2012 100 - Networld Media Group

TOP
2012
100

DRIVE
CUSTOMER
ENGAGEMENT
AND BUILD
LOYALTY
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WELCOME
to the 2012 edition of
the Retail Customer Experience Top 100, sponsored
by Motorola!
Once again, our team of retail experts sat down to
identify the hundreds of trends, technologies, brands,
strategies and people that are having an impact on retail.
They then assigned them numerical votes based
on their influence and impact on customer experience,
and the resulting rankings are collected in the
document you’re now reading.
This year’s Top 100 highlights how very different retail
is today from just a few years ago. Look at the top two
on the list — Amazon has turned bricks-and-mortar
retail on its ear to the same extent that Apple gutted
the retail music industry. Social media remains a huge
influence, even as it remains a moving target that retailers
are trying desperately to figure out. Last year’s
No. 1 — the economy — is still in the top five, and still
casts a shadow over everyone and everything beneath it.
But there is a new air of optimism in retail, and we
can see hints of that in the list as well. Tiffany, Neiman
Marcus, Nordstrom all in
the top 30? And multichannel
and m-commerce initiatives,
which have been talked
about for years, are actually
starting to happen in meaningful
numbers.
Joseph Grove, executive editor
josephg@networldmediagroup.com
James Bickers, senior editor
jamesb@networldmediagroup.com
David Henry, contributor
Jan Shrode, designer
There has been a lot of fear
and uncertainty in retail these past few years, and
more than enough “sky is falling” blog posts about
how everything is changed and nothing will ever be
the same, retail is dead, the kids these days only buy
things online, yadda yadda yadda. Those kinds of articles
certainly get a lot of page views – which of course
is the point – but they don’t really add anything meaningful
to the conversation. We present this Top 100
in the hope that it starts any number of meaningful
conversations with your team.
James Bickers
Senior Editor
Retail Customer Experience
Tom Harper, publisher
tomh@networldmediagroup.com
Kathy Doyle, senior vice president sales
and marketing
kathyd@networldmediagroup.com
Scott Slucher, account executive
scotts@networldmediagroup.com
Top 100 2012 ©2012 Networld Media Group. 13100 Eastpoint Park Blvd., Louisville, KY 40223. (502) 241-7545. All rights reserved. No part of this
publication may be reproduced without the express written approval of the publisher. Viewpoints of the columnists and editors are their own and
do not necessarily represent the viewpoints of the publisher.
3

1
AMAZON
For those who remember Amazon as a
really cool online bookstore, the view
from 2012 shows just how far the retailer
— and the world — has come.
What once seemed a promising fad is
now an accepted way of life. Amazon’s
revenues more than doubled in the
past four years, from $14 million in
2007 to $34 million in 2010, and show
little sign of slowing down.
In the past year, Amazon introduced
no fewer than four potentially gamechanging
products: Amazon Cloud,
AmazonLocal, Kindle Fire and the
Price Check smartphone app.
Amazon Web Services set the pace for
the year in March with an aggressive
rollout of cloud products that included
Elastic Beanstalk, CloudFormation,
Amazon Cloud Player and Amazon
Cloud Drive. Users can store music
and other digital content in the cloud
and play cloud-hosted music tracks
via players for the Web and on Android.
Although AWS represents just a
sliver of Amazon’s total business, UBS
Investment Research analysts Brian
Pitz and Brian Fitzgerald predict it
could capture as much as $2.5 billion
by 2014.
In June, AmazonLocal launched, and the
daily deals service with region-specific
deals delivered by LivingSocial quickly
became the sixth most-visited website
in the U.S., according to comScore. It
racked up 97.1 million unique U.S.based
visitors in July alone.
Amazon rolled out its new line of Kindle
readers, and the Kindle Fire tablet
in September. The latter was pointedly
positioned as a direct rebuke to the
iPad 2 and its hefty price tag, as if to
suggest that Steve Jobs’ parting gift was
essentially a $199 device dressed up in
a sleek design and seductive logo. The
7-inch Fire received near-universal acclaim
as a fun and versatile, easy-touse
tablet that links seamlessly with
Amazon’s impressive collection of digital
music, video, magazine, and book
services.
In December, Amazon once again got
under the skin of brick-and-mortar
merchants by offering discounts to users
who took its Price Check app into
stores to comparison shop. The deal
was that in-store shoppers could earn a
5-percent discount (up to $5) by scanning
the barcode of an in-store product
and then buying it from Amazon. The
howls of protest were hardly confined
to abused shopkeepers. Senator Olym-
4

pia Snowe called the incentive “an attack
on Main Street businesses that
employ workers in our communities,”
and called on Amazon to cancel the
program. “Small businesses are fighting
every day to compete with giant retailers,
such as Amazon,” she said in a
statement, “and incentivizing consumers
to spy on local shops is a bridge
too far.” Pundits, commentators, latenight
comics and principled consumers
warned of a future in which the entire
physical world would serve as Amazon’s
showroom.
2
APPLE
Amazon’s third-quarter profits for 2011
were down an alarming 73 percent —
yet reported revenues went up 44 percent
to $10.9 billion, powered in part
by the new generation of Kindle book
readers and preorders for Kindle Fire.
So where did the money go? Amazon
invested it for the future and apparently
intends to keep doing so. For one
thing, Amazon invested nearly $1.6
billion — double what it spent the year
previous — toward “fixed assets, including
internal use software and website
development,” and another $769
Despite Amazon’s steady march of progress throughout 2011, Apple, true to form,
managed to out-dazzle the world’s biggest online retailer every step of the way.
The company continued to lure consumers and business users away from desktop
computers to the more manageable environment of iOS devices such as the iPad,
hastening the day when general-purpose computers are the province of software
engineers and tech enthusiasts.
The year began with an effort to broaden the iPhone market beyond a single carrier
by terminating Apple’s exclusive partnership with AT&T and announcing that the
iPhone 4 would be available through Verizon. January also saw the launch of the
Mac App Store, Apple’s effort to remake its Mac OS ecosystem in the image of iOS,
and thus collect a 30 percent cut of Mac app revenue in the process.
In February Apple became the first computer maker to introduce Intel’s Light Peak
data transfer technology under the name Thunderbolt. The iPad 2 came out in
March even as competitors were struggling to deliver an answer to the original.
In October Apple announced a breakthrough set of free cloud services that keep
stored data up to date across all devices, including PCs.
million to “technology and content,”
up 74 percent. Founder and chief executive
Jeff Bezos has increasingly used
Amazon’s cash to expand the business
into the digital domain and invest in
backend infrastructure to support all
the digital media he expects users to
consume on their new Kindle Fires.
Toward that end, Bezos struck deals
with Twentieth Century Fox and PBS
to stream movies and TV shows from
their vast libraries. (This is in addition
to deals previously inked with CBS,
Sony, Warner Bros. and others.)
The company sold 72 million iPhones (nearly double the total for 2010), 32 million iPads, 17 million Macs and 42.6 million
iPods, generating $108 billion in revenue in 2011 — up 66 percent from fiscal 2010.
However, Apple’s many marketing, business, and technology achievements through the year were overshadowed by the death of
Steve Jobs on Oct. 5, the day after Apple introduced the iPhone 4S. Under the guidance of corporate America’s most high-profile
practicing Buddhist, Apple made function not merely inseparable from form, but indistinguishable from it. In Jobs’ hands, the
two truly became one.
5

3
DISCOUNTING
Discounting dates back to the days of
open-air bazaars, but the proliferation
of e-commerce and smartphones now
puts the neighborhood boutique in direct
competition with the biggest discounts
offered by any vendor anywhere
in the world. And vice versa.
The practice is bleeding profits from
traditional retailers, with daily deals
and online rivals inflicting most of the
damage. Best Buy, to cite but one highprofile
example, saw its shares plunge
more than 15 percent after reporting
a steeper-than-expected drop in 2011
third-quarter profits and margins —
the result, Wall Street analysts said, of
fierce price competition from Amazon.
Only 20 percent of new customers lured
in by daily deals ever return to make
a full-price purchase, according to a
study conducted by Rice University.
Despite this, the vicious cycle is perpetuated
by retailers who feel the need
to promote, “but know that increasing
discounts are eroding category value,”
according to Bob Welch, senior vice
president of manufacturer practice
client solutions at dunnhumbyUSA.
Meanwhile, he says, “manufacturers
feel that retailers are driving promotional
strategies that do not make sense
for the category and are eroding their
brand’s equity.”
While strategic discounting can be an
effective quick-fix for moving volume
in a struggling economy, the fix leaves
consumers craving ever bigger, deeper
4
discounts — and nothing but discounts.
Cynthia Jasper, a consumer science professor
at the University of Wisconsin,
warns that pursuing discounts can become
an addiction. Or as James Dion
of the retail consultant Dionco puts it,
many discount hunters “don’t bother to
eat what they kill,” citing research findings
that 30 percent of Groupon deals
are never redeemed. “That really leads
me to believe that it’s the thrill of the
hunt. For some consumers, it is just
scoring the deal.”
THE ECONOMY/UNEMPLOYMENT
The numbers say the Great Recession ended way back in June 2009. Somebody
needs to tell the economy that. Growth isn’t accelerating as it normally would during
a recovery. The U.S. economy in 2012 is expected to grow a scant 2 percent
(unchanged from 2011). While 2 percent may keep us from dipping back into recession,
it won’t make much of a dent in unemployment. It follows, of course, that
with more people out of work, fewer people will be buying, and thus the retail sector
will decline.
Consumer spending, which accounts for about 70 percent of GDP, has been positive
but shows no signs of driving a sustainable recovery. The economy will remain
vulnerable to possible shocks, such as war, terrorism, oil price hikes, or natural
disaster. Any one of these could tip the U.S. into recession.
6

Retail sales are expected to grow about
10 percent in 2012, a slightly optimistic
uptick from the 8 percent expected in
2011. One unpredictable factor that
might lower 2012 sales is the sovereign
debt crisis in Europe, which could keep
markets volatile and consumers concerned
about the future. Still, a reliable
disconnect between consumer confidence
and actual spending bodes well
for retailers. Sales began to climb in
October 2011, due in large part to a 3.7
percent jump in electronics sales (the
largest monthly increase in two years)
even as confidence fell to its lowest level
since 2009.
If the euro crisis spins out of control,
fear of a new credit crunch may deter
spending by business owners. Another
factor that could lower next year’s forecast
is slower-than-expected growth
of personal income, which hasn’t been
keeping up with the rise in retail sales.
If lower wages and high unemployment
persist during the second half of
the year, expect retail sales growth to
slow even further.
Retailers have the power to drive
growth, though. Noting that new economic
realities have resulted in a new
order of buyers who are more priceconscious
and careful about the purchases
they make, Deloitte LLP Vice
Chairman Alison Paul believes that
delivering compelling in-store experiences
could drive profitable growth for
retailers in 2012.
5
MULTICHANNEL INTEGRATION
It no longer matters, really, whether the customer is always right. The customer is in
charge. He decides when, where, and how he will interact with the retail landscape
through whatever channel, device, or touchpoint he wants. Such an environment
has made multichannel, by default, the new standard operating model for retail.
While it can be argued that mobile devices and multichannel commerce have made
it easier than ever for retailers to reach customers, they have also made it easier to
lose them. Retailers will need to use a combination of channels to attract and convert
consumers going forward, says e-commerce and multichannel consultant Kees
De Vos, “rather than focusing on channel-centric approaches. Companies relying
on selling goods and services to their end-customers have to recast their operational
and technical infrastructures to compete or even survive in the years to come.”
Best Buy CEO Brian Dunn, for example, is committed to making the chain’s physical
presence “more reflective of all the possibilities that are available to customers
today.” That means creating a web of experiences around the customer in all the different
channels in which he operates. “Customers don’t think, ‘I’m going to behave
in a multichannel fashion today,’” he notes. “They say, ‘I’m gonna go online and
check it out, I’m gonna call and check it out, I’m gonna stop by and visit the store.’”
Early multichannel adopters are now thoroughly vindicated and firmly in the driver’s
seat. Indeed, multichannel has been so roundly embraced that some, such as
blogger and principal analyst at Forrester Research Brian Walker, argue that multichannel
is already passé. “Customers no longer interact with companies from a
channel perspective,” he says. Customers now interact through touchpoints that include
not only channels such as “stores, branches, call centers and websites, but also
emerging interactions, including apps, social media, mobile sites, SMS messages
and interactive advertising across smartphones, tablets, cars and even appliances.”
“It is time for organizations to leave their channel-oriented ways behind,” he says,
“and enter the era of agile commerce.”
7

6
M-COMMERCE
Technology companies and retailers
alike have hailed 2011 as the year of
mobile shopping. Consumers are fast
approaching the tipping point in their
embrace of smartphones and tablets to
access apps, discounts, price comparison
information, and payment mechanisms.
According to Email Marketing
Reports, mobile devices such as tablets
and smartphones became the highestselling
consumer electronic device category
in 2011, amounting to 115 million
units in Q3 alone — beating out PC,
laptop and netbook figures combined.
A much-cited report from comScore
found that two-thirds of all smartphone
owners have performed some
sort of shopping activity on their
phones, including comparing products
and prices, searching for coupons,
taking product pictures, or locating a
retail store, and that 38 percent have
7
used their phones to make a purchase
at least once. In fact, more than one
in three purchasers have used their
smartphones to make a purchase while
in a store, according to a less-noted
finding from the same report.
Thus far, e-commerce companies have
had the upper hand in using mobile
technology to inflict blows on physical
stores. But we are still in the early
ASSORTMENT LOCALIZATION
As consumers continue to trim spending
and do more of their shopping online,
big-box retailers are moving to
smaller stores to reduce under-utilized
space and stay profitable. At the same
time, consumers are treating retail
stores as showrooms where they can
test-drive merchandise before making
a purchase. Whether or not they purchase
in-store, shoppers will increasingly
turn to their mobile devices to
check for better pricing or selection
before making that purchase.
As a counter to both of these trends,
proactive retailers are utilizing sophisticated
communication tools such as
assortment planning, flow modeling,
price optimization, promotion optimization
and size optimization to create
custom assortments based on each
store’s local characteristics and demographics.
By capturing information
about the specific buying patterns of
their shoppers, they can efficiently cater
to each store’s particular needs.
John Seidl, a partner at Kurt Salmon
Associates, argues that, as U.S. consumers
become more diverse, they tend to
rounds of this fight. M-commerce
may prove to be the salvation of brick
and mortar after all. Cyriac Roeding,
founder of the location-based mobile
shopping app Shopkick, believes mobile
commerce provides merchants
with unprecedented opportunities to
bring personalization and one-on-one
personal treatment back to the in-store
purchase experience.
Jani Strand, a spokeswoman for teen
apparel chain American Eagle, said,
“Our customers are rarely without their
smartphones, so any engagement that
connects with them through these devices
tends to be effective.” Indeed, today’s
shoppers are so umbilically tied
to their phones, according to Master-
Card executive Mario Shiliashki, they
are more likely to leave home without
their wallet or cigarettes. “And I mention
cigarettes,” he adds, “because the
phone has become more addictive than
the most addictive substance out there.”
rebel against the one-size-fits-all retailing
models. By utilizing the concept
of store assortment localization, Seidl
notes that retailers have been able to
boost sales by 40 percent to 50 percent
and carve out a solid competitive advantage
for themselves.
Assortment localization can be an effective
way to build intimacy with
customers as the economy puts more
pressure on retailers to manage their
inventories closely. Scott Welty, vice
president of retail industry strategy for
JDA Software Group, notes that the
8

trend toward shoppers using brickand-mortar
locations as showrooms
requires retailers to stock the optimal
localized assortment range and
maintain appropriate quantities for
each store. “Having the right item in
the right store at the right time helps
maintain and improve customer loyalty,”
says Welty. “Providing a superior
customer experience by ensuring that
‘available to promise’ meets the demand
and geographic location of the
customer, no matter how or where they
ultimately buy the merchandise.”
8
EXPERIENCE DESIGN
In theory, experience design — or user
experience (UX) design — operates
from the premise that consumers wish
to engage in a meaningful interaction
when purchasing a product or service.
In practice, experience design involves
the creation of culturally relevant
products, processes, services, events,
and environments that focus primarily
on the quality of the user experience
rather than functionality. This emerging
trend in “user-centered” design
informs the latest in everything from
intelligent buildings to Facebook apps,
iPhone games and digital equipment.
Mobile adoption in the retail and financial
sectors is fueling the drive toward
smoother, more intuitive designs.
Applying experience design principles
to mobile, for example, would strive to
eliminate clutter while requiring fewer,
simpler steps to accomplish a task, thus
providing a more streamlined and targeted
experiences.
UX design is a highly multi-disciplinary
field, incorporating aspects of
everything from psychology, anthropology,
sociology, computer science,
graphic design and cognitive science.
Depending on the product, UX may
also draw on content design disciplines
as varied as communication, instruction
and gaming.
Emerging trends in UX design include
designs that can adapt and perform
within various media devices, gestural
and touch-based interactions, location/proximity-based
mobile experiences,
smart real-time user interface,
and designs that can adapt and perform
within various media devices.
The rise of social media has increased
the importance and impact of each
customer experience. Because customer
expectations and experiences are
rapidly shared and distributed between
peers, it is more important than ever
that retailers engage in meaningful
interactions with customers to make
them truly empowered participants.
UX designer and blogger Whitney
Hess’s 10 guiding principles can be
applied to both physical and virtual
world projects irrespective of goals,
constraints, or resources. Her first
principle is: “Stay out of people’s way.
Pave the road for an easy ride.”
9

9
iTUNES
Apple has benefited mightily in the
past decade from the shift from CDs
to online music services — a shift it
helped set into motion with the unveiling
of the iPod in 2001. Two years later,
Apple launched the iTunes music store
offering songs for 99 cents apiece.
During the past year, iTunes has faced
some stepped-up competition from
both Google and Swedish-based Spotify.
Google introduced a music service
that lets users buy songs through the
Android Market, and the European
music-streaming startup Spotify offered
an upgraded shopping system that allows
users to purchase entire playlists
of MP3s with a single click and sync
them directly to their music players.
Google has partnered with more than
a thousand record labels (including
Vivendi SA’s Universal Music Group,
10
MOBILE COUPONS
Sony Corp.’s music unit and EMI Group
Ltd.) in assembling an offering of some
13 million songs that users can share
on its Google+ social network. Spotify
is coming at iTunes from a different
angle than most other sync platforms,
starting out with a strong inventory,
more than a million subscribers and a
war chest estimated at $100 million.
Thus far, Apple has fended off competitors
by issuing frequent upgrades
of the media-management software
to thwart third-party iPod synching.
One downside of that strategy has been
that, over time, iTunes has morphed
and bloated into an increasingly confusing
and compartmentalized hodgepodge
of products jerry-rigged as one.
In terms of ease of use, iTunes is the
least Apple-like piece of software the
company produces. While version 10.5
brought support for iOS 5 and iCloud,
as well as some small changes to the
user interface, most observers agree
the software must trim down and get
back into fighting condition in preparation
for the coming challenges to its
market dominance. Besides Google
and Spotify, iTunes is also facing onslaughts
from San Francisco startup
DoubleTwist and a Seattle-based outfit
known as Amazon.com.
The victor in this struggle will claim
the hearts and payment methods of
a user base that, in the last fiscal year,
generated $6.3 billion. It will be interesting
to see how Apple does it.
According to a study by Group SJR and Liz Claiborne Inc. conducted among 8 0 1
smartphone and tablet owners between the ages of 18 to 64, half said they
planned to scan barcodes more often to get additional information about
a product, suggesting that barcode scanning is poised to go mainstream
within the next few years. Citing an increase in mobile payment systems,
better targeting technologies, and budget-friendly marketing techniques,
Juniper Research analysts believe mobile coupons will be key to driving in-store
purchasing with potential for exponential growth that could result in a market worth
$46 billion by 2016.
According to a survey commissioned by AT&T, 66 percent of respondents agree that mobile barcodes
will drive new mobile marketing campaign concepts in the next year. The majority of executives surveyed
believe mobile barcodes represent the greatest area of potential for innovation in 2012.
SpyderLynk CEO Nicole Skogg believes mobile barcodes “offer unmatched opportunity to increase brand value by adding measurable
interactive functionality and richer consumer engagement.”
10

Prosper Mobile Insights has found
that a majority of survey respondents
had used their smartphones or tablets
for some type of shopping behavior.
Of the 348 smartphone and tablet users
surveyed, 67 percent agree that
location-based coupons are “very con-
11
BEHAVIORAL TARGETING
venient and useful,” while 42 percent
had used their smartphone or tablet to
scan a barcodes or present a text message
or promo code to a cashier. Forty
percent had made a purchase directly
on a mobile device, and 36 percent had
scanned a QR code. A major hurdle
As yet another example of how the Amazon model continues to shape the
evolution of the Web, the deluge of user-generated content — from product
reviews and comments posted on news stories, to the glut of unguarded
personal information offered up by users of Facebook, Twitter, YouTube,
et al — amounts to a behavioral marketer’s dream come true. All that
data, freely given, is rich in the sort of detail that behavioral marketers
prize in selecting which advertising messages are displayed to that individual.
The algorithms Amazon developed to suggest items of interest
based on a particular user’s browsing habits and purchasing history may
soon permeate the entire Internet. The challenge is to find the appropriate opportunities
without seeming too invasive or behaving like a virtual stalker.
12
ZAPPOS
facing QR code acceptance has been
that most mobile phones do not come
equipped with the requisite scanning
capabilities, although marketers expect
that 2D barcode readers will be
standard issue for smartphones beginning
in 2012.
Seeking to drive home the point that Zappos offers “more than
shoes,” the online retailer last summer launched a uniquely interactive
print ad campaign that invited consumers to dress naked
models using QR codes. The ads depicted naked models (mostly
women) doing outdoor activities, such as jogging or riding a
scooter through Manhattan locations, with strategically placed
censor bars emblazoned with the campaign’s tagline. The QR
codes lead the user to a website where a video shows how the scenario
depicted in the ad plays out. Consumers can then choose an
outfit for the model and go to Zappos to buy it. While some Zappos
brands declined to participate in the campaign, fearing the
photos were too risqué, Nathalie Binda, marketing vice president
for women’s active wear manufacturer of Lolë, did not hesitate to
sign on, calling the campaign “gutsy” and “very Zapposesque.”
“If there’s one brand out there that can do it,” she said, “it’s Zappos.”
11

On the night of Sunday, Sept. 18, 2011, Netflix cofounder
and CEO Reed Hastings sent an email to
the company’s 24.6 million subscribers that began: “I
messed up. I owe you an explanation.”
The blunder had come three months earlier when customers
who opted for the company’s DVD-by-mail
and streaming services learned that their subscription
rates would jump by as much as 60 percent if they retained
both.
Hastings’ mea culpa also included the bubbly news
that the company’s DVD-by-mail service would
henceforth be a separate entity called Qwikster, accessible
via its own website for an additional fee —
a move that drew comparisons to the launch of New
Coke from the instant Hastings clicked “send.” Hastings
was roundly mocked in the business trades and
on Saturday Night Live for his arrogant, if not outright
incompetent, disregard for his core customers. He
even neglected to acquire the @Qwikster handle on
Twitter, which was then being used by a man named
Jason Castillo, whose profile pictured the Muppet
Elmo smoking a joint. No word on whether Castillo
managed to cash in on the urgent offers to buy his
handle (“idk who to trust,” he tweeted) during his
three-week window of opportunity before Hastings
went back to the confessional to renounce Qwikster
as a non-starter. In the meantime, the company(s) had
shed 800,000 angry subscribers, and saw a 76 percent
REED HASTINGS
tumble that erased approximately $12 billion from the
company’s market value.
Hastings ended 2001 by announcing
he would take a
33-percent cut in pay, while
assuring investors that “we
are done with pricing changes.”
An SEC filing revealed that Hastings’ stock option
allowance for 2012 will be $1.5 million, half of what he
received for 2011, and his salary will remain $500,000.
In a January 2012 posting headlined “Reed Hastings:
2012’s CEO of the Year?” Rick Aristotle Munarriz of
The Motley Fool marveled that Netflix shareholders
had seen a remarkable 25 percent surge in the first
week of the new year. Munarriz speculated that shares
had bounced back following some well-deserved
tax-loss selling, and the company’s revelation that
it logged some 2 billion hours of streaming content
during the last quarter. Netflix may have received an
unexpected and counter-intuitive boost when Time
Warner announced a 56-day waiting period (double
the previous 28 days) before offering its DVDs to
rental companies at bulk discount prices. While this
will hamper the DVD-by-mail side of the business,
the same constrictions apply to its chief rivals Blockbuster
and Coinstar’s Redbox which continue to rely
primarily on physical rentals. Netflix’s emphasis on
streaming may yet put Hastings on the shortlist for
Comeback CEO of the Year.
12

13
RETAIL CRM
The future of retail CRM — both its potential and pitfalls — is writ
large on the walls of Facebook. Amassing more than a trillion page
views per month, Facebook is an immense source of CRM data with
unlimited potential, but it appears in an unwieldy mix of text, graphics,
geospatial and other formats that, thus far, retailers have been unable
to wrap their arms around. In the past couple of years, the industry
has been aswirl with rumors of impending CRM breakthroughs,
with speculation ranging from artificial intelligence supercomputers
such as IBM’s “Jeopardy!” champion Watson to applications developed
by CIA-friendly organizations for monitoring potential terrorist
activities. However, with the release of its Gateway for Facebook CRM solution this past summer, retail business analytics leader
MicroStrategy has positioned itself as first-mover in what some observers have already dubbed the “Facebook CRM era,” potentially
the biggest development in retail technology and marketing since the invention of the Web.
14
FACEBOOK
It’s no exaggeration to say that Facebook
represents an unprecedented leap in
the history of human interaction. As
of September 2011, Facebook has more
than 800 million active users, with
more than 50 percent of those logging
on in any given day and amassing more
than a trillion page views per month.
Facebook traffic to retail sites increased
an incredible 92 percent year-over-year
for August 2011, yet that traffic showed
a conversion rate of only 1.2 percent,
suggesting that Facebook also represents
the world’s richest source of untapped
CRM data (see No. 13 above).
15
MOBILE POS
Point-of-sale systems have become
the true command centers
of in-store operations, providing
a host of applications that leverage
customer search histories,
generate cross-selling recommendations
to prompt add-on
purchases, streamline inventory
functions, schedule employees and allocate
store resources. Yet “traditional”
POS technologies — if it’s not too soon
to use that term — are already facing
threats from mobile POS platforms
such as smartphones and tablets. The
migration to mobile is particularly
evident at independent restaurants
and start-ups, where less-expensive
options are more readily embraced,
says Greg Buzek, president of research
and services firm IHL Group. Adopting
mobile devices within a POS system
requires a lower initial investment
and offers a “cool” factor for customers.
According to Store Systems Study
2011 released by RIS News
Mobile, transaction systems provide
a way for retailers to reduce checkout
lines without adding expensive checkout
counters or staff. Automated systems
that use mobile computers and
printers add speed, security and professionalism
to transaction-processing
operations. The results are greater customer
satisfaction and fewer carts
abandoned by customers who leave the
store discouraged by long checkout lines.
13

16
IN-STORE WEB ACCESS
In an effort to draw customers into stores as the primary means of merchandise
distribution, some retailers are offering in-store Web access through self-service
kiosks and workstations to engage customers, provide convenience and increase
satisfaction. This past year, JCPenney refined its Findmore technology with 42-inch
interactive plasma-screen kiosks linking shoppers and sales associates to its 250,000
online products. The media-rich kiosks provide editorial content and highlight key
seasonal trends while incorporating social-media-like features, such as permitting
shoppers to add items to an online “dressing room” and email their choices to themselves
or friends. Customers also can use Findmore to finalize the sale, either by
purchasing items online and having them shipped to their home or to the store for
later pickup, or by printing out a receipt and purchasing an online item at an instore
register.
18
MILLENNIALS
17
DIGITAL PRODUCTS
Representatives from major music labels EMI, Universal, and Sony have, at the time of
this writing, all declined to comment on claims from various music industry insiders
that they all have timetables in place for phasing out their production of physical CDs
by the end of 2012. While no one is stepping up with such bold predictions on when the
last movie theater will shutter its doors, a steadily growing number of viewers are content
to stream movies online, with Netflix alone reportedly accounting for 30 percent
of all evening Internet traffic. Newer devices can handily stream movies on ever-larger
and less expensive TV screens. The demand for deluxe edition CDs (and vinyl sets)
loaded with extras is expected to remain for the foreseeable future, as are venues for
projecting the occasional must-see, special-effects-laden blockbuster. The fate of any
products capable of being delivered digitally seems clear. The handwriting has been on
the wall ever since the first MP3 was posted to Napster back in mid-1999.
Finding themselves with more time than money and armed with total pricing transparency and unlimited selection, Millennial
shoppers (those born between 1980 and 2000) are taking Depression-era frugality to a whole new level. In the process, Millennials
are pushing retailers to learn new tricks. According to a study from Deloitte, Web-savvy Millennials treat each shopping
trip as a mission. They research online and know exactly what they’re going to buy when they arrive at the store. TechCrunch
sees in this trend the “Death of the Impulse Shopper,” while Bloomberg hails the “Rise of the Surgical Shopper.” Whether retailers
see the glass as half-empty or half-full, the trend increases the importance of every customer who comes in their stores.
Retailers can no longer rely on impulse buying to pay back the cost of loss-leader promotions, and rewards for store loyalty.
Efforts, instead, must be dedicated to converting every shopper into a buyer.
14

19
TRADER JOE’S
Privately owned Trader Joe’s has been on an expansion binge
over the past three years, continuing to build on its near-cult
status by providing healthy, organic and locally produced
food to shoppers on a budget. The company has expanded at
a steady pace, opening some 40 new stores a year and moving
well beyond its Southern California stronghold to the delight of
awaiting customers in markets such as New York, Chicago, and
Des Moines. The expansion comes as many retailers are eyeing
Trader Joe’s success and experimenting with smaller-format
stores that can slide easily into urban areas with lower rents. In
2010, the company pulled in an estimated $8 billion in sales,
roughly on par with chief rival Whole Foods Market.
20 LOYALTY PROGRAMS MOBILE/CONTACTLESS PAYMENTS
According to the Loyalty Marketer’s Association,
customer loyalty, rather than acquisition,
is the key to sustainable growth. Business consulting
firm Protiviti ranks customer loyalty as
the top non-financial business challenge companies
will face in 2012. Yet businesses report that
retaining and engaging customers remain their
greatest challenges. While daily-deal sites such as
Groupon and LivingSocial continue to generate
the greatest buzz, marketers suspect that pricebased
strategies are taking focus away from the
real prize, customer loyalty. The emerging model
for success uses data gathered from loyalty programs
to engage with customers across all touchpoints
at all stages of the customer life cycle.
21
Although U.S. customers
have been relatively slow
to adopt NFC-equipped
smartphones or utilize the
contactless payment cards
they already carry in their
wallets, blogger and principal
analyst at Forrester
Research Brian Walker
predicts we will soon see
customers waving NFC-enabled
smartphones across
interactive display ads to
automatically add pictured
items to their online carts,
making immediate transactions
on their phones, or
walking into a store with
the resulting offer. More
than 7,000 Subway restaurants across the U.S. are installing new Tap & Go
Payment Readers to accept contactless payments through the MasterCard
PayPass platform. Subway diners will be able to pay for their meals simply
by tapping a PayPass-enabled card or device at the register. As more and
more consumers interact with these devices, Walker expects that their
expectations and buying habits will quickly change.
15

22 COSTCO 23
Costco’s 596 stores provide a great indicator
of where different products — from
milk and eggs to diamond rings — are
likely to see growth, according to Jeff
Weidauer at retail industry marketing
firm Vestcom International. Hofstra
University business professor Barry
Berman recommends Costco’s strategy
of opportunistic buying to any “smart
retailer.”
By focusing on prices and maintaining
a 17-percent profit margin, Costco has
seen its profitability grow during the
economic downturn as shoppers turned
to the wholesale club operator for deals
on food and necessities. The Issaquah,
Wash., company reported that its fiscal
2011 net income rose 12 percent to $1.46
billion, or $3.30 per share, while revenue
climbed 14 percent to $88.92 billion.
24
UGC, PRODUCT REVIEWS
NEIMAN MARCUS
Online marketers recognize how effective user-generated content (UGC) can be in
strengthening search engine optimization strategies. According to comScore ARS,
UGC product reviews are every bit as persuasive and effective (if not more so) than
far costlier advertising media, including display and TV. User-generated product
reviews have proven to be one of the most highly effective tools of social media
marketing, allowing marketers to tweak and modify their messages — and help
businesses increase their profits in the process. For retailers, UGC provides unbiased
and unguarded feedback from actual customers. The next logical step for many
marketers involves gleaning data from “micro UGC” — short, low-involvement forms
of user-generated content such as Facebook status updates, “likes,” star ratings on
Netflix or Amazon, location-based check-ins, “you may also like” recommendations
and pictures posted on Tumblr. The logic of UGC’s effectiveness is simple:
Like-minded people trust the opinions of their peers above the hype of paid shills.
Like many other luxury players concerned
about protecting their carefully
cultivated brand images, Neiman
Marcus was slow to embrace social
media. But in the run-up to the 2011
holiday season, the high-end retailer
got into the spirit in a big way by hosting
a flurry of digital campaigns aimed
at boosting its online presence. As of
mid-December, the retailer had nearly
500,000 fans on Facebook and 50,000
followers on Twitter. The campaigns
included a Foursquare scavenger hunt
called “Clutch me if you can,” in which
Nancy Gonzalez clutch bags were hidden
in 15 of its 41 stores and customers
had to check in via Foursquare to receive clues about where to find them. In an effort
to create buzz for the launch of celebrity stylist Rachel Zoe’s collection, Neiman
Marcus launched a Facebook design contest encouraging fans to assemble virtual
outfits from items in the collection. The ensembles were judged by Rachel Zoe and
the chain’s fashion director Ken Downing, with the winner receiving a private meeting
with the two judges plus a $2,500 Neiman Marcus gift card. So what caused the
sudden shift in attitude? Research showing that 77 percent of Neiman Marcus customers
own a Web-enabled mobile device and 60 percent are on Facebook.
16

25 TIFFANY 26 STARBUCKS
According to data compiled by Bloomberg,
Tiffany nearly tripled its value
from the sale of engagement rings
alone, helped along by price increases
and sales in the Asia-Pacific region.
It boosted its market capitalization to
$8.6 billion in 2011, up from $3.1 billion
in June 2009, when the U.S. economy
emerged from the longest contraction
since the Great Depression. The
world’s second-largest jewelry retailer
became a likely takeover target after
Swatch Group AG terminated its 20year
watch partnership with the jeweler
16 years early. The company reported a
63 percent jump in fiscal third-quarter
2010 earnings as every geographic segment
saw double-digit sales growth,
including a 17 percent increase in the
Americas, which accounted for the
bulk of its 21 percent revenue growth.
27
NORDSTROM
Now in its 110th year, Seattle-based Nordstrom continues to
live by its one-sentence doctrine: “Use good judgment in all situations.”
The fourth-generation, family-run department store
is legendary in the retail industry for its emphasis on customer
service above all else. In a 2011 consumer survey forecasting
holiday spending, the upscale specialty retailer came out on
top among department stores in online shopping, more than
doubling its online share from December 2010. Rather than
defining store space by brand, Nordstrom groups merchandise
into so-called lifestyle sections, making it easier for shoppers
to put together outfits, says retail analyst Jennifer Black. As a
result, competitors have rushed to copy the Nordstrom model,
and brands vie for invitations to win shelf space. Shoe entrepreneur
Steve Madden recalls the first time he was asked to a
Nordstrom buyers’ meeting. “It was like an invite to the White
House,” he said.
Starbucks marked its 40th year in business
with the rollout of a new logo and
a mobile payment app that has become
the early standard for m-commerce
success by demonstrating that customers
will adopt mobile payments at the
point of sale. Eschewing fancy tech for
relatively pedestrian barcodes, the Starbucks
app operates with a minimum of
fuss and a maximum of utility — two
qualities that watchers agree are essential
to supplanting the use of cash
and cards. Introduced in January 2011,
the app racked up an impressive three
million transactions in its first three
months. Additionally, by making its
mobile payments closed-loop and keeping
the transactions on its own systems,
Starbucks bypassed the complicating
step of partnering with a carrier or card
brand. Starbucks was also an investor
favorite in 2011, delivering a 35 percent
year-to-date gain in December despite
spiraling coffee prices worldwide.
17

The retail world is watching CEO Ron Johnson close-
ly to see if he can replicate his success as the creative
force behind the Apple Store in the relatively stodgy
retail environment at JCPenney. The Apple Store concept
was a success, he contends, because rather than
tweaking the traditional model, Apple started from
scratch and “re-imagined everything.” (Of course
it helps if the thing you’re selling happens to be the
sleekest, most-coveted product since Cadillacs came
with tailfins.) In a piece written for The Harvard Business
Review “Online Forum” just weeks into his tenure
at Penney, Johnson conceded that Apple products
do indeed pull people into stores, but added, “How do
you explain the fact that people flock to the stores to
buy Apple products at full price when Walmart, Best
Buy and Target carry most of them, often discounted
in various ways, and Amazon carries them all — and
doesn’t charge sales tax!” People come to the Apple
Store for the experience, he says, “and they’re willing
to pay a premium for that.”
Since announcing his departure from Apple, Johnson
has been on a mission to revitalize the JCPenney
brand and increase the retailer’s appeal to younger
more affluent customers. Toward that end, Johnson
is emphasizing store-within-store formats, partnering
with retailers such as the Moët Hennessy - Louis
RON JOHNSON
Vuitton-owned Sephora and Martha Stewart Living,
adding more brand names, streamlining supply-chain
operations, and — as he did at Target — bringing in
exclusive lines from high-end
designers like Michael Graves.
The retailer is also eliminating
discount signs for in-season merchandise
and doing away with
cents on price tickets in certain
cases. For instance, an item that
costs $19.99 will now be $20.
Johnson has brought on a number of former colleagues
from Apple and Target, which would indicate
that his plans include high-level structural changes.
He’s also planning a Penney’s version of the Apple Genius
Bar — a concept he created as the SVP of retail
for Apple — staffed by trained employees who can
offer advice and tips. The challenge, he says, is conceptually
similar to the ones Steve Jobs faced with the
iPhone. “He didn’t ask, ‘How do we build a phone that
can achieve a 2 percent market share?’ He asked, ‘How
do we reinvent the telephone?’ In the same way, retailers
shouldn’t be asking, ‘How do we create a store
that’s going to do $15 million a year?’ They should be
asking, ‘How do we reinvent the store to enrich our
customers’ lives?’”
18

28 DISNEY 29 DIGITAL SIGNAGE
Following record sales and profit, the
Walt Disney Company, owner of the
namesake theme parks and ESPN sports
network, increased its annual dividend
for 2011 by 50 percent, the most in at
least 20 years. The Burbank, Cali.-based
company, which also owns Marvel
Entertainment and the ABC TV network,
is returning cash to investors
through stock repurchases as well,
buying back $5 billion of shares in the
year ended Oct. 1. The Steven P. Jobs
Trust, Disney’s largest shareholder,
will reap $82.8 million, an increase of
$27.6 million based on the 138 million
shares held by the estate of Apple’s late
co-founder.
30
H&M
The world’s second-largest clothing retailer,
Hennes & Mauritz AB, recently
announced its “Versace for H&M” line
featuring apparel and accessories designed
by Gianni Versace SpA, ranging
from $17.95 zebra-print underwear to
$299 studded leather jackets and floorlength
“goddess” gowns dotted with
Presented with so many attractive buying options, consumers often gravitate toward
the lowest price, which they usually find online. Thus, retailers have been
searching for new engagement strategies, such as interactive digital signage. By displaying
targeted eye-catching content that can easily be customized according to
the context and the audience, digital signage is helping brick-and-mortar retailers
attract — and hold — the attention of the same customers that many feared
were just stopping in to check prices before making an online purchase. Described
by one retailer as being “like having a giant smartphone in your store,” interactive
digital signage delivers some of the online world’s most appealing capabilities and
functions in a real-world environment, replete with attentive sales associates.
Grecian buttons, and fluorescent micro-minis.
H&M creative adviser Margareta
van den Bosch sees “design and
celebrity collections as crucial to establishing
the fashion authority of H&M
as a brand.” H&M has been marketing
limited-edition designer collections
since partnering with Chanel creative
director Karl Lagerfeld in 2004, and
this most recent partnership between
the Swedish fashion giant and a luxury
designer will give the Italian label global
visibility, according to Versace Chief
Executive Officer Gian Giacomo Ferraris,
with targeted sales expected to
reach $700 million by 2014.
19

31
INTERACTIVE STOREFRONT WINDOWS
Saks Fifth Ave. and Starbucks were
among those pushing the boundaries
of interactive storefront displays to
captivate passers-by in high-traffic locations.
EBay introduced interactive
store windows in New York City and
San Francisco encouraging holiday
shoppers to make charitable donations
to Toys for Tots by scanning a QR code.
Displays fronting Starbucks stores in
Toronto and Vancouver encouraged
passers-by to assemble their favorite
Tazo teas using gesture controls via a
vinyl screen and projector, while Saks
and Stylelist.com tapped downtown
agency Gin Lane Media to create a
three-window display featuring 64 iPad
2s and nine 27-inch flat-panel Cinema
Displays for the high-end retailer’s
flagship Fifth Avenue store. The display
featured original imagery, streaming
content, tweets from around the Web
and user-submitted photos with the
#StylelistatSaks hashtag. Running a native
iPad application built specifically
for the installation on a local network,
32
all the iPads were able to talk “to each
other to produce elegant fades and
control what device should display,”
said Gin Lane’s Digital Creative Director
Dan Kenger.
SMALLER STORE FORMATS
As consumers continue to do more shopping online, big-box retailers
are attempting to stay profitable and reduce under-utilized
space by moving to smaller store formats. Safeway and Walmart are
among the latest to follow the trail blazed by Tesco’s Fresh & Easy
Neighborhood Market. The advantages of smaller formats include
greater flexibility, proximity to local markets, a quicker shopping
experience, new store development options, solutions for recycling
older units, and lower break-even points. According to Marketwise,
62 percent of Walmart’s newest stores are small-format Walmart
Express, most of them in underserved rural and urban areas. The
chain’s small-format Walmart Express stores typically carry between
11,000 to 13,000 items, compared with the more than 100,000 items
found in a Supercenter. “Small stores are going to be a very good
growth opportunity for us,” says William S. Simon, president and
chief executive of Walmart’s domestic business, “because they allow
us to get access in places we are not in today.”
20

33
GROUPON/LIVINGSOCIAL/ETC.
The exploding daily deal industry pioneered by Groupon has spawned,
by some estimates, more than 700 copycats. And who can blame them?
Barely three years after its founding, Groupon raised more than $700
million in an initial public offering, generating 30 percent more than
the company originally sought, then saw its value balloon to more
than $16 billion on its first day of trading on the Nasdaq. LivingSocial
is Groupon’s most logical competitor. Backed with hundreds of
millions of dollars in funding, primarily from Amazon (for which it
provides the deals for AmazonLocal), the 2-year-old deal-maker says
it expects to generate revenues of $1 billion in 2012.
35
YELP
San Francisco-based user review website
Yelp filed to raise as much as $100
million in a 2012 initial public offering,
seeking to become the latest unprofitable
Internet company to go public.
Co-founded by former PayPal Inc. executive
Jeremy Stoppelman in 2004, the
website features more than 22 million
reviews created by its 61.1 million
users. “Investors are open to taking bets
34
GAMIFICATION OF RETAIL
Boosted by the success of Facebook-supported games such as Farmville and Mafia Wars,
gamification is the latest innovation retailers are banking on to improve customer engagement,
build loyalty, strengthen their brand, and incentivize employees and business
partners for better productivity. Gamification is defined as the process of integrating
game thinking and game mechanics into marketing activities to solve problems and engage
users. According to Gabe Zichermann, CEO of Gamification Company, the key
to gamification’s success is drugs — “One important drug — dopamine,” he explains.
“It’s what we secrete in response to challenge and achievement. It is part of the core
group of behaviors that makes gamification and games powerful in changing influence
and behavior.” Data released by M2 Research set the current worth of the gamification
market at $100 million, with a projected value of nearly $2.8 billion by 2016. Gamification
vendors predict 197 percent growth through 2012, representing an increase of 42
percent over 2011.
on companies that are generating
losses,” says Tom Taulli, founder of
IPOByte.com and author of “Investing
in IPOs.” “No one knows how long this
window is going to last, so I think Yelp
is going to get out as fast as possible.”
Yelp faces competition from Google,
Facebook and Yahoo!, all of which sell
online ads to local businesses. The
wrinkle here is that Yelp relies on these
rivals to send visitors to its site. Google
alone accounted for more than half of
Yelp’s traffic in the first nine months of
2011. The search engine’s dual role as
both competitor and ally may put Yelp
in a difficult position in the future, according
to Taulli. “Their main source
of customers is coming from their
competitor.”
21

36
BERGDORF GOODMAN
Online merchants are forcing even the highest-end stores to offer up bargains
to their well-heeled clientel who are relatively insulated from the job
and housing markets. “At the luxury end, discounting has become very
mainstream because of the Gilts of the world,” said Andrew Sacks of luxury
research firm AgencySacks, referring to Gilt Groupe, the online discounter
for designer fashions. At the height of the 2011 holiday season, Bergdorf
Goodman’s website listed more than 70 pages of discounts on designer
fashions, some marked down as much as 40 percent. Bergdorf Goodman
has also turned to digital and social-media programs in recent months,
launching campaigns aimed at building the brand’s presence online, including
a contest inviting its Facebook fans to design a Fendi handbag.
While Bergdorf isn’t the first luxury retailer to try a user-generated design
campaign, it may be the first to board the crowdsourcing bandwagon.
37 AT&T WIRELESS REI
The collapse of AT&T’s $39 billion bid for
T-Mobile USA leaves the second-largest
U.S. mobile carrier with few options to
challenge market leader Verizon Wireless.
T-Mobile’s spectrum assets would have allowed
AT&T to expand its LTE footprint
to cover 97 percent of Americans. How
AT&T will make up that difference isn’t
yet known, but AT&T needs to act quickly,
as Verizon has already blanketed some
190 markets and 200 million Americans
with LTE. While AT&T was focused on
winning regulatory approval for the takeover,
rivals were negotiating their own airwave
deals. As a result, several spectrum
assets that would have still been available
to AT&T are now off the table. Its remaining
options are time-consuming, expensive
and risky, says Cowen & Co. analyst
Colby Synesael. AT&T can either seek
to buy spectrum from another company,
wait for the government to auction more
frequencies or try to squeeze more capacity
out of its current airwaves.
38
REI has teamed up with U.S. Bank to make credit card approval easier and faster
for consumers shopping in-store via an iPhone application. By promoting a download
of the REI Visa app at point of purchase, the retailer can enable customers to
instantly be approved for the REI Visa card and begin using their reward points
immediately. “The app also moves the customer application process out of the service
lane to more of an in-store experience that connects with the brand,” says
Dominic Venturo, chief innovation officer of the bank payment service division at
U.S. Bank. REI was deemed the best fit to try out the mobile credit card application
process because of the company’s mission. “Eliminating paper was important to
REI because it is an environmentally conscious group,” Venturo said.
“REI also has a very strong customer following with their existent iPhone app
and wanted to try something new.”
22

39
POP-UP SHOPS
Although pop-ups have moved up in the world, for some the term
still has downmarket connotations. The first generation of popups
often consisted of little more than shelving and a cash register
in empty mall space. In recent years, retailing stalwarts breathed
new life into the format. Procter & Gamble, for example, operated
a 4,000-square-foot pop-up on 57th Street in Manhattan that drew
14,000 visitors in the 10 days it was open. The store had no cash
registers because everything was free — including a full CoverGirl
makeover or a Head & Shoulders wash and blow dry. The P&G
pop-up — the company’s marketing executive Nataraj Iyer prefers
the term “interactive experience” — represents a new iteration in
the evolution of the pop-up. The goal was not to move merchandise
but to build brand loyalty.
40
DEAL-OF-THE-DAY (WOOT, ETC.)
The “daily deal” concept is as old as
retailing itself. Strictly speaking, dealof-the-day
sites are similar to job lot
discounters. They take unused capacity
and sell it at a discount. The difference
is that businesses use social media to
pre-sell this excess inventory in hopes
of luring new customers. Pioneered by
Woot in 2004, deal-of-the-day websites
started out selling mostly electronics
and tech gear at deep discounts. Woot’s
41
IKEA
Ikea is developing its website to have
a broader geographic reach and offer
more services, such as allowing customers
to select items they want in
the store and have them delivered to
their home without having to gather
them from the outlet’s warehouses.
The world’s largest furniture retailer,
known for setting a price point for a
phenomenal success — the company
was acquired by Amazon.com in 2010
— combined with extremely low barriers
to entry inspired a slew of similar
deal-of-the-day sites with quirky product
descriptions and real-time inventory
updates. It wasn’t until such sites
began offering deals for local shops and
restaurants that the industry truly took
off. BIA/Kelsey released a forecast in
March 2011 indicating that consumer
product and then figuring out how to
make it, will cut prices by 1.5 percent
this year as its increased scale allows
it to produce items at less cost. Ikea,
which updates its collection of about
10,000 products with more than 2,000
new items a year, will continue investing
in products and enlarging stores
in the coming year, adding 50 more
spending on deal-of-the-day offers
could grow from $873 million in 2010
to $3.9 billion in 2015. The same forecast
also estimates there are 178 U.S.
cities with deal-of-the-day sites reaching
102 million people.
stores in North America by 2013. Ikea
expects to triple its pace of store openings
in China to capture faster growth
in the second-largest economy, says
CEO Mikael Ohlsson. The expansion
in China will also allow the company
to reduce its reliance on Europe, which
is suffering from a slump in consumer
confidence.
23

Recent headlines tell a dismal story: “Best Buy’s
Dunn Should Be Next CEO Fired” wrote Douglas
A. McIntyre on 24/7WallStreet.com. Then, just a few
weeks later, “Why Best Buy is Going out of Business
… Gradually” topped a 3,000-word screed by Forbes
contributor Larry Downes, that garnered some 15,700
Facebook shares, 17,500 tweets, and a blunt response
from Dunn himself titled “My Thoughts on Best Buy’s
Recent Media Coverage,” albeit without mentioning
either McIntyre or Downes by name. Best Buy has
posted a string of poor quarterly results since Dunn
assumed the CEO mantle in June 2009. Throughout
his reign, Downes charges, Dunn has pursued a strategy
of protecting market share over profit. In the quarter
ending November 30, 2011, store sales increased 1
percent — marking the retailer’s first increase in two
years. Margins, however, sank, with net income dropping
by 29 percent. For the quarter ending May 28,
2011, the firm posted a sales increase of only 1 percent
to $10.9 billion. EPS fell by 3 percent to 35 cents.
Online revenue rose only 10 percent in the U.S., not
nearly enough to keep up with Amazon, which continues
to grow more than 50 percent per quarter.
Dunn maintains that his company is well positioned
to poach significant online market share from Ama-
BRIAN DUNN
zon.com with Best Buy Marketplace, a new service
meant to challenge the world’s largest e-commerce
company. The effort addresses challenges shared by
all retailers committed to maintaining
large bricks-and-mortar
operations while simultaneously
trying to flank Amazon online.
Although Best Buy Marketplace
substantially increases the selection
of products and brands available at BestBuy.com,
Wall Street appears to be losing patience with Best
Buy’s plans to overhaul itself. Despite Dunn’s upbeat
assurances to the contrary, Amazon.com has badly
damaged Best Buy’s earnings and its future projects.
As evidence of investor reaction to the CEO’s tenure,
Best Buy’s shares are off 43 percent over the past two
years, while Amazon’s are up 39 percent, and the S&P
500 is higher by 12 percent over the same period. The
market’s stunned response to Best Buy’s third quarter
2011 results and forecasts resulted in shares plummeting
more than 15 percent. A decisive blow to Dunn’s
tenure may have come just days before Christmas
when the world’s largest consumer electronics retailer
announced that it would be unable to fill an undisclosed
number of holiday orders placed online.
24

42
TARGET
After spending two years preparing to
take control of its website from Amazon.com,
a prominent link (“learn all
about what’s new”) on Target’s home
page failed to work when the site went
live in August. That was just the beginning.
Three weeks later, the release of
a collection from Italian fashion house
Missoni brought a rush of visitors that
crashed the site for most of the day. A
month later, the site went down again
during peak shopping hours. Later
that day, Target announced in a one-
43
LULULEMON
Vancouver-based athletic apparel company
Lululemon Athletica has caught
fire with yoga enthusiasts to a degree
that sent its competitors stumbling
over themselves in pursuit of customers
willing to spend $98 on stretchy
yoga pants. Mimicking Lululemon’s
winning strategy, Nike’s Salvation
chain of athletic-wear stores introduced
$64 training capris featuring a
yoga-studio format and similar logo.
Gap’s Athleta stores began selling $60
women’s yoga tops and offering free
yoga classes — another Lululemon innovation.
Nordstrom’s Zella line, dedicated to
yoga attire, went so far as to hire a
Lululemon alum to launch the effort.
Since opening its first store in the
United States in 2003, Lululemon’s aggressive
strategy has paid off with revenues
growing from $40.7 million in
2004 to $711.7 million in 2010.
sentence statement that Target.com
president Steve Eastman had left the
company to “pursue other opportunities.”
All told, Target.com crashes
44
TABLET COMPUTERS IN-STORE
An estimated 25 percent of all tablet
computers purchased in 2011 were
bought by enterprises, and 25 percent
of those enterprises were retailers. Retailers
are putting tablets to work as
digital catalogs, signage and in-store
information kiosks. Tablet computing
solutions connect retail sales associates
with a wealth of knowledge, including
product information, learning tools,
real-time product inventory, customer
reviews and ratings, updated price and
promotional information, as well as the
ability to print or email any of these.
Unlike other business solutions that
require a great deal of infrastructure
and integration efforts, tablet computing
solutions require minimal impact
on existing systems and are often more
reliable than other solutions. In-store
tablet computing systems provide retailers
with consistent sales processes
that can be promoted across all stores,
increased sales, significantly reduced
accounted for more than half of the
major outages on the top 100 sites in
the U.S. by revenue, according to Web
monitor AlertBot. Still, e-commerce
analyst Colin Sebastian at Robert W.
Baird & Co contends that Target made
the right move. “The complexity of
building a large-scale e-commerce site
is really difficult,” he said. “But, at the
end of the day, Target made the right
decision. Amazon is a competitor, and
you don’t want them controlling your
e-commerce business.”
learning curves for new hires, more
engaging and knowledgeable sales associates,
sales associates’ ability to help
customers in more store departments
and a more pleasant and efficient buying
experience for customers.
25

46
CVS/CAREMARK
Reversing two years of decline, CVS/
Caremark expects 2012 profits to grow
11 percent to 15 percent based on its
acquisition of Universal American
Corp.’s Medicare Part D business, a deal
with health insurer Aetna Inc., better
drug pricing, and billions of dollars in
47
VICTORIA’S SECRET
Victoria’s Secret is all about differentiation,
according to Stuart Burgdoerfer,
CFO of Victoria’s Secret parent Limited
Brands Ltd. “We really have unique
products, a leading position [and] with
respect to our brands, no obvious immediate
close competition.” The Columbus,
Ohio-based specialty apparel
retailer posted a 12 percent gain in
comparable sales for the 11 months
through December 2011. While Limited
registered revenue growth across
all of its major brands, Victoria’s Secret
was the major growth driver for Q3,
with U.S. stores registering a comp sales
45
new contract wins. Furthermore, chief
rival Walgreen Co. has failed to replace
its contract with employee-benefits
manager Express Scripts. Valued at
more than $5 billion in annual drug
sales, the lapsed contract will put approximately
90 million prescriptions
increase of 12 percent, benefiting from
the wide array of its assortment, which
includes major third-quarter launches
such as Showstopper Bra, PINK, the
Heartbreaker Bra, the Unforgettable
AMERICAN GIRL
Mattel’s American Girl line of dolls, accessories, books, and
(more recently) movies, has dominated the big and expensive
($95) doll market for a quarter-century by building its
brand with unwavering focus on its core customers (girls,
their mothers and their grandmothers), an ability to identify
and fill gaps in the market for their customers and a commitment
to connecting with its customers beyond the actual
sale. Since its first mail-order catalog debuted in 1986,
American Girl has sold more than 20 million dolls and 135
million books that tell the stories of its dolls representing different
periods in American history.
up for grabs. With 43 percent of CVS
stores located within one mile of a
Walgreens (85 percent are within five
miles), CFO Dave Denton expects to
pick up as many as 23 million of those
prescriptions, which would boost profits
by as much as 11 cents a share.
Bra and the Gorgeous Bra. The company
also registered an 8 percent revenue
increase in Victoria’s Secret direct
channel, driven primarily by PINK,
sleepwear, panties and knit clothing. In
March, the company introduced three
versions of its “Incredible” bra, a supersoft
push-up that is more comfortable
than earlier versions. An accompanying
Incredible fragrance is a mixture
of magnolia, pear and sandalwood and
described as “fruity, feminine and surprisingly
clean smelling.” The bra’s predecessor,
“Miraculous,” boosted busts
by as much as two cup sizes.
26

48 PUBLIX
DICK’S SPORTING GOODS
Publix Super Markets has offered exceptional
customer service for more
than 80 years, operating 1,000 locations
through one of the worst economic
downturns in history without
laying off a single employee. Publix is
the country’s largest employee-owned
supermarket and the fourth-largest
operator of traditional supermarkets
overall, behind Kroger, Supervalu,
and Safeway. George Jenkins — or Mr.
George, as he is still known within
the company — launched his serviceoriented
supermarket in 1930 and immediately
embarked on an expansion
effort that has yet to abate. Publix continues
to grow at a time when many
other businesses are stagnating. The
retailer’s latest growth efforts include a
hybrid store that melds its GreenWise
organic format with its more conventional
stores. Publix’s second-quarter
2011 net income rose 9.7 percent, to
$382.4 million. Total sales increased
5.8 percent, to $6.6 billion, with samestore
sales up 4.2 percent.
49
Dick’s Sporting Goods dates back to 1948 when Richard Stack (father of current
CEO Edward Stack) opened a bait-and-tackle store in Binghamton, N.Y. When Edward
took over as CEO in 1984, only two stores were in existence. Today Pittsburghbased
Dick’s is the largest sporting goods retailer in the country, with 474 namesake
stores in 42 states and 81 Golf Galaxy stores in 30 states. Dick’s still has abundant
top-line growth opportunity with plans for 400 more stores over the next several
years to build out its presence on the West Coast. Dick’s has succeeded where other
big-box sporting goods efforts have failed by catering to serious enthusiasts who
want a big selection and an engaging in-store experience. Each Dick’s location features
stores within the store, such as the Golf Shop, the Lodge and Perfect Season,
which highlight whatever sport is then in season.
50
BUILD-A-BEAR WORKSHOP
The interactive entertainment retailer Build-A-Bear Workshop invites
guests to create their own customized stuffed animals. Digital Signage
Today named Build-A-Bear’s new Digital HearMe Sound Stations one
of the top 10 coolest digital signage deployments of 2011. The self-service
kiosk is highly visible, located near the entrance and “ChooseMe”
area where guests first select their “new friends.” The stations bring a
new experience to the customers while reducing time to market for
new sounds — automatically linking the sound purchase to a POS
system and improving personalization through a record-your-own
sound module. Digial Signage Today rates the experience as “fun for
kids and easy to understand for grandma.”
27

51
LEGO
The 76-year-old, family-owned Danish
toy maker topped $1 billion in U.S.
sales for the first time in 2010 and was
on track to repeat that performance in
2011. The snap-together plastic brick
empire has grown and evolved dramatically
to include robotics, films, video
games, theme parks — even a business
consultancy to foster creative thinking
— but all focused on boys. On New
Year’s Day 2012, Lego introduced Lego
Friends, a full line of 23 different products
aimed at girls aged 5 and up. “This
is the most significant strategic launch
we’ve done in a decade,” said Lego
Group CEO Jørgen Vig Knudstorp.
“We want to reach the other 50 percent
of the world’s children.” The company’s
commitment is evidenced by a $40
million global marketing push behind
the launch.
53
52
QUICKRESPONSE (QR) CODES
HIGH-TECH DRESSING ROOMS
Shoppers at San Francisco’s Industrie Denim no longer need to venture outside the
fitting room to ask friends (or strangers) if the jeans they’re trying on make their
butts look big. Nor do they have to take anyone else’s word for it. They can see for
themselves using the closed-circuit “Booty Cams” installed in the retailer’s dressing
rooms. (Store manager Rob Jolin is quick to assure shoppers that the process is
completely private.) Some of luxury retailer Prada’s dressing rooms employ plasma
mirrors similar to the Booty Cams, as well as doors that go from opaque to transparent.
A growing number of clothing retailers are using such gee-whiz technology
to entice customers into trying on clothes and get them excited about shopping.
Consumer psychologist, Kit Yarrow, said the high-tech dressing-room tools are as
much about customer assistance as they are marketing. “What it tells consumers,”
she says, “is that a store is trying and they’re thinking.”
At first glance, QR codes seemed a sure bet to be the next big thing. So why aren’t they? They’re everywhere: on billboards,
magazine ads, business cards, T-shirts, shop windows, every variety of signage — even on trees and playground equipment in
public parks. Yet, according to a recent survey conducted by Archrival research group, nearly 80 percent of college students
across the U.S. had no clue how to scan a sample QR code when presented with one. No clue and little interest. Nearly 75 percent
said they were unlikely to scan a QR code in the future. Go off campus and QR’s prospects are a little brighter. A recent survey
by Prosper Mobile Insights found that nearly one-third of general-population smartphone and tablet users have scanned QR
codes to access in-store coupons. But unless someone comes up with an application that will catch fire with the cool kids, the
only place you may see those now-ubiquitous do-hickeys — often described as barcodes on steroids or a checkerboard on LSD
— will be in the next millennium edition of Trivial Pursuit.
28

54 BEST BUY
EBAY
Best Buy is taking its best shot at
poaching some online market share
from Amazon.com with a new service
meant to challenge the world’s largest
e-commerce company. Best Buy
Marketplace substantially increases
the selection of products and brands
available at BestBuy.com. The effort
addresses challenges shared by Barnes
& Noble and all retailers committed to
maintaining large bricks-and-mortar
operations while simultaneously trying
to flank Amazon online. Wall Street
appears to have lost patience with Best
Buy’s plans to overhaul itself. For the
quarter ending May 28, 2011, the firm
56
LL BEAN
posted a sales increase of only 1 percent
to $10.9 billion. EPS fell by 3 percent to
35 cents. Online revenue rose only 10
percent in the U.S., not nearly enough
to keep up with Amazon, which continues
to grow by more than 50 percent
per quarter.
Never regarded as a retail trendsetter, L.L. Bean has responded to customer demand
and now allows consumers to shop its entire inventory of outdoor gear and apparel
using a new commerce-enabled mobile site powered by Usablenet. “It’s really to
meet our customers where they want to shop,” said senior public relations representative
Laurie Brooks. “We’re a multichannel merchant. We were responding to what
our customers were asking us — to have a shoppable mobile site.” The company
built a loyal following over the past 98 years with its liberal return policy and folksy
sales staff. The $1.5 billion Freeport, Maine, retailer saw Internet sales top catalog
orders for the first time in
2010. The shift from catalog
to Web sales led to a decline
in phone-in order volume,
requiring the retailer to
close one of its four call centers.
The company responded
by allowing affected employees
to work from home,
winning the No. 1 spot in
that year’s Bloomberg BusinessWeek
customer service
ranking.
55
In a direct rebuke to Amazon.com,
eBay is offering consumers an incentive
to shop in stores by offering those
who spend $100 online a $10 discount
on purchases from designated retailers.
To qualify, shoppers must buy on
the Web from Toys R Us, Dick’s Sporting
Goods, or Aeropostale using eBay’s
PayPal payments servicer. The world’s
largest online marketplace announced
the incentive after Amazon drew
heavy fire in December for offering a
5 percent discount to those who used
its new mobile app to compare prices
with those in physical stores. While
eBay also offers an app for price checking,
it doesn’t actively compete with retailers
on its site. EBay is “trying to be
the anti-Amazon in a sense,” said Colin
Sebastian, an analyst at Robert W.
Baird & Co. The company is “positioning
itself as a partner with traditional
retailers, whereas Amazon is trying to
accelerate that shift away from stores.”
29

Upmarket yoga and sportswear retailer Chip Wilson
had a topsy-turvy 2011. In March, the lululemon ath-
letica founder, chairman of the board, and chief in-
novation and branding officer made Forbes’ World
Billionaires list for the first time while climbing from
49th to 15th place on Canadian Business magazine’s
list of wealthiest Canadians, increasing his worth by
128 percent to $2.85 billion. His company suffered
some grisly publicity that same month when an employee
brutally murdered a co-worker after hours in
the chain’s Bethesda, Md. store. The incident was routinely
referred to as the “Lululemon murder” in the
intense media coverage that followed. Wilson drew
personal fire in November when the chain printed
“I Am John Galt” on its shopping bags, in reference
to Ayn Rand’s 1957 objectivist novel Atlas Shrugged.
Pundits warned that the sentiment would likely alienate
his lotus-sitting customers. Indeed, the embodiment
of Rand’s free-market philosophy, which dismisses
altruism and in favor of individuals living for
their self-interests seems an unlikely model for Wilson,
who sprinkled his own “manifesto” with slogans
such as “The pursuit of happiness is the source of all
unhappiness,” and “What we do to the earth we do to
ourselves.”
CHIP WILSON
Wilson began 2012 on a decidedly different note by
unexpectedly announcing he would resign his executive
position as chief innovation and branding officer
effective Jan. 29, although he will
continue to serve as chairman of
the board of directors. Wilson
founded the pricey yoga gear retailer
in 2000 when he opened
the first lululemon in Kitsilano, a
beachside part of Vancouver, and
took the firm public in 2007. Lululemon
now boasts revenues of more than $800 million
from 140 stores and catalog sales. Wilson gave no
reason for his abrupt exit, merely stating that in any
organization there comes a time when there is a need
for change, that he felt comfortable leaving his replacement
Christine Day “at the helm of a world class
management team whom I fully believe will continue
to elevate our world.” For now, Wilson plans to devote
himself fulltime to his remaining role as board chairman
guiding the company’s future growth.
30

57
RETAIL CROWDSOURCING
Crowdsourcing will soon become as
commonplace as outsourcing. Retail
marketers need more crowdsourcing to
open up their talent pool for research
and development. The strategy “greatly
reduces costs to the retailers because
they’re only paying for the idea, not
the process,” says C.J. Kettler of Genius
Crowds. “Crowdsourcing provides a
59
58
WILLIAMS-SONOMA
way to build sustainable relationships
with consumers and thereby develop
a deeper connection and better brand
loyalty.” According to Alisa Gould-
Simon, director of marketing and
communications at Pose.com, a free
mobile shopping application, “Brands
are looking at ways to not only listen
to their customers but allow them to
WHOLE FOODS
The upheaval in the commercial property
market has created opportunities
for companies looking to expand, and
Whole Foods has identified locations
where it “can put some bets down and
take advantage of that,” says co-CEO
Walter Robb. After stumbling during
the recession, the country’s largest
seller of natural and organic foods is
now outperforming other grocery sellers.
Whole Foods has lowered prices
Williams-Sonoma is seeing benefits from the high-end sales recovery,
helped along by the shift to online and strong merchandising in
its stores, according to David Strasser of Janney Capital Markets. Earlier
this year, Williams-Sonoma announced it would invest $75 million
in e-commerce and the information technology and supply chain
solutions to support it in fiscal 2011, with $25 million earmarked specifically
for long-term international e-commerce growth. Due in large
part to its rapid online growth, Williams-Sonoma’s direct-to-consumer
channel already contributes an impressive 41 percent to the company’s
overall revenues, with that figure expected to reach 43 percent.
“E-commerce is not only our fastest growing but also our most profitable
channel,” said CEO Laura Alber, “and, therefore, its growth as a percentage
of total company revenues increases overall corporate profitability.”
participate in the online shopping process.”
Australia-based Shoes of Prey is
apparently meeting a tremendous demand
by giving women the power to
design their own shoes. According to
founder Jodie Fox, women have collectively
spent more than 15 million minutes
designing shoes on their site since
the company’s launch in October 2009.
and cleaned up its balance sheet. Now,
it’s debt-free, gaining market share and
generating good cash flow. In June,
Robb announced that Whole Foods
plans to use some of its cash to speed
up store openings, with the eventual
goal of operating 1,000 stores in the
U.S., up from around 300 currently. As
part of its health-and-wellness initiatives,
Whole Foods also plans to open
wellness clubs in five U.S. cities.
31

60
BLOOMINGDALE’S
Widely regarded as an endangered
species a decade
ago, high-end department
stores, exemplified by the
venerable Bloomingdales, are staging
an impressive comeback by luring
shoppers with exclusive, trendy
items that appeal to Gen Y. Financial
results at department stores are outpacing
specialty retailers such as Gap
and American Eagle Outfitters. In
February, sales at department stores
open at least a year rose 5.7 percent,
versus a 3.2 percent gain for apparel
stores, according to the International
Council of Shopping Centers, continuing
a trend that has prevailed for three
quarters. Wall Street Strategies analyst
Brian Sozzi has declared that the oncestodgy
department stores are again a
“credible destination for fashion.” To
further dispel any lingering stodginess
in the air, this past fall, Bloomingdale’s
entered into a marketing partnership
61 HOLLISTER
62 NIKE
If the apparel industry was dominated
in 2011 by the emergence of e-commerce
and m-commerce, 2012 looks
to be the year of f-commerce — f for
Facebook, what else? Teen apparel
companies Abercrombie & Fitch and
its American lifestyle brand Hollister
are actively engaging and building
brand loyalty with their target market
on the site. Hollister and Abercrombie
& Fitch are the two most popular teen
apparel brands on Facebook, followed
by American Eagle and Aeropostale.
As Facebook emerges as a serious marketing
platform, this ranking is a significant
indicator of teen shoppers’ enthusiasm
for the retailers’ promotions
and product offerings.
with NBC. One crosspromotional
effort had
Bloomingdale’s 39 stores
taking part in a virtual reality
experience. Shoppers could stand
in a certain spot in the store and snap
photos of themselves using an iPhone
app. Through augmented reality, they
appeared to be standing on a red carpet
with NBC stars such as Hank Azaria of
“Free Agents” and Christina Applegate
of “Up All Night.” The hope was that
shoppers would then share their photos
on social networking sites.
Despite higher prices, Nike published
quarterly results that beat Wall Street
estimates, as it attracted shoppers,
especially in emerging markets. In
China, orders scheduled for delivery
from December 2011 through April
2012 rose 31 percent, with a 12 percent
rise in other emerging markets. Mob
scenes surrounding a new release of
Nike’s retro Air Jordans two days before
Christmas conjured up memories
of the frenzied scenes from the mid to
late 1980s when the release date for Air
Jordans had to be moved to weekends
to keep kids from skipping school.
32

63
IN-STORE AUDIO
While advertising is most often employed to lure customers into a store, advocates of in-store audio argue that it can be even
more effective once they are there. One current strategy gaining favor among retailers is to build on traditional marketing and
advertising efforts by promoting heavily inside the store. The theory is that shoppers come in with one or a few items in mind;
the goal is to entice them to buy more with well-planned advertising and marketing within the store. An in-store audio branding
channel contributes to a great customer experience, encourages impulse buys, motivates sales associates, and makes their
jobs easier.
64 ANTHROPOLOGIE 65 DOLLAR TREE
Female apparel store Anthropologie, known for
its $300 bohemian dresses, quirky accessories, and
unique home goods is expanding its sumptuous
print catalog to digital platforms with an iPad application
designed to increase brand awareness.
The app lets consumers browse the current collection
and features recent news and social media.
Anthropologie is also looking to increase its social
media efforts by embedding the brand’s Facebook
and Tumblr pages into the app. The mid-upscale
retailer also rolled out a commerce-enabled mobile
website that lets shoppers browse and purchase
clothing items. The app has been criticized, however,
for its lack of a store locator feature, which is
crucial to any shopping app. As part of an effort
to revitalize flagging sales following a three-quarter
long revenue drop, Urban Outfitters named
former Under Armour president David W. Mc-
Creight as CEO of its Anthropologie chain and
eliminated the positions of the co-presidents who
previously ran the brand.
66
Changes in spending patterns, especially among low-end consumers,
necessitated by a weak economy, has led to Dollar Tree’s induction into
Standard & Poor’s S&P 500 Index. The discount retailer’s inclusion came
after Dollar Tree added equity of more than 48 percent over a 52-week
period. More signifcantly Dollar Tree reported same-store sales growth
of 7.1 percent, 4.7 percent, and 4.8 percent during the first three quarters
of 2011, respectively. The last quarter increase of 4.8 percent was aided by
a 1.4 percent higher ticket price and a 3.4 percent increase in customers.
AHOLD USA (STOP & SHOP, GIANT, MARINI’S PEAPOD)
Ahold USA, the U.S. division of Amsterdam-based
Ahold, encompasses
376 units of Stop & Shop, 180 Giant
Foods of Landover, Md., and 148 Giant
Foods of Carlisle, Penn. Ahold USA
accounts for approximately 57 per-
cent of the parent company’s total sales.
Additionally, Peapod.com, based in
Skokie, Ill., provides Internet-based
home shopping and grocery delivery as
an integrated element of Stop & Shop
and Giant Foods, serving markets in
11 states and the District of Columbia.
Founded in 1989 by brothers Andrew and
Thomas Parkinson as a wholly owned
subsidiary of international food provider
Royal Ahold, Peapod has grown to be one
of America’s leading Internet grocers.
33

67
STAPLES
With its new 2.0 version iPhone app, office supply and service
chain Staples has turned its signature Easy Button into a fullfeatured
mobile shopping accelerator. The app allows for synchronizing
shopping list construction across desktop and app
so a customer can start a shopping list on the PC and have that
in-process list show up in-store in the app. The code scan feature
can be used to create a list of items that are running low and need
refreshing.
Following its mobile site redesign in the autumn of 2011, Staples
saw a rapid acceleration in customers’ adoption of its mobile site,
which now accounts for about 14 percent of all online. To adapt
to this growth, Staples made several feature improvements to the app, stemming from the needs of small business: a feature specifically
for timely printer cartridge replacement, synchronization of shopping lists across both desktop and app, and barcode
scanning to maintain inventory of supplies that are running low. Also of note is the addition of an in-store mode that activates
when the user checks in at a Staples store. The setting prioritizes different features, including a coupon wallet to use in-store.
68 LOWE’S
69 CABELA’S
As the world’s second-largest hardware
chain, Lowe’s is ranked among the Top
50 corporations in America. Along with
chief competitor Home Depot, Lowe’s
was able to thrive on homeowners’ new
focus on remodeling. Despite signs of
an improving economy and consumer
spending, the retail giant recently announced
that 20 underperforming
stores across the country will be shut
down. Moreover, Lowe’s is also holding
back on its expansion plans of opening
up any new stores. As a part of this
restructuring effort, it will also be laying
off around 2,000 people for better
resource utilization and to maximize
profits. Lowe’s is also working to reduce
promotions and moving toward
an “everyday low price” philosophy in
response to consumers’ reluctance to
undertake pricey home improvement
projects.
Cabela’s takes the concept of in-store
experience to new vistas. After passing
by statues of two huge bears wrestling
at the store’s entrance, outdoor adventurers
are in their element, scouting
out guns, camo rainwear, scent
eliminators, arrow rests, trolling gear,
blinds, tactical knives, camping stoves,
swimbaits, and outdoor-themed furniture
and artwork. A museum presents
dioramas featuring trophy animals, a
walk-through aquarium, and a conservation
mountain complete with a running
stream that ends in a small pond
stocked with live trout. While opportunities
to experience Cabela’s in person
are limited to 35 stores in the U.S.
and Canada, the adventurous retailer is
now shipping its popular print catalogs
with QR codes so customers can scan
special offers or select products using
Cabela’s iPhone or Android app.
34

70 T MOBILE 71 TWITTER
T-Mobile’s 33.6 million customers may
be relieved that the federal government
blocked AT&T’s bid to buy the No. 4
wireless carrier so they can keep their
wireless service plans. But in the long
run, T-Mobile is in an unsustainable
position. Analysts say the company’s
past decisions have painted it into a corner
where it is being squeezed by competitors
on both sides. On the high end,
it can’t compete with Verizon Wireless
and AT&T. At the low end, T-Mobile
is struggling against competitors Sprint
Nextel Corp., which sells governmentsubsidized
“lifeline” service, and MetroPCS
Holdings Corp., which targets
urban, working class consumers with
cheap “unlimited” plans. “We’re stuck
in the middle from a brand point of
view,” says T-Mobile CEO Philipp
Humm. Essentially, T-Mobile is seen as
a cheap brand by those who can afford
better, and an expensive buy for those
who must pinch every penny. That
leaves the most valuable customers, the
ones who buy smartphones and sign
up for two-year contracts with lucrative
data plans. They’re the ones racing
for the exit.
When Twitter was introduced in 2006,
the result of a daylong brainstorming
session among board members of the
podcasting company Odeo, it was
deemed but a trifle, a novelty — a step
backwards, even. Who, in the age of cell
phones and unlimited email, would
choose a platform that constrained
messages to the length of a haiku? But,
lo, five and a half years later, a study
from the University of Washington con-
72
GREEN RETAILING
As consumers increasingly focus on
eco-friendly shopping and greener
lifestyles, “greentailing” has been upgraded
from warm and fuzzy niche
marketing tactic to value proposition.
As demands from both customers and
regulators have tightened, some of the
industry’s biggest players, including
Home Depot, Starbucks, and
Walmart are leading the charge
to more environmentally
aware practices with environmentally
friendly initia-
73
LAYAWAY
firmed what everyone already knew:
Millions of tweets had played a central
role in galvanizing and organizing the
disparate rebel groups that would topple
dictatorships in Tunisia and Egypt.
Think about that for a minute.
tives aimed at reusing materials, eliminating
waste, and preserving resources.
Supermarket chain Tesco has famously
declared its intention of being “a leader
in helping to create a low-carbon economy.”
One green step the company has
taken thus far is bringing emissionfree
delivery vans to London and
other locations. The batterypowered
vehicles save 21 tons
of CO2 per year, the equivalent
of driving 51,000 miles
in a conventional car.
Although the concept still conjures up images of the Great Depression
when merchants gave cash-strapped customers the opportunity to set
items aside until they were paid for in installments, layaway made a surprising
comeback during the recent Great Recession, and big news this
past holiday season when so-called layway “angels” began showing up at
retail outlets such as Kmart and Walmart to anonymously pay off the balances
on strangers’ layaway accounts, releasing troves of set-aside gifts —
especially children’s toys and clothing — in time for family celebrations.
35

It’s instructive to remember that Jeff Bezos founded
Amazon in the mid-1990s, at a time when most re-
tailers and corporations treated the Web as little more
than a space for billboard messages. More than any
other company or institution, Amazon made the Web
a venue for commerce. Amazon’s pioneering security
innovations are responsible for chipping away at customers’
initial reluctance to enter their credit-card
numbers and other sensitive information online. David
Hornik of VentureBlog notes that, “while many
firms use Web platforms successfully, very few make
real money from Web commerce alone. … Amazon
stands out for demonstrating what can be done, and
— just as important — for showing how difficult and
rare real Web-commerce success is. Amazon is so
big, so embedded in our daily habits, that it’s folly to
think it could serve as a useful model for any emerging
firm.”
Amazon now accounts for more than 40 percent of
online commerce transacted in the US, yet Tom Foremski
of Silicon Valley Watcher reckons that Bezos’
most impressive feat may be summed up in Amazon’s
JEFF BEZOS
miniscule operating profit margin — just 2.47 percent
for its most recent quarter. (Compare that to Google’s
33 percent Apple’s 31 percent, and Microsoft’s 39
percent.) Bezos has consistently
rebuffed institutional investors’
pleas to maximize quarterly returns
for the sake of shares value, choosing to focus
instead on long-term profitability and stability, sacrificing
high margins for market share. “Amazon’s slim
margins are a key component of Mr Bezos’ business
strategy in keeping competition away,” says Foremski.
“Amazon forces a competitor to fight in the gutter
over margins that are rounding errors for others.” No
longer content with being a mere retail outlet, Bezos
is turning Amazon into an entertainment hub, taking
bigger risks on ventures such as the Kindle, inking big
Hollywood content deals, providing in-the-cloud access
to music and video, and hosting Web service data
for other firms and institutions. His newly rekindled
spirit of adventure, along with the untimely passing of
Steve Jobs, may yet give Bezos his long-awaited turn
as the wizened savant, showing the world the way to
the future.
36

74
ETHNIC RETAIL
The café inside Walmart’s Hispanic-themed Más Club in
Houston offers fresh-made tortillas. Macy’s Salt Lake City
store carries larger-size cookware to accommodate the area’s
Mormon families, which tend to be bigger. Whole Foods’
special halal promotion during Ramadan boosted sales by
300 percent. The iPhone World Cup app published by Hispanic
network Univision was 2010’s 13th most popular free
application in the U.S. A survey published in Ad Age found
that 42 percent of Hispanics said they are more loyal towards
companies that show appreciation for their culture by advertising
in Spanish. But before they change their logos to red
and green, marketers and retailers are cautioned to consider
that those who identify themselves as Hispanic hail from as
many as 20 different cultures. A campaign targeting the U.S. Mexican population would fall flat (or worse) if aimed at South
Americans or Spaniards. Cultural sensitivity and a working knowledge of cultural taboos are crucial.
75
URBAN OUTFITTERS
Urban Outfitters shares slid 27 percent
in 2011, the year’s biggest drop
among U.S. specialty apparel retailers
except for Aeropostale, costing the retailer
its spot on the Nasdaq 100 Index.
Net income also dropped for the past
four quarters, prompting the chain to
boost discounts to clear slow-moving
inventory. Oppenheimer & Co. analyst
76
ANN TAYLOR
Your mother’s favorite retailer is looking
to become a fashion destination for
women in their twenties. Ann Taylor’s
new online lookbook “The Style For
Students” takes its lead from street style
blogs such as Scott Schumann’s Sartorialist
and Jak and Jill, and features
young women from universities across
Pamela Quintiliano blames “bizarre”
and “lackluster” fashion selections for
the retailer’s woes. It didn’t help matters
when the Philadelphia-based
Urban was served with a cease-anddesist
order from the Navajo Nation
in June 2011 in response to a line of
products emblazoned with bold geometric
designs reminiscent of South-
the country wearing the label’s latest
collections. The brand’s new concept
stores, designed by New York-based
architecture firm S. Russell Groves, feature
a runway of mannequins, crystal
chandeliers, tufted couches, and “shops
within the shop” that lend a more
boutique-y feel. The dressing rooms
western Native American motifs. The
trouble started when Urban Outfitters
described the items as Navajo. Under
the terms of the Federal Indian Arts
and Crafts Act of 1990 and the Federal
Trade Commission Act, it is prohibited
to falsely claim, or even imply, that a
product is Native American-made if it
is not.
are equipped with flattering, back-lit
mirrors and touch screens that display
product information. The retailer saw
its net sales in the third quarter ended
Oct. 29 increase 12 percent to $564
million and net income rise 33 percent
to $32.3 million, compared with the
same quarter last year.
37

77
MACY’S
Macy’s relentless endeavors to keep itself
on a growth trajectory have paid
off. The second-largest U.S. department
store chain, reported earnings that beat
analysts’ estimates and boosted its fullyear
profit forecast as sales increased
faster than the retailer expected. The
company, which sells exclusive goods
by Madonna, Martha Stewart and
Karl Lagerfeld, exceeded projections
as store and online revenue gained at
78 TJ MAXX
DOLLAR GENERAL
Off-price apparel and home fashions
retailer TJ Maxx boasts an unmatched
track record of leveraging modest sales
growth into double-digit profit gains —
a feat it has achieved consistently over
the past decade, with average threeyear
earnings growth figures at nearly
26 percent annually. The retailer’s focus
on selling clothing and accessories
from major-label brands at discount
prices is a proven winner in any economic
climate, as was made clear when
the company sailed through the credit
crisis without so much as a hiccup.
both its namesake and Bloomingdales
chains. From January to November
2011, Macy’s consistently registered
comparable-store sales growth posting
a low of 0.9 percent in March and
a high of 10.8 percent in April, for an
average growth of approximately 5.1
percent. This is far better than its competitor
JCPenney, which witnessed an
average comps growth of a meager 0.8
percent over the same period.
79
Third-quarter earnings for Goodlettsville, Tenn.-based Dollar General jumped
34 percent as same-store sales continued to rise on improved traffic. In addition,
Dollar General approved a new share repurchase program of up to $500 million
in stock. The deep discount leader has seen its profit rise in recent quarters as it
opened new stores and added better-known brands of merchandise. At the end of
the third quarter, Dollar General operated 9,813 stores, up 5.8 percent from a year
earlier, and plans to open about 625 new stores in fiscal 2012, matching its new
store openings for 2011. As with other discount retailers, the company has had to
contend with more conservative spending from its customers.
38

80
FAMILY DOLLAR
While other retailers have closed
stores and struggled with sales, dollar
stores have been in growth mode as
consumers attempt to stretch smaller
incomes or trade down in spending.
Unlike Walmart Supercenters, dollar
stores serve neighborhoods in a small
footprint, sell smaller items, and are
convenient to lower-income shoppers
who walk or take the bus. According to
Nielsen data, 55 percent of Family Dollar
customers have an annual gross income
of less than $40,000 and 24 percent
make less than $20,000. Although
lower incomes make up a majority of
the customer base, a greater number of
those who can afford to shop elsewhere
are finding the convenience factor
makes dollar stores an attractive alternative.
Family Dollar added about 300
stores in 2011 after same-store sales
grew 5 percent. The second-largest U.S.
dollar store chain plans to add as many
as 500 stores in 2012 to accelerate sales
growth.
81
HOME DEPOT
With the housing market in a seemingly endless slump, big-box store Home Depot’s
stock finished strong in 2011, and now trades at levels higher than it did before the
recession. As shoppers spent more per trip, the world’s largest home-improvement
retailer reported a third-quarter profit gain that topped analysts’ estimates. Net income
rose 12 percent to $934 million, or 60 cents a share, in the quarter that ended
Oct. 30, up from $834 million, or 51 cents, a year earlier. CEO Frank Blake has
lured cash-strapped do-it-yourselfers by shifting back-office employees to the floor
and improving distribution from warehouses to stores. The Atlanta-based chain’s
number of transactions increased by 1.2 percent to 325.3 million while shoppers’
average spending rose 3 percent to $53.03 per ticket.
82
BED BATH & BEYOND
Bed Bath & Beyond turned in an unexpectedly stellar
performance reporting fiscal 2011 second quarter earnings
of 93 cents per share, an increase of 33 percent over
the year earnings-per-share figure of 70 cents. Gross
profit of $951 million during the quarter represents a 41
percent margin on sales of $2.3 billion. That compares
with gross profit of $875 million (the same 41 percent
of sales) in the year-ago quarter. The home-and-kitchen
furnishings retailer’s solid management team executed
especially well in an economic environment that threatened
a double-dip recession. Same-store sales growth indicates
that consumers are continuing to buy.
39

83
OAKLEY
This past holiday season, Oakley, maker of eyewear for world-class athletes
released special edition 3D glasses to commemorate Paramount Pictures’
“The Adventures of Tintin” a 3D film extravaganza directed by Steven
Spielberg and produced by Peter Jackson. The Oakley 3D Gascan Tintin
Limited Edition uses the company’s patented optical innovations to offer the
ultimate 3D entertainment experience. The Foothill Ranch, Calif.-based brand, owned by Luxottica SpA, currently holds more
than 600 patents for eyewear, performance gear, and materials for its high-performance sunglasses, sports visors, ski goggles,
watches, backpacks, shoes and other accessories.
84 SEPHORA
BATH & BODY WORKS
The Sephora chain of cosmetics stores founded in France in 1970
and acquired by Paris-based conglomerate LVHM (Moët Hennessy
• Louis Vuitton) in 1997 includes more than 750 stores in
17 countries and carries more than 250 brands, including its own
private label. The trendy cosmetics giant now provides its beauty-
and trend-conscious customers a personal experience through its
iPad 2 app. The tablet’s front-facing camera is used to create a virtual
mirror so that customers can view how-to videos on one side
of the screen while watching themselves create their own runwayworthy
looks. Sephora has also partnered with nail polish brand
Opi to develop an iPhone app that allows customers to match their
skin tone to an on-screen hand and then “try on” a range of virtual
nail colors, which they can then buy through the app.
85
Bath & Body Works’ parent company, Limited Brands,
specialty retailer of women’s intimate and other apparel,
beauty and personal care products, reported adjusted
earnings per share for the third quarter, 2011 up
39 percent to $0.25 compared to earnings per share of
18 cents for the same quarter 2010. Third-quarter operating
income was $186.1 million compared to operating
income of $149.1 million the previous year, and
adjusted net income was $77.6 million compared to
2010 net income of $61.3 million. In 2011, Bath & Body
Works Canada launched a promotional sale in which
all new items in its Signature Collection were priced at
$1. The promotion, intended to entice more customers
to sample the new products, netted the retailer valuable
marketing information regarding the popularity of
each product.
40

86
87
RETAIL AT AIRPORTS
With malls sales stagnating during the recession,
many mass-market retailers began searching for
more fertile locations. Places where people might
have time on their hands — and nowhere else to
go. “Airports are becoming, really, a service facility,
like a shopping mall,” said Jose Gomez, senior vice
president for business development for fashion retailer
Mango which recently opened two stores at
San Francisco International and one in the Orlando
airport. Whether it’s because they are on vacation
or charging to expense accounts, “the experience of
traveling tends to put people in a mode that they’re
prepared to spend money,” says Paul McGinn, president of MarketPlace Development, which manages and leases retail space at
Philadelphia International Airport and LaGuardia. “It is also a venue where — and this is always a funny thing to talk about —
but there’s an awful lot of people that are motivated by guilt. That certainly inspires a lot of sales.”
88
LACOSTE
French apparel retailer Lacoste, founded
in 1933, most famous for selling
tennis shirts emblazoned with its iconic
green alligator logo, is transitioning
into a mainstream brand that deals
with and produces high-end apparel.
The retailer’s new Lacoste L!ve” creates
its collections in association with musicians
and artists from across the world,
CAFÉS AND OTHER AMENITIES
Black Friday marketers and gamification
advocates please take note: There is
strong evidence that shoppers will actually
buy more — and even pay more
— when they are relaxed. A new study
in the Journal of Marketing Research
finds that a calm shopper might spend
up to 15 percent more than a stressed
with a plan to engage a guest artist
or designer for each season. Lacoste
launched its new brand range for
shopper would for the same item. So
how do retailers help their customers
relax? Some are offering soothing amenities
and pampering services such as
trays of complimentary cocktails and
finger food, private events before and
after regular store hours, and cushy
lounge areas with free Wi-Fi and flat
Spring/Summer 2011 with an interactive
campaign shot by renowned party
photographer Cobrasnake. The resulting
film documents a 24-hour party
with models in Paris offering a first
person perspective of the fun and the
opportunity to shop the collection live
with interactive features and personalized
messages popping up throughout.
screens that encourage shoppers to linger.
Department stores and boutiques
are adding in-store cafés, or breaking
up a large store into small rooms, says
Jim Bieri, principal at retail real estateconsulting
firm Stokas Bieri Real Estate
in Detroit. “They engineer it so that
some are almost empty, on purpose.”
41

THE SPIRITUAL SUCCESSOR TO STEVE JOBS
Although Tim Cook assumed the mantle when Ap-
ple’s iconic CEO stepped down due to illness, Walter
Isaacson’s biography of Steve Jobs included the astonishing
disclosure that Apple’s senior vice president
for industrial design, Jonathan “Jony” Ive, has nearly
complete freedom to do as he sees fit. Ive, whom Jobs
called his “spiritual partner,” had “more operation
power” at Apple than anyone besides Jobs himself.
Jobs further told Isaacson that no one at the company
could tell Ive what to do. That, Jobs said, is “the way I
set it up.” When the reclusive and soft-spoken Ive took
the podium at a November event on Apple’s campus
to commemorate Jobs, he looked to be, in the words of
Michael A. Robinson, “as many have pointed out, the
spiritual successor to Steve.” While Ive’s design work
ultimately must mesh with the hardware requirements
coming out of Apple’s engineering groups under Bob
Mansfield, Eric Slivka wrote on MacRumors.com, “it’s
clear from Jobs’ comments that Ive is free to pursue
his own design solutions for Apple products.” That
Jobs-like level of freedom “ultimately helps to guard
against a watering-down effect that could occur if his
designs were subject to the approval of and revision by
others in the company.”
“Perhaps no one spent more time with Jobs in the last
fifteen years, and Jony looks poised, charismatic, and
unbelievably inspired,” Slivka wrote. “In short, he’s not
Steve, but he’s another kind of creative genius.”
Devin Leary-Hanebrink, blogging at Ludwig von
Mises Institute, posits that Jobs’ successor “would
more fittingly be an entrepreneur rather an innovator.”
Jobs, he says, “enjoyed a gift
few possess: the ability to transform
a fledgling idea into a masterpiece.
He rarely created from
scratch, but he could recognize
what we ‘needed’ long before we
even wanted it.” Not to be outdone, Kanye West proclaimed
himself to be Steve Jobs’ successor. In a series
of tweets on Jan. 5, 2012, the rapper announced
that he is creating a company called Donda — named
for his late mother — that “will pick up where Steve
Jobs left off,” with a mission, to “marry our wants and
needs to make products and experiences that people
want and can afford.” Apparently, he wasn’t joking. As
subsequent tweets explained, “We need scientists and
top world designers to directly affect governments.”
And, “I am assembling a team of architects, graphic
designers, directors, musicians, producers, A&Rs,
writers, publicists, social media experts …”. There, his
thought trailed off. Although his global plan remains
short on specifics, we include West here to represent
the countless others like him inspired by Jobs to think
different.
42

90
ELECTRONIC SHELF LABELS
Given the headaches and hours of labor it takes to keep prices accurate
and up to date for a superstore’s worth of product, electronic shelf
labels would seem to be a no-brainer. Yet ESLs, while widely used
in Europe and parts of the West Coast, have seen only limited, experimental
use in other locales. ESLs connect to a storewide network,
communicate with the retailer’s POS system and download prices to
labels at the store, or from a corporate location for numerous store locations
simultaneously. ESLs can also display additional information
via a touchscreen interface such as nutritional information, priceper-measure,
or even recipes. Even though the cost of implementing
ESLs has decreased over the years thanks to improvements in battery
technology and economies of scale, there are still significant startup
costs. The tipping point for ESLs will come if and when there are sufficient
gains in flexible and responsive pricing to justify the cost difference
over cheaper labels.
91
TESCO
CEO Phillip Clarke is confident about
the future of Tesco’s Fresh & Easy
Neighborhood Market because of the
enthusiasm and loyalty of its customer
base, despite the company’s decision
to shutter 13 underperforming units.
“The key components are coming to-
89
RFID IN RETAIL
If the predictions of RFID advocates have their way, grocery store checkout
lines will soon be a thing of the past. RFID technology uses ink laced with
carbon nanotubes to print electronics directly onto items such as cereal boxes
and potato chip bags, and then transmits information about an entire cartload
of groceries when the shopper wheels past a detector that instantly tabulates
the total. RFID also gives retailers an unprecedented ability to fully track
and trace inventory throughout the supply chain from source to shelf to final
sale with near-perfect accuracy. Research conducted by Dr. Bill Hardgrave of
the University of Arkansas RFID Research Center shows that RFID is capable
of accuracy rates topping 99 percent.
gether,” Clarke says, for Fresh & Easy
to achieve profitability in 2012 or 2013,
by which time Tesco expects to be operating
close to 400 U.S. stores. For the
six-month period that ended Aug. 31,
2011, Tesco’s U.S. division, which then
encompassed 159 stores, lost $151
million, while sales rose 47 percent to
$392.7 million and same-store sales
rose approximately 10 percent. The
chain experienced additional losses,
due to costs related to its acquisition of
two suppliers, and increased rent from
unopened stores.
43

92
94
KROGER
Although Kroger’s fiscal third-quarter net income
slipped 2 percent, the performance beat analysts’ expectations
and raised its full-year earnings forecast. Like
many grocers, Kroger has been dealing with rising costs.
The Cincinnati-based company has been passing along
higher prices to consumers to offset rising costs and
increased supplier prices for meat, produce, and other
goods. The nation’s largest grocery chain was recently
named America’s Most Generous Company in a Chronicle
of Philanthropy listing in Forbes magazine. Kroger
contributed 10.9 percent of its $589 million pre-tax profits
($64 million) to charity in 2009, the year Chronicle of
Philanthropy used to make its evaluations.
OVERSTOCK.COM
In a short-lived rebranding experiment
begun in June, the company tried calling
itself by the single-letter domain
name “O.co.” But by November, Overstock.com
was once again Overstock.
com. President Jonathan Johnson notes
that customers continued to call the
company “Overstock.com” through-
93
ABERCROMBIE & FITCH
Mall-based teen retailer Abercrombie & Fitch has announced plans to
open new stores in Paris, Madrid, Dusseldorf, Brussels, and Singapore,
even as its U.S operations continue to struggle. Abercrombie & Fitch
said its better-than-expected second-quarter showing was the result of
both strong international sales and comps. The controversial clothing
retailer faced hostility from parents of tweens in response to its padded
push-up bikini tops for “girls 56 to 58 inches tall” according to the Abercrombie
Kids size chart. In an example of reverse product placement,
the company offered to pay Mike “The Situation” Sorrentino of MTV’s
reality hit Jersey Shore to desist from wearing its products on the show.
out the transition. “What we learned
was that we haven’t yet adequately
transferred the decade of brand equity
we have in Overstock.com. So, we’re
down-shifting the rebranding effort
in order to leverage and transfer that
brand equity,” Johnson says. However,
shoppers can still use O.co as a short
cut to reach its site. Also in November,
the Salt Lake City-based discount
merchant launched a free O.co iPad
application, which features the same
product selection available on the
Overstock.com website.
44

96
AUTOZONE
Auto parts chain AutoZone has the
right business model at the right time.
As consumers tighten their budgets,
they’ve been extending the use of their
cars and delaying plans to buy new
ones. As a result, the median age of
vehicles on the road has extended to
more than seven years (as compared
to about five in 2003). With new vehicle
sales trending at a 13.6-millionper-year
pace, as of November 2011,
97
LANDS’ END
Faced with an increasingly saturated
marketplace and a slowing economy,
Lands’ End is moving more toward
hybrid or multichannel marketing
campaigns and shifting management
focus from product-centric to customer-centric
strategies. As part of its ef-
95
AutoZone has benefited from an increased
demand for parts and accessories
for used cars. AutoZone, which
stocks a wide assortment of replace-
fort to better understand and target its
customers, the global direct merchant
of classically inspired clothing has undertaken
an extensive CRM strategy,
leveraging its existing enterprise data
warehouse to create a customer data
mart for campaign management, and
GYMBOREE
Toddler-targeted Gymboree irked parents and made
news last fall when the company offered onesies
for baby boys emblazoned with the words “Smart
Like Daddy,” while the corresponding girls’ onesie
said, “Pretty Like Mommy.” The children’s clothier
announced last February that it would use its
$1.8 billion leveraged buyout by Bain Capital LLC
to refinance debt. The company replaced an $820
million loan with one that has no financial maintenance
covenants. The San Francisco-based retailer’s
net sales for the 39 weeks ended Oct. 29, 2011, increased
to $815.7 million from $745.0 million in the
same period the previous year, an increase of $70.7
million, or 9.5 percent.
ment hard parts, maintenance items,
and accessories has also benefited from
declines in gas prices that have encouraged
an increase in driving.
implementing enterprise marketing
automation software. By implementing
enterprise marketing automation software,
Lands’ End hopes to improve its
current operational processes as well
develop more targeted, personalized
marketing strategies.
45

98
GUESS
Despite weak holiday sales, Guess has
made a “conscious decision” to cut
down on markdowns and promotions.
“We cannot and we would not continue
to go in that direction,” says CEO Paul
Marciano. The company, which generates
more than 40 percent of its sales
from Europe, expects a challenging
year ahead as the sovereign debt crisis
moves closer to the heart of the eurozone.
Guess is now banking on store expansion
in North America and growth
in Asia to help drive profits and offset
99 PAYLESS SHOESOURCE 100
Faced with a U.S. unemployment rate averaging 9 percent
and competition from shoe departments at discount
retailers such as Target Corp. and Walmart, Collective
Brands, is closing 475 underperforming Payless
and Stride Rite stores — about 10 percent of its total
locations—over the next three years, more than 300 of
which were to be shut by January 2012. Luring priceconscious
urban-area customers in the wake of the longest
recession since the Great Depression has been the
company’s biggest challenge, as Payless saw same-store
sales drop for four straight years.
the weakness in Europe. The trenddefining
apparel retailer is among the
first in line to try using Microstrategy’s
Gateway for Facebook analytics to tap
into Guess’s one million Facebook fans
and nudge its social media marketing
conversion rate above the typical tenth
of a percent mark. The Microstrategy
gateway opens the possibility of using
Facebook as a CRM database, says
Guess CIO Michael Relich. Incorporating
Facebook data into customer
profiles will relieve Guess from probing
too deeply into customer preferences
when they sign up for the loyalty
program, something many shoppers
dislike. By pulling shopper data from
Facebook, Guess expects to enrich its
customer profiles and keep them automatically
up to date.
GODIVA CHOCOLATIER
This year, marketers at Godiva were saddled with the daunting task
of persuading women to eat more chocolate. Their answer? Put the
high-end chocolatier’s wares within arm’s reach where consumers
can just munch them mindlessly. At the risk of diminishing its upscale
brand, the 80-year-old boutique chocolatier began placing its
indulgent confections on grocery store shelves in the form of jumbo
candy bars, cupcakes and
brownies. Godiva even
uses its exquisite, premium-priced
chocolate
to coat pretzels, espresso
beans and — gasp! —
Oreos. “We want to get
more Godiva into people’s
mouths more often,”
explains chief marketing
officer and senior vice
president of global brand
development Lauri Kien
Kotcher. “It’s all about
chocolate snacks, little
chocolate treats. … When
those things come, you
just keep eating.”
46

DRIVE
CUSTOMER
ENGAGEMENT
AND BUILD
LOYALTY
Today consumers and businesses rely on smartphones, tablets
and other Wi-Fi enabled devices for a wide array of personal and
commercial applications. Now Motorola’s Proximity Awareness
& Analytics Solution makes it possible to use these devices to
improve consumer engagement and improve associate productivity
in WLAN environments. Use your Wi-Fi infrastructure to capture
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coupons. Enable applications that help drive employee productivity
and service delivery. Get the data you need to turn browsing into
buying – and prospects into profits.
Learn more at:
motorolasolutions.com/shopperengagement
MOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC
and are used under license. All other trademarks are the property of their respective owners. © 2012 Motorola Solutions, Inc. All rights reserved.