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Posts from the ‘Margin’ Category

7
Jun

The Fit Fitting Room – Part 1; Size Matters!


I’m often asked what constitutes a good fitting room from a customer point of view that would take into consideration things like size, color, and environment.  This is the first in a series of blogs on what I think about each element of fitting room design and the impact each has on the overall customer experience in the fitting room.

First up is size.  Size matters!  Unfortunately, there is no standard size fitting room.  Sizes range from a box about the size of a phone booth (remember those?) which are so small they make you lean up against the door when trying on, or the curtained ones that your butt pokes out as your balancing on one foot, to eerily large rooms that make you feel isolated and deserted.

Last there are the ‘gang fitting rooms’ that are so horrible they should be illegal.  There is nothing worse than standing half naked in a fitting room bay full of other half naked women pretending that the other one doesn’t exist and no one’s looking.

What appears to dictate size is the type of retailer.  Discounters are generally tiny, and the size usually grows with the price tags – but not always. Some architects try to jam as many fitting rooms as possible into the designated fitting room area without much thought about function or consistency of size.  Even within the same fitting room bank the rooms can vary significantly.

What constitutes a good sized fitting room?  It should be large enough to fit your customer and a reasonable amount of their stuff (purse & shopping bags), and something to put their stuff on, to sit on, and to lay their clothes on while they are trying on their selections.  People need room to take off their clothes and put yours on comfortably.  If you offer ‘big & tall’ items, be sure your fitting rooms can accommodate a ‘big & tall’ customer!

It should also be large enough so that when they have successfully undressed and are attempting to make a decision about what to buy; they have enough room to look into the mirror from a reasonable distance and see themselves.  This will not only make them feel more comfortable, it will also help them make their buying decision final in the store instead of taking the items home and trying them on to make their decision.

If you don’t make your fitting rooms fit for your customers, they’ll work around them by taking their selections home to try and buy.  And there’s the rub, taking items home increases returns, kills margin, and destroy comps.

So the next time you think about redoing your fitting room, remember, size does matter!

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4
Feb

Victoria’s Secret Success is No Secret


by Marge Laney

The last chapter is closing on Holiday 2010 with the release of the January retail sales figures.  It was pretty much as we all expected, maybe a little stronger than some had guessed, but overall pretty good for most retailers. 

Limited Brands, however, blew it out with strong comps and margin improvement throughout the season.  Ending it up with their January performance off the charts with a 24% comp increase company wide, and Victoria’s Secret turning in a 35% comp increase (up against a 17% increase in January 2009); no small feat.   

The analysts credit their success to the right product at the right price. 

I agree that having compelling product that is priced correctly is crucial, but I think that’s far from the whole story of their success.  Nor can their remarkable increase be credited only to a mobile app, kiosk, or discounts (their semi-annual sale took place in January) although they utilize all of these.

What I believe separates them by such a wide margin from the rest of the apparel retail pack is that they wrap all of those right moves they make in product, pricing, and marketing in an in-store experience that is personal, efficient, and consistent across the brand.

When you walk into a Victoria’s Secret you are met by sales associates who know the product and are trained and managed to service their customers from the moment they enter the store to the moment they leave. 

On the sales floor they engage with each customer and encourage a fitting room visit where their specialists take over and provide an attentive, knowledgeable experience which in many cases results in a purchase. The cash wrap experience is efficient and appreciative. 

Some apparel retailers say that selling underwear warrants special attention and fitting room service, therefore the model doesn’t apply to them.  I say baloney!  For non-apparel retailers door traffic and sales floor engagement are where the action is.  The sales floor is where their customers “try-on” their products and the buying decision is made. 

 But, for the apparel retailer fitting room traffic and fitting room engagement is where their opportunities lie.  The customer who uses the fitting room is 67% likely to buy, versus the customer who shops the sales floor at 10%. 

Engaging the customer on the sales floor, driving them to the fitting room, and servicing them efficiently and knowledgeably in the fitting room should be in every apparel retailer’s playbook.  For the apparel retailer conversion takes place in the fitting room!

The secret of Victoria’s Secret success is no secret.  Simply put, they understand that an in-store experience wrapped in knowledgeable personal service may not be the newest or sexiest strategy, but without it they become just another retailer relying on discounts and gimmicks which ultimately commoditize their products and render their brand forgettable. 

Lot’s of retailers sell sexy underwear, but with more than 50% of the market in North America, and unparralled growth Victoria’s Secret is unforgettably the brand to emulate or ignore at your own peril.

15
Jan

Technology and the In-Store Customer Experience


by Marge Laney

One of the sessions that I attended at the NRF convention in New York this past week was conducted by McMillan Doolittle where they unveiled their “8 C’s Model of Customer Experience.”  The model included: Clarity, Convenience, Choice, Communication, Cast, Control, Consistency and Connection.

This is a great list, but I can’t think of one chain brick and mortar retailer that gets it all right on a consistent basis.  But, I’m not going to focus on consistency as I think the biggest challenge is cast and connection. It’s relatively easy for the chain retailer to get the other 6 of the 8 C’s right through the use of technology, but getting the people, training, and connecting with customers in a meaningful way takes more than a mobile app or a twitter account.

Technology whose goal is to encourage and enhance personal customer service in the brick & mortar store was nearly non-existent on the show floor. Which begs the question, when you need to deploy a great cast and connect with the customer who makes the effort to visit your stores, is technology the answer? For the most part, I think not. The Container Store was noted as an example of a chain that executes cast well, and I agree. They also do a fabulous job connecting with their customers in their stores. I will tell you that they spend a lot of time and money on selection, training, and creating an environment that encourages personal growth of each employee. Sound a little Kumbayah? Maybe, but when you walk into one of their stores you don’t need a mobile app or an augmented reality android to find out about a product or service. You get a real person who knows the products well and can help you with your particular storage problem. Sounds so last century, but it’s what their customers expect. What’s really interesting is that they sell commodity product at a premium that can be bought from Walmart or any other discounter, but they’re doing well and growing.

So instead of spending on sexy tech solutions that ex out the associate and promise to be the silver bullet, brick & mortar needs to invest in their people and technologies that help them create a differentiated experience, build customer loyalty, and most important, sell more product.

30
May

Retail Margin 101: Grow It or Kill It


by Marge Laney

The word on everyone’s lips today in retail is margin.  From the gurus on Wall Street, to the management teams steering the ships of big retail, everyone’s preaching, ‘Enough with the cuts already!’  ‘We need top line growth and margin improvement!’  So why is it when I walk my local mall and enter almost any store I’m greeted with “Hi, welcome to fill-in-the-blank! Check out our buy-one, get-one stuff and our 40% off whatever!” Or my favorite, “…we just did a whole bunch of new markdowns, come check them out!” 

I’m not speaking to discount self service retail here.  They know who they are and they pay for their service model with margin.  I’m talking about the retailers who preach that they do put customer service first and attempt to provide personal service to their customers in the name of adding value which translates to higher margin. 

I did a training recently and had the opportunity to ask the sales associates what margin was.  Not one of them had a clue, but they all were aware that it was something that they needed to improve.  For those of you who don’t know, margin is profit. Markdown’s destroy profit and eat up payroll that could and should be allocated to customer facing time to sell merchandise when it is fresh instead of sucking up that payroll on processing markdowns.  Sure, margin can be boosted by cutting SG&A (read payroll), but retail is pretty much done with that.  They’ve rung all the available fat out of their P&L for the most part.

The funny thing is that everybody in these organizations knows that the customer should come first and that the sales associate time is better spent connecting with the customer and selling.  So why don’t they just do it?  There are a million reasons why most don’t and they all make sense to somebody, but a couple of retailers are doing it and reaping the benefits.  One of them is J. Crew. Mickey Drexler,  CEO of J. Crew, is quoted in a recent WWD Article  and gives insight into their formula for success; “We are and will continue to be focused on our mission — to innovate in our design, style, quality and customer service and to invest in our business, our associates and our customers for the long term…”  J. Crew posted strong first quarter results with net income and gross margin up significantly across the board.  J. Crew associates are true brand advocates; they connect with their customers personally to provide service and sell, they don’t task.

I challenge all retailers who preach margin growth to put their in-store customer service strategies and their payroll allocation where their mouth is and provide the customer with the service and experience they advertise.  Select your front-line associates based on their ability not their availability, train them to be the knowledgeable brand advocates that deliver your message to every customer, give them standards and goals and monitor them, and offer tangible rewards for success.  And above all let them do the job you hired them to do – deliver the brand promise personally, and hire other non-sales people to process shipments, execute plan-o-grams, clean, and process a lot fewer markdowns.