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The New World of Retail Requires a New Type of Talent

Investment in the development of employees pays off. One study conducted by ICF International Inc. reported that the median company return on such programs was 7X the initial investment.

Opportunities for ongoing learning and development can be powerful motivators for employees and can help solidify the employee/employer relationship for improved retention and performance- and evidence shows it’s something that employees want. According to LinkedIn’s 2018 Workplace Learning Report, 56% of employees say they would spend more time on learning and development if courses were recommended by their manager, and 94% say they would stay at a company longer if it invested in their career development (LinkedIn Learning and Development Report).  Executing a formalized learning and development program is easier said than done and many well-intentioned courses ultimately come up short. Why are so many development programs struggling to achieve what they set out to do?

Training ≠ Development

First, it is important to understand that development is not the same thing as training. Training happens at a point-in-time (or time frame) and on a specific skill, system, function, etc. with little room for creativity.  Development, on the other hand, is ongoing, open-ended and something that should be consistently nurtured. It focuses on soft as well as hard skills, building better leaders from every angle. While training certainly serves a necessary purpose, development programs provide the foundation to build winning organizations. The best (and most successful) programs are multi-format, interactive and get people to think outside of the scope of their day-to-day roles.

Your People are an Asset

Second, many programs focus exclusively on development as an individual at the expense of the whole. To take leadership development to the next level, focus on ways to encourage collaboration amongst employees that wouldn’t otherwise have the opportunity to collaborate. Leverage the broader team to challenge one another, build each other up, and to share ideas. Not only does evidence show that these types of programs improve the retention rate amongst top talent and lower the cost of turnover, cross-functional training also helps to solidify bonds throughout the organization.

We have said it before, and we will say it again: the new world of retail requires a new type of talent.

What are You Waiting For?

We’ve been working with clients to develop and lead transformational retail workshops and dynamic training programs that get participants out of their comfort zone with cross-industry case studies, expert speakers, collaborative team building activities and inspirational study tours that drive real-world results.  What are you waiting for? Contact the experts at McMillanDoolittle to inquire about our customized training programs to serve your teams.  Our 2019 client course work has achieved a 99% satisfaction rate among surveyed participants, reflecting our highly collaborative approach and deep commitment to client success.  We would be happy to share examples of recent course topics, outlines, and client testimonials with you to help us jointly develop and execute a learning and development program that exceeds your needs.

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Different Leaders, Different Results: Modern Retail Requires A New View From The Top

CHICAGO, IL- Aug. 5th, 2019 In this report McMillanDoolittle details shifting consumer expectations across all retail categories – and the blind spots the leaders of both legacy retailers and digital natives must overcome as they adapt to an integrated retail landscape.

In Different Leaders / Different Results McMillanDoolittle estimates that consumers already spend $.45 of every dollar within categories where they expect their retailer to provide an integrated user experience, allowing them to make purchases and fulfill their transactions in the way that best suits their needs.  These retailers require a new set of capabilities – driven by a new leadership mindset – to provide an integrated consumer journey.

As consumer expectations have shifted, new winners have emerged. Target, Warby Parker, & Domino’s are retailers that top our list.  Meanwhile, some retailers that are just now opening stores are missing the opportunity to build integrated capabilities from a clean foundation.  Many Digitally Native retailers are rapidly opening stores but do not operate “as one” with their digital presence. The customer is not at the center.

Due to their heritage, both digital natives and legacy retailers have executive blind spots that can be barriers to effectively operating an integrated retail model.  McMillanDoolittle research found that only 7% of the leaders of digital natives come from traditional retail functions such as buying or merchandising.  Meanwhile, legacy retailers lack marketing-driven retail expertise, with only 5% coming from marketing and even fewer have technology or analytics expertise.  Both leadership profiles have their advantages – and blind spots. These legacy retailer and digital native executives can learn from each other to develop new models for leadership, customer-centricity, multi-channel shopping, and operations.

McMillanDoolittle forecasts that spending at integrated retailers will nearly double to $.86 of every dollar within five years. It remains to be seen which culture of leadership – and business model – can integrate more quickly to capture this share but doing so will be key to the future success of each.

McMillanDoolittle LLP is a retail consulting firm based in the U.S.A.  Since 1986, our team has helped retailers and suppliers worldwide to successfully navigate and conquer the changing retail marketplace.  There are only winners and losers in retail. Armed with decades of experience, an unparalleled commitment to your team, and play-making insights, McMillanDoolittle helps you win.

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What’s New: Chicago Retail Rundown

From pop-up shops to Digital Natives opening retail stores, some new concepts have recently hit the Chicago market. Stores are still relevant, and creating engaging experiences that drive customers to visit remains a top priority. We are sharing a few stores to visit if you live in or are visiting the area.

  1. Virgil Abloh designed and inspired pop-ups. The pop-ups are part of a larger effort, where he is running a concurrent exhibit Figures of Speech at the Museum of Contemporary Art. The exhibit was reportedly an effort three years in the making and is the epicenter of the pop-up collaborations:
    • Nike Re-Creation: Nike and creative genius Virgil Abloh recently opened the Re-Creation pop-up as a destination for sustainability, workshops, give back programs, product exclusives and local influencers. The store goes well beyond traditional retail and shows the true meaning of redefining the retail experience with a focus on engagement and sustainability. Located next to Nike Chicago at 669 N Michigan Avenue. The exhibit closes on July 28th.
    • Louis Vuitton Pop-Up: A hard one to miss if you are in the West Loop neighborhood, the neon orange painted building is a homage to its menswear artistic director Virgil Abloh and the men’s 2019 Fall/Winter collection. The pop-up also has a car service that takes shoppers to the LV Michigan Avenue store to continue the shopping experience. An interesting tie-in to the store and encouraging more purchases. A few limited-edition, orange-hued pieces are for sale inside the pop-up shop, open through July 7th at 1100 W. Randolph St.
  2. Amazon Go: Amazon has expanded its retail footprint with Amazon Go throughout the city. The frictionless and “just walk out” experience is reinventing retail. Amazon Go currently has four locations in Chicago: 500 W Madison; 113 S Franklin; 111 E Wacker; 144 S Clark.
  3. Allbirds: A Digital Native, Allbirds is expanding its store base with the newest location in Chicago selling casual wool sneakers for men and women. Allbirds is located in Lincoln Park at 843 W Armitage.
  4. Roots: Canadian apparel chain Roots recently opened its largest store to-date on Chicago’s famous Michigan Avenue. The store offers personalization stations for the brand’s salt-and-pepper sweats and leather products. Spanning 11,448 square feet, the store offers a full scope of the brand’s offerings including men’s, women’s and children’s, in addition to its artisanal leather products and premium sweats. This is Roots’ eighth U.S. store and located at 605 N Michigan Avenue.
  5. Politan Row Food Hall: The food hall does a great job of integrating a variety of cuisines from Mediterranean to Mexican, Indian, Vegan, Asian and more – a curated assortment of nine restaurants, a bar and beer garden. Many of the vendors are behind popular Chicago restaurants like Fat Shallot and Café Tola. Politan Row is a spinoff of the New Orleans food hall, St. Roch Market serving as a hub for entrepreneurs to build a name for themselves and eventually opening their own full-service restaurants. Politan Row is in the West Loop neighborhood at 111 N Aberdeen.

We are always scouting the latest and greatest retail concepts in every market. Contact us to learn more about our study tour services!

Interested in innovations? Download a copy of our Retail Innovations book here.

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Small Is The New Big: Specialty Food Growth Outpaces The Market

Recently, the Specialty Food Association (SFA) released its annual State of the Specialty Food Industry Report, which highlighted that small or specialty food brands are driving the most growth and innovation. According to the report, total sales in specialty foods grew by 10.3% versus 3.1% for all food at retail, bringing specialty food’s market size to roughly $150 billion or 16.1% of the total market. And, there seems to be no sign of the market slowing down.

Specialty food is becoming less of a fringe item and more mainstream, which provides retailers with an opportunity for differentiation. This market was previously dominated by Whole Foods and smaller specialty food stores. However, as Amazon continues to integrate Whole Foods, the culture has become more corporate and lost its feel – this presents a void and an opportunity for all retailers.

One example is the growth of plant-based meat alternatives such as Beyond Meat and Impossible Foods. Beyond Meat went public in May with a valuation close to $6 billion while Impossible Foods raised more private funding this past May to bring their total to $750M. Both companies have been able to garner the attention of grocery operators and restaurants alike and prove it can drive increases in traffic and same-store sales.  Lofty evaluations aside, the momentum for alternative and plant-based proteins seems real, driven largely by millennial demand.

Specialty foods are driving growth and disrupting the food retail industry. I saw many new trends in the market at this year’s Expo West Show that continue to grow.

    1. Dairy-free alternatives are expanding into other categories and exploding the segment.
    2. Functional beverages are blowing up with creative infusions including CBD, Kombucha, and others that serve a distinct purpose.
    3. Healthy alternatives are on the rise to accommodate dietary needs including paleo, grain-free, and gluten-free among others.
    4. Food conglomerates like Kellogg’s are making major investments in health foods including brands like RXBar.
    5. Innovation continues to improve in frozen and refrigerated options.

This has two significant points of impact on the industry at large:

  • From a retailer point of view, the Amazon influence on Whole Foods is running the risk of alienating its core customer. A void has appeared that represents an opportunity for other retailers such as Sprouts, Natural Grocers and new chains popping up on a regional basis. The retailers that cater to these shifts in specialty food will demonstrate growth and relevancy to a wider audience of consumers.
  • From a “big” food standpoint, growth will continue to be fueled by small to mid-sized brands that do a better job of capturing key food trends that appeal to the next generation customer. With the big CPG manufacturers largely failing to develop these brands on their own, expect more efforts around incubation, VC backed efforts (often in collaboration with the large brands) and rapid acquisitions of promising start-ups.

The buzz around small and specialty is very real, and likely will be the driver of future industry growth.

Interested in innovations? Download a copy of our Retail Innovations book here.

This article first appeared in Forbes.

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What’s Old is New Again – NikeLab Chicago Re-Creation Store Opens

In good company, Nike and creative genius Virgil Abloh recently opened the Re-Creation pop-up in Chicago as a destination for sustainability, workshops, give back programs, product exclusives and local influencers. The store goes well beyond traditional retail and shows the true meaning of redefining the retail experience.   The focus on community engagement and sustainability is unique and goes to show where the future of retail is headed:  Stores are still relevant, product may be less relevant, and experience is everything.

Less than half of the store space is used for retail, and what makes it unique is the Mentorship and Reuse-a-Shoe programs.   The Mentorship Program brings in design students, hand-picked by Abloh for an eight-week experience where they work alongside other Nike creatives and local artist/mentors. Mentors include an impressive list of local artists like Chuck Anderson for Graphic Design, Paul Octavious for Photography, Thomas Kelley and Carrie Norman for Brand Identity and Ann Lui and Craig Reschke for Architecture expertise.

The Reuse-a-Shoe, known here as “Nike Grind” transforms worn-out athletic footwear contributed by customers.  Nike Grind is Nike’s sustainability program that has been around for over two decades and is used to create new facilities. This time around, the shoes will be used to build a basketball court in the local community in advance of the NBA All-Star game hosted in Chicago next year.

Sustainability is becoming a more prioritized component of retailer transparency among consumers worldwide. According to the 2019 Global Consumer Report we published in conjunction with Ebeltoft Group, sustainability, and social responsibility are becoming top of mind, forcing brands and retailers to practice and communicate responsibility through the entire value chain. The report noted that a staggering 84% of consumers across 14 key international markets feel it is important that brands and retailers care about sustainability and offer services like recycling and re-use.  More than 4 in 5 of the 13,000 consumers surveyed also agree it is important that retailers and brands employ social responsibility initiatives.  Nike has taken note. How are you integrating sustainable practices into the retail experience?

The Nike Re-Creation pop-up is open until July 28th at 673 N. Michigan right next to the Nike Flagship store.

Download a copy of the Global Consumer Report here.

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Walmart is Leveraging Store Traffic for Ad Sales and Personalization – Why Don’t You?

Walmart stores have 300 million unique visitors a month – more than the big online players. They’ve decided to leverage those visits and the data they provide on spend and in-store/online behavior to create a compelling and profitable ad channel for their own business, as well as for CPG partners and other companies interested in reaching these consumers.    Walmart is expected to announce more details this week in NYC.

Source: Forrester Research
Note: Figures are estimates based on publicly reported data. Walmart only provides weekly traffic figures.

All store-based retailers should be following Walmart’s lead but not necessarily in monetizing data.   Leveraging in-store behavioral data and historical first party spend data can be a gold mine for helping retailers develop more productive offers.  Those that have implemented these tactics are reporting that personalization is delivering a staggering (30%+) of improvements in conversion as well as improvements in visit frequency and overall spend.

In order to make it happen, they must understand the capability to detect both a visitor’s PRESENCE and IDENTITY.  The ingredients to get started are often already in place:  in-store wi-fi and a basic splash page to capture customer email or phone number.  No full-fledged loyalty program or app is required (although it helps).

With wi-fi, retailers can gather data about where and how visitors spend time in their stores. This data on its own can help business leaders make smarter merchandising and customer engagement decisions and enable simple communication with the visitor to turn them into a known shopper and ultimately a buyer and promoter.

We’ve been working with clients to establish basic personalization capabilities with excellent results.  Leveraging wi-fi clients can gather data on:

  • Who is passing by but not entering the store
  • Who is visiting but leaving without a purchase
  • Shoppers’ path in store and engagement with store associates, in-store experiences and ad campaigns

This enables clients to deliver the best in class marketing or service actions both in-store or post-visit through digital channels.   All resulting in increased sales and engagement.

Let us help you get started. Contact us!

Interested in innovations? Download a copy of our Retail Innovations book here.

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Have E-Commerce Grocery Sales In The U.S. Turned The Corner?

Yes. And no.

According to a 2019 Coresight Research study, some 36.8% of U.S. consumers bought groceries online in the past year, up significantly from just 23.1% a year prior. Not surprisingly, it’s older millennials (30-44) who are leading the charge, with 45% having purchased groceries online. However, the study also found that nearly three-fourths of Millennials tend to buy just a small proportion of their grocery products online. So, progress has been made but there is a long way to go to significantly alter customer shopping patterns.

Food retail is currently sitting at just 2% e-commerce penetration, compared to 12% overall. And, given that food is far and away the largest retail category, its laggard position represents both the biggest challenge and biggest opportunity for e-commerce. The reasons for the low penetration are well-documented, from inherently low margins and bulky multi-temp products to the consumer need for selection (ripeness of banana, trim on meat, etc.).

That said, there is so much activity being directed to this space that growth (as evidenced by the survey) is inevitable. It is also apparent that there is no one size fits all solution for grocery e-commerce and companies will continue to attempt a multitude of approaches to “profitably” get groceries to American consumers.

Equally important is who will ultimately prevail in the grocery e-commerce wars. Coresight’s survey tells us where customers are shopping today. Amazon was mentioned by 62% of shoppers with Walmart the next closest at 37%. However, Walmart had the biggest gain, up a full 12 points from a year prior, and Target jumped past Kroger, mentioned by 16% of consumers. Amazon is hitting customers on all fronts, from the immediacy of Prime Now, through full-service offerings from Amazon Fresh. Walmart has focused heavily on click and collect but also offers delivery options. Target bought Shipt to provide immediacy of delivery and Kroger will soon have it all (ClickList for pick-up, Instacart for immediacy and a partnership with Ocado for automated home delivery).

Will one of these delivery methods prevail? Not likely. Consumers reported an even split between pick-up and delivery, with pick-up mentioned by nearly 50% of consumers as their main source of fulfillment and delivery at 48%. There are continued efforts on both of these options with Walmart rolling click and collect to over 2,100 locations today and with plans to reach 3,000 and Kroger’s aggressive move with Ocado to streamline home delivery.

It will be interesting to continue to track consumer adoption. The biggest retailers continue to bet big on grocery e-commerce being the next big thing. It will take a combination of a willing consumer and a profitable business model to see this come to fruition.

Interested in innovations? Download a copy of our Retail Innovations book here.

This article first appeared in Forbes.

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Awareness is on the Rise!

In today’s retail environment, consumers are more informed, and prioritizing sustainability and social responsibility efforts more than ever, forcing brands and retailers to deliver and add value. Running a retail business responsibly and with transparency is becoming increasingly more important in today’s world.

Activism centers around taking a stance on societal and political issues and being transparent on propositions which we highlight in The Global Consumer Report 2019. In this report, we profiled 14 international markets, and found that 81% of consumers feel it is important for retailers and brands employ social responsibility initiatives. 84% also feel it is important that brands and retailers care about sustainability and offer services like recycling and re-use. These topics are rising in importance across all generations.

Consumer attitudes towards responsibility

How important is it to you that retailers and brands employ social responsibility initiatives, e.g. good conditions for workers and donations to charities?

Answer: Important + very important

How important is it to you that brands and retailers care about sustainability and offer services like recycling, re-use etc. and in general take care of the environment? (very important + important)

Answer: Important + very important

Thus, social responsibility and sustainability are important issues across all age groups, and it is crucial for retailers and brands to integrate these ideas into the experience.

Hungry for more?

Find out more about Activism and gain insight into global consumer attitudes and behaviors in 14 select markets regarding sharing economy, as just one example, in The Global Consumer Report 2019

Interested in innovations? Download a copy of our Retail Innovations book here.

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Under Armour’s Good, Bad and Opportunity

Under Armour announced good news yesterday. Revenue grew, gross margin grew, and inventory levels were down. That’s normally a trifecta of responsible health. But underneath the covers Under Armour still has significant work to do.

About the good; revenue was up slightly, driven by international strength and the wholesale business.  Simultaneously, inventory was down 24% – a trend in stark contrast to previous year-over-year growth. And finally, UA was one of the few brands to see success in the performance sector of shoes, with its HOVR platform driving footwear revenue up 8%.

But UA’s headwinds remain substantial. The company’s commitment to Performance may pay benefits in five years. But UA is not going to grow in the near future in its women’s business – or its men’s business – relying on performance.  Sports fashion and athlesiure rule the day.  Throw in the continued commoditization of performance garments – led by the continuing rise of private label (Dick’s) or mass-market players (Target, Old Navy) – and growth for a higher-priced brand will be tough. Even under the cover of the wholesale growth – presumably through Kohl’s – there are issues.  Kohl’s is the preferred retailer if you need volume now.  Moms shop their regularly as opposed to their infrequent trips to Dick’s triggered by the start of a new sports season.  But it is a value play that is not brand positive.

Leading indicators reveal that stormy clouds are still approaching. Direct-to-Consumer sales were down.  Backpack sales were unexpectedly soft. Both of these speak to a need to reinvigorate the brand as it has lost some of its cool, the site isn’t drawing traffic and kids don’t want to feature the brand. Additionally, the international growth strategy needs refinement. Walking through Seoul we found two Under Armour stores virtually across the street from each other. This location strategy will lead to inventory challenges and shows that UA’s overseas partnerships can be improved.

Did you know about recovery sleepwear?

And finally, the company has work to become truly a brand and not a sales-team driven organization that focuses on revenue at the expense of brand health and margin. An example of a miss in marketing: did you know Tom Brady is a key endorser? Maybe, maybe not.  UA has never had the marketing chops Nike has.  Although Brady’s latest pre-season collection kit is sold out in brand house stores and online, the inventory commitment was small and there wasn’t a coordinated, 360-degree marketing effort to promote the association with the G.O.A.T.  The same goes for an innovative product that hasn’t been commoditized – recovery sleepwear, again, featuring Brady.  But the brand has not been loud about the product.

This article first appeared in Forbes.

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A Digital Win And Physical Loss At Finish Line Fresh

Finish Line has its struggles. A mall-based retailer – in a crowded space and previously focused on “just shoes” – Finish Line lost share for five years to the lifestyle merchandised Foot Locker and its own supplier’s direct-to-consumer efforts. A strategy to place 300+ shop-in-shops in struggling Macy’s stores added to the impression that the retailer was shoes-only and could win only on price. But a refreshed store concept began rolling out in 2017.  And in 2018 – its first year after an acquisition by UK-based JD Sports – Finish Line stores grew both revenue and earnings. JD’s lifestyle merchandising expertise and global knowledge should accelerate the transformation in 2019.

In order to improve its positioning as a sports fashion retailer, Finish Line has focused on linking pop culture to its brand. Frequent collaborations with musical artists are layered on to routine athlete and team endorsements, helping repair the retailer’s relevance.

One of the larger efforts has been with the hip-hop group Migos. Migos filmed videos set in a fictional bodega and featured their music in Finish Line’s Youtube channel in 2018. In 2019, Finish Line invited Migos to shoot both a video and curate an online assortment. To bring excitement to their physical space, Finish Line inserted faux-bodegas in three of its mainline locations; Garden City’s Roosevelt Field, Chicago’s Water Tower Place and Torrance’s Del Amo Fashion Center. The installations began in March and end April 26th.

Cool, right? Yes. But the physical store reveals that experience is not as valuable as customer engagement.

The physical space is fun and showcases the featured product in a positive light. But for all the expense of revamping a substantial portion of the store – and then keeping the installation for only four weeks – the investment has been wasted. The Chicago store associates acknowledged that store traffic was “pretty much the same” and only one launch event had been held at the site. Even with the attentive associates, it is easy to walk in and walk out with just an “isn’t that cool.” A better location in Chicago could have improved awareness and efficacy, but unfortunately, the Water Tower Place isn’t what it once was and the seventh floor is a low-traffic space. But even a better location and more events would show that the experiential retail concept isn’t as valuable as the digital campaign that is building a community.

The digital effort builds a deep relationship with sneakerheads. Migos has the right credentials and is recognized by media authority COMPLEX as a tastemaker.  Stranger Thing’s Caleb McLaughlin, hip-hop artist Billie Ellish and Jerry Rice all join Migos in the video and add further validation. The Youtube channel is just part of the digital ecosystem the Finish Locker has built and an excerpt of the latest bodega video garnered 4.5M views. The commentary was robust. The shoes picked for the curated assortment sparked a mostly positive twitter debate. Finish Line’s efforts made it part of “the conversation.”

Looking at the total effort, Finish Line has done substantial work. But the physical manifestation of the bodega campaign is a good reminder to all retailers that experience can be an over-hyped fix. The faux-bodegas will not have a meaningful impact on Finish Line’s business.  Creating engagement – either in physical or digital space – should be the goal for most retailers – and will change a retailer’s trajectory.  Finish Line has made progress there.

This article first appeared in Forbes.

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