Monday Nov 19, 2012

Selling Solutions, Not Products

When I think about next-generation retailers, the names that come to mind are Apple, Whole Foods, Lulu Lemon, and IKEA.  They may not be the biggest retailers, but they are certainly growing fast. Success is never defined by just one dimension, and these retailers execute well across many dimensions, but the one that stands out for me is customer experience.  These stores feel...approachable...part of the community...local.  Customers are not intimidated to ask questions, and staff seem to go out of their way to help.

What's makes these retailers stand out in the industry?  These retailers aren't selling products -- they're selling solutions.  Think about that.  You think you're going to the Apple store to buy a phone, but you're actually buying a communications solution that handles much, much more.  If you carry an iPhone, your life has changed.  The way you do things is different.  The impacts go much beyond a simple phone.

Solutions start with a problem, which is why these retailers greet customers with "what brought you in today," or "can I answer any questions for you?"  Good retailers establish a relationship, even if it lasts only a few minutes.

You don't walk into Whole Foods looking for cans of soup.  You are looking for meals: healthy snacks, interesting lunches, exotic dinners.  Its a learning experience where you might discover solutions to problems you didn't know you had.  Mention what foods you like, and you'll get a list of similar items you had not considered.  I didn't know I needed a closet organizer until I visited an IKEA and learned about all the options.  They were able to customize the solution to meet my needs, and now I'm much more organized.

One of the differences between selling products and selling solutions is training.  Visit any of these retailers' sites and you'll see a long list of in-store events for the benefit of customers.  You can buy exercise clothing from Lulu Lemon, and also learn new yoga techniques, meet like-minded people, and branch off to other fitness regimes via their ambassadors.  You can visit the Geek Bar at Apple, eat lunch at IKEA, and learn to cook at Whole Foods.

These retailers are making an investment in a relationship with their customers.  They are showing loyalty to their customers before asking for it back.  In the long-run, this strategic approach will outlive any scan-and-bag mentality.

Friday Aug 31, 2012

Retail CEO Interviews

Businessweek's 2012 Interview Issue has interviews with three retail CEOs that are worth a quick read.  I copied some excerpts below, but please follow the links to the entire interviews.

Ron Johnson, CEO JCPenney

Take me through your merchandising.
One of the things I learned from Steve [Jobs]—Steve said three times in his life he had the chance to be part of the change of an interface. If you change the interface, you can dramatically change the entire experience of the product. For Steve, that was the mouse, the scroll wheel on the iPod, and then the [touch]screen. What we’re trying to do here is change the interface of retail. What we call that is the street, and you’re standing in the middle of it.

When you walk into a store today, you’re overwhelmed by merchandise. There is a narrow aisle. Typically, it’s filled with product on tables and you’re overwhelmed with the noise of signs and promotions. Especially in the age of the Internet, the idea of going to a very large store and having so much abundance is actually not very appealing. The first thing you find here is you’re inspired. I have used the mannequins. The street is actually this new navigation path for a retail store. So if you come in here—you’ll notice that these aisles are 14 feet wide. These are wider than Nordstrom’s (JWN).

Slide show of JCPenney store.

Walter Robb, co-CEO Whole Foods

What did you learn from the recent recession about selling groceries?
It was a lot of humble pie, because our sales experienced a drop that I have never seen in 32 years of retail. Customers left us in droves. We also learned that there were some very loyal customers who loved Whole Foods (WFM), people who said, “I like what you stand for. I like coming here. I like this experience.” That was very affirming. I think the realization was that we’ve got some customers, and we need to make sure we know who they are. So instead of chasing every customer out there, we started doing customer discussion groups. We were growing for growth’s sake, which is not a good strategy. We were chasing the rainbow. We cut the growth in half overnight and said, “All right, slow down. Let’s make sure we’re doing this better and more thoroughly and more thoughtfully.” This company is a mission-based company. This company started to change the world by bringing healthier food to the world. It’s not about the money, it’s about the impact, and this company is back on track as a result of those experiences.

Video of Whole Foods store tour.

Kay Krill, CEO Ann Taylor

You’ve worked in retail all your life. What drew you to it?
I graduated from college, and I did not know what I wanted to do. Macy’s (M) came to campus to interview for their training program, and I thought, “Let me give it a try.” I got the job and fell in love with the industry. The president of Macy’s at the time said, “If you don’t wake up every morning dying to go to work, then retailing is not for you; it has to be in your blood.” It was in my blood. I love the fact that every day is different. You can get to be creative one day, financial the next day, marketing the next. I love going to stores. I love talking to associates. I love talking to clients. There’s not a predictable day.

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David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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