tornado effect in retail: leveraging constant innovation for growth
DESCRIPTION
Douglas M. Smith, Chief Innovator of HolyTornado! presents a new way for retailers to turn empowered customers into empowered shoppers. By leveraging constant innovation, or Tornado Effects, retailers can create real growth.TRANSCRIPT
© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVED
DOUGLAS M. SMITH - CHIEF INNOVATOR
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APPLE STORE LAUNCHES IN CONVENT GARDEN
WITH QUEUES AROUND THE BLOCK
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RETAILERS LIKE APPLE ARE LEVERAGING
TORNADO EFFECTS TO CROSS THE CHASM TO REACH THE HOLY GRAIL OF LIFE INSIDE THE TORNADO
TECHNOLOGY ADOPTION CURVE APPLIES TO RETAIL
CHASM
TORNADO
BOWLING ALLEY
(FOCUSING)
BOWLING ALLEY
(FOCUSING)
MAINSTREET
(CONCEPT MAINSTREAMS)
FULL ADOPTION
EARLY MOVERS
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HOW WE KNOW THESE TORNADO EFFECTS EXIST?
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BLOCKBUSTER, KILLED BY COMPLACENCY
WHILE RIVAL NETFLIX INNOVATES AROUND CUSTOMERS.
Photo by The Consumerist
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Will Rogers 1879-1935
“Even if you’re on the right track, you’ll get run over if you just sit there.”
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"Shoppers are tuning out. Worse, they are
exhausted by their shopping experience
when they should be energized. That's what
happens when you force shoppers to think about
getting low prices when what they want is to feel
good about what they're buying. "
Al Wittemen - MD Retail strategy, Advantage Retail
THE TRAIN IS COMING
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SHOPPERS DON’T LOVE SHOPPING
• pushy or over-enthusiastic staff
• music being played too loudly
• having to queue
• battling with crowds
52%
Source: Mintel research
I hate…
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SHOPPER SATISFACTION DECLINING ± 15% / YR*
• arrogant and nasty salespeople
• communal changing rooms - even among teenagers
• paying a small fortune for something that will go out of fashion
Source: *IPG Media Lab & Mintel research
I hate…
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TYPICAL SHOPPER GOES THROUGH
THE BIG DIP
OptimismAnticipation
Hope
PessimismFrustration
Irritation
Initial enthusiasm
The process of buying
Getting the product
(if you’re lucky)
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Retail Sales Index (3 months on previous 3 months %)
Chart to compare 1st estimate with 12 months later
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
Mar -04 Sep- 04 Mar-05 Sep- 05 Mar-06 Sep-06 Mar -07 Sep- 07 Mar-08 Sep-08
First Estimate Value 12 Months laterPercentRETAIL SALES INDEX
(3 mo. on 3 mo. %)
RESULTING IN NEGLIGIBLE GROWTH
LOW GROWTH IS HERE TO STAY
“The market scraped marginal growth in 2009 and I
see a low growth environment as here to stay. The
combination of a weak economic outlook and a changing
consumer means the industry is at a key inflection point as
it re-aligns itself to a new reality. What growth there
is will be absorbed by online. Like-for-like sales
will thus dip in and out of negative territory on a monthly
basis.” - Helen Dickinson, KPMG
Source: KPMG/Synovate Retail Think Tank Whitepaper, Feb 2010Published by the
BRITISH RETAIL CONSORTIUM
MEANWHILE…
2006 2007 2008 2009 2010 2011
$406.8
$357.4
$307.1
$255.7
$196.9
$132.9
(37.2%)
(28%)
(25.6%)
(20%)
(15.6%)
B2C E-COMMERCE SALES* IN EUROPE** 2006-2011
(billions USD and %increase vs. prior year)
Source: eMarketer*includes online travel, event ticket and digital download sales; **includes Austria, Belgium, Denmark, France, Finland, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK
© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVEDSource: Forrester Research Inc. Report, “ U.S. Online
Retail Forecast, 2009 to 2014”
2.5%
11%TOTAL PREDICTED E-RETAIL GROWTH IN 2010
10%/YREST. GROWTH OVER NEXT 5 YEARS
VALUE OF E-RETAIL IN 2014 WILL TOTAL $249 BILLION.
PREDICTED TOTAL US RETAIL GROWTH IN 2010
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$1,409,000,000
= 53% OF ALL RETAIL SALES
VALUE OF US SALES INFLUENCED BY THE WEB BY 2014
Source: Forrester Research Inc. Report, “ U.S. Online
Retail Forecast, 2009 to 2014”
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ONLINE VS. HIGH STREET
Experience
Better choice
Time savings / convenience
Empowerment
Customer Service
E-RETAIL
HIGH
STREET
SHOPPERS LIVE IN
TWO DIFFERENT
WORLDS
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© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVED Source: Interbrand Top 50 Retail Brands
SOME BRANDS ARE SHOWING
THE WAY FORWARD
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FIRST RETAILER TO ELIMINATE COMMISSIONS
EARLY MULTI-CHANNEL ADOPTER
Source: BEST BUY ANNUAL REPORT
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NOW INNOVATES AROUND CUSTOMER INSIGHTS
Source: BEST BUY ANNUAL REPORT
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CREATED LIVING ROOMS TO SHOWCASE EQUIPMENT
BASED ON INSIGHTS INTO FEMALE BUYERS
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CREATED GEEK SQUADS
BASED ON INSIGHTS INTO DIFFICULTIES CUSTOMERS HAVE WITH TECH.
GEEK SQUAD NERDY ATTIRE IS INSTANTLY
RECOGNIZABLE
TURNING BLAND EXPERIENCES
INTO SOMETHING MEMORABLE
SERVICES 6% OF
DOMESTIC REVENUE=+
CUSTOMER CENTRIC INNOVATIONS
IS FUELING GROWTH
NATIONALLY AND INTERNATIONALLY
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THE TORNADO EFFECT IN RETAIL
1. LEVERAGE CONSTANT AND RAPID INNOVATION
2. THINK OUTSIDE THE BOX
3. TAKE RISK
4. FAILURE LEADS TO SUCCESS
5. FOCUS ON THE CUSTOMER, NOT SALES
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Kakushin
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Katsuaki Watanabe IN A 2006 INTERVIEW
WITH THE WALL STREET JOURNAL
“KAIZEN IS OUT. KAKUSIN IS IN.”
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SHAPES WHAT HAPPENS INSIDE THE FUNNEL
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THE NEW CUSTOMER
JOURNEY INSIDE A
TORNADO EFFECT
DRIVEN FUNNEL
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ENGAGE
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MOST CAMPAIGNS FAIL IN-STORE
DESPITE DOING WELL ONLINE AND OFF
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OUR OBJECTIVE NEEDS TO BE
TO REVERSE THE BIG DIP
“I’ve bought it!”
“I’m going somewhere else, or not buying at all”
OptimismAnticipation
Hope
PessimismFrustration
Irritation
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ENGAGE >BE INTEGRATED
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WHEN YOU DO A CAMPAIGN ONLINE, MAKE IT LIVE IN RETAIL.
CONTINUE THE JOURNEY AND THE CONVERSATIONS.
!WATCH HEREhttp://www.youtube.com/watch?v=Ojx2wVWlx-0
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ENGAGE >BE INTEGRATED>BE SURPRISING
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LEVERAGE DIGITAL ENABLED WINDOW DISPLAYS
TO SURPRISE & DELIGHT
!WATCH HEREhttp://www.youtube.com/watch?v=qN0PkWRj_Hs
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USE CEILINGS AND WALLS TO TURN EVERY
SPACE INTO SOMETHING UNIQUE
Courtesy of THE EMBRYO STUDIO
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ENGAGE >BE INTEGRATED>BE SURPRISING
>BE SMART
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THINK LIKE A HAIRDRESSER
KNOW YOUR CUSTOMER & WHAT
THEY LIKE TO EARN STRONG LOYALTY
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SALON PLAN B IN CAMBRIDGE, MA. HOLDS 15 MIN.
SKYPE CALLS WITH CUSTOMERS BEFORE THEY VISIT
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ADIDAS miCOACH TAKES
YOUR TRAINING DATA IN-STORE
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FOR A PERSONAL SHOPPING EXPERIENCE
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ADIDAS mi INNOVATION GOES FURTHER WITH AN
INSTORE DIGITAL RUNNING TRACK
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CONCEPT STORES NOW 43% OF ADIDAS RETAIL
SALES AND 50+% OF ALL STORE FORMATS!
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EXCITEENGAGE
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EXCITE >BE REMARKABLE
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50%
APPLE RETAIL’S SPACE FOR KNOWLEDGE & SERVICE
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• NO COMMISSIONS
• TEAM BONUSES
• FOCUS ON THE EXPERIENCE
• HIRE FOR PERSONALITY, ATTITUDE
AND CUSTOMER FIT. TRAIN THE
REST
• 3 WEEK IMMERSION ONLY ON
CUSTOMER RELATIONSHIP SKILLS
AND UNDERSTANDING CUSTOMER
NEEDS/LIFESTYLE
• ALL PRODUCT TRAINING ONLINE
(EXCEPT GENIUSES)
APPLE RE-THINKS RETAIL JOBS
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Apple Retail 2001
Sorry Steve, Apple Stores Won’t Work
(Business Week)
Apple Retail 2004:
Fastest retailer ever to reach the
$1 billion mark a year
Apple Retail 2006
Fastest retailer ever to reach
$1 billion/quarter mark
Apple Retail 2007
Sales per sq.meter = $ 30,176
(as comparison: BestBuy = $10,643)
AND GET’S RECORD-BREAKING RESULTS!
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ADIDAS JAPANESE STORE IS MORE THAN A STORE
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SHOWERCHANGE
IT’S A PLACE TO…
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DISNEY IS TURNING ITS STORES INTO “IMAGINATION PARKS”
DISNEY IS TURNING ITS STORES INTO
“IMAGINATION PARKS,”
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WHERE KIDS CAN CUSTOMIZE
THEIR OWN CARS TOYS,
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PLAY IN MAGIC CASTLES,
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CREATE
CHARACTERS
WITH A WAVE OF
A WAND,
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AND ENJOY
THEATRE ALL
DAY LONG.
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EXCITE >BE REMARKABLE>BE CONSISTENT
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ADDING FUN BACK INTO HAMLEY’S ADDING FUN BACK INTO HAMLEY’S
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WHERE IT’S OKAY TO PLAY
ACTORS HIRED TO INVITE PEOPLE TO TO PLAY
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AND PARTY WITH THE STAFF IN THEME
DAYS AND PARTIES
AND PARTY WITH THE STAFF IN THEME DAYS & PARTIES.
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£100K PROFIT FIRST QUARTER! SALES UP 5%
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EXCITE >BE REMARKABLE>BE CONSISTENT
>BE RELEVANT
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A SPORTS STORE THAT BRINGS THE
OUTSIDE IN
FEATURING CLIMBING WALLS, MOUNTAIN BIKE TRACKS, RAIN CHAMBERS FOR TESTING WET-WEATHER GEAR, FISHING PONDS, ARCHERY RANGES & PUTTING GREENS
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HMV CONNECTS WITH GAMERS
CREATES GAMERBASE
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AND ‘GETS CLOSER’ TO AN INSTANT COMMUNITY.
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FRENCH MOBILE RETAILER MIXES
MUSIC AND PHONES
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WITH LIVE CONCERTS AND PLACES TO
DOWNLOAD AND LISTEN TO MUSIC.
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EMPOWEREXCITEENGAGE
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EMPOWER >GIVE CONTROL
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MOBILE APPS LIKE SHOPSAVVY EMPOWER SHOPPERS TO SCAN PRODUCT BAR CODES AND FIND CHEAPER PLACES TO BUY GOODS
DOWNLOADED BY 4.5 MILLION USERS & 1 MILLION BAR CODES SCANNED DAILY.
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MIELE IN VIANEN CREATES REACTIVE DISPLAYS
TAILORED TO YOUR PREFERENCES
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INTERACTIVE MIRRORS EMPOWER
SHOPPERS TO FIND WHAT THEY WANT
!WATCH HEREhttp://www.youtube.com/watch?v=Ojx2wVWlx-0
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GROWING USE IN FASHION (DIESEL STORE, GINZA)
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PRODUCING STRONG RESULTS
MITSUKOSHI BUSINESS RESULTS
90% customer satisfaction
25% savings in staff time
15.8% increase in sales
revenue over previous year
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EMPOWER >GIVE CONTROL
>BE CONVENIENT
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A KIOSK OR MOBILE STORE ALLOWS SHOPPERS TO
PURCHASE STOCK THAT’S IN THE E-STORE
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OPTIMUS LETS SHOPPERS CONFIGURE THEIR PHONE
ON THE SPOT WITH FILMS, MUSIC, GAMES.
SOURCE: DISPLAX
!WATCH HERE http://www.youtube.com/watch?v=Pt2xt7914f4
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ANYTHING CAN BE VENDED.
FORGOT YOUR IPOD? BUY ONE HERE.
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WHO NEEDS A CONVENIENCE STORE
WHEN YOU HAVE ONE OF THESE.
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DON’T FORGET TO BUY THAT LUXURY COSMETIC
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OR A PAIR OF SNEAKERS
THE NEXT TIME YOU’RE BAREFOOTED ON CARNABY LANE.
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OR EVEN A PAIR OF JEANS.
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HOW ABOUT 64 VARIETIES OF FRESH ICE-CREAM
MIXED FRESH IN THIS $15 MILLION MACHINE
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AND YES YOU CAN EVEN BUY A CAR.
NOT THIS ONE, IT’S A CAMPAIGN.
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BUT THE MORGAN HOTEL’S VENDING SHOP,
WILL SELL YOU A BENTLEY.
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EMPOWER >GIVE CONTROL
>BE CONVENIENT>BE CONNECTED
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BLOOMINGDALE’S
DRESSING ROOM
MIRROR LETS YOU
FASHION WITH
FRIENDS
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21 MILLION CUSTOMER REVIEWS & COUNTING
21 MILLION CUSTOMER REVIEWS & COUNTING
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WHY DO LOYAL CUSTOMERS PHOTO THEMSELVES
ALL OVER THE WORLD?
MOOSEJAW PUTS CUSTOMERS AT THE CENTER.
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!WATCH HERE http://www.youtube.com/watch?v=fnkDt5xq2M4
IN FACT, THERE’S NOT MUCH THEY
WON’T DO FOR YOU
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WHICH IS WHY THEY INTEGRATED THEIR WEBSITE,
MOBILE & POINT OF SALE SYSTEMS…
TO PROVIDE A SEAMLESS SHOPPING EXPERIENCE.
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THAT WAY YOU CAN PARTICIPATE, READ REVIEWS, HAVE
FUN NO MATTER WHERE YOU ARE
THAT WAY YOU CAN PARTICIPATE, READ REVIEWS, &
HAVE FUN NO MATTER WHERE YOU ARE.
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Increase in conversions:
3 to 4%
Increase in sales:
+10%
Increase in items sold/visit
1.9 to 2.5
OH, AND IT DOES GIVE GOOD RESULTS TOO
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TORNADO EFFECT RETAILERS ARE
DRAMATICALLY CHANGING THE
GAME AND GIVING SHOPPERS
WHAT THEY WANT:
A GREAT SHOPPING EXPERIENCE
WHERE THE CUSTOMER IS IN
CONTROL.
PROCESS
1. KNOW YOUR CUSTOMER
2. IDENTIFY KEY DECISION POINTS WITHIN
YOUR STORE. THESE ARE KEY IN-STORE
CONVERSION MOMENTS.
3. SET YOUR BENCHMARKS
4. PLAN YOUR STORE EXPERIENCE
AROUND THE CUSTOMER
5. DESIGN YOUR STORE INTERACTIONS TO
EXCITE, ENGAGE AND EMPOWER
6. TEST AND REFINE YOUR APPROACH
7. MEASURE THE RESULTS
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READY TO CREATE YOUR OWN TORNADO EFFECT?
CALL NOW: +44 772 4 03 91 68