung, which showcases the brand in the biggest concept globally for the electronics powerhouse. The fashion mall is the final stage of Highpoint’s redevelopment and follows the opening of the fresh food market and eco mall last October. Inside Retail, 1 March Home improvement retailer Masters has launched an iPhone app to provide real-time customer service including customer support, inspiration and product information.

The Masters Home Improvement app features a ‘chat now’ function that links directly to a Master’s service representative for on-the-spot answers. The app also features a product finder that allows users to shop for more than 30,000 products and search through 19 categories to buy on the spot. There is also the ‘scanner’, a price comparison tool that ensures customers get the best price guaranteed, while the ‘projects’ feature provides a library of howto videos, articles and step-by-step instructions for a number of projects. Masters, a joint venture between Woolworths and US home improvement chain Lowe’s, currently

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April 2013

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has 26 stores and is on track to open between 15 and 20 new stores a year. RetailBiz, 11 March Printed catalogues are more effective than their online counterparts in engaging with Australian retailers and consumers according to new research from the Australian Catalogue Association (ACA). The research conducted by Roy Morgan in the lead up to Christmas last year found that over 70% of Australians aged 14 and over prefer reading printed catalogues over online catalogues. The research also found that only 11% of Australians read catalogues online. While Australians aged 50 and over are most likely to read printed catalogues, 66% of those aged 24-35 also read printed catalogues. For consumers, catalogues bring the shop front to the home and assist in the pre-purchase decision-making, encouraging customers to go to the store or online. As such, the most effective use of catalogues is part of a multi-channel communication plan, with letterbox drops supported by text messages, email campaigns and QR coding delivering the highest return on investment for retailers. B&T, 5 March Optus is looking to refresh its retail network, with the opening of ‘yes’ pilot stores. The re-branded concept stores will include 33 new stores and 200 new retail staff, as well as an overhaul of the Optus website and Optus branded applications. The new stores will focus on service, with staff undergoing new training programs, while ‘Gurus’ will be available to help with technical queries and a new queuing app will allow customers to see when a consultant is available. As well as getting improved service in-store, customers will be able to experience live demos of new Optus products such as the Optus TV with Fetch or 4G Internet. There will also be interactive hubs which will show off solutions for home, business and mobile. Stores will also see newer technology used which will show a 40% energy saving using new lighting. Ausdroid, 11 March Italian pizzeria Konopizza will open its first Australian outlet at the newly revamped Jam Factory in Melbourne, as the Italian pizza chain continues its aggressive international expansion. Konopizza, famous for its cone shaped pizza, will open a 40sqm kiosk at the iconic Chapel St centre in its refurbished food court in March. Since its establishment in Italy in 2005, the company has entered 17 international markets including Canada, France, Greece, Hungary, Japan, Lebanon, and Morocco.

The franchise is currently scouting sites to open a second store in Melbourne’s CBD, with a target to open between 50 to 100 stores in the next 10 years. Inside Retail, 5 March

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International News Bites Based near Lagerfeld headquarters, the 2,150 square foot boutique is the brand’s first dedicated retail space, carrying the men's and women's ready-to-wear, footwear and accessories lines. Also on offer is a wide selection of objects specially curated by Lagerfeld, including sunglasses, gadgets, and photography and design books. While the label is already stocked in department stores such as Selfridges, Harrods and Galleries Lafayette, this is the first showcase for the entire Lagerfeld portfolio, including a dedicated area for the new line of watches. Spread over two floors, in line with the brand's strong online presence, technology is a key focus. The women's ready-to-wear salon boasts a floor-to-ceiling video wall, payments are processed on mobile devices, and iPads are placed throughout. Customers can use the iPads to flick through digital lookbooks, to browse the brand's website and to share photos of outfits directly from the fitting rooms via Facebook, Twitter and email. WGSN, 7 March Fashion house Oscar de la Renta is refreshing the customer experience on its ecommerce site by offering personalized shopping and fitting profiles with True Fit technology. True Fit is a software service that matches shoppers to clothing that fits their body type and style preferences. Consumers can build a True Fit profile quickly from the Oscar de la Renta Web site. The data is collected through a series of questions about a consumer’s body type and style. The technology also takes in recommendations from a consumer’s purchases from Oscar de la Renta. Next, the system asks for gender, height, weight and age. It then asks for specifics on body type to help find the best fit.

Lastly, consumers are asked to put in the brand of their favorite product.

For example, selecting “dresses” in the first step spurs the statement, “Think about the dresses in your closet and identify your favorite.” Consumers must insert a brand name and are then asked for the size of the dress. Additional details can be added such as a favorite style of dress. After answering all of the questions, consumers are then presented with a list of product suggestions that are given a rating of how closely the system thinks the product matches with a consumer’s ideal. A click-through on a product allows consumers to rate it to help personalize their suggestions. Options include, “need,” “obsessed” and “own.” Luxury Daily, 19 March At the new Hointer designer jeans store store in Seattle robotics and a smartphone application are used to com-

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plete the shopping experience. The jeans hang from metal racks attached to the ceiling with their QR code tags easily accessible, shoppers download the store’s app, then scan the styles of jeans they’d like to try on and tap a button to select their sizes. The app sends a message to the stockroom, where a robotic system finds the requested items and delivers them to one of six dressing rooms The whole process, is designed to take 30 seconds or less. If shoppers like something enough to buy it, they drop the jeans into a bag, return unwanted merchandise through a chute, and proceed to self-checkout. To make a purchase, shoppers simply slide their credit cards through a machine and leave without ever talking to a single salesperson. Hointer promotes itself as the rare store that eliminates the need to sift through piles of clothes or wait to find a salesperson.

While Hointer goes all-in on mobile technology, it also has store employees to answer questions. Seattle times, 18 March China’s new 110sqm Nike store is located in the Joy City shopping centre on the mall's fifth floor with the company chosing the store location to be closer to Beijing's skate community. Inside, grey concrete floors, bricks and rectangular benches recreate an urban skate park feel, along with graffiti-style murals on the walls and fake manholes. Painted by local artist Li Qiuqiu, the artwork was inspired by Nike Skateboarding athletes Che Lin, Omar Salazar, Kostona and Paul Rodriguez. Key components of the store include video screens and an instore maintenance table, encouraging skaters and shoppers to stop by and hang out. On offer is Nike's full range of action sports apparel and footwear. WGSN, 25 March In the lead up to Easter Harrods hosted a set of children’s activities in its Toy Kingdom and childrenswear departments. Children and their parents could take part in The Giant Egg Hunt where participants searched for missing Easter eggs to figure out a secret password for their chance to win a chocolate hamper. Families could also create an Easter-themed moving flip book or meet the Giant white rabbit. There were also children’s Easter workshops held by the Harrods Chocolate Academy in partnership with Godiva Chocolatier which cost $113 where participants made their own chocolate lollipops and decorated a large chocolate egg, bunny or other Easter character.

Children also received a goody bag with a youth-sized chef’s hat and apron and a certificate of participation. Luxury Daily, 27 March

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Thought Leader Q&A Peter Birtles - CEO Supercheap Auto

What are the key retailing trends for 2013?  Retail is increasingly becoming a global market place, whether through international retailers opening stores in Australia, acquiring existing domestic retailers or presenting their offer online with speedy and cheap delivery into Australia.  Customer’s expectations are rising in relation to price, range, environment and service  Continued breakdown of the traditional supply chain relationships; retailers are developing more of their private label products and manufacturers are going direct to the customer with their own stores or online sites.  Increasing variety of sales and marketing channels.  Increasing challenge in attracting, engaging and retaining motivated and capable team members How do you anticipate market conditions locally and internationally changing over the next 12 months?

General retail conditions will remain patchy in 2013 as a number of factors continue to impact on consumer confidence including low global growth, the risks associated with the European economy, slower growth in China, and a subdued housing market and political uncertainty locally.

What is your omni-channel strategy for 2013?

Where do you anticipate your biggest channel growth to come from in the next year?

In $ terms this will clearly be the physical store but in % terms it will be the online channel.

How do you anticipate the role of the store changing in line with the growth of emerging channels?

Stores will become more of a showroom with a reduced range but more engaging displays - inspiring the customer with solutions and the latest products supported by more accessible information in printed and video format, as well as ready access to online information.

How will the increasing number of international retailers entering Australia change the retailing landscape?

We will all have to lift our game - we are competing against the world’s best operators who bring their scale and knowhow into our market.

What are the key consumer trends that are emerging ?

Consumers are increasingly researching online and through a mobile device before coming into store. There is also a growing number of consumers who are relying on social media to gather information or testimonials. Customers are also becoming more demanding of service standards and expecting best value.

To continue to develop the capabilities that we need to provide an integrated offering for our customers to allow them to shop their way when it suits them. This includes extending the range of products available online beyond those we have in store, improving our delivery and fulfilment for our online business, testing a number of new store concepts to create a more engaging environment, and developing our CRM and direct marketing.

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ACRS Research Insights Mystery Shopping & Shopper Study Mystery Shopping The ACRS provides a comprehensive mystery shopper service that can be used to measure a wide variety of commercial aspects of retail stores. Mystery shopping is a valuable form of research where a qualified professional poses as a customer to objectively gather information on an area of interest. Our expert shopping team can be deployed to offer real insight and assess key areas of interest such as employee performance and service quality, price audits, product quality and store layout amongst many others.

Mystery Shopping is a dynamic and useful customer relationship management tool that helps companies to identify areas of weakness in their retail environment and pur chase processes. The resulting information can then be used to develop improvement programs and create a more enjoyable and memorable buying experience for customers.

The ACRS mystery shopping team is experienced, reliable and analytical and aims to provide the best feedback and results to provide you with a real snapshot of your brand in action. Mystery shopping can be used in a wide range of retail settings from food retailing to fashion to fast moving consumer goods.

Shopper Study There is an ever growing number of choices available to consumers, making it increasingly important to understand shopper behaviour. As such, understanding shoppers’ missions, what motivates them, what triggers the purchase, and how to stimulate the purchase is a key competitive advantage for retailers. A Shopper Study involves the use of in-person interviews, intercepts and observations with retail staff and consumers within particular retail establishments. This methodology aims to gain a better understanding of the shopping process across a range of different product categories and consumers, and seeks to gain insights into the development of a consumer’s product consideration set and purchase decision drivers, including advertising and point of sale retail experiences.

A Shopper Study may involve observations of random purchasers or potential purchasers who are shopping for a particular type of product, or they can involve observations of a prerecruited participant, followed by a shopping trip. During the accompanied shopping trip, the participant undertakes their normal shopping process, with the interviewer observing the shopping behaviour, although not influencing the outcome of product consideration or selection. An accompanied shopping study might also involve a final face to face interview at the conclusion of the shopping trip in order to clarify and better understand the shopper’s purchase decisions.

The ACRS also utilises the Field Agent app technology to provide immediate consumer insight by using technologies built into the iPhone. Using this app, shoppers can be surveyed about their experience as it happens, giving an objective view straight from the customer. These shoppers can be surveyed about their experience, and even take photos to ensure store designs and product displays match the desired quality level.

For further information please contact us at acrs@monash.edu

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April 2013

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Australian Centre for Retail Studies Department of Marketing Faculty of Business and Economics Monash University Level 6, Building S 26 Sir John Monash Drive Caulfield East, VIC 3145 Phone: +61 3 9903 2455 Fax: +61 3 9903 2099 Email: acrs@monash.edu www.buseco.monash.edu/centres/acrs