It is not the size of Wal-Mart, but Dollarama is doing much more aggressive for low price. All items were at $1 one year ago and some items are still at $1 and some items have been adjusted to $1.25, $1.5 and $2 now. What is its pricing strategy and how it sustains and develops?
With extreme low prices for small living items, Dollarama penetrates into market quickly in Canada in the past several years. Currently there are 8 stores in Edmonton and each store is with considerable large square foot. Without too much effort on advertising, customer traffics are quickly built up and customer flows are constant.
It seems the price-quantity curve doesn’t work for the products in this store because the prices are fixed. Its products still match with its image although now some prices have been adjusted to $2. Customers always can find some useful items so the transaction pretty stable and the sales largely depend on traffic.
The perceived value of the products is so high that few customers consider prices over the convenient. One example is the steel screen for sink. It captures small particular even the hairs but maintain sufficient water flow. It is easy to compare to another scenario that needs to pay hundreds bucks to hire plumber for plug. So for this example, the perceived value is at hundred bucks while the price of this screen is $1. What customers get is price excitement plus the convenient.
Even though we ignore the fact that all items are sourced from oversea particular from China and some international trade issues may exist, we still can follow the trajectory to see that price is set originally from customer’s willingness (or market) down to cost. I would think the prices are still extreme competitive after the adjustment because of two reasons, one is no such competitors on the market for similar products, another is the perceived value is so high that $0.25 to $1 up is still at the lower end of the spectrum.
However, it is worth to discuss how to make customer lifetime value as high as possible. Obviously, the acquisition cost has been already paid and should be constant for foreseeable long time, words-of-mouth is expected other than expensive advertising in the future. Customer retention rate should be at high level without big change. The only thing to increase the CLV is to increase the margin and there are two approaches might be considered. One is to increase the selling prices and this looks pretty feasible at current stage. Another is to lower variable cost particularly on hourly salary given the fact that retail format and location will be unchanged, specifically; the store might consider vending machine for the goods or automatic scan-then-pay way in the future if the labor cost will be skyrocketed.
This store is a kind of black horse in retail business and make retail giant such as Wal-Mart hard to squeeze it out from market by pricing tool. If Dollarama is able to manage the growth by controlling the numbers of new stores and prices adjustment, it should be able to keep decent growth by more brand recognizing in North America.
Sunday, March 21, 2010
Friday, March 19, 2010
Pop-Up the shopping experience
Pop-Up Stores
The Pop-Up store concept has been around for a few years now but is gaining traction especially after the downturn in the economy. A pop-up store opens up at an empty retail location for a few days in a major city and is found more during the holiday season. Major retailers sell items in high traffic areas to make that extra push to improve their brand awareness, and also use it as a venue to sell new products. Like any other industry, retailers are looking to reduce expenses in every possible way particularly rental spaces in this case. What these pop-up locations provide are outlets that will garner high foot-traffic numbers and emphasize on the extra value to customers through promotions. The retail industry has become very dynamic and there is an increasing focus to maintain a high customer relationship through retention and marketing. In a pop-up store concept, all that has to happen very quickly. You have to do really heavy marketing to draw attention and draw people in immediately.
I’m sure we have seen many small pop-up store brands these days but guess what, the big brands are finding their way into this space.
Holt Renfrew
Last December, Holt Renfrew opened a pop-up store in downtown Toronto for five days. Barbara Atkin, VP of Holt Renfrew Fashion Direction, stated that this was an opportunity to test out a new method of “pure design”. The store resembled an attic concept and was very unique in the sense that it wanted to draw those customers who regarded Holt Renfrew as an expensive store and would hesitate to step in. Furthermore, an interesting aspect is that the store did not carry the HR branding in this pop-up store. It was smaller and more personal than its big box fashion which aimed at providing advice, meeting customers especially those who felt uncomfortable trolling up to a flagship store. This strategy would help them build many first time relationships with customers and ultimately drive traffic to their flagship stores.
American Eagle
American Eagle Outfitters introduced its pop store, 77kids, a children’s brand from AE, at Pittsburgh’s Mall at Robinson last December. After an overwhelming response from customers, they decided to keep the store open till late April this year. AE believes at creating a totally unique value creating experience at the store with a wide variety of trendy spring collection for all kids. In addition, customers can shop the full 77kids spring assortment at a touch screen kiosk in the store, which also provides an opportunity for AE to capture customer behaviour. I believe this would help them to cater to a specific target market and listen closely to the customer needs and preferences.
Container Shipping Store
Puma introduced its first portable Puma store called the Puma City. The 11,000-square-foot retail store is made of 24 refurbished shipping containers. The building was even built with international travel in mind, meeting international building codes, dramatic climate changes and ease of assembly. This industrial tri-level super store has an open design, with built in shelving, recessed lighting, large expansive outdoor decks and seems perfectly suited as a night club. It’s really impressing to see how this concept drew a lot of people to the store. I believe this surely created a unique customer shopping experience and most likely increased the customer lifetime value.
http://industry.bnet.com/retail/10004588/toysrus-american-eagle-and-others-bet-on-pop-up-stores/
http://www.businessweek.com/bwdaily/dnflash/content/feb2007/db20070206_949107.htm
http://www.businessweek.com/smallbiz/content/nov2009/sb20091112_724305.htm
http://www.Martiniboys.com/Toronto/citystock/Concept%20Store/1516.html
http://gliving.com/puma-city/
Pop-Up Stores
The Pop-Up store concept has been around for a few years now but is gaining traction especially after the downturn in the economy. A pop-up store opens up at an empty retail location for a few days in a major city and is found more during the holiday season. Major retailers sell items in high traffic areas to make that extra push to improve their brand awareness, and also use it as a venue to sell new products. Like any other industry, retailers are looking to reduce expenses in every possible way particularly rental spaces in this case. What these pop-up locations provide are outlets that will garner high foot-traffic numbers and emphasize on the extra value to customers through promotions. The retail industry has become very dynamic and there is an increasing focus to maintain a high customer relationship through retention and marketing. In a pop-up store concept, all that has to happen very quickly. You have to do really heavy marketing to draw attention and draw people in immediately.
I’m sure we have seen many small pop-up store brands these days but guess what, the big brands are finding their way into this space.
Holt Renfrew
Last December, Holt Renfrew opened a pop-up store in downtown Toronto for five days. Barbara Atkin, VP of Holt Renfrew Fashion Direction, stated that this was an opportunity to test out a new method of “pure design”. The store resembled an attic concept and was very unique in the sense that it wanted to draw those customers who regarded Holt Renfrew as an expensive store and would hesitate to step in. Furthermore, an interesting aspect is that the store did not carry the HR branding in this pop-up store. It was smaller and more personal than its big box fashion which aimed at providing advice, meeting customers especially those who felt uncomfortable trolling up to a flagship store. This strategy would help them build many first time relationships with customers and ultimately drive traffic to their flagship stores.
American Eagle
American Eagle Outfitters introduced its pop store, 77kids, a children’s brand from AE, at Pittsburgh’s Mall at Robinson last December. After an overwhelming response from customers, they decided to keep the store open till late April this year. AE believes at creating a totally unique value creating experience at the store with a wide variety of trendy spring collection for all kids. In addition, customers can shop the full 77kids spring assortment at a touch screen kiosk in the store, which also provides an opportunity for AE to capture customer behaviour. I believe this would help them to cater to a specific target market and listen closely to the customer needs and preferences.
Container Shipping Store
Puma introduced its first portable Puma store called the Puma City. The 11,000-square-foot retail store is made of 24 refurbished shipping containers. The building was even built with international travel in mind, meeting international building codes, dramatic climate changes and ease of assembly. This industrial tri-level super store has an open design, with built in shelving, recessed lighting, large expansive outdoor decks and seems perfectly suited as a night club. It’s really impressing to see how this concept drew a lot of people to the store. I believe this surely created a unique customer shopping experience and most likely increased the customer lifetime value.
http://industry.bnet.com/retail/10004588/toysrus-american-eagle-and-others-bet-on-pop-up-stores/
http://www.businessweek.com/bwdaily/dnflash/content/feb2007/db20070206_949107.htm
http://www.businessweek.com/smallbiz/content/nov2009/sb20091112_724305.htm
http://www.Martiniboys.com/Toronto/citystock/Concept%20Store/1516.html
http://gliving.com/puma-city/
Bought a new suit lately?
A growing number of men are visiting travelling tailors when they want to buy a suit. Tailors like Maxwell Clothiers or Raja Fashions will set up shop in a hotel suite for a few days every couple of months in cities across the world. Men come in, have measurements taken, choose from 20,000 fabrics and innumerable styles. Two months later, a made-to-measure suit arrives in the mail. All for a price that is ½ the cost of having it done locally. As they say in their own words, “a high quality product at an affordable price.”
What kind of suit do you get out of it? They truly have a vast selection of fabrics, much more than the off-the-rack suits they compete with. Also, style choices are nearly limitless; indeed the biggest problem in attracting new clients may be the overwhelming and possibly intimidating number of options. Their main competition is not the tailor made $3000 Saville Row suit. Most customers seem to be off-the-rack buyers who aren’t looking for brand and don’t mind paying the same or a little bit more to get a great cut.
The experience does not exactly compete with the high end either. Customers are packed in with each other and have said it feels a little like an assembly line. But, that is how price is kept down and is a reasonable trade-off. Only being able to access the tailors every 3 months is an inconvenience however, the frustration is mostly offset by the size of the purchase. A suit is a larger ticket item and whether you have an upcoming occasion or need it for work; you usually have the ability to plan ahead.
After sale service is also incredibly important. Without reputation or any enduring local representation, it is a little unnerving to give some guy in a hotel room your credit card. In the early years that was likely more of a challenge but the business model has been around for several years and these companies have received mainstream media coverage. Online consumer reviews are mostly favourable with complaints centered more on minor style issues rather than major problems.
On a suit there is no conspicuous branding. The lack of visible logos or labels can help decrease part of the brand experience and allow for easier entry from new companies. Even industry insiders say to focus on cut and cloth, not brand.
Price is the most important part of the value proposition. You do not get a big brand, but, those who would have purchased a $1000+ suit would already be spending in the range it costs to have a tailored suit made locally. All the tailoring is done cheaply in Hong Kong and China. As stated at the outset, their value proposition is quite simple; good selection at affordable prices.
A growing number of men are visiting travelling tailors when they want to buy a suit. Tailors like Maxwell Clothiers or Raja Fashions will set up shop in a hotel suite for a few days every couple of months in cities across the world. Men come in, have measurements taken, choose from 20,000 fabrics and innumerable styles. Two months later, a made-to-measure suit arrives in the mail. All for a price that is ½ the cost of having it done locally. As they say in their own words, “a high quality product at an affordable price.”
What kind of suit do you get out of it? They truly have a vast selection of fabrics, much more than the off-the-rack suits they compete with. Also, style choices are nearly limitless; indeed the biggest problem in attracting new clients may be the overwhelming and possibly intimidating number of options. Their main competition is not the tailor made $3000 Saville Row suit. Most customers seem to be off-the-rack buyers who aren’t looking for brand and don’t mind paying the same or a little bit more to get a great cut.
The experience does not exactly compete with the high end either. Customers are packed in with each other and have said it feels a little like an assembly line. But, that is how price is kept down and is a reasonable trade-off. Only being able to access the tailors every 3 months is an inconvenience however, the frustration is mostly offset by the size of the purchase. A suit is a larger ticket item and whether you have an upcoming occasion or need it for work; you usually have the ability to plan ahead.
After sale service is also incredibly important. Without reputation or any enduring local representation, it is a little unnerving to give some guy in a hotel room your credit card. In the early years that was likely more of a challenge but the business model has been around for several years and these companies have received mainstream media coverage. Online consumer reviews are mostly favourable with complaints centered more on minor style issues rather than major problems.
On a suit there is no conspicuous branding. The lack of visible logos or labels can help decrease part of the brand experience and allow for easier entry from new companies. Even industry insiders say to focus on cut and cloth, not brand.
Price is the most important part of the value proposition. You do not get a big brand, but, those who would have purchased a $1000+ suit would already be spending in the range it costs to have a tailored suit made locally. All the tailoring is done cheaply in Hong Kong and China. As stated at the outset, their value proposition is quite simple; good selection at affordable prices.
Sunday, March 14, 2010
How the recession and global warming boost promotions
Shoppers are increasingly price sensitive and demanding regarding retailers’ offers. Prices, discounts, coupons – everything is carefully studied before a shopping trip. The recession affected the shoppers’ purchasing power and consequently their shopping patterns. They want more customized offers and more convenient ones.
Meanwhile, their concern about the environmental impact of their consumption behavior grew. This trend appears to settle and Wal-Mart took the lead of the industry when promising last month it would lower greenhouse gas emissions by 2015. It would include reducing transportation emissions and waste for fresh foods. Such a commitment already encouraged its competitors to follow. Indeed, when Wal-Mart decided to rethink its supply chain organization to make it greener, UK hypermarket retailers decided to directly tackle the consumer behaviour issue. It sounds logical: Wal Mart has an Every Day Low Prices – EDLP - policy and focuses on efficiencies even in the conception of its green strategy. Hypermarkets are different; they rely more on trade deals to generate traffic in their stores and, as a result, created green sales promotion tools.
Recently, hypermarkets customers have been demanding for more immediate and meaningful discounts instead of points or product offers. One of the most successful sales promotion tools used by supermarkets to counter EDLP is the Buy-One-Get-One-Free – BOGOF. They always loved to use those manufacturer-funded "multi-buy" promotions. If they can promise manufacturers that they will sell 20 % more during the operation, the manufacturer can be convinced to provide the "get-one-free" element of the offer for free. In return, the food company gains market share and its factories are kept busy. It seems to be a win-win situation, as supermarkets get free produce and win over customers. In the UK, it has proven very successful as more than 80 % of all promotional activity within supermarkets is a BOGOF or a three-for-two. The only drawback may rely in the fact that it backfires on brand equity as customers gradually lose sight of a reference price.
A recent study by the Cabinet Office which showed that UK households bin 1/3 of all food they buy - worth £ 420 a year and amounting to 4 million tons a year - highlighted the negative action of supermarkets like TESCO, Asda or Sainsbury’s.
In recession and environmental concern times, their promotional campaigns were accused of encouraging waste. This bad publicity had a surprising effect: it encouraged innovation.
Thus, TESCO created a new promotion: the BOGOL, aka Buy One Get One Free Later.
It allows shoppers who bought participating items to claim their free item the following week, using a voucher they received at the cashier. This campaign was so successful – sales and image-wise – for TESCO that Sainsbury’s decided to follow with a “buy now free next time” campaign on selected items. Nevertheless, those offers are limited to make good business sense: customers can’t receive more than four “free next time” coupons in a single transaction.
Those operations seem incredibly positive at all levels; supermarket chains improved their Price and Convenience categories at once; they offered a consumer-centric solution to avoid waste and allowed customers to not carry large packs around the store and back home; they created publicity and traffic simultaneously. It also represents a new step towards customization; it suggested an adapted promotional campaign to promote a healthier and more environmental-friendly consumption behavior, which perfectly fits the consumer’s state of mind. Fresh products might now have an adequate promotion tool: consumers might buy them when they really need it.
A flexible, sustainable and customized sales promotion tool has been created.
Sunday, March 7, 2010
COSTCO...THE PROOF IS IN THE PUDDING!
The Costco warehouse selection is vast and climatic: from food, household products, auto products, electronics to furniture, it has always created that element of ‘finding the treasure you have been looking for at a great price and good quality too’. Costco corporate buyers have consistently provided a great selection with limited supply keeping demand and repeat business sky-scraping as shoppers maintain excitement of what new products will be in store next. Furthermore, the special exclusivity you feel when you get a high quality, hot ticket item at an excellent price makes you want to go back for another trip or at least make sure you check out what Costco has when you need that other hot item.
Traditionally, expensive marketing campaigns generate brand awareness with time. Costco generates brand awareness by offering high-quality prices at great prices in popular items with wide appeal. If Costco corporate buyers feel they can offer a better PL product value than what’s offered by current manufacturers- they do so. This allows them to control the quality of the product, drive prices of national brands down, and achieve higher efficiencies in their supply chain. CEO Dick DiCerchio states ‘the working rule is that all Kirkland products must be equal or better than the national brands offering savings to our members.’ Costco’s brand awareness is much like ‘the proof is in the pudding’. Existing products have built trust with members and now Costco can ride the front end of the PL wave as 81% of North America consider PL products extremely good value for money. This is exceptional!
Further brand awareness is marketed to existing members in flyers dependent on the class of card you carry and is also provided now through education in the Costco connection magazine: http://www.costcoconnection.ca/connectioncaeng/20100304#pg30.
For example, this article boasts the savings you get with Kirkland OTC products compared to national brands sold right at Costco! Traditional polo shirts are featured with higher quality fibres, fitted styles at ½ to 1/3 of the price of national brands comparable product. Baby wipes are featured showing exclusive, proprietary, all natural fibre derived from 100% sustainable forests. Now that is something for moms to talk about! Moreover, they appeal to small shop owners for resale of their own product with individual packs and barcodes. They educate their market on how clever designs in products allow more product per pallet which reduces costs, lowers their carbon footprint, and lowers costs for us....with unannounced added benefit of higher profits for Costco! If you cannot get to the Costco store, no problem! Get it online, have it in 2 days!
As the world turns to more customized personal shopping from examples of mi adidas, to the young Gen Y entrepreneurs selling customized chocolate bars right over the internet to programs offered by Loyalty one through data base management, to Costco’s awareness of needs of members and trust in PL products, Costco is well on its way turning good loyal customers into assets. I am personally surprised at how much I spend each time I go, but I still seem to return –each time spending more than anticipated. Way to go Costco in building me a bigger basket time and time again!
Executive News Report from ACNielsen Global Services, September 2005. “The Power of Private Label An insight into consumer attitudes”
Friday, February 12, 2010
ING, Getting other to tweet its value
ING DIRECT’s use of social media is both creative and effective. Surrounded by the mediocre attempts of many corporations to broadcast through social media, ING truly breaks through.
In July of 2009, ING started the FairFees website and twitter account. ING differentiates itself from other banks by competing on price. The twitter account actively solicits Canadians to tweet their anger over bank fees.
Obviously ING is the antithesis, as it does not charge any fees. TD Canada Trust, Scotiabank, RBC, and CIBC all have twitter accounts but they all seem to be used more for press releases than anything else. It is difficult to see any of these sights engaging customers to the same extent.
ING is a relative newcomer to Canadian banking and has successfully captured market share from competitors in a short timeframe. Its value proposition and business model are much more targeted than the major Canadian banks.
In selection, ING started out with savings accounts and mortgages, two very basic products. This lack of selection can actually be an advantage in customer acquisition as many clients find financial products confusing. Also, servicing and infrastructure costs are lower due to the simplified processes.
ING does not compete on its convenience. It is only available via remote channels such online or telephone, features already offered by major competitors. In fact, ING is somewhat less convenient as funds are essentially only available via electronic funds transfer to a chequing account at another bank, which can take 2-3 days to process. Neither does ING compete on the customer experience it offers. From my own experiences, telephone banking is completely indifferent. ING’s online experiences have a little more differentiation, as they feel less cluttered and more intuitive than other online platforms.
Back to price. ING offers good rates. The rates are not necessarily the best rate available but they are the finance equivalent of an everyday low price strategy at a discounter. As mentioned before, ING also actively promotes how they have no fees. How do they do it? ING will only open savings accounts for customers who have existing chequing accounts with a Canadian financial institution. This matters because to open a bank account in Canada, a company representative must physically view a client’s identification. ING piggybacks existing brick and mortar institutions. By limiting itself to customers with existing chequing accounts, it can meet identification requirements without investing in the staff and physical presence it would take to perform the checks itself.
This brings us back to the FeeFree twitter page. When I looked at the first page, all of the complaints are for services that ING does not even provide. Complaints overwhelming concern fees for chequing account-type transactions or items such as drafts that ING does not provide.
The FairFees website, created by ING, uses a similar strategy. It hosts this video, starring the ING DIRECT CEO:
Keep in mind while you are watching that ING doesn’t offer the services that most of these fees are charged for.
ING has done a great job at carving a very profitable niche forcing some Canadian banks such as Scotiabank and CIBC to try competing directly by offering high-interest, online only, bank accounts. However, these accounts have a $5 service charge for every "non-online" transaction. Probably just spurring more indignation.
By very carefully selecting the products to compete on, using competitors infrastructure, and by being the most effective harnesser of social media it is likely ING will continue to erode the market share of the big five.
ING DIRECT’s use of social media is both creative and effective. Surrounded by the mediocre attempts of many corporations to broadcast through social media, ING truly breaks through.
In July of 2009, ING started the FairFees website and twitter account. ING differentiates itself from other banks by competing on price. The twitter account actively solicits Canadians to tweet their anger over bank fees.
Obviously ING is the antithesis, as it does not charge any fees. TD Canada Trust, Scotiabank, RBC, and CIBC all have twitter accounts but they all seem to be used more for press releases than anything else. It is difficult to see any of these sights engaging customers to the same extent.
ING is a relative newcomer to Canadian banking and has successfully captured market share from competitors in a short timeframe. Its value proposition and business model are much more targeted than the major Canadian banks.
In selection, ING started out with savings accounts and mortgages, two very basic products. This lack of selection can actually be an advantage in customer acquisition as many clients find financial products confusing. Also, servicing and infrastructure costs are lower due to the simplified processes.
ING does not compete on its convenience. It is only available via remote channels such online or telephone, features already offered by major competitors. In fact, ING is somewhat less convenient as funds are essentially only available via electronic funds transfer to a chequing account at another bank, which can take 2-3 days to process. Neither does ING compete on the customer experience it offers. From my own experiences, telephone banking is completely indifferent. ING’s online experiences have a little more differentiation, as they feel less cluttered and more intuitive than other online platforms.
Back to price. ING offers good rates. The rates are not necessarily the best rate available but they are the finance equivalent of an everyday low price strategy at a discounter. As mentioned before, ING also actively promotes how they have no fees. How do they do it? ING will only open savings accounts for customers who have existing chequing accounts with a Canadian financial institution. This matters because to open a bank account in Canada, a company representative must physically view a client’s identification. ING piggybacks existing brick and mortar institutions. By limiting itself to customers with existing chequing accounts, it can meet identification requirements without investing in the staff and physical presence it would take to perform the checks itself.
This brings us back to the FeeFree twitter page. When I looked at the first page, all of the complaints are for services that ING does not even provide. Complaints overwhelming concern fees for chequing account-type transactions or items such as drafts that ING does not provide.
The FairFees website, created by ING, uses a similar strategy. It hosts this video, starring the ING DIRECT CEO:
Keep in mind while you are watching that ING doesn’t offer the services that most of these fees are charged for.
ING has done a great job at carving a very profitable niche forcing some Canadian banks such as Scotiabank and CIBC to try competing directly by offering high-interest, online only, bank accounts. However, these accounts have a $5 service charge for every "non-online" transaction. Probably just spurring more indignation.
By very carefully selecting the products to compete on, using competitors infrastructure, and by being the most effective harnesser of social media it is likely ING will continue to erode the market share of the big five.
MAC Cosmetics-Artistic, Cutting Edge, Unique
MAC Cosmetics was founded in Toronto, Canada by Frank Toskan and Frank Angelo in 1984. MAC's products were originally designed specifically for professional make-up artists, but Frank and Frank brought the luxury to consumers worldwide at an affordable price. The success of MAC came from the high quality, vast selection of products along with their vision of make up as an art rather than more focused towards skin care.
Estée Lauder Companies acquired MAC in 1998. One year prior to the acquisition, Frank Angelo, passed away. The challenge then became keeping the small vibrant company’s vision and success and combining it with the knowledge and business strategies of a large company.
MAC is a unique store, thriving solely on private label products. With a sole focus on the fashion industry, MAC is at a high risk if their private label misses the newest trends. Fortunately, MAC has mitigated this risk well as their artists are always responsible for the runway models makeup and thus are able to tell their retail clients the upcoming trends. Hot off the press fashion news! Wow!
Estée Lauder Companies acquired MAC in 1998. One year prior to the acquisition, Frank Angelo, passed away. The challenge then became keeping the small vibrant company’s vision and success and combining it with the knowledge and business strategies of a large company.
MAC is a unique store, thriving solely on private label products. With a sole focus on the fashion industry, MAC is at a high risk if their private label misses the newest trends. Fortunately, MAC has mitigated this risk well as their artists are always responsible for the runway models makeup and thus are able to tell their retail clients the upcoming trends. Hot off the press fashion news! Wow!
When Frank & Frank first opened MAC, the customer perceived a very high RVP. They had cutting edge selection hot off the runway, personalized ‘runway like’ experience not only for the customers, but for the employees as well. They offered a fair price point for the experience of having the luxury of a makeup artist beautifying you while sitting amongst a hand painted floor in a handcrafted chair- allowing you to come out feeling completely satisfied with your experience. Employees of MAC felt upper classed, got paid higher wages, were very loyal. The love for MAC poured out of their persona as the makeup artist beautified the customer. This parallels with businesses such as Henry Singer and Nordstrom’s where they do not compete on price; they deliver superior customer care and experience right down to the finest detail. Furthermore, similar to these companies, MAC employees upheld such pride in the business and their creativity with a reflective compensation scheme allowing them to be amongst the highest paid in the industry.
Since the acquisition, the experience has moved from the ‘runway experience’ to just another cosmetic counter. From this, the experience in the RVP has declined. New stores don’t have traditional hand painted artist tiles, but a classic cosmetic retail outlet look in the retail store architecture. The Artists have now transitioned to cosmetics staff, with training focused on sales with profiling of the ideal customers rather than training focused around creativity for artists.
Their brilliant social media presence provides more fashion iconic envy than the store itself now.
On their website, http://www.maccosmetics.ca/whats_new/wnoverview.tmpl, MAC allows the customer to profile themselves (Brilliant Evolution from Estee Lauder). They do make you feel as though you can go on the website without making yourself feel like you don’t have a place if it is your first time either looking at makeup products or if you simply are returning. The demographic they market to want to see beauty and get the education and fortunately this is something Estee Lauder has maintained very well in social media.
Experience for a customer through the private parties held yearly is still upheld, just no longer over the top. It appears that Estee Lauder being a power retailer, has chosen to excel on selection while maintaining consumer experience, convenience and price at an acceptable level shifting away from models similar to Nordstrom’s and Henry Singer.
External Links
Richard Ivey School of Business, The university of Western Ontario, Case 9B05A016, “Note on The Retail Value Proposition”, Page8,17.
http://www.maccosmetics.ca/templates/looks/looks_landing.tmpl
http://en.wikipedia.org/wiki/Make-up_Art_Cosmetics
Experience for a customer through the private parties held yearly is still upheld, just no longer over the top. It appears that Estee Lauder being a power retailer, has chosen to excel on selection while maintaining consumer experience, convenience and price at an acceptable level shifting away from models similar to Nordstrom’s and Henry Singer.
External Links
Richard Ivey School of Business, The university of Western Ontario, Case 9B05A016, “Note on The Retail Value Proposition”, Page8,17.
http://www.maccosmetics.ca/templates/looks/looks_landing.tmpl
http://en.wikipedia.org/wiki/Make-up_Art_Cosmetics
Augmented Reality ( AR) and Retail: Get in there!!
What is Augmented Reality?
One of the newer digital technologies that is creating some noise right now is Augmented Reality, or AR. AR is the technique of overlaying graphics on a real-world image so the graphics enhance and recontextualize the scene. In simple words, AR visually merges the real world with the virtual world. Retailers realize the significance of remaining updated with technology since they have to cater to the ever changing technology savvy customer base.
How does it work?
AR requires an advanced phone or device with a special application. Users point out an image that the AR application uses to determine the scene geometry. Users can view it coming to life on a computer screen by holding it in front of the camera or shooting it with a mobile device.
How can this virtual technology be successful for retail?
We know that online stores are limited when trying to show how their products fit on customers. AR applications will likely focus on AR applications for location-based search, games, lifestyle, education and reference; multimedia and entertainment and social networking. There is also a value created for retailers, as it helps them tackle the product imaging space to see if they can start connecting product images to product data that will be valuable to consumers.
As a retailer
Segmentation: AR will help retailers create better segmentation strategy especially addressing key generation trends, lifestyles and behavior of their customers.
Targeting: This technology can be easily extended to retail outlets for example, Point of Sale at the store. A well defined product line and advertisement can make a huge impact and easily influence the purchase decision of the consumer within no time.
HUGO BOSS uses Augmented Reality 
Augmented Reality technology gurus, Total Immersion, have introduced their first store front experience at Hugo Boss, London, UK. Hugo Boss decided to take window shopping to a whole new level. The promotion campaign, “Black Magic” was live for three weeks in December 2009, both inside and outside the store. So this is how it works. Firstly, the AR window display targeted the passerby with an effective strategy to draw in potential customers. When people took the free “Black Magic” cards that were handed out, a sparkly “Season’s Greetings” appeared and a virtual fashion show would begin, allowing the customer to live the experience.
Secondly, after they drew customers into the store, they had an AR screen that allowed customers to play a game of blackjack, by scanning the image on their card. If they were lucky enough to pick a winning card, they won an in-house coupon of £50. It’s amazing to see how this resonates with the Retail Value Proposition of Hugo Boss. An entirely different game with technology, forced people to stop by to experience the technology and of course the motivation to win by stepping into the store. AR also removes the space constraints to retail by offering a wider selection of products. It also created a different strategy to generate repeat business through their in-store Blackjack cash prize. Hugo Boss also aimed at increasing traffic to the store and potential conversion. Furthermore, for someone returning from work, the AR display is relaxing and convenient to find out more about the products and services offered even if they don't want to enter the store at that particular moment.
I believe it will take a while for retailers to adapt this new technology until most the smartphones or other devices are capable to support the AR technology.
Source:
http://www.shopperculture.com/shopper_culture/2009/10/augmented-reality-ar-at-retail.html
http://nishithsblog.wordpress.com/2009/12/29/how-augmented-reality-can-be-used-in-retail-marketing/
http://blog.taragana.com/pr/hugo-boss-wows-with-augmented-reality-shopping-experience-10921/
http://www.doctor-retail.co.uk/hugo-boss-uses-augmented-reality-in-window-display/
Subscribe to:
Posts (Atom)
