2016 Retailing Summit spotlights an array of stories

The annual Retailing Summit, hosted by Texas A&M University’s Center for Retailing Studies (CRS) at the Westin Galleria Dallas, united retailers from across the United States and Taiwan. The CRS is based at Mays Business School.

On Oct. 13-14, executives from PetSmart, Walmart, Fishpeople Seafood, Carter’s, the Dallas Cowboys, Learfield, Tuesday Morning, Bridgestone, CVS Health, Groove Jones and newly formed Mizzen+Main discussed “driving customer-centric retail.”

Becoming the trusted partner to pet parents and pets 

Kicking off the first day, Eran Cohen, a 30+ year fashion veteran and current Executive Vice President of Customer Experience at PetSmart outlined the “big dog” retailer’s approach to creating a customer-centric world.

As the #1 specialty retailer in a $64 billion dollar pet industry, PetSmart has a wide portfolio that includes more than 1,500 stores in the United States, Canada and Puerto Rico.

In addition to food and merchandise, the company offers dog training, grooming, boarding and in-store pet adoptions. It maintains a digital presence through Petsmart.com, Pet360.com, OMP.com, PetSmart Direct, Blog Paws, PetMD and Pet360 Publishing & Media. Over 900 Banfield veterinary offices are located inside PetSmart stores.

Following a slow growth period of industry from 2010-2014, the company conducted a survey of 50,000 pet parents to uncover a 360-degree view of “how to better focus on the consumer and become customer driven.”

Now focused on building trust and loyalty, PetSmart embraced a new vision to “Become the trusted partner to pet parents and pets in every moment of their lives.”

According to Cohen, “as more human owners treat pets as family members, purchasing doggie apparel or birthday gifts, the concepts of ‘humanization’ and ‘premium-ization’ instead drive PetSmart’s aggressive growth plan.”

PetSmart’s new strategy includes:

1. A focus on data
2. Being purpose-driven
3. Developing omni-channel
4. Mobile-first
5. Emphasis on communities
6. New service-driven layouts

As of September 2016, with $7 billion in revenue, PetSmart lands at #48 on Forbes’ list of America’s Largest Privately Held Companies. Through the company’s generosity, PetSmart has saved 7 million lives via pet adoption and has donated more than $275 million through PetSmart Charities.

Building a big brand on a small budget

Kevin and Jen Lavelle, the power couple behind the performance fabric dress-shirt start-up brand Mizzen+Main shared their story of taking risks and creating a business.

Inspired by the wearability and performance of golf fabrics in Washington, D.C.’s summer heat, the Lavelle’s used their entire savings to fill a gap in current apparel offerings.

According to Kevin, who serves as Chief Executive Officer, the couple used their home as a workspace, storage unit and distribution center until Mizzen+Main eventually raised $4.25 million in investments.

With a background in marketing and advertising, Jen, Chief Marketing Officer for Mizzen+Main, began writing thank you cards to “accompany each order as a personalized touch and genuine appreciation for their business.” The founders encouraged feedback from customers.

However, with growing success also came new challenges.

To go beyond online-only sales, Mizzen+Main began hosting sports locker room trunk shows with the hopes of cultivating authentic relationships – and it worked. In 2015, the company sold out all of its inventory.

Currently, the company maintains over 250 professional athletes as customers and has now tapped into sports celebrities like Houston Texans’ J.J. Watt, as brand ambassadors and product endorsers.

Located in Dallas, the Mizzen+Main office now acts as a hidden brick-and-mortar store where customers occasionally drop in to shop the latest product selection or have a beer.

Creating customer-centric quality at Walmart

Serving over 200 million customers each week as the largest retailer in the world, Walmart returned to the 2016 Retailing Summit to share four changes the company is making to ensure top quality and service to its customers.

In order to “better compete with other grocers and non-conventional food distributors like Amazon,” Shawn Baldwin, Walmart’s SVP of Produce & Global Food Sourcing, shared that customers increasingly care about the quality of their food and where it comes from. They demand:

1. Flavor
2. Freshness
3. Locally grown
4. Use of sustainable food sources

Working directly with local growers and seed companies to ensure a flavorful, non-GMO product is created, Baldwin and his team reconstructed Walmart’s supply chain to ensure faster farm-to-table shipping, while using fewer additives and pesticides. In Bentonville, the company boasts a new culinary center to test products and improve quality.

Joining Baldwin as an example of the partnership initiatives driving Walmart’s sustainability efforts was Duncan Berry, Founder & Head of Innovation for Portland-based Fishpeople Seafood.

As Berry explained, “consumers are [becoming more and more] skeptical of ‘Big Food’,” leading to mistrust in the American seafood industry.

Fishpeople, a farmer’s market-like distributor taken to scale in over 4,000 stores, surveyed stakeholders in the seafood ecosystem to uncover what they valued most:

• Honesty
• Sustainability
• Transparency
• Local
• Pure and wild food
• Easy to prep food

Fishpeople prides itself on personalization.

In an effort to continue normalizing “relentless transparency,” even the packaging tells the customer about the fisherman who caught their dinner and characteristics of the fish, tracing it back to the original source.

The impact of IT evolution in retail

 As Chief Information Officer for the 150-year-old children’s and baby apparel and accessories brand, Carter’s Janet Sherlock introduced forward-looking technologies and the impact they have on retailers and brands.

A “unique blend or art and science,” retail personalization is not about a consumer’s wants or needs, but instead about retailers influencing a customer to want what they need or need what they want.

Both Sherlock and Carter’s have seen innovation evolve – including RFID technology, mobile, social media, the cloud, artificial intelligence, and big data, all shifting the ways we interact with each other.

According to the World Economic Forum’s “Technology Tipping Points,” driverless cars, robotics, blockchain and bitcoin, and 3D printing as technologies will be fully integrated by 2027.

Technological evolutions also allow companies to interact with customers, possibly for the first time without a sales associate.

 

Using herself as an example, Sherlock recently found a sweater she liked, but discovered it wasn’t in stock online or in any nearby stores. For retailers, this is an opportunity to use big data to fuel predictive analytics without sacrificing product assortment as trends begin to change.

Sherlock also mentioned the increasing presence of artificial intelligence and drone infrastructure.

Citing Amazon’s Alexa and Facebook Messenger, chatbots are becoming superior, “not because they can understand natural language, but because they are constantly learning and digesting data to have a profound impact.”

As expectations are tailored to how the consumer wants to receive products, logistics and fulfillment will also change. And, although free shipping hasn’t reached critical mass, Sherlock believes that AI and drones will significantly alter the dynamic of how a customer shops, orders and receives merchandise in the next several years.

Changing the gameday experience

Moderated by Andrew Wheeler, SVP, South Region at sports marketing agency Learfield, was a panel that included Matt O’Neil, VP of Brand & Media for the Dallas Cowboys and Texas A&M University’s Shane Hinckley, VP of Brand Development.

The group discussed sports fan engagement and the customer experience.

O’Neil described the Dallas Cowboys as primarily focusing on three areas: “football, content and media production, and apparel.”

Hinckley shared that as the third-largest university in the country, Texas A&M works to “create brand ambassadors” from the 66,000-member student body. Like the state of Texas, the university’s demographic has shifted to become more Hispanic.

Both the Cowboys and Texas A&M are focused on attracting younger more diverse audiences.

The Cowboys have rolled out a bilingual website that allows their target market to engage with the brand in a familiar setting. Additionally, the football giant is working towards capturing the attention of female fans and millennials.

The game day experience at Texas A&M extends far beyond the beloved Kyle Field football stadium, hosting fans for tailgating and alumni events that “build strong, lifelong bonds between students, friends, family members and the university.”

Surprisingly, 51 percent of Dallas Cowboys fans only attend one game per year.

According to O’Neil, “it’s ‘a must’ to create an incredible experience every home game.” Music is carefully chosen and fast-food lines are quick and efficient. To stay engaged beyond the game, the Cowboys have created a points system to reward fans for apparel and concessions purchases and social media interaction.

The panel agreed that sponsorships play a huge role in extending into new markets of loyalists.

Hinckley cited metrics showing the Dallas Cowboys and Texas A&M University fans as the state’s most loyal and rabid. As top enlisters of these brands, retailers who affiliate with them can recapture financial benefits in the short and long term future.

The turnaround story of a 40-year-old off-price retail chain

 Known as the “fix-up, cleanup girl,” Melissa Phillips, President and Chief Operating Officer for Tuesday Morning, began her career 18 years ago in Walmart’s merchant training program.

Tuesday Morning initially entered the market as an off-price, high-end furniture retailer, hosting pop-up stores in rented warehouses. In 1984, the company went public and quickly became known as the nation’s largest upscale garage sale, though open only four times a year.

Following a shift in leadership and the great recession, the company opened for business 50 weeks out of the year and narrowed its assortment. It pursued an ill-fated strategy that included:

1. Going head to head with its closest competitors
2. Growing the company’s real estate portfolio too quickly
3. Funding growth strategies by managing investments

As a result, Tuesday Morning’s revenue dropped $100 million after opening 100 stores, a disastrous and opposite result of its strategy.

Phillips, who joined Tuesday Morning in 2014, reverted to retail basics. The company eliminated non-core categories like apparel; increased product quality and value statements; brought in expert talent in management and associates; cleaned up stores; and, improved processes through discipline and tough decision making.

The company then surveyed customers to identify outstanding loyalist behavior, brand perception and awareness. Phillips even participated in many shop-along visits to listen to loyalist complaints and compliments.

Tuesday Morning eventually regained traction. Sales rebounded $100 million in 4 years by negotiating better lease locations, remodeling stores with a crisp warehouse feel, and offering exclusive door-buster savings that loyalists loved.

Developing a simplified no-frills strategy, Phillips concluded that “in order to be a successful change agent, you sometimes need to ‘find your true north.’”

VISION 2020

See: “Bridgestone’s Vision 2020 and calling the customer ‘boss’”

Understanding and combating organized retail crime

Tony Sheppard, National Manager for Organized Retail Crime at CVS Health, cites Congressional testimony that “retailers in the U.S. lose an estimated $15-30 billion due to theft.”

Though the general public may associate theft with petty shoplifting, it has evolved into a large scale venture, involving sophisticated networks of thieves.

Organized retail crime (ORC) can occur through refunding, universal product code (UPC) swapping, creating counterfeit UPCs, or through check, credit or gift card fraud, money PAC scams and currency fraud.

Sheppard, who also works with Walgreens and Rite Aid to nab “boosters,” identified three methods of ORC:

• Level 1 – Individuals who conduct thefts alone and in common areas
• Level 2 – Teams of 2+ who operate in loosely structured groups in a larger target area
• Level 3 – Highly organized, national level groups affiliated with grand theft rings

Each of these “boosters” shoplift merchandise in large quantities in order to resell to “fences” for 25% of the products face value.

• Level 1 fence
  • Usually a single person operation who trains or recruits boosters
  • Purchases product from boosters to sell online or in-person for 50% of the retail price
  • Often appears to be a legitimate business
• Level 2 fence
  • May operate out of their home and have an online account
  • Makes purchases from several groups of boosters
  • Will diligently clean the product of identifiable stickers and repackage before selling and shipping to wholesalers
• Level 3 fence
  • Also referred to as “Diverters,” operates alongside wholesalers and distributors
  • Often mix real products with counterfeit versions obtained from Level 1 and 2 fences to move product back into commerce

In addition to monitoring the Organized Retail Crime Association’s website, retailers should also consider having a surveillance team (with archived databases) and equipment, GPS tracking and product for reverse stings – all worth the investment to avoid ORC from occurring in stores.

Unicorns are real: The coming revolution of virtual reality

 A self-proclaimed “creative guy who has embraced IT,” Dan Ferguson, EVP of Digital Interactive at Groove Jones studio wrapped the two-day conference by outlining case studies using virtual reality.

According to Ferguson, virtual reality (VR) is different than augmented reality (AR) in that VR creates an artificial environment that allows the user to be immersed in the content through 360-degree videos or games and apps. Using personal computer (PC) virtual reality technology, the user can be engaged and fully interact in the new reality.

Nestlé’s Callier introduced a new chocolate confectionery by staging pop-up stores in malls throughout California and Europe. In order to be rewarded with a free sample, consumers had to participate in VR to learn about the historic brand and what makes it unique (and pricier).

As a result, a social and low-maintenance campaign delivered amazing results and created a brand memory with customers.

At Austin’s SXSW, McDonald’s used VR to allow fans to explore the inside of a Happy Meal box. Instead of pushing a sales message, the fast-food chain “created a fun and interactive gamified experience.” It was small, portable, convenient and hugely successful – essentially developing a new playground for McDonald’s among Austin’s techy culture.

Other brands using VR to engage their customers include IKEA and Audi.

With more than 2 billion phones worldwide, virtual reality is a disrupter that will soon become a part of our everyday world. It offers businesses and retailers untapped channels for training and sales at a low cost, that especially Gen Z customers and employers will welcome.

The 2017 Retailing Summit will take place on Oct. 12-13 at the Westin Galleria in Dallas. For more information, visit retailingsummit.org.