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July 2019
Volume 101 N
umber 5
The Magazine of NRFJULY 2019
The Nation’s Retail Power Players 2019
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As retailers strive to lead the pack in ‘fastest delivery’, consumers are not only expecting but also, demanding
this service now. This means many consum-ers are looking for same-day and sometimes, even two-hour delivery windows. While this is a possibility for large retailers like Amazon and Walmart, it is difficult for thousands of other retailers that make up the vast majority of the industry.
But there’s hope. Before throwing in the towel and succumbing to the retail giants, retailers should know that perfecting the last-mile delivery service is closer than they might think. By leveraging the following strategies, shippers can create a successful omnichannel fulfillment process and last-mile delivery plan to compete with the large retailers and exceed customers’ expectations.
Five Ways to Enhance the Omnichannel Last-Mile Customer Experience
1. Know what the customer expects: In order to meet customers’ expec-tations, retailers must know them.
While this seems obvious, this step is often overlooked. Amazon’s customers may expect something different than your customers. Retailers must research and learn about the demands of their own customer base. They can then implement the necessary delivery options that will keep customers satisfied.
2.Utilize multiple inventory sources: The difference between a basic last-mile fulfillment strategy and a
successful omnichannel fulfillment strategy is utilizing all possible inventory sources—both internal and external.
While many are familiar with internal inventory sources like warehouses, distribu-tion centers and fulfillment centers, many retailers don’t use their own stores. Instead of using storefronts for solely traditional retail purposes, retailers can take advantage of them for omnichannel fulfillment.
Also, retailers can use third-party logis-tics (3PLs) and manufacturers to help with delivery. Unfortunately, these shippers typically have higher cost of goods sold; however, 3PLs and manufacturers offer a lower cost per sale when compared to the additional cost of ex-press services needed to meet customer expec-tations. This makes it a win-win for everyone.
3. Use a wide selection of carrier ser-vices: The days of using only one ship-ping service are gone. By contracting
with more than one carrier, retailers have greater flexibility to offer same-day, next-day, two-day or any delivery time to meet custom-ers’ needs. This equips them to meet the ever-growing customer demands and expectations while avoiding capacity constraints and unex-pected carrier strikes.
It is also worthwhile to consider local and regional carriers. Many retailers may not realize local carriers can transport shipments 80 to 100 miles within a specified zone. This is an excellent mode of transportation for last-mile delivery as it can provide a personalized service for customers. For instance, crowd-sourced delivery services like Deliv can power same-day delivery for retailers and businesses in thousands of cities across multiple mar-kets, making these services a popular choice for retailers’ new ship-from-store initiatives.
Lastly, regional carriers, which deliver across a state or small region of states at typically lower costs compared to national carriers, can even provide next-day delivery options. These carriers are especially benefi-cial for retailers with multiple distribution centers and a high concentration of custom-ers in a specific area.
4. Create comprehensive business rules: Business rules help decide the packing and shipping of orders
based on the nature of products. For fragile items, certain packing materials are needed and certain orders require speedy delivery services. Business rules for such orders help drive efficiency in the warehouse and allow orders to get on the truck quickly and more accurately.
5. Leverage rate shopping: Delivery is the top priority when it comes to customer experience. However, with custom-
ers’ expectations of two-day or even next-day delivery, shipping costs can get expensive. To combat these high shipping costs, retailers need to rate shop multiple carriers and their services. Using multi-carrier shipping software, retailers can research the best shipping op-tions in seconds and select the lowest cost service that also meets customer’s demands.
Did you know that advanced forms of rate shopping algorithms take into account nine data sets to maximize the ability of shipments
to be delivered on the promised customer delivery date? This results in money saved through close deliveries by using low-cost carrier services with the assurance that the system will use express services in the event of a longer fulfillment time or distance.
Amazon and Walmart are already using these shipping strategies to stay ahead in the industry. From “buy online, pick up in store” and “Amazon lockers”, these large retailers know that their customers want convenience – and they’re delivering it. Thus, small and mid-sized retailers must also begin optimizing their ware-house and omnichannel fulfillment procedures to keep their customer base happy.
A Success StoryWhile this may seem like a large feat, a retailer in the top 100 league leveraged these shipping strategies and achieved huge suc-cess in customer satisfaction.
This retailer was struggling with provid-ing affordable and faster shipping options to its customers. Its existing shipping system didn’t have the ability to keep up with its ship-ping volume and didn’t offer the number of carriers it required. The retailer also wasn’t using its stores as mini-distribution centers. Overall, the retailer was dealing with high shipping costs and not enough delivery op-tions to satisfy its customer base.
However, soon after incorporating the five strategies for enhanced omnichannel fulfillment, integrating its WMS, OMS with updated multi-carrier shipping software, the nation-wide retailer experienced many benefits, namely:•Reduction in shipping costs due to rate
shopping•Boost in customer experience due to a di-
verse mix of shipping and delivery options• Increased carrier compliance and compatibility•Larger footprint due to ship-from-store
capabilities• Increased warehouse efficiencies with cus-
tom label indictor for manual sortation•Access to regional and local carriers to
increase shipping options and lower costs The retailer now uses eight shipping
carriers, seven distribution centers and over 150 ship-from-store locations to ensure its customers’ expectations are met.
While this is only one success story, there are many other retailers that have found great benefits from utilizing new shipping strate-gies. With competitors only a click away, retailers must constantly look for speedier fulfillment approaches and more efficient last-mile logistics. In the end, you’ll experi-ence more cost savings, better delivery offer-ings and happier customers.
Before Throwing in the Towel,
Perfect Last-Mile Delivery
Advertorial
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STORES.ORG STORES July 2019 5
JULY 2019 VOLUME 101, NO. 5 STORES.ORG
32 48
CONSIDER THIS 6 Editor’s Page
7 President’s Page
10 Retail Politics
11 NRF News
50 End Cap
TRENDS 12
SOLUTIONS
36 SUPPLY CHAIN Texas supermarket chain teams up with specialized software providers to manage home delivery.
38 IT French supermarket giant moves forward with IBM blockchain initiative.
EXECUTIVE SUITE
COVER STORY
20 Top 100 Retailers As retail continues to evolve,
the top players remain the same.
16 Retail People Andrew McQuilkin, retail leader and partner,
BHDP Architecture
32 Retail’s Robot Revolution Beyond big-name uses, robots are becoming
more prevalent in retail.
35 C2W Green Growth Brands
40 MARKETING An inside look at streetwear brands Need Supply and Totokaelo.
42 STORE OPERATIONS Dillard’s deploys mobile learning to keep employees in the know.
44 STARTUP SPOTLIGHT Endear helps in-store staff become outbound retailing masters.
LOSS PREVENTION
46 ONLINE How retailers can guard against fake reviews.
48 FRAUD Retailers stem returns with new rules and oversized tags.
6 STORES July 2019 STORES.ORG
EDITOR’S PAGE
STORES MagazineSTORES Digital Edition STORES Mobile Edition
STORES Weekly1101 New York Avenue, NW
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SUSAN REDAEditor, STORES Media
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STORES (ISSN 0039-1867) is published nine times per year by the National Retail Federation Inc. 1101 New York Avenue NW, Suite 1200, Washington, D.C. 20005. Periodical postage paid at Washington, D.C. and additional mailing office. POSTMASTER: send address changes to Naylor, 5950 NW 1st Place, Gainesville, FL 32607. Vol. 101, No. 5, July 2019. ©2019, National Retail Federation Inc. All rights reserved. Publications Agreement No. 40609151. CANADA POSTMASTER: Forward returned copies to Station A, PO Box 54, Windsor ON N9A 6J5.
Decision ExhaustionGoogling “little black
dress” yields in excess of 5 billion results — seriously. Where does one begin? For most women, a search that yields that many results is a non-starter; they quickly close their browser and turn their attention to another task.
Andrea Bell, director of insight and executive editor for the Americas at WSGN, characterizes this time-pressed, decision-averse cohort as “the compressionalists.” Speaking to attendees at NRFtech in San Francisco earlier this year, Bell said compressionalists crave ease of purchasing far more than price discounts.
“Pressure, time affluence and an overabundance of choice are creating a culture of decision exhaustion,” Bell said, recalling a Columbia University study that found the average American makes 70 conscious decisions daily.
At first, I thought 70 sounded like a lot — until I tried to keep track: From which Nespresso pod to which exercise class I had time for to which newsletter to read that morning … I was more than halfway to 70 before lunch.
Then I started applying the theory of decision exhaustion to some recent purchasing decisions. Why did I choose that white button-down shirt from a startup? Obviously, I could have purchased it from thousands of retailers. Still, I choose the startup, and I’m convinced that part of what drew me to this item was the brand story and the details of why this shirt was different from other options. It was available in just three styles, a handful of colors and five sizes. It was a simple, uncomplicated decision. It wasn’t inexpensive, but I did consider it a value for the price — a statement that rings true for so many startup products.
What portion of the success of companies like Away and Allbirds is tied to a well- defined product offering? It turns out that a “less is more” mentality is indeed part of the attraction. Bell cited a study from Diffusion that found 33 percent of U.S. consumers plan to do at least 40 percent of their shopping from direct brands within the next five years. Finely tuned product
assortments are fueling those findings.Bell left attendees with two action
points to consider adopting. First, she stressed that visually overloaded websites hurt conversions. Shoppers’ attention is now a commodity; meaningful attention is imperative. Her solution: Invest in a decluttered user experience.
And she shared some proof that it works, pointing out that Lululemon logged 48 percent online growth in 2018. It was largely attributable to a website redesign that focused on decluttering product images and speeding up load times.
The second takeaway: “Embrace a ‘less is more’ mentality and use artificial intelligence and machine learning technology to streamline the shopper journey,” she said. The one-time model that more product equals more sales is being eschewed for a more thoughtful product offering. It’s time for retailers to truly leverage the data they’ve amassed to anticipate shopper preferences and respond with shopping solutions that are more tailored.
In a world where consumers articulate feelings of time-famine and decision paralysis, it’s advice worth heeding.
STORES.ORG STORES July 2019 7
PRESIDENT’S PAGE
STORES is published by the National Retail Federation Inc.
1101 New York Avenue, NW Suite 1200
Washington, D.C. 20005.202/783-7971
NRF.com
CHAIRMAN OF THE BOARDChristopher Baldwin, Chairman,
President and CEO, BJ’s Wholesale Club
FIRST VICE CHAIR, NRF BOARD Jeff Gennette, Chairman and CEO,
Macy’s Inc.
SECOND VICE CHAIR, NRF BOARD John Furner, President and CEO,
Sam’s Club
PRESIDENT & CEOMatthew R. Shay
SENIOR VICE PRESIDENTSEllen Davis, Strategic Initiatives
David French, Government Relations Carleen C. Kohut, COO
Stephanie Martz, General CounselLisa Marzetti, Member Development
& PartnershipsSusan Newman, ConferencesBill Thorne, Communications
& Public Affairs
1101 New York Avenue, NW Suite 1200
Washington, D.C. 20005
All articles published in this magazine represent solely the individual opinions of
the writers, and not necessarily those of the National Retail Federation.
Regardless of Career Choice, Retail S kills Are Ticket to SuccessNew research from NRF
shows work experience in retail can fast-track a career in technology — and elsewhere.
It turns out that “human” skills like leadership, communication and problem solving learned in retail apply equally well in the tech world. According to the “From Cashier to CTO” study we conducted with labor market analytics firm Emsi, those skills are in high demand in the tech industry.
As an example, the research found a web developer with a retail background is six percentage points more likely to be promoted to a managerial position than someone without retail experience. And a software developer who has worked in retail is eight percentage points more likely to receive the same promotion.
It’s not the only proof we’ve seen that retail experience gives workers a leg up, no matter what industry they go into.
A recent survey by market research firm Ipsos found 83 percent of former retailers now in management or executive positions in other industries recommend getting a start in retail, while 85 percent of students working in retail see the industry as a good place to start a career. And 60 percent of former retailers say retail taught them skills they could use elsewhere.
An earlier study by research firm GfK found 71 percent of hiring managers across the economy said retail provides employees with foundational skills and experience transferable to other industries. They find former retail workers are friendly, follow directions, take initiative, can learn quickly and are able to work with anyone.
Retail is the first rung on the ladder to success for many. Retail provides the
first job for 32 percent of Americans and six out of 10 have worked in our industry. It’s an industry where hard work is recognized and rewarded — two-thirds of retail store managers have reached their positions by moving up through the ranks. There are many stories of retail executives who started off as rank-and-file store employees; according to Ipsos, 81 percent
of retail employees say they are satisfied by their jobs.
Not surprisingly, retail is the nation’s largest private-sector employer. According to government data, retail directly employs about 16 million U.S. workers and has grown roughly 10 percent over the past decade. Frustratingly, those numbers are based on out-of-date standards that leave out retailers’ corporate headquarters and fast-growing retail areas like distribution centers and call centers, so we estimate the actual total at about 20 million. And when employment tied to retail is counted — from contractors who clear snow-covered parking lots to truck drivers who deliver merchandise to the store — the number of jobs supported by retail is millions more.
Retail offers a wide range of career opportunities, from store operations to finance, marketing, technology and corporate leadership, to name a few. For some, retail is a great place to start and for others it is a great place to stay. But either way, retail jobs are the backbone of the American economy.
Not a member yet?
Learn how members get more at nrf.com/membership.
nrf.com/ondemand
Discover your next bingeTHAT’S 100% WORK-APPROVED
NRF On Demand provides NRF members year-round education. Because our impact doesn’t stop when the event ends.
› Watch top-rated sessions featuring industry visionaries
› Learn new retail trends, insights and best practices
› Gain actionable takeaways from industry leaders
YOUR
all-accessPASS
WATCH NOW
by National Retail Federation
964484_Editorial.indd 2-3 5/13/19 11:07 AM
Not a member yet?
Learn how members get more at nrf.com/membership.
nrf.com/ondemand
Discover your next bingeTHAT’S 100% WORK-APPROVED
NRF On Demand provides NRF members year-round education. Because our impact doesn’t stop when the event ends.
› Watch top-rated sessions featuring industry visionaries
› Learn new retail trends, insights and best practices
› Gain actionable takeaways from industry leaders
YOUR
all-accessPASS
WATCH NOW
by National Retail Federation
964484_Editorial.indd 2-3 5/13/19 11:07 AM
10 STORES July 2019 STORES.ORG
RETAIL POLITICS
Retailers face a deadline this month on whether to accept a proposed monetary
settlement in a long-fought legal battle over credit card swipe fees, even though no agreement has been reached on changes in the way the fees are set.
Unveiled last September, the proposal is a new version of a class-action settlement rejected by the retail industry five years earlier because it failed to do enough to end Visa’s and Mastercard’s alleged price-fixing of the fees. It is still unclear, however, whether the proposal has won any more support than the original.
Under the new plan, Visa, Mastercard and a number of banks would now pay merchants up to $6.24 billion, a reduction from the $7.25 billion originally offered and still only a fraction of the hundreds of billions of dollars in fees charged during the 15-year period covered by the suit. Negotiations continue on whether to change the way Visa and Mastercard set the complex matrix of swipe fees followed by virtually all banks that issue their cards, a practice retailers say violates federal antitrust law.
NRF is closely watching the continued negotiations but said earlier that “significant changes” in the way swipe fees are set are “integral to helping merchants.” The money alone is inadequate without “ending the practices that lead to these anticompetitive fees,” NRF said.
Merchants have until July 23 to decide whether to opt out of or object to the monetary settlement and, as a class-action, those who don’t will be automatically included. The proposed deal won preliminary approval from U.S. District Judge Margo K. Brodie in January, and a hearing on final approval is scheduled for November 7 in U.S. District Court in New York.
Those who take the money would be barred from suing Visa, Mastercard and the banks for additional damages over the same issues for five years. A settlement on how to change the way the fees are set is being negotiated separately, and — unlike last time — retailers would still be able to decide whether to take part in that settlement regardless of whether they participate in the monetary settlement.
The settlement proposal comes in a lawsuit filed in 2005 by a group of small retailers without the involvement of NRF or most major retailers. The original settlement was approved by a U.S. District Court judge in 2013 but rejected by a broad cross section of the retail industry because of its failure to adequately address growing swipe fees. NRF and a number of retail companies appealed the approval, which was overturned in 2016 by the 2nd U.S. Circuit Court of Appeals. In 2017, the Supreme Court refused to take up the case, letting the appellate ruling stand and sending the case back to trial court for further attempts to reach a resolution.
The fees average about 2 percent of each credit card transaction, and the lack of competition has allowed them to increase dramatically. Swipe fees for Visa and Mastercard totaled $43.4 billion in 2017, up from $25.9 billion in 2012, according to the Nilson Report, a newsletter that follows the issue. Card industry rules and practices have effectively forced retailers to include the fees in the price of merchandise, driving up costs for the average cardholder by hundreds of dollars a year.
Deadline This Month in Credit Card Swipe Fee Lawsuit
Bill Would Enlist Retailers in Stopping Senior ScamsNRF is backing legislation aimed at
stopping fraud that targets the elderly.
“Scams committed against vulnerable senior citizens living on meager savings or fixed incomes are deplorable,” NRF Senior Vice President and General Counsel Stephanie Martz said. “Retailers are more than willing to do our part to put these crimes to an end and help protect our nation’s seniors.”
The Stop Senior Scams Act would establish a Senior Scams Prevention Advisory Council at the Federal Trade Commission, with members including representatives of a variety of federal agencies plus industries and organizations including retail, banks, telecommunications and consumer advocacy.
Sponsors of the legislation say criminals steal more than $3 billion annually from seniors through scams in which callers
coerce and threaten legal action over bogus claims unless payment is immediately made, often in the form of wire transfers or prepaid gift cards. Among other efforts, the advisory council would develop materials retailers could use to train employees on how to spot signs of a scam, such as an elderly person purchasing gift cards for a large amount. Similar materials would be prepared for bank workers processing wire transfers and employees in other industries.
Signage warning seniors against scams would also be developed for stores and banks.
The legislation was introduced earlier this year following congressional hearings where witnesses testified that elderly parents had been bilked out of tens of thousands of dollars. The measure is awaiting House and Senate approval.
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NRF NEWS
A veteran security expert who helps retailers find
the best loss prevention talent and a Department of Homeland Security investiga-tor who helped shut down a major organized retail crime ring have been presented with NRF’s top LP awards.
“Every day, individuals working in loss prevention are staying one step ahead of lawbreakers to protect the communities they serve and to prevent the next big crime,” NRF Vice President for Loss Prevention Robert Moraca said. “We’re proud to recognize these hardworking individuals for their commitment to safety and to highlight the importance of collaboration between retail and law enforcement.”
Gus Downing was honored with NRF’s Ring of Excellence Award and DHS Special Agent John Willis received the Law Enforcement Retail Partnership Award during the annual NRF PROTECT conference in Anaheim, Calif., in June.
The Ring of Excellence award recognizes outstanding leaders in the retail LP community whose “honor, integrity and character serve as an example for the industry.”
Downing is president of Downing & Downing, an executive search and consulting firm he founded in 1983 that has helped retailers hire more than 2,800 LP executives. He is also publisher and editor of the D&D Daily, an email newsletter that specializes in retail loss prevention and IT security news.
Prior to starting his own business, Downing held LP leadership roles at several retail companies including The
Children’s Place, Lerner Shops and Gold Circle Stores. He is a second-generation retail LP expert who began his career in 1973 working for a security firm run by his father, Gus Downing Sr., a pioneer in the LP industry.
The Law Enforcement Retail Partnership Award acknowledges law enforcement officers or agencies that have gone “above and beyond the call of duty” to support the retail industry in combating fraud, protecting assets and reducing losses.
Willis was recognized for his work during a 10-year investigation into an organized retail crime group based in San Diego that targeted specialty retail stores. Bringing together
multiple retail investigators and law enforcement agencies, the investigation led to the 2017 arrest and conviction of 15 suspects and helped reduce violent theft incidents at shopping malls throughout Southern California.
The case, which recovered approximately $500,000 in merchandise stolen from more than 50 retailers, has been used as an example of successful collaboration between retail and law enforcement in combating ORC losses.
More than 2,500 retail security executives from across the country attended the June 11-13 conference, which featured over 90 speakers on topics ranging from panic protection to cybersecurity.
NRF Honors LP Veteran and DHS Special Agent for Combating Retail Crime
Gus Downing
trends
= $
Learning the language of emojis may provide keen insight into business success. That’s what social media analytics firm
Talkwalker found when it looked into Starbucks’ use of emojis. Among the data that a simple smiley face can deliver:
Campaign effectiveness. Starbucks’ social media influencers delivered the
same messages with different emojis, allowing the company to see
how customers responded differently.
Brand attachment. The emojis indicated
how consumers felt about the brand.
Advance warning of trends. “Attention to emoji detail can help mitigate emerging crisis or capitalize on growing trends.”
And you thought it was just a smile.
‘ONCE UPON A TIME …’Moxy NYC Chelsea, one of Marriott’s millennial-focused hotels, brings a
new twist to bedtime stories. Working with autonomous sensory meridian response company Whisperlodge, the hotel tested a concept that allowed guests to relax by watching celebrities interact with props. The titillating stories — read by actress Bella Thorne, her sister Dani Thorne (aka DJ COM3T) and singer Caroline Vreeland — are designed to trigger the viewer’s specific senses of seeing, hearing and touching. ASMR is often referred to as an alternative to guided mediation or a drug-free mental massage.
The AMSR videos were part of Moxy’s Bedtime Stories events, all designed to help guests unwind at the end of a long day.
Moxy NYC isn’t the only hotel to bring some childhood fun. At the Trivial Pursuit Hotel outside of Moscow, customers can pay for any part of their
stay simply by answering Trivial Pursuit questions correctly. While the rules are in Russian, a subtitled promotional video suggests that answering correctly may unlock haute cuisine while a wrong answer delivers ramen noodles. Even requesting a booking requires a quick round of the board game.
Both approaches suggest that hotels haven’t totally given millennial and Gen Z consumers over to VRBO and Airbnb.
FANNIES AND FEET
Crocs has teamed up with Japanese clothing brand Beams for the ultimate mash-up in comfort kitsch: The pairing puts fanny packs on the traditional Crocs.
While we might make fun — thinking that fanny packs are for decidedly unhip tourists at major theme parks — Crocs is having a bit of a moment with younger shoppers. Post Malone, the genre-bending rapper and producer, teamed with Crocs for two collaborations in 2018, both selling out in minutes.
Such collaborations bring significant press attention (and yes, we’re aware that we’re in on it, too), leading CEO Andrew Rees to highlight the increase in “brand heat” for the product line.
12 STORES July 2019 STORES.ORG
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A SOBER GROUPWhile we’re on the subject of millennials, there’s yet
another way they are changing society. In fact, let’s go ahead and brand them the “moderation millennials” — at least when it comes to drinking, according to the millennial and Generation Z marketing firm Ypulse.
The firm’s survey indicated that 16 percent of those aged 21 to 36 never drink alcohol, with another 35 percent saying they drink less than once a week. The perception that drinking too much is uncool is shared by 82 percent of those surveyed.
Dry January — an event in which participants vow to abstain for 31 days — has had an impact on alcohol sales, Forbes reports: It cites millennials as more actively participating in the event than other age groups.
So where are millennials spending their extra cash and unwinding? Food tends to drive the weekend menu much more than drinks, according to Ypulse. It found that 71 percent of millennials base their going-out preferences on food versus drinks and that restaurants top nightclubs in places where they like to go.
OUT OF STEP WITH REALITY
New research says consumers worry about using credit cards at gas pumps but still prefer plastic over cash when paying for a fill-up. A study of 1,270 adults by YouGov and ACI Worldwide found that 62 percent of adults are worried about financial data security when paying at the pump. Mobile apps aren’t the solution, with only 7 percent saying they prefer to pay that way.
Still, debit/credit cards are the preferred method — with 55 percent opting for that. Only 21 percent prefer cash.
In the grocery aisle, digital payments also lag behind; only 19 percent of customers shop at stores that offer digital payment and 18 percent at stores with a self-managed mobile app or scanning option.
PUTTING A RING ON ITThe folks at
Pinterest have noticed
another trend: More
women are searching
for creative ways to pop
the question. Whether that
means they actually are
doing so remains to be seen.
But the company reports a 336
percent year-over-year increase in the search term “women
propose to men ideas.” That is far behind the
search for “unique lesbian proposals,” which increased
by more than 1,200 percent.No matter who is proposing —
and to whom — Pinterest searches reveal other in-the-moment trends, such as Asscher-cut and double-halo diamond engagement rings and
honeymoons to Tuscany and Paris.
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TRENDS
Top 10 Boys Names in 2019:Liam (Previously # 1) Noah (Previously # 2)Logan (Previously # 5)James (Previously # 4)Oliver (Previously # 9)Elijah (Previously # 8)Benjamin (Previously # 6)William (Previously # 3)Lucas (Previously # 11)Mason (Previously # 7)
Top 10 Girls Names in 2019:Emma (Previously # 1)Ava (Previously # 3)Olivia (Previously # 2)Isabella (Previously # 4)Amelia (Previously # 8)Mia (Previously # 6)Evelyn (Previously # 9)Charlotte (Previously # 7)Sophia (Previously # 5)Harper (Previously # 11)
A HIPSTER BETTY CROCKER
While “moderation” may apply to drinking, it’s not the same with sweets. Millennials and Generation Z are also reviving a love of home-baked goods, according to The Atlantic. The magazine recently described a salted chocolate-chunk shortbread cookie that made the rounds of all the hippest potlucks — cribbed from chef Alison Roman’s “Dining In” cookbook.
Weekend baking — and cooking in general — is becoming a preferred way to relax in our oh-so-challenging times. “We’re at a time when people who aren’t used to any self-care practices are having to develop them for the first time in their lives,” the magazine quoted Kat Kinsman, a food journalist who’s written a book on her struggles with anxiety. “People are afraid to spend money, and they’re feeling like shit. Baking is cheap, it’s easy and it’s visceral.”
It’s also noted for attributes like working with one’s hands to create something tangible and for bringing mindfulness into the conversation, though the sugary treat at the end of the process certainly sweetens the deal. But thanks, millennials, for helping make cakes and pies seem downright healthy.
WHAT’S IN A NAME?
When it comes to naming your child, you can follow the pack — or avoid it — with this list of anticipated most popular baby names for 2019. Using data from the Social Security Administration and data from its own site, Names.org suggests the following top names will be among the most used:
Of course, others prefer to be a bit more on the cusp — and some “wildcard” names are showing increased use in 2019.
Top 15 Wildcard Names for Boys in 2019EzekielMaverickJamesonEzraMateoEliasTheodoreAsherSantiagoSawyerGraysonJosiahGreysonEastonLeo
Top 15 Wildcard Names for Girls in 2019NovaEverlyKinsleyWillowAuroraLunaEmiliaValentinaHazelQuinnAmeliaElianaStellaNaomiPaisley
GROOM ZOOMMen on the receiving
end of a proposal will want to look good while their true love is on bended knee — and every other moment. So male grooming and skin care adds another layer with a slow growth in male makeup.
According to Vogue, the trend has increased thanks to a number of male beauty influencers; it also points to the rise of K-pop (boy bands from Korea).
Vogue reports men’s grooming products topped $52 billion in 2018, up from $34 billion in 2014. Euromonitor International, which provided the data, anticipates a $64 billion market in five years.
The U.S. market accounts for about 20 percent of the sales, well behind Europe — which is about one-third. Neither is growing as fast as Asia, where male beauty is growing faster than products aimed at women. The article suggests those K-pop boy banders with their heavy eyeliner, lipstick and beauty balms are setting the new standards for male beauty.
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STORES.ORG STORES July 2019 15
70%CONSUMERS who say they consider their impact on the environment when shopping, although only 52% have actually shifted their purchase decisions, finds A.T. Kearney.
58%PEOPLE currently subscribed to a loyalty program saying they spend more on a brand when they are in its loyalty program, notes YouGov.
28%SHARE of population
using shopping apps at least once a day, reports portfolio
website Visual Objects.
392,803WORDS of research compiled for this year’s STORES Top
100 Retailers report.
$2,600AMOUNT teens spend annually
on food and clothing,
according to Piper Jaffray.
55%CONSUMERS saying
technologies like self-checkout,
product locator, inventory look-up
and endless aisle are important factors
when choosing where to shop, relates
BRP’s special report, “The State of Store
Technology.”
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16 STORES July 2019 STORES.ORG
RETAIL PEOPLE
SENSE AND SENSIBILITYby JANET GROEBER
For more than 30 years, Andrew McQuilkin has held leadership roles with major architecture and planning firms specializing in retail design. He is currently responsible for leading BHDP Architecture’s retail design and architecture expertise in branding, store planning, interior design and merchandising.
… Other formats are not as comfortable with that approach, so they wait to undertake a whole store remodel, for example, when leases require a refresh.
And that’s an issue?Yes, it is. It’s no secret that bricks-and-mortar
retailers are trying to reclaim the advantages they once held … when they owned location, selection, price and quality. Ecommerce eliminated advantages of location and price, even selection, so most retailers understand they’ve lost control of their customer. We did research to figure out what the customer owns now and found the balance of power changed. The number one thing customers own now is the choice of where to shop. So how do you combat choice?
How does a retailer do that?Just because you’re a national chain doesn’t
mean all your customers and every location are the same. When decisions are centralized and made at the corporate level for a local community store, they’re usually disconnected from that customer.
Retailers need to stop centralizing every decision and rely on localized data and observable customer behavior that can be quantified. Ecommerce retailers have that kind of data and easily can make decisions to customize a particular customer’s experience. That’s not so easy for the physical retailer, and that places them at a disadvantage, even though more sales transactions take place inside bricks-and-mortar stores.
As an industry we’ve seen what’s happened as retailers have spent the past 30 years getting their store footprint into the hundreds or even thousands of stores. For the retailers who went public in order to expand, they had to keep increasing overall revenue. … In fact, to get all those stores open it wasn’t the merchant in charge of the retailer anymore, it was the chief financial officer, who had no idea that there could be a return on investment between experiential retail and sales. To them it wasn’t provable.
McQuilkin and his teams have received more than 70 design honors, including “Store of the Year” awards for Aveda, Tokyo (2003); Toys “R” Us, Times Square (2001); Richards of Greenwich (2000); and Saks Fifth Avenue (1995). A design advocate, McQuilkin served multiple terms as international chairman and president of the Retail Design Institute, where he remains a member. In 2010, he was named an Institute Fellow for his commitment and service to the association.
Is the “Amazon effect” affecting the business of designing bricks-and-mortar stores?
There’s not as much new prototype work based simply on the fact there are not many new malls being built, and that’s one driver for retailers to rethink their
current strategies. I’m not saying there are no new concepts today testing the waters. Take
a look at the winners of the Retail Design Institute’s annual design competition and you’ll find retailers and brands that are committed to physical spaces.
In 2018, we saw new approaches to everything from new quick-service restaurants and grocery stores to fashion brand pop-ups. There’s a lot of good work coming from mass merchants and department
stores, too. For our firm specifically, department store retailers are a big
part of our business and many have aggressive plans to renew
key locations. Department stores are comfortable at moving in new shops or tweaking their adjacencies based on changing merchandise.
ANDREW MCQUILKINRetail leader
and partner
BHDP Architecture
Cincinnati
STORES.ORG STORES July 2019 17
But is it now provable?When you have a CEO or president who doesn’t
walk the store, or their corporate office isn’t in a flagship they can easily access, they become removed from the customer. The store managers, who were integral to the process and closest to customers and selling process, have now become just operators. They could make adjustments, because they were so close to sales data and with the customer who shops that store location.
Is localization the key?We partner with a privately held grocery
client who allows us to help it localize its store’s personality by creating a design platform that provides a way to connect to its neighborhood customer. What we’re looking to do is get more retailers closer to the information about the behavior of the people in their spaces, and put together relevant planning and design solutions so they can invest incrementally into their stores and not wait every seven to 10 years to renovate.
Through artificial intelligence, we are the only architectural firm with a division that has technology to measure people in a specific space. … So, we’re taking our office capabilities and expertise and leveraging being able to understand how many people use a space, how they move through a space. When we marry that with the retailer’s sales data, we can directly translate that information into planning and design decisions.
Our technology knows right now how many people are in this conference room and where they’re sitting. It’s learning through artificial intelligence the behaviors of occupants and identifying their behaviors. These are things that are directly translatable to how people behave in retail environments. We can understand how people are moving through that space, behaving in that space, engaging in that space, and then marry the data to create behavioral maps from which we can glean actionable insights.
Why isn’t sales data enough to make store planning decisions?
Armed with relevant shopper data, we’d like to bring back the store planner, who was … the liaison to all the different expertise that bring a retail environment to life. Over time as the businesses centralized, the store planner became pigeonholed as a fixture counter, but the store planner was the one person or team who worked with all departments and divisions to understand the business at that location.
Instead of doing what data gathering, beacon or sensor companies would do, where they gather all the data and say, “Here you go,” as the store planner, we’re taking a collaborative and scientific approach. We’re proposing an iterative strategic store design methodology that can optimize retail environments by integrating real shopper behavior into our design process.
Can you share an example?Let’s say your data says every time someone buys
a Coach handbag, 60 percent also buy earrings. We might create a hypothesis that plays with adjacencies and/or with fixture design. We would first benchmark with sensors and observation to validate the behaviors and current space.
But before making that change, the retailer is going to measure productivity, then after making the change we’re going to keep measuring and see what’s going on. We can use that data to run two or three experiments in four or five locations. Now, let’s say those tweaks begin to show sales increases, and you know that because you have installed our proprietary AI sensors. You can take the sensors and move into another location to solve the next issue. Maybe it’s a visual merchandising thing, maybe it’s a paint color, maybe it’s lighting, which usually makes a big impact, or maybe it’s a circulation thing.
Together with the retailer and maybe including the store manager, we’re looking to make changes incrementally in each area. Let’s say three stores prove that kind of adjacency, or that kind of visual merchandising or that blue wall is making ROI. We would then roll out the incremental adjustment to more stores instead of reinventing the whole store every time.
Janet Groeber has covered all aspects of the retail industry
for more than 20 years. Her reporting has appeared in
AdWeek and DDI Magazine, among others.
Just because you’re a national chain doesn’t mean all your customers and every location are the same.
BEGINNING ONLY the
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954167_salesforce.indd 1 4/16/19 5:17 PM
STORES.ORG STORES July 2019 19
COVER STORY
The Top 100 Retailers are ranked by 52/53-week annual retail sales. In almost all instances, sales used to rank companies are for retail activity in the United States only; footnotes are provided when this is not the case. To arrive at U.S. retail sales figures, a variety of estimation techniques are applied based on publicly disclosed information. For this reason, the figures presented do not always match the companies’ official public filing reports.
Company revenues from non-retailing operating segments are removed unless otherwise noted; system-wide sales are provided when the operation is a franchise.
In keeping with the methodology used in previous years, the rankings eliminate fuel sales at locations designated as having a gasoline/fueling station as its primary business.
What constitutes a segment Power Player? Any retailer with 2018 U.S. sales equal to or greater than 10 percent of the sales of the category leader.
Kantar is the world’s leading data, insights and consulting company. We understand more about how people think, feel, shop, share, vote and view than anyone else. Combining our expertise in human understanding with advanced technologies, Kantar’s 30,000 people help the world’s leading organizations succeed and grow.
Information and follow-up:[email protected]/consulting
Salesforce brings shoppers and brands together. Salesforce is the world’s leading CRM platform. We integrate departments and technologies into a single source of truth so employees can provide a seamless customer experience whether online or in-store. Create engaging marketing Deliver targeted and personalized messaging. Send trigger messages based on customer interactions. And use data from multiple sources and devices. Connect every commerce channel. Unify buying experiences. Deliver continuous shopping innovations. And conquer personalization with artificial intelligence. Better support every customer. Improve agent response time. Manage every channel from one view. And unify interactions across email, social, phone, and chat.
COVER STORY
TOP 100 RETAILERS
As retail continues to evolve, the top players remain the same
by DAVID P. SCHULZ
Stability is reflected in the first 10 positions on STORES Magazine’s annual Top 100 Retailers list: The companies are the same as they were last year, with the only changes being six of them moved up or down a notch in swapping positions with each other.
No. 2 Amazon.com’s retail business is nowhere near as large as No. 1 Walmart’s, but Amazon is easily the most disruptive and influential force in the retail industry. The company sells merchandise from all manner of vendors and suppliers, via both online commerce and through a variety of physical stores. Amazon also provides a digital marketplace for unaffiliated retailers to sell their wares.
In addition, Amazon retails non-tangible goods and services, including electronic books and publications, digital music and videos, and streaming entertainment, much of which is proprietary. Where do private-label movies fit on the retailing spectrum? And what will be considered retailing on next year’s Top 100 list?
Personal shoppers have gone from being mainstays at tony clothing emporiums to a business model for Instacart and upstart Dumpling. Where do Lyft, Uber Eats and similar services fit?
“If I am providing a service and only a service, I am an intermediary,” says Dave Marcotte, senior vice president of cross industry, cross border and technology at Kantar, and one who feels the definition of a retailer is being unnecessarily broadened in some circles.
It’s completely understandable that retailers are providing more services, Marcotte says. “The markup on merchandise is typically 20 percent
to 25 percent, while on services it’s more like 40 percent to 50 percent. If I’m in retail, I might want to go where I’m going to make money,” he says.
It’s a similar story with remodeling stores versus opening new ones. “Most retailers are shy about opening new stores, but they will remodel so they can provide new services,” Marcotte says.
MULTIPLE INITIATIVESWalmart has undertaken a number of initiatives
to assure it remains king of the retail hill.“We’re spending more and more on remodels,”
Walmart’s CFO Brett Biggs told Wall Street analysts recently, including retrofitting 500 stores this year with brighter lighting, wider aisles and self-checkouts, duplicating its remodeling efforts last year. The company is also testing such things as store-cleaning robots, installation of interactive displays and using artificial intelligence to help monitor stock levels on store shelves.
As for the notion that Walmart is forever chasing Amazon in an evolving retailing world, Marcotte says, “Three or four years ago it was head-to-head. Now Walmart is more confident doing what they are doing. Except for groceries and seasonal items, Walmart is comfortable being the alternative.”
Regarding Amazon’s retail initiatives, the company is moving in several directions at once. In bricks-and-mortar, there are plans for a new supermarket concept outside the boundaries of Whole Foods Market to be launched in the Los Angeles area. Online, Amazon is cutting back on sales to consumers in favor of allowing third-party Marketplace vendors to handle those chores. Those outside merchants now account for 58 percent of the retail sales on Amazon’s website, up from
Retailing encompasses more today than it ever has before. A year from now it will encompass even more. Whatever the future may hold, the present is still dominated, at least in terms of sales, by retailers with a bricks-and-mortar heritage: Bricks-and-mortar accounts for about 90 percent of total sales.
20 STORES July 2019 STORES.ORG
about 30 percent 10 years ago. In addition, third-party merchants allow Amazon to cut expenses by not having to invest as much in inventory. Amazon also collects a fee from Marketplace sellers while reducing its risks of stocking slow-moving merchandise.
As a corporate entity, most of Amazon’s profit comes from its other business, notably Amazon Web Services cloud computing and advertising. While the retail business continues to grow, the rate of growth is slowing down. That’s one reason the company planned to spend $800 million in the second quarter of this year to boost its retail business, including faster delivery to customers.
“This is all about the core free two-day offer evolving into a free one-day offer,” says Brian Olsavsky, Amazon’s CFO. “We think that will open up a lot of potential purchases and convenience to those customers.”
Amazon initiatives are aimed at its Prime subscribers, who pay $119 each year for an annual membership fee. In addition to faster delivery, benefits include streaming television and discounts at Whole Foods Markets.
Amazon is estimated to have more than 100 million Prime members, who tend to be the retailer’s best customers: Non-Prime members spend about $600 a year on Amazon’s website, says Consumer Intelligence Research Partners, while Prime members averaged about $1,400 in purchases last year.
DATA, PEOPLE FIRSTNo. 3 Kroger, the nation’s leading traditional
supermarket operator, has been embracing big data
STORES.ORG STORES July 2019 21
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and technology for a number of years, first with its alliance with number cruncher dunnhumby and more recently with British automated grocer Ocado Group. Kroger invested a reported $250 million in Ocado last year, and now the two are ready to open the first of about 20 automated warehouses around the United States to handle online grocery services.
Kroger says it has spent hundreds of millions of dollars on its online operation, including expanding store pickup locations for online order and grocery delivery service. Along with others,
POWER PLAYERS
RESTAURANTS
Chain restaurants have been running in place the last few years, showing year-over-year sales gains that are flatlining, according to industry watcher Technomic. Operators are scrambling to distinguish themselves from the competition. Restaurant Brands’ Burger King began testing the Impossible Whopper earlier this year, featuring a plant-based patty made with wheat and potato proteins by Impossible Foods.
Burger King isn’t aiming at a vegan clientele with its new sandwich, says CMO Fernando Machado, rather meat eaters who want an option to the usual beef. In addition to the 59-store pilot project introducing the Impossible Whopper in the greater St. Louis area, Machado conducted taste tests at corporate headquarters.
“People on my team who know the Whopper inside and out, they try it and then struggle to differentiate which is which,” he says. The tests were so successful, Burger King will roll out the Impossible burger chainwide by the end of the year.
Dunkin’ Brands is doing more than dropping donuts from its flagship’s name; it’s also closing stripped-down units that “don’t provide the full Dunkin’ experience,” says Dunkin’ Brands CEO Dave Hoffman.
At the intersection of fast food and regulation, McDonald’s this spring said it would no longer fight proposals for a $15 hourly minimum wage. In another development affecting fast-food restaurants, the Trump administration has taken steps to move away from Obama administration rules that said franchisors like McDonald’s could be considered “joint employers” with their franchisees and therefore responsible for issues like compliance with local minimum wage laws or other labor disputes.
22 STORES July 2019 STORES.ORG
COVER STORY
Company 2018
retail sales (billions)*
Sales per store (millions)
Comp-store sales change %
Stores
McDonald’s $38.53 $2.7 2.5% 14,155
YUM! Brands $18.63 $1.1 NA 17,504
Starbucks $17.41 $1.3 2.0% 13,172
Subway / Doctor’s Associates $10.42 $0.4 Private 26,932
Chick-fil-A $10.00 $4.8 Private 2,102
Burger King Worldwide $9.94 $1.4 1.4% 7,362
Wendy’s $9.40 $1.6 0.9% 5,739
Dunkin’ Brands Group $9.40 $0.8 0.6% 11,366
Darden Restaurants $8.62 $5.0 NA 1,734
Dine Brands Global $6.76 $1.9 NA 3,495
Domino’s Pizza $6.51 $1.2 6.6% 5,371
Panera Bread Company $5.63 $2.8 Private 2,036
Chipotle Mexican Grill $4.79 $2.2 4.0% 2,221
Jack In The Box $4.46 $1.5 0.1% 2,954
Sonic (Parent Inspire Brands) $4.44 $1.2 NA 3,557
CKE Restaurants $4.02 $1.3 Private 3,058
SOURCE: Kantar*Includes online sales related to respective brands
STORES.ORG STORES July 2019 23
Source: Kantar
1 Sold convenience store business to EE Group, effective FY 20182 Acquired part of Rite Aid stores, effective FY 20183 Orchard Supply Hardware divestiture in the U.S., effective FY 20184 Includes Trader Joe’s and Aldi Sued
2019 TOP 100 RetailersRank Company
Headquarters/ U.S. headquarters
2018 retail sales (billions)
USA sales growth
(‘18 v ‘17)
Worldwide retail
sales (billions)
USA % of worldwide
sales
2018 stores
growth (‘18 v ‘17)
1 WALMART Bentonville, AR $387.66 3.3% $529.54 73% 5,263 -1%
2 AMAZON.COM Seattle, WA $120.93 17.4% $185.33 65% 490 6%
3 THE KROGER CO1 Cincinnati, OH $119.70 4.2% $119.70 100% 3,035 -22%
4 COSTCO Issaquah, WA $101.43 9.0% $135.51 75% 523 3%
5 WALGREENS BOOTS ALLIANCE2 Deerfield, IL $98.39 19.1% $106.37 92% 9,451 18%
6 THE HOME DEPOT Atlanta, GA $97.27 5.2% $106.42 91% 1,969 0%
7 CVS HEALTH CORPORATION Woonsocket, RI $83.79 5.8% $85.06 99% 9,954 1%
8 TARGET Minneapolis, MN $74.48 3.6% $74.48 100% 1,844 1%
9 LOWE’S COMPANIES3 Mooresville, NC $64.09 3.3% $69.57 92% 1,723 -6%
10 ALBERTSONS COMPANIES Boise, ID $59.71 -0.2% $59.71 100% 2,249 -3%
11 APPLE STORES/ iTUNES Cupertino, CA $47.27 15.6% $54.05 87% 271 -0%
12 ROYAL AHOLD DELHAIZE USA Carlisle, PA $43.80 1.5% $74.11 59% 1,958 -0%
13 BEST BUY Richfield, MN $39.19 2.7% $42.72 92% 1,024 -21%
14 MCDONALD’S Oak Brook, IL $38.53 2.4% $82.71 47% 14,155 -1%
15 PUBLIX SUPER MARKETS Lakeland, FL $36.52 4.7% $36.52 100% 1,444 3%
16 TJX COMPANIES Framingham, MA $29.59 9.4% $39.52 75% 3,092 5%
17 ALDI4 Batavia, IL $28.78 7.0% $106.16 27% 2,386 6%
18 DOLLAR GENERAL Goodlettsville, TN $25.63 9.2% $25.63 100% 15,472 6%
19 MACY’S Cincinnati, OH $24.90 0.7% $25.02 100% 867 1%
20 H.E. BUTT GROCERY San Antonio, TX $24.02 6.3% $25.17 95% 333 1%
21 DOLLAR TREE Chesapeake, VA $22.48 2.6% $22.75 99% 15,012 3%
22 VERIZON WIRELESS New York, NY $22.26 17.8% $16.92 132% 6,839 -4%
23 KOHL’S Menomonee Falls, WI $19.17 0.6% $19.17 100% 1,175 0%
24 YUM! BRANDS Louisville, KY $18.63 3.6% $54.93 34% 17,504 1%
25 MEIJER Grand Rapids, MI $17.69 3.2% $17.69 100% 242 3%
it’s also working on driverless technology and experimenting with autonomous grocery delivery; Kroger currently works with Instacart delivery service at about 1,600 locations.
Kroger is also working on an app for mobile devices that will allow it to communicate directly with customers’ phones. Inside stores, Kroger Edge is a digitally enabled shelf that communicates directly with shoppers through LED displays.
“We are transforming from grocer to growth company by deploying our assets to serve even more customers and create margin-rich alternative profit streams,” says Rodney McMullen, Kroger chairman and CEO, in discussing the retailer’s plans for this year.
No. 4 Costco doesn’t draw a lot of attention to itself in retail circles. A major plus for the company is that consumers love to shop at its stores. As CFO Richard Galanti says, foot traffic in the stores is “as strong as it’s ever been.”
That helps explain why Costco has been slow to develop its online channel, though its
POWER PLAYERS
SUPERMARKETS
With all the “last-mile” chatter about home delivery of online grocery purchases, it is easy to forget how store-based the supermarket industry really is. U.S. supermarkets added more than 17 million square feet of selling space last year, as new store openings grew 30 percent over the previous year, according to an annual study by real estate services firm JLL.
“Grocery is one of the strongest retail sectors, with nearly twice as many new stores opening than closing last year,” says James Cook, director of retail research for JLL. Shoppers now make more frequent trips to the store, making fewer purchases, than they did in the past when there were weekly pantry-filling visits to the supermarket. In response, grocers are building smaller stores, though the trend is not spread evenly around the country, JLL reports; three states — California, Florida and Texas — captured a quarter of the new stores opened in 2018. Busiest of the chains debuting new units were Aldi, H-E-B, Kroger, Publix and Sprouts Farmers Market.
Aldi has been a proponent of small format stores since brothers Karl and Theo Albrecht started the business in Germany before bringing it to the United States in 1976. Last year Aldi opened 82 stores as it moves toward a goal of 2,500 locations within four years and being the country’s third largest grocer after Walmart and Kroger. “They’ve done such a great job with building up a brand allegiance. They’re clearly appealing to the consumer, and it just allows them to expand pretty rapidly across the country,” says Taylor Coyne, JLL’s research manager of U.S. retail. With stores ranging from 10,000 square feet to 12,000 square feet, Aldi floods markets with new stores. “We are seeing significant growth in key markets such as Minnesota, California, Texas, the Carolinas, Georgia and New York,” says Matt Lilla, divisional vice president of Aldi’s Faribault division.
24 STORES July 2019 STORES.ORG
COVER STORY
Company 2018
retail sales (billions)*
Sales per store (millions)
Comp-store sales
change % Stores
The Kroger Co.^ $110.60 $41.7 1.8% 2,650
Albertsons Companies $59.71 $26.6 1.0% 2,249
Royal Ahold Delhaize USA $42.92 $21.9 3.3% 1,958
Publix Super Markets $36.52 $25.3 2.1% 1,444
Aldi^^ $28.78 $12.1 Private 2,386
H.E. Butt Grocery $24.02 $72.1 Private 333
Neighborhood Market/ Marketside (Walmart)
$18.73 $25.9 NA 724
Wakefern/Shoprite $16.57 $47.1 Private 352
Whole Foods Market (Parent Amazon.com)
$15.95 $33.8 NA 472
Source: Kantar*Includes online sales related to respective retailers^Kroger excludes Fred Meyer^^Aldi incl. Trader Joe’s
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STORES.ORG STORES July 2019 25
2019 TOP 100 RetailersRank Company
Headquarters/ U.S. headquarters
2018 retail sales (billions)
USA sales growth
(‘18 v ‘17)
Worldwide retail
sales (billions)
USA % of worldwide
sales
2018 stores
growth (‘18 v ‘17)
26 STARBUCKS Seattle, WA $17.41 5.3% $19.16 91% 13,172 5%
27 ACE HARDWARE Oak Brook, IL $17.32 4.2% $18.26 95% 4,426 0%
28 WAKEFERN/SHOPRITE Keasbey, NJ $16.57 1.6% $16.57 100% 352 2%
29 7-ELEVEN Dallas, TX $16.51 13.9% $89.15 19% 8,951 11%
30 AT&T WIRELESS Dallas, TX $16.41 22.5% $13.87 118% 2,004 -5%
31 RITE AID2 Camp Hill, PA $15.83 -27.4% $15.83 100% 2,550 -44%
32 NORDSTROM Seattle, WA $15.06 1.7% $15.48 97% 366 1%
33 ROSS STORES Pleasanton, CA $14.96 7.0% $14.98 100% 1,715 6%
34 BJ’S WHOLESALE CLUB Westborough, MA $13.01 2.0% $13.01 100% 217 1%
35 GAP5 San Francisco, CA $12.88 4.5% $16.17 80% 2,296 -3%
36 ALIMENTATION COUCHE-TARD6 Tempe, AZ $12.46 3.1% $15.75 79% 6,872 -2%
37 BED BATH & BEYOND Union, NJ $12.23 0.6% $12.44 98% 1,481 -1%
38 MENARD Eau Claire, WI $11.69 4.5% $11.69 100% 310 1%
39 J.C. PENNEY COMPANY Plano, TX $11.66 -6.2% $12.40 94% 864 -0%
40 L BRANDS Columbus, OH $11.34 0.3% $12.42 91% 2,722 -1%
41 QURATE RETAIL Englewood, CO $11.34 1.5% $14.08 81% - n.a.
42 HEALTH MART SYSTEMS Omaha, NE $10.62 3.3% $10.62 100% 4,953 2%
43 SUBWAY / DOCTOR’S ASSOCIATES Milford, CT $10.42 -3.5% $26.70 39% z,932 -2%
44 HY-VEE West Des Moines, IA $10.15 5.3% $10.15 100% 250 2%
45 CHICK-FIL-A Atlanta, GA $10.00 9.9% $6.14 163% 2,102 6%
46 BURGER KING WORLDWIDE Miami, FL $9.94 3.3% $17.30 57% 7,362 3%
47 GOOD NEIGHBOR PHARMACY Chesterbrook, PA $9.58 5.6% $9.58 100% 2,962 4%
48 O’REILLY AUTO PARTS Springfield, MO $9.54 6.2% $9.54 100% 5,219 4%
49 SOUTHEASTERN GROCERS (BI-LO) Jacksonville, FL $9.48 -7.2% $9.48 100% 654 -8%
50 AUTOZONE Memphis, TN $9.46 4.1% $10.95 86% 5,552 3%
Source: Kantar
2 Acquired part of Rite Aid stores, effective FY 20185 Announced spin-off of Old Navy as standalone entity effective FY 20196 Acquired CST Brands convenience stores, effective FY 2018
DELIVERING SATISFACTIONPharmacy chains Walgreens and CVS hold
down the fifth and seventh positions on the Top 100 chart; both have been buffeted of late as a result of the volatility enveloping the health care industry. The retailers are currently focused on increasing the speed of prescription medication home deliveries.
Disrupter Amazon pops up here too: About a year ago Amazon acquired PillPack, an online pharmacy services firm that sorts, packages and delivers medications to patients’ homes. This spring, Amazon offered its Prime members monthly deliveries of prescriptions to treat chronic conditions such as high blood pressure and diabetes.
CVS quickly launched a delivery service where 80 percent of medications are delivered the next day, the rest within a two-day window. Walgreens joined with FedEx last December to initiate its Express next-day delivery service, and CVS raised the bar by offering same-day deliveries
POWER PLAYERS
MASS APPAREL
“Consumers are seeking value-oriented retailers offering attractive and acceptable quality merchandise,” says Monica Aggarwal, primary industry analyst at Fitch’s Rating Service. “In addition, apparel purchases have been rapidly moving online, putting significant pressure on in-store sales,” she says.
“While leading players such as Kohl’s have been able to largely offset decline in in-store sales through the growth in their ecommerce businesses, retailers are forced to invest heavily in omnichannel platforms, which have driven down EBITDA [earnings before interest, taxes, depreciation and amortization] margins and reduced cash flow.”
The outlook for Kohl’s is positive, Aggarwal says; Fitch believes Kohl’s multi-year investments in areas such as developing omnichannel capabilities, store remodels, growing its national brand presence and increased activewear penetration should allow it to grow sales and compete more effectively.
There are numbers to support this position. Online sales accounted for just over 20 percent of Kohl’s sales in 2018 versus 5 percent in 2011. Mobile represented the majority of its traffic growth at over 70 percent of digital traffic and more than half of digital sales in 2018, supported by investments in the mobile app, Your Price, personalized search, Smart Cart and fulfillment such as buy online, pick up in store and buy online, ship from store.
Kohl’s CEO Michelle Gass is working to expand the role of bricks-and-mortar locations. The retailer is working with Planet Fitness to install small gyms in 10 Kohl’s stores: About 20 percent of Kohl’s sales are generated by workout apparel and other health and wellness gear, Gass says, and the segment has more than doubled over the last four years. She sees it as becoming “even more important” in the immediate future.
26 STORES July 2019 STORES.ORG
COVER STORY
ecommerce has been growing by double digits in the past few quarters.
Costco prides itself on a people-first culture, which includes a minimum $15 starting wage for new employees. “People are happy with a job for more reasons than money,” says Jim Sinegal, co-founder and former CEO who stepped down from the board of directors last year. “There’s generally a pride in the organization. There’s an attitude that there’s security, that somebody cares about them, that we’re offering careers. We’re not offering jobs, we’re offering careers.”
That positive environment touches customers — Costco earned the top spot in the latest American Customer Satisfaction Index, dethroning Amazon, which had held the No. 1 spot since 2010. “Costco is the value leader among online retailers and its Kirkland brand may be part of the reason why, offering quality products at a lower price,” said ACSI in announcing the award.
Company 2018
retail sales (billions)*
Sales per store (millions)
Comp-store sales
change % Stores
TJX Companies^ $23.67 $10.2 7.0% 2,314
Kohl’s $19.17 $16.3 1.0% 1,175
Ross Stores $14.96 $8.7 4.0% 1,715
J.C. Penney Company $11.60 $13.5 -3.1% 858
Old Navy (Gap) $8.79 $9.2 -1.0% 961
Burlington $6.58 $9.9 3.2% 664
Ascena Retail Group $5.46 $1.3 -2.0% 4,231
Nordstrom Rack $4.35 $18.1 1.7% 240
H&M Hennes & Mauritz Ab $3.28 $5.7 NA 578
Forever21 $2.96 $5.2 Private 570
Sears Holdings $2.72 $12.6 NA 216
Source: Kantar Mass Ap-parel Power Players Total $103.54 $7.7 13,522
*Includes online sales related to respective retailers^TJX Companies excludes HomeGoods
MAR
CH M
ARCH
O/S
HUT
TERS
TOCK
.CO
M
STORES.ORG STORES July 2019 27
Source: Kantar
2019 TOP 100 RetailersRank Company
Headquarters/ U.S. headquarters
2018 retail sales (billions)
USA sales growth
(‘18 v ‘17)
Worldwide retail
sales (billions)
USA % of worldwide
sales
2018 stores
growth (‘18 v ‘17)
51 WENDY’S Dublin, OH $9.40 1.8% $9.89 95% 5,739 0%
52 DUNKIN’ BRANDS GROUP Canton, MA $9.40 3.7% $10.17 92% 1,366 4%
53 GIANT EAGLE O’Hara Township, PA $9.13 1.2% $9.13 100% 426 2%
54 WEGMANS FOOD MARKET Rochester, NY $9.05 4.3% $9.05 100% 98 2%
55 SHERWIN-WILLIAMS Cleveland, OH $8.71 5.6% $9.34 93% 4,032 2%
56 PETSMART Phoenix, AZ $8.70 4.8% $9.06 96% 1,507 3%
57 DARDEN RESTAURANTS Orlando, FL $8.62 5.2% $7.14 121% 1,734 13%
58 DICK’S SPORTING GOODS Coraopolis, PA $8.25 -0.3% $8.25 100% 858 2%
59 TRACTOR SUPPLY CO Brentwood, TN $8.09 11.5% $8.09 100% 1,940 5%
60 SEARS HOLDINGS Hoffman Estates, IL $7.72 -45.4% $8.44 91% 397 -58%
61 WINCO FOODS Boise, ID $7.69 8.0% $7.69 100% 125 7%
62 ARMY & AIR FORCE EXCHANGE SERVICE Dallas, TX $7.50 1.2% $7.50 100% 901 -1%
63 STAPLES Framingham, MA $7.24 -5.2% $9.39 77% 1,139 -4%
64 SAVE-A-LOT Earth City, MO $7.13 0.7% $7.13 100% 1,262 -2%
65 DINE BRANDS GLOBAL Glendale, CA $6.76 2.8% $8.00 84% 3,495 0%
66 ULTA SALON, COSMETICS & FRAGRANCE Bolingbrook, IL $6.72 14.1% $6.72 100% 1,174 9%
67 BASS PRO Springfield, MO $6.71 -1.3% $7.27 92% 161 -2%
68 BURLINGTON Burlington, NJ $6.58 9.2% $6.63 99% 664 8%
69 ASCENA RETAIL GROUP Suffern, NY $6.53 -1.6% $6.69 98% 4,543 -4%
70 DOMINO’S PIZZA Ann Arbor, MI $6.51 12.9% $9.90 66% 5,371 3%
71 DILLARD’S Little Rock, AR $6.12 0.2% $6.12 100% 291 -0%
72 IKEA NORTH AMERICA SVCS Conshohocken, PA $6.05 10.7% $44.90 13% 49 9%
73 OFFICE DEPOT Boca Raton, FL $6.00 -6.0% $8.86 68% 1,361 -1%
74 FOOT LOCKER New York, NY $5.96 1.8% $8.04 74% 2,071 -6%
75 GAMESTOP Grapevine, TX $5.89 0.9% $8.14 72% 3,896 -0%
destinations.” “It’s clear that the drug stores that we are used to knowing will not be the stores of the future for sure, so we have to change that,” says CEO Stefano Pessina.
TECHNOLOGY’S ROLENo. 6 The Home Depot took a hit to start 2019
when the wet weather put a damper on building projects. The retailer still has high hopes for this year based on strong consumer spending and an improving housing market, says CFO Carol Tomé, who will be retiring in August after 24 years with the company.
Technology plays a large part in the company’s success, in part because of its use of mobile apps and other digital means of courting professional customers. It added 100,000 professional customers to its business website last year and is aiming to add 1 million more this year. Once orders are made online or with the app, the merchandise can be delivered to worksites and, in select locations, picked up at an interactive locker. The Home Depot is spending some $1.2 billion to add 170 of these smart distribution centers around the country.
COVER STORY
28 STORES July 2019 STORES.ORG
of prescriptions — and much front-end merchandise — via Shipt for a $7.99 service charge. Next-day or two-day deliveries can be had for $4.99.
CVS and Walgreens are also enhancing in-store medical services. CVS, which has about 1,100 of its corporately owned MinuteClinics in its locations, refers to its enhanced units as “health hubs.”
“It’s bringing more health services to a more
convenient location that doesn’t disrupt your day and has a consumer bent to it,” says Alan Lotvin, CVS’s chief transformation officer.
With medical clinics operated by local or regional healthcare providers in about 400 locations, Walgreens calls stores with bulked-up medical services “neighborhood health
POWER PLAYERS
MASS MERCHANTS
Walmart is having a much easier time making itself a force in ecommerce than Amazon.com is having trying to establish itself as a major player in the physical world. Walmart keeps matching Amazon’s quick-delivery moves “without a membership fee,” as it reminds its customers, who don’t have to pay Prime rates.
Walmart, as does Amazon, sees digital advertising as a growing profit center for its Media Group. The recent acquisition of Polymorph Labs will help scale online advertising, which uses Walmart customer data to target both online shoppers and bricks-and-mortar customers. The Polymorph transaction came only a couple of months after Walmart brought all of its advertising in house.
“In-house is everything,” says Stefanie Jay, head of Walmart Media Group. “For us to be able to serve our advertisers holistically and strategically, we have to own the whole dialogue end-to-end. It’s critical as we think about scaling the business. Buyers don’t just want one piece of a campaign, they want a full marketing solution.”
Walmart says 160 million people shop its stores or online sites every week, allowing it to provide considerable insight to advertisers about what customers are looking at and what they are purchasing. “Our bread and butter is first-party transaction data, both in store and online. Only we can see that and connect the dots,” Jay says. “In my mind, that’s the differentiator. No one can do that, and especially not at our scale.”
Walmart CEO Doug McMillon says he expects online sales to increase 35 percent this year, on top of a 40 percent gain last year. In addition to investments in the digital business, Walmart is remodeling stores with brighter lighting, wider aisles and more self-checkouts. With a nod to both online and offline retailing, McMillon says, “The magic for us is how we bring the two together. It results in an omnichannel experience.” And, he says, “That is our advantage, and that is what we are working on.”
Company 2018 retail
sales (billions)* Sales per store
(millions)**
Comp-store sales change
% Stores
Walmart^ $367.27 $81.1 2.1% 4,529
Amazon.com^^ $104.94 NA NA NA
Costco $101.43 $193.9 7.4% 523
Target $74.48 $40.4 5.0% 1,844
Source: Kantar*Includes online sales related to respective retailers**Sales per store metrics excludes sales of online retailers that do not have stores^Walmart Supercenters, walmart.com and Sam’s Club only^^ Amazon.com excluding Whole Foods Market
STORES.ORG STORES July 2019 29
2019 TOP 100 Retailers
Source: Kantar
7 Acquired by Andavour Brands convenience stores, effective FY 20198 Acquired by Inspire Brands, effective FY 2019
Rank CompanyHeadquarters/
U.S. headquarters2018
retail sales (billions)
USA sales growth
(‘18 v ‘17)
Worldwide retail
sales (billions)
USA % of worldwide
sales
2018 stores
growth (‘18 v ‘17)
76 SEPHORA (LVMH) San Francisco, CA $5.81 4.3% $13.55 43% 396 9%
77 WAYFAIR Boston, MA $5.75 41.1% $6.72 86% - n.a.
78 AVB BRANDSOURCE Tustin, CA $5.70 4.7% $5.87 97% 3,073 3%
79 PANERA BREAD COMPANY St. Louis, MO $5.63 -0.1% $4.96 113% 2,036 3%
80 WILLIAMS-SONOMA San Francisco, CA $5.47 6.8% $5.60 98% 595 -2%
81 BIG LOTS Columbus, OH $5.24 -0.6% $5.24 100% 1,401 -1%
82 HOBBY LOBBY STORES Oklahoma City, OK $5.22 6.3% $5.22 100% 883 5%
83 SPROUTS FARMERS MARKET Phoenix, AZ $5.21 11.6% $5.21 100% 313 10%
84 SPEEDWAY7 Enon, OH $5.19 5.9% $5.19 100% 2,774 1%
85 SIGNET JEWELERS Akron, OH $5.10 -3.4% $5.89 87% 2,950 -1%
86 DEFENSE COMMISS. AGENCY Fort Lee, VA $4.98 -2.1% $4.98 100% 238 0%
87 ACADEMY Katy, TX $4.90 2.2% $4.90 100% 259 7%
87 SAKS FIFTH AVENUE/ LORD & TAYLOR New York, NY $4.90 -5.9% $7.50 65% 194 -3%
89 TRUE VALUE CO Chicago, IL $4.86 2.0% $4.89 99% 4,286 -1%
90 CHIPOTLE MEXICAN GRILL Denver, CO $4.79 8.7% $4.50 106% 2,221 12%
91 DISCOUNT TIRE Scottsdale, AR $4.79 1.9% $4.79 100% 1,003 3%
92 MICHAELS STORES Irving, TX $4.78 -1.5% $5.27 91% 1,124 -9%
93 CAMPING WORLD Lincolnshire, IL $4.77 21.2% $4.77 100% 217 63%
94 EXXON MOBIL CORPORATION Irving, TX $4.76 2.5% $10.67 45% 3,311 -1%
95 NEIMAN MARCUS Dallas, TX $4.54 2.2% $4.90 93% 71 -16%
96 JACK IN THE BOX San Diego, CA $4.46 0.0% $4.17 107% 2,954 2%
97 SONIC8 Oklahoma City, OK $4.44 0.6% $4.37 102% 3,557 1%
98 BELK Charlotte, NC $4.38 3.5% $4.38 100% 292 1%
99 SHELL OIL COMPANY Houston, TX $4.22 -4.7% $4.81 88% 4,406 -5%
100 STATER BROS HOLDINGS San Bernardino, CA $4.19 1.6% $4.19 100% 171 0%
“I think Target’s aspiration of reducing shopper friction is on the right track,” says Mark Ryski, CEO of business analytics firm HeadCount. “Traditional approaches of making customers wind through long lines or increase dwell times in order to capture another add-on sale are antiquated. Some shoppers simply want to get in and get out, and this new initiative delivers on this.”
At No. 9, Lowe’s is benefitting from new CEO Marvin Ellison, who took over the reins after leaving J.C. Penney last summer. His next moves are aimed at raising sales and productivity per square foot, and the efforts are being noticed on Wall Street. “It shows how early restructuring efforts (e.g., exiting certain business lines) should already start to narrow the margin gap, by reducing costs and select operating losses,” wrote Credit Suisse analyst Seth Sigman in a research note. “Ultimately, the pruning at Lowe’s and refocus on the core store base should position the company for improving profitability, assuming demand trends hold up.”
Rounding out the Top 10 is grocery conglomerate Albertsons, which is all about using technology to improve the customer experience. The company is using Microsoft cloud capabilities to shorten waiting times at butcher and deli counters, at checkout and even outside the store at the gas pumps. AI is used to anticipate out-of-stock situations and detect items misplaced on shelves.
“We are reimagining the future to serve customers in a way they want to interact with us across all channels,” says Anuj Dhanda, executive vice president and chief information officer at Albertsons.
Albertsons has also unveiled its prototype “next generation” store just down the street from its Boise, Idaho, headquarters. “The culture of this store is unique, focusing on creating a food experience through expertise, demos and education,” says John Colgove, head of Albertsons’ Intermountain Division, “from hard-to-find ingredients and prized local foods to cooking classes and live events.”
David P. Schulz has been writing for STORES since
1982 and is the author of several non-fiction books.
COVER STORY
30 STORES July 2019 STORES.ORG
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No. 8 Target is in the sixth year of its drive to open smaller footprint stores without eliminating any of the departments found in its larger units. The company is looking to open 30 of these locations this year in urban markets.
Target is also doing work on its older and larger stores as part of a plan to redesign 1,000 stores by the end of next year. One component is a section of grab-and-go food items called the Snack Bar, which will include a dedicated self-service checkout kiosk, part of Target CEO Brian Cornell’s vision to make Target “America’s easiest store to shop.”
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FUTURE PROOF YOUR STRATEGY- Predict changing shopper needs- Diff erentiate to drive competitive advantage1MAKE THE RIGHT INVESTMENTS IN INNOVATION- Elevate the shopper experience- Increase the eff ectiveness of in-store marketing2UNLOCK GROWTH THROUGH INSIGHTS- Understand the evolving path to purchase- Navigate macroeconomic pressures and industry disruption3BECOME A DIGITAL LEADER- Integrate digital throughout the planning process- Implement winning online initiatives4
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TECHNOLOGY
RETAIL’S ROBOT REVOLUTION
Beyond big-name uses, robots are becoming more prevalent in retail
by CRAIG GUILLOT
Major retailers are increasing their adoption of robots both behind the scenes and on the sales floor. Walmart announced in April it would further its drive toward automation with a new fleet of 1,500 autonomous floor-cleaning robots, 300 shelf-scanning robots, 1,200 automated unloaded systems and 900 new Pickup Towers for customers to pick up online purchases in the store.
Amazon now has more than 100,000 robots operating in its distribution centers around the world and is continually looking into new robotic applications. In April, it announced it would spend more than $800 million to make one-day shipping the new standard for Prime members;
many analysts expect that will include new automation initiatives. Since January, Amazon has been testing six Amazon Scout robots to deliver packages in Snohomish, Wash.; it’s also working on a next-generation warehouse robot called Hercules that can lift 1,250 pounds — 500 pounds more than its predecessor.
While Amazon and Walmart’s initiatives aren’t surprising, many small and mid-sized retailers are also testing robots.
“There are some pretty massive deployments of robots in retail now, and they’re ramping up fairly dramatically to address a number of issues in the industry,” says Stephen Platt, director and
For decades, futurists have been talking about a time when robots would be widespread, doing everything from cleaning homes to serving food at restaurants. That vision hasn’t materialized at the pace originally thought, but artificial intelligence, mobility and connectivity have made robots more advanced than ever. Robots can move, grip, perform tasks, “think” through artificial intelligence and operate with a high level
of autonomy.
32 STORES July 2019 STORES.ORG
STORES.ORG STORES July 2019 33
research fellow at the Platt Retail Institute and research director at the Retail Analytics Council.
New navigation and cognitive abilities have enabled robots to become more agile and take on more tasks, from moving products at distribution centers to helping direct customers around the store. “Most of the technology is ultimately to relieve staff of mundane tasks to focus on more value-added, customer-facing activities,” Platt says.
Several factors are driving the rapid adoption of robots, says Martin Hitch, chief business officer at Bossa Nova Robotics. While Wi-Fi connectivity and advances in the Internet of Things and artificial intelligence have grown, the cost of such technologies and components has also fallen. Meanwhile, rising labor rates and competitive pressures have driven many retailers to look to new technologies and innovation.
“There has been a convergence of trends that has made it real,” Hitch says. “The technology is becoming cheaper and there’s new development in IoT, self-driving vehicles and components like [3D laser scanning], navigation and cameras.”
FILLING THE GAPSWhile robots can perform many tasks, some of
the most promising deal with inventory. Schnuck Markets, a Midwest supermarket chain with more than 100 stores, has deployed Tally robots in nine of its stores and is the process of deploying six more. The robots go out three times daily to count all merchandise in the 60,000-square-foot store,
except fresh produce and frozen goods. The robots can count approximately 30,000 SKUs in two to three hours — three times faster than humans, says Dave Steck, vice president of IT infrastructure and application development at Schnucks.
“We have APIs in place to notify us when there’s an outage on the shelf. That will go to teammates on a handheld device, they’ll investigate it and act,” Steck says. “The robot is exposing [issues] for us that we didn’t know existed.”
Tally is manufactured by Simbe Robotics and is designed to help retailers better manage the state of merchandise on shelves, along with things like pricing and promotional execution. The robots travel
around the stores on a pre-determined path during normal hours to capture 2D and 3D imagery of store shelves, then processes that information in real time using computer vision and machine learning to look for key insights around which products are out of stock, missing facings, misplaced or have incorrect tabs.
Tally is not only more accurate and faster than humans, it also releases them to focus on customers, says Brad Bogolea, co-founder and CEO of Simbe Robotics.
“Tally is a tool to help fill some of those gaps better,” Bogolea says. “Because in the retail world, customer service is everything, and as humans we’re much better at providing that service.”
Giant Eagle, a supermarket chain with more than 470 locations in Ohio, Pennsylvania, West Virginia, Indiana and Maryland, has deployed Tally robots in three of its locations. The robots have freed up members from the time-consuming task of inventory audits to focus more on interacting with guests, says spokeswoman Jannah Jablonoski.
“It really adds value at the store level because it takes a huge burden off the team members,” she says. “At the end of the day, it all comes back to customer service and making sure we’re meeting the needs of our customers every time they walk into the store.”
Retailers that have deployed robots to handle inventory say there’s a strong return on investment: A recent survey by JDA Software Group found more than three-quarters of respondents said they couldn’t track inventory in real time, and 55 percent don’t have a single view of product levels across distribution channels. A recent study by IHL Group found that retailers could be losing up to $1 trillion in sales annually due to out-of-stocks. Robot-assisted inventory counts can offer a clear ROI by not only saving human labor hours but by being able to take multiple counts per day with more timely and accurate data, Bogolea says.
VERSATILE APPLICATIONSWith a solid payload and navigation system, robots
can be repurposed for many applications. When outfitted with additional sensors, they could easily be called upon to complete several tasks at once, Platt says.
“The ROI drivers of these things are going to vastly increase. There’s inexpensive value add with additional sensor devices. Take a floor scrubber going up and down the aisles — one could easily add a sensor device to track traffic up and down the aisles,” Platt says.
Other robotic applications are coming to market, including one that can stack shelves and another that
34 STORES July 2019 STORES.ORG
can determine the age of produce. In addition, Platt says, retailers that deploy RFID and make better use of the data may find all sorts of new applications.
To bring greater ability to the system, Schnucks is using Tally robots to map the coordinates of all products in the stores. At stores with Tally data, customers can use their rewards app to build a shopping list that will give the aisle location as they walk through the store to find their items in the most efficient manner.
Ahold Delhaize, parent company of Giant and Stop & Shop, is rolling out “Marty” robots in 500 stores to scan for hazards such as spills and report to associates when corrective actions are needed. The robots are also adaptable; if an area is prone to spills, it can roll through the entire area instead of just scanning for issues.
CUSTOMER SERVICE AND HUMAN INTERACTIONMany robots that operate near customers are
designed with discrete, low profile designs — Schnucks went with Tally because the robot “doesn’t draw much attention from customers,” Steck says.
Pepper, a 4-foot-tall humanoid robot with a tablet on its chest, was built for human interaction. SoftBank Robotics, Pepper’s manufacturer, designed the robot to engage people as they come into a store and then offer information or refer them to an associate.
Pepper is currently being used in fast-food restaurants in Tokyo where it frees up staff to focus more on engaging customers. And last year, HSBC Bank rolled out Pepper at its Manhattan flagship location to greet customers, streamline branch operations and enable staff to have deeper and more high-value customer engagements.
“The design of the robot is specifically built to interact with people,” says Kass Dawson, head of marketing communications at SoftBank. “Rather than a kiosk which is static and often ignored by people, Pepper can come over to them, ask them a question and point them in the right direction.”
While Pepper does have limitations with human engagement, one advantage is that people are more inclined to be open and honest with a robot, Dawson says. “Whether it’s not wanting to be sold, to be judged or whatever the case may be,” she says, “people let their guard down and are willing to have that first interaction with Pepper and have it point them in the right direction.”
THE FUTUREPast experience demonstrates the best technology
applications are those that ultimately enhance the customer experience. There can often be a gap between executive and customer perception of technology, according to the Future of Retail study by Oracle NetSuite: While 73 percent of executives says the ambience in retail stores has become more inviting in the past five years, only 45 percent of consumers agree.
The relationship robots could have with humans will also become an important factor as the technology grows. Americans have many fears around automation, especially when it comes to jobs. Roughly half of U.S. adults say automation through new technology in the workforce has hurt workers, according to a survey by Pew. In addition, three-quarters believe inequality between the rich and poor will increase if robots and computers perform most of the jobs being done by humans by 2050.
Only 5 percent of consumers in the Oracle NetSuite study selected robots and chatbots as the technologies they most wanted to utilize when shopping in the store. And a recent study from the Brookings Institution found 61 percent of U.S. adult respondents were either somewhat or very uncomfortable with robots. While the technology is growing, researchers found there’s a barrier of unwillingness to accept machine replacement of some tasks.
Robots do have many benefits over humans, especially when it comes to dull or repetitive tasks. They don’t get bored, distracted, tired or frustrated. They don’t question the work or have feelings. They don’t need sick time, vacation or days off. And in many retail applications, robots are far superior: A Bossa Nova robot can scan an 80-foot aisle in only 90 seconds and analyze it on the fly. “Within five minutes, all the tasks to remerchandise, restock, change anything on that aisle are delivered to associates and then we’re onto the next aisle and the next one,” Hitch says.
But capabilities like this are more about supplementing and enhancing human labor than replacing it; while Bossa Nova can identify the problems, it can’t fix them. That job will likely be one that only humans can handle for years to come. “At the end of the day, we’re creating the tasks, not executing them,” Hitch says. “Our job is really to automate the process that is dull and that humans haven’t been very good at.”
Craig Guillot is based in New Orleans and writes about retail,
real estate, business and personal finance. Read more of his
work at www.craigdguillot.com.
Tally robots can count
approximately 30,000 SKUs
in two to three hours
— three times faster than humans.
“It all comes back to
customer service and making sure
we’re meeting the needs of
our customers every time
they walk into the store.”
— Jannah Jablonoski,
Giant Eagle
TECHNOLOGY
STORES.ORG STORES July 2019 35
Growth Spurt
CONCEPT TO WATCH
GREEN GROWTH BRANDS INC.
Columbus, Ohio
CEO and co-founder:
Peter Horvath
Locations: 3
Green Growth Brands is swiftly opening a variety of retail brands selling cannabis and CBD products targeted to specific customer types, intending to give each brand mass appeal through different emotional positionings.
CEO Peter Horvath previously served as an executive at retailers including Victoria’s Secret and DSW, and says the company focuses on customers from the time they pull into a parking lot to the time they leave the store. “It’s a completely new concept in the world of cannabis,” he says.
Green Growth, which launched in March 2018, acquired and remodeled the first of its brands, a Las Vegas cannabis dispensary called The+Source, last year. Currently there are two, with 1,200 square feet of selling space and 3,000 to 5,000 square feet of total space. Horvath says the average customer spends $45-$55 per visit. “Margins average about 55 percent, and annual sales are trending to about $18.5 million,” he says. Each store does an average of 1,000 transactions a day.
GGB opened its first mall-based Seventh Sense kiosk in February, selling products made with the cannabis compound cannabidiol. The company plans Seventh Sense to be in about 200 malls by the end of this year and 450 malls by the end of 2020. The kiosks offer private label and branded CBD products for face, bath, body and pain relief; Horvath says they typically generate 45 percent customer conversion and high customer return visits.
Two additional concepts will launch this year in Nevada: cannabis dispensary CAMP and Green Lily, targeting women and carrying high-prestige beauty and personal care products.
Horvath says Green Growth is building stores that “have easy assortment navigation that enables tier migration and related selling, a weapon that nobody in cannabis has right now because they don’t have the cross-functional team that we have.” — Liz Parks
36 STORES July 2019 STORES.ORG
SUPPLY CHAIN
Texas supermarket chain teams up with specialized software providers to manage home delivery
by PETER JOHNSTON
Ecommerce, a major factor in most retail categories these days, is still very much
a minority activity in groceries; according to a recent report from Deutsche Bank Securities, only about 3 percent of U.S. grocery sales takes place online. The reasons for this are fairly obvious — huge inventory, low profit margins and the need to keep things cold, among others — but that doesn’t mean consumers don’t want it. United Supermarkets began offering a choice of delivery or buy online, pick up in store in November 2016, and is “seeing triple-digit, year-over-year increases as we continue to add delivery and pickup locations in our major service areas,” says Chris Farr, ecommerce manager.
In some ways, United Supermarkets
could serve as a textbook illustration of the challenges involved in ecommerce for groceries. The company, which was acquired by Albertsons Companies in 2013, operates 95 stores in 51 communities across northwest Texas and New Mexico. Brands include United Supermarkets (a traditional grocery store), Market Street (in-house prepared bakery items, and deli), Amigos (Mexican specialties) and Albertsons Market (former Albertsons outlets in New Mexico now managed by the United Supermarkets division).
A quick look at a map will clarify the challenges in providing grocery delivery in a territory like this. It’s 125 miles from Amarillo to Lubbock, two of United’s
larger markets in Texas; there are towns in between, but there aren’t very many of them, and they aren’t very big. On the New Mexico side of the line, it’s like that only more so: From Alamogordo to Albuquerque it’s 155 miles as the crow flies, 210 if you go by car; along the way there’s some beautiful desert scenery and the White Sands Missile Range, and not a lot else.
DELIVERY LOCATIONSAll of which means it’s impractical and
uneconomic to offer home grocery delivery to large portions of the Texas panhandle and New Mexico. The good news is, it’s also unnecessary; a map will also tell you that by and large, people in the West
Going the Last Mile
STORES.ORG STORES July 2019 37
live pretty much the same way as people everywhere else in the country, i.e., in cities and towns.
“We’ve got 14 delivery locations,” Farr says, “which cover all our major locations across New Mexico and Texas.” Within those locations, United Supermarkets (as themselves, as Market Street or as Albertsons Market; there are plans to add Amigos to the mix eventually) offers customers the ability to shop online and receive delivery within a two-hour window. To manage this operation, Farr and his colleagues rely on the assistance of two software partners, Mi9 Retail (formerly MyWebGrocer) and Onfleet.
Mi9 Retail provides two critical links in the ecommerce chain. It maintains
the actual website from which United Supermarkets’ customers place their orders. Once the order is placed, the Mi9 back-end process allows United Supermarkets to pick the order and stage it for delivery.
Which leads to Onfleet. United Supermarkets uses its own trucks and drivers to make deliveries; until last February, store management and dispatchers at each of the 14 delivery locations would route and schedule the orders themselves, relying to a great extent on their understanding of local traffic conditions.
“If I grew up in Lubbock, I know how to get around Lubbock, so I’m going to deliver in what I think is the best way possible” Farr says. “In Dallas, they’re going to deliver however they think is the best way possible.” This approach tends to give rise to inefficiency; it’s going to change based on who’s doing the routing day to day, or if they’re behind or ahead of schedule.
To help impose order on this situation, United Supermarkets turned to Onfleet, a startup that specializes in delivery software. Essentially, it provides an app that lives on each driver’s phone and keeps track of deliveries. It also keeps track of the vehicle’s location so dispatchers, who are using Onfleet’s dashboard, know at a glance where all their drivers are, which deliveries have been completed and — at least roughly — how long it’s going to be for the deliveries in progress to be made.
CLOSING THE LOOPIt can also trigger notifications and real-
time tracking information to the customer. Instead of being told by somebody at the store, “Yeah, it’s on its way,” the customer can learn at a glance that the shipment is at the corner of X and Y street and should be there in 15 minutes. Once it arrives, the driver can collect signatures, photos, bar codes and other pertinent information, using the phone and the same app. That all goes immediately to the store’s dashboard, along with the fact that truck so-and-so is at such-and-such an address and ready to head for the next delivery.
“In United’s case, we work with them through an integration with Mi9,” says
Onfleet CEO Khaled Naim. “When a customer places an order on United’s website or app, it hits Mi9, which then creates a task on Onfleet. When United is ready to send out deliveries, they’ll select, say, dozens or hundreds of stops and optimize them across their driver fleet, considering vehicle capacity, delivery windows, driver schedules, traffic data, and other constraints. The drivers receive these optimal routes in their app, and then they go about their deliveries.”
Farr says the integration process has been relatively painless. “We actually onboarded a handful of stores at a time, using the interactive videos and training material on Onfleet’s website,” he says. “It’s all gone pretty smoothly.”
MANAGING THE EXPERIENCEOne benefit of using the Onfleet
system is that it has made it easier for United Supermarkets to continue using its own trucks and drivers for delivery. “Right now, I think a lot of retailers are going through the dilemma of, ‘Do you handle the last mile yourself, or do you outsource it?’” Farr says. “From the beginning, we’ve been very strong in the belief of handling it ourselves. There’s a cost involved in doing that, managing the salaries and benefits of the drivers and all the other expenses. Onfleet has allowed us to maximize efficiency and reduce cost while not sacrificing control of the customer experience.”
In fact, he says, it has improved the customer experience. “Before, we had no ability to track. Did we deliver on time? Did we leave early, did we leave late? Where’s the truck? The combination of control and analytics has enabled us to stick to our goal of handling everything from beginning to end. I would make that recommendation to any retailer dealing with these issues. You don’t want to be in a position where you do everything right and then pass that last mile to a third party that might or might not have your best interests at heart.”
Peter Johnston, a freelance writer and editor
in the New York City area, can be reached at
38 STORES July 2019 STORES.ORG
Farm to Table, GuaranteedFrench supermarket giant moves forward with IBM blockchain initiative
IT
by JOHN MORELL
Potatoes have taken a curious road to popularity. Originally from South
America, they were brought to Europe in the 16th century since they appeared to be an easy-to-grow animal feed. Farmers began trying the hardy root vegetable during lean growing seasons when other crops waned and found an ideal, high-carb side dish. French scientist Antoine-Augustin Parmentier is credited with promoting potatoes, and by the early 1800s, cooks throughout France were experimenting with roasted, boiled and especially mashed potatoes.
“Pomme puree” continues to be a popular dish in France and other European countries, with Nestle’s Mousline brand instant mashed potato mix a supermarket best seller. Carrefour, the multi-national Paris-based food retailer and a major seller of Nestle products, saw an opportunity in a joint project with Swiss-based Nestle and
the IBM Food Trust: Using blockchain technology to track food sourcing. The first fully tracked Mousline boxes arrived in Carrefour stores in April.
“Our customers have told us they’re interested in where their food comes from,” says Emmanuel Delerm, blockchain project leader for Carrefour. “We were the first to offer this kind of transparency. Ideally, a customer can scan the Quick Response code on a vegetable and find out where it was harvested and when. On a meat product they can see what the animal was fed. It’s truly a revolutionary step.”
IN-DEPTH INFORMATIONWhile blockchain technology is
probably best known as the basis of cyber currencies, food distribution may be one of its most practical uses. Blockchain is a “distributed ledger” database that, among other things, can follow a product
through the supply chain in which each participant can make an entry. It allows anyone along the supply chain to see where it started and where it’s been.
Ultimately, it shows the journey a product can take from raw material to finished product. For instance, a chicken dish tracked by blockchain would show whether the chickens were given antibiotics, if the vegetables were grown organically, when and where the dish was prepared, etc. These digitized “certificates” are critical to labeling laws that mandate how products are described.
The level of detail in a scan can point to the GPS coordinates of a farm where the product was harvested, the types of fertilizers and/or pesticides used and even who picked it. Quality control staff along the supply chain sign off on the product’s condition at each place.
Following fresh products like meat, dairy and produce through blockchain,
STORES.ORG STORES July 2019 39
which requires each step taken for the product’s journey from farm to store shelf to be recorded, is one thing. But tracking mass-produced items such as instant potato mix is another — manufacturers typically buy massive amounts of raw produce from farms and distributors and combine them to create product.
Knowing which farm supplied the potatoes that were used in a particular box of Mousline would seem to be impossible. However, customers equipped with a QR scanning app can see information about how the potatoes were grown all the way through how the instant puree was made.
“The fact that we can track this information in depth brings an entirely new dimension to our work,” Delerm says. “Consumers are looking for accurate information about the food we sell, and blockchain allows us to do that even in packaged, mass-produced items.
Additionally, when there’s a recall we can quickly determine what’s been affected, where the products are and remove them from the shelves.”
In the cases of contamination, blockchain not only can quickly identify products, it helps protect against waste. “If we know produce from a particular farm harvested over a few dates are having a problem, we can find those and destroy them rather than all the produce from that farm,” Delerm says.
That type of transparency for food retailers is considered critical. “We can see if a distributor is selling us product
from a farm that has had problems in the past,” Delerm says. “The retailer — and the consumer — can check the sourcing of products. Everyone will get insights into the food they eat.”
ENHANCING CONFIDENCE“What we’re seeing today with
Carrefour and Nestle will soon be commonplace everywhere,” says Suzanne Livingston, director of the IBM Food Trust. “It’s information that benefits both the consumer and the businesses involved, so it’s a natural fit to introduce people to blockchain technology.”
Nestle, which joined the Food Trust in 2017, had been experimenting with blockchain tracking of its products and was looking for a retail partner. Carrefour had developed a thriving blockchain program covering a selection of private-label items including fresh
poultry, vegetables and dairy, with a stated goal of having more than 100 of its products traceable through blockchain by 2022. The company was approached by the IBM Food Trust last October about connecting with Nestle, and quickly signed up.
Use of the blockchain is simple enough to require minimal training. Carrefour employees using a mobile device loaded with a QR scanner note the arrival of a shipment of Mousline potatoes, which is added to the product’s blockchain history. Once shelved, consumers using the Carrefour app can scan the QR code on an individual box and see what types of potatoes were used, when and where the product was made, where it was shipped from and how long it had been at the store.
IBM is working with more than 50 food brands to integrate their products into the Food Trust, and retailers are showing interest. Due to recent E. coli and salmonella contamination recalls, Walmart and Albertsons have joined the Food Trust and asked their leafy produce distributors to become involved.
“Distributors and retailers always have to calculate how to make sure the products on their shelves are fresh. It’s costly when they go bad or stale,” Livingston says. “When they have an exact timeline to see when a vegetable is picked and when it arrives at the store, that gives the retailer knowledge they can use.”
Going forward, it’s expected that blockchain verification could become commonplace in supermarkets. “The more parties involved in the process the better for everyone concerned,” Livingston says. “Transparency only enhances the confidence consumers have in the products they buy, and through their choices that’s what they’re telling us.”
John Morell is a Los Angeles-based writer who
has covered retail and business topics for a
number of publications around the world.
“Consumers are looking for accurate information about the food we sell, and blockchain allows us to do that even in packaged, mass-produced items.”
— Emmanuel Delerm, Carrefour
40 STORES July 2019 STORES.ORG
by SANDY SMITH
hen Need Supply and Totokaelo merged operations last year, it might
have seemed an aligning of two fairly similar brands.
Both focus on new wave and streetwear fashions and both are heavily focused on ecommerce with a relatively small bricks-and-mortar footprint. The courtship began in 2016 when Totokaelo was acquired by the same venture capital firm that held a minority interest in Need Supply. But late last year, the two merged into one, calling the umbrella NSTO and with Need Supply founder Chris Bossola at its helm.
Make no mistake: Both will continue to operate as separate entities with strong adherence to the distinct identities at each core. “The way we see the two brands is very distinct,” says Fanny Damiette, vice president of brand and marketing for NSTO. “One of the key distinctions is the point of view. There are customers who shop at both, but we don’t assume that they do so for the same reason.”
With a keen focus on understanding the distinctions and in reaching those audiences in new and creative ways,
Need Supply’s and Totokaelo’s marketing efforts might be as leading-edge as the streetwear fashions both brands represent.
UNDERSTANDING THE DISTINCTIONSTotokaelo has a more urban sensibility,
Damiette says. “It’s actually talking to this urban customer who has a strong creative interest, creative sensibility. They are interested in creative expressions. They have an intellectual understanding of fashion. When they buy a piece, they are interested in understanding what makes that piece special.”
Need Supply customers are “more relaxed, more casual, a little bit more nostalgic,” she says. “If you look at the offering, there are a lot of nods to the ‘70s, ‘80s and ‘90s, in how we sell the product and look at the product.”
With such distinct brand visions, the company has a clear mission in marketing to each, though a commonality is in a nontraditional approach. Both brands find their customers most often on their own social platforms, Damiette says: Totokaelo may use Instagram to promote
an interview with a well-known designer like Stella McCartney, while Need Supply’s Twitter account touts an up-and-coming filmmaker. Both approaches align with those distinct customer profiles.
“For Totokaelo, we look for inspiration on the outside, meaning we try to open our customers to new faces, new brands, new experiences and new ideas,” she says. “We’ll interview an interesting chef who opened an interesting sushi store. We may feature a brand and their approach to sustainability. We bring them information they won’t find anywhere else.”
Need Supply customers are inspired by up-and-coming and emerging talent, so the company emphasizes images shot in industrial spots or modern homes. “The Need Supply approach to creative direction is more relatable,” Damiette says. “And for Totokaelo, it is more aspirational.”
The term “aspirational” gets a bit of an NSTO definition, Bossola notes: “We use aspirational, not in the traditional sense of a luxury brand where our customer is looking to show they’re rich. But the aspiration is to be seen as a person with
MARKETING
Aligning Brands and StrategiesAn inside look at streetwear brands Need Supply and Totokaelo
STORES.ORG STORES July 2019 41
vast knowledge, to challenge the customer with things they haven’t seen before.”
Damiette believes that lack of need to “show off” separates both Need Supply and Totokaelo customers from similar brands. “Both brands talk to a customer who is very self-aware.”
And that means using marketing to play up cultural knowledge — which Bossola believes is the core of what both customers seek.
A MINDSET, NOT AN AGEThe focus on outlook rather
than demographics reflects a shift that Damiette believes applies to other retailers as well.
“We’re not in this world anymore where each generation is siloed into their own way of life or geographically siloed,” Damiette says. “That’s an asset for retailers. It means that we’re free from some of the boundaries that used to exist and some of the silos that used to exist. A mother of three from Los Angeles shops in the same way as a student from Stockholm. They get the information from the same influencers, the same blogs. They read the same magazines.”
Damiette says the “only way” for a retailer to get out of the race of demographic is to “double down on the point of view, on what you stand for. Let’s say you have a store that’s all about brands that are sustainable. You should double down on that and your message should translate that. You will reach that global niche that is interested in that point of view.”
Granted, there are generational applications as well — especially when it comes to aging the product or sticking with the initial vision.
“In our case, it’s even more relevant,” Damiette says. “When the first iteration with Need Supply was born, it addressed what is now Gen X, which now has children, probably earns a good living, whereas before they might have been students. Need Supply was always about the American spirit behind fashion.”
Because that point of view is so deeply in the Need Supply DNA, “we happen to renew our customer base a lot,” Damiette says. “You might have someone who has followed us for 20 years but still shops at Need Supply. They still see themselves as the 20-year-old they used to be. And they look at the current 20-year-olds and a little part of themselves wants to be that 20-year-old because they have a better vision of what those customers’ lives look like.”
Bossola, who has been with Need Supply from the beginning, notes the big changes in communications. “When I look back, media was more of a way that you pushed communications out. The only place you had a dialogue was in a physical store. We don’t push messages out anymore. We create content, we share it with our customer, and we have a conversation.”
That content may appeal beyond a certain age group — but that does not mean NSTO eschews demographics. It has its eye firmly on the next generation of shoppers, Gen Z, and anticipating the shifts that they will bring. Already, they are bringing some definite ideas.
“They’re definitely into brand nations and brand point of views even more than the other generations,” Damiette says. “They’re more sensitive about what brands stand for and care about. For us, it will be about being even more transparent and how we plan on playing on those values. That’s going to be true for every brand out there.”
ALIGNED AND READY TO GROW
Now that the two brands have formalized and expanded the relationship, don’t expect a blending of perspectives. Granted, the underpinnings of the ecommerce technology are shared — but the messages won’t be, Damiette says. “We want to keep the points of view very pure, more integral to each other. The Totokaelo lens and Need Supply
lens are very different. There’s very little advantage of mixing them. Maybe one day we’ll see an interesting opportunity. For now, there’s actually more value in keeping them very separate.”
Don’t think that NSTO’s point of view is in staying stagnant. The company recently added shoes and is keenly focused on expanding private labels. More bricks-and-mortar stores are on the table, too.
Even then, expect NSTO to do things a bit differently. “We’re taking the approach of not having a strict bricks-and-mortar strategy, but a geographic strategy,” Bossola says. “We decide based on our ecommerce data, where we may be underrepresented. Then we ask, ‘What is the best approach to engage with that consumer, considering the competition and the logistics?’ Is it a full bricks-and-mortar store, a pop-up store, a private showroom, additional marketing? We will develop an approach in each of those markets from a digital physical strategy.”
Sandy Smith grew up working in her family’s
grocery store, where the only handheld was a
pricemarker with labels.
42 STORES July 2019 STORES.ORG
by FIONA SOLTES
It’s not hard to imagine the scenario: A pop star performs on an awards
show, debuting a fabulous new makeup look. The next day, fans go in search of product recommendations and application techniques. They just might find it at Dillard’s.
In recent years, the retailer’s army of 6,000 beauty advisors spread across 29 states have been in constant learning mode, staying updated on cosmetics, skincare, fragrance and makeup. There’s formal training — but there’s also a constant flow of on-demand, bite-sized segments on trends, five-star service, product launches and promotions, in addition to the opportunity to create
STORE OPERATIONS
On-Demand InstructionDillard’s deploys mobile learning to keep employees in the know
community through comments and learn from internal beauty influencers.
Best of all, it’s right there on their phones, accessible when and where they want it. The tool is called Learner Mobile — branded at Dillard’s as Beauty Institute Mobile — and Sheryl Porter, director of beauty education at Dillard’s, sees it as a convergence of YouTube, Instagram and Facebook, as well as a lot of fun.
“We’re always looking at ways to do things differently,” Porter says. “We saw a huge need in educating our team, and also knew that generationally, the sales team is changing. They’re younger, and they like to process information
and receive information differently than traditional methods.”
Learner Mobile is not just a web-based formal training program optimized for mobile. Its informal learnings are available on desktop in addition to iOS and Android, but it is decidedly mobile-first. It uses artificial intelligence and algorithms to determine where the community is most engaged, and what is likely to engage them next.
Learner Mobile also provides ongoing analytics and reports that tie training back to key performance indicators. And there is no risk of an information breach in terms of metrics, as all information is internal, rather than
STORES.ORG STORES July 2019 43
shared on a social network. Learner Mobile — and BIM, by extension — is not crowdsourced, adding credibility.
That last bit is an important distinction, says Learner Mobile President Tim Harmon. If users are “spending their days in the retail space in Learner Mobile, just browsing and having fun, that’s not good,” he says. “As we know in retail, they need to be spending that time on the floor. We designed this application to allow people to get in, pinpoint what it is that they need to be productive and get out.” All the same, today’s training content must be marketed to those learners, engaging their interest rather than simply being directive.
SPEED + SCALABILITY + AFFORDABILITY
The relationship between Dillard’s and Learner Mobile goes back further than the introduction of the system. The companies have worked together for a decade; Dillard’s was the first company to sign on for Learner Mobile with parent company SVI, which also offers 36 Dollar 360 — a low-priced, easy-to-use 360-assessment system — and Quickfires, a low-priced, easy-to-teach library of off-the-shelf training courses for managers.
Those themes of “easy” and “low-priced” are by design. Harmon says the SVI leadership came up in the retail marketing space; based in Arkansas, its mere proximity to the multinational retailer also in the state deeply engrained the concepts of speed, scalability and low cost early on. The overall idea is to empower every single employee, and SVI has worked with a variety of complex organizations to make it happen, including Tyson, Walmart, Interstate Batteries, BSN Sports and AutoNation.
At Dillard’s, Porter admits there were questions at first about beauty advisors using their own devices — especially on the sales floor.
“But once people get on it, they see the value, and they understand it,” she says. When customers approach, they know not to be on their phones. That said, they can use devices and the app to fact check, which can assist with the customer experience, and also can take advantage
of quick learnings in downtime. For her part, Porter finds the advanced technology of smartphones has made it easy and fast to shoot video and produce content.
“This really augments a lot of the things we’re already doing with our instructor-led training,” Porter says. “It helps us reach a wide broad audience. I can deploy information fast. And the way that it’s portrayed is very fun.”
The accessibility of the app means the content is consistently spread from “Missoula, Montana, to Macon, Georgia.” In the past, the experience and effectiveness of training might have depended more on availability and on the skills of the facilitator. Today, however, the graphic-heavy, eye-catching app includes images, short videos and content from vendor partners.
Porter also likes to include contributions from internal influencers who work with her on topics and scheduling. The platform also allows for special seasonal channels, such as one dedicated to holiday and another to Skin Cancer Awareness Month.
BUYING INTO THE MISSIONThe target market for Learner Mobile
is enterprise organizations. That doesn’t mean they have to be large and global, says CEO and founder Mike Thompson, but ideally there’s a field-based component. The goal is to empower, engage and value each employee, at every level.
These organizations, he says, will be looking for a “new, innovative, disruptive way of delivering content and training to their people,” but also will want to connect the learning and training aspect to strategic and measurable goals.
“Sometimes traditional training is completely disconnected from business results or business metrics,” he says. “We want to be very connected to the business metrics. When we work with our clients, we’re asking for that data. We want to understand, what is the activity within Learner Mobile, and how is that driving real business ROI?”
Porter wouldn’t share specifics about the return on ROI for Dillard’s but did say it was “significant. Even mild usage impacted the numbers.”
Thompson — inspired to empower and inspire others and make the most of life after losing a young child to congenital leukemia — says his company aims to be a global leader in next-generation learning management systems. SVI blends Thompson’s marketing acumen and Harmon’s software development background with the industrial engineering skills of COO Erin Marchese in a way he believes is unprecedented in the industry.
In the early days, bringing a new client onboard meant “they had to buy into our mission,” Thompson says. “They had to fall in love with us. And that can be heavy lifting sometimes.” With Learner Mobile, “they first see it as a smart decision.”
BSN Sports has seen adoption and activity go “sky high” through Learner Mobile, Thompson says, using it as a productivity tool for its salespeople. And AutoNation has expanded use of the system to go beyond training and content delivery to highlight communication of new initiatives and product information, Thompson says.
The system, then, is constantly learning — as are those who use it.
Fiona Soltes, a freelancer based near Nashville,
Tenn., loves a good bargain almost as much as
she loves a good story.
44 STORES July 2019 STORES.ORG
Bringing Shoppers BackEndear helps in-store staff become outbound retailing masters
by JULIE KNUDSON
STARTUP SPOTLIGHT
The rise of ecommerce has shifted the retail
landscape significantly over the years, but it’s still taking brands some time to cope with all of the changes. Many of today’s technology offerings focus on the ecommerce space, but “outbound retailing” platform Endear is intended to boost physical stores.
“It’s about allowing stores to be more data driven,” says co-founder Leigh Sevin. “It’s about understanding what associates were doing on a day-to-day basis, and how that resulted in impacting their sales.”
Originally launched as a consumer platform, Endear began by helping customers work with freelance stylists. Along the way, the team realized store associates were diligent in nurturing customer relationships, but they didn’t have access to the right technology to drive consistent results in those efforts.
“For so long they had been on their own in terms of tools and resources,” Sevin says. “They were building these very high-touch relationships with customers, but no one had formalized that procedure and empowered them to do this.” Rather than watch store staff continue on the journey alone, the team behind Endear shifted its focus, intent on helping make customer relationship development a more collaborative effort.
“Retailers integrate their ecommerce and point-of-sale into Endear so their associates can access all of that information through our platform,” Sevin says. The system works on any device and gives store associates the tools to be more proactive, providing
them with a more structured and productive way to reach out to customers.
Where staff used to keep a notebook with customer information tucked away and use personal phones to maintain engagement, Sevin says, “Now they can segment that into a more data-driven degree to determine who they want to target.” Using Endear’s centralized messaging capabilities and its power of scale, associates can reach out over text and email, sharing product images and setting up lookbooks for customers. The platform enables a level of personalization that, while typically done well through ecommerce channels, can be missing in stores.
Retailers can gain important benefits by deploying Endear; the platform gives brands a way to find new opportunities through outbound retailing by using associates’ off-peak hours to do additional marketing. Normal lulls in traffic no longer need to translate into lost productivity if staff can continue selling even when the store is slow.
“They can use those people to help market the location, to bring people back
at a later date or to drive traffic to the website,” Sevin says. The focus turns to bringing shoppers into the store rather than simply waiting for them to visit. In an increasingly omnichannel world, Endear also provides a way to attribute sales to individual stores, regions or to a brand’s online presence. “Whether they come back in store or they go online, we can show the retailer how that customer was brought to them,” Sevin says.
High turnover rates are another recurring issue for many retailers, and the resulting negative impacts of employee churn may be lessened with Endear. Instead of watching a customer relationship walk away when a key associate leaves, those connections can instead be retained by the brand, along with the customer’s data and longer-term loyalty. “If an associate moves on, the retailer can hold onto that customer and keep the same level of personalization and communication,” Sevin says.
Though Endear got its early traction in areas such as affordable luxury and high-end fashion where sales associates were already doing a good bit of outbound retailing, Sevin thinks every type of retailer could see a benefit from the technology. “Customers are always looking for personalized content that’s relative to them, and your associates are best equipped to understand those needs and address them effectively.”
Julie Knudson is a freelance business writer
who focuses on retail, hospitality and
technology.
STORES.ORG STORES July 2019 45
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46 STORES July 2019 STORES.ORG
ONLINE
Foiling the PhoniesHow retailers can guard against fake reviews
by PAUL VACHON
Remember the old adage “don’t believe everything you read”? Today
the axiom remains true: Despite more effective policing, in many ways the internet still resembles the wild west, with scamsters peddling snake oil in the form of bogus reviews. Products and services that are actually inferior are given false four- or five-star ratings to trick the trusting consumer. This digital sleight of hand can also be used to trash competitors with deceptively negative reviews, robbing a quality brand of hard-earned business.
The problem of fake reviews is almost as old as the internet, but one that has intensified over time.
“It started out on a much smaller scale,” says Rob Gross, COO at Fakespot, a data analytics company dedicated to detecting and pointing out fraudulent evaluations. “Let’s say you develop your own product and list it online. You might ask a few friends for a favor to post a few positive reviews to help get your business started. That’s all pretty innocent.”
But the growth of third-party ecommerce beginning around 2005 changed things. “When Amazon developed the third-party marketplace system, it incentivized the gaming of the system,” Gross says.
He says ranking algorithms like Amazon’s consider both the number of reviews and the distribution of their star ratings. To exploit this, an unscrupulous vendor could produce an inferior item (perhaps a knock-off version of a popular product), create a third-party seller account, then post dozens of fake reviews. This will move the item up in search algorithms virtually overnight.
“We’ve seen situations where a product will start out with zero reviews one day,” Gross says, “and the next day it’ll have 3,000.”
Manipulation of this kind proved highly lucrative — and affected everyone, including the honest merchant. With
virtually every business having an online presence, from large retailers to the corner bakery or locksmith, maintaining a strong star ranking is essential to capturing business. “If any business has less than four stars, consumers have been trained not to even look at it,” Gross says.
‘LAST LINE OF DEFENSE’Fakespot was born to root out these
deceptions. In 2016 company founder Saoud Khalifah became frustrated with the rampant quantity of misleading or even fraudulent reviews online and decided to take action.
Fakespot functions as a consumer service, operating through Fakespot.com, a Chrome extension and a mobile app. Each analyzes reviews that appear on the
sites for Amazon, Best Buy and Walmart, plus hospitality sites TripAdvisor and Yelp.
The proprietary technology the company uses was developed internally and consists of several closely guarded algorithms. “By maintaining our secrecy, we stay one step ahead of the sellers (who sometimes use fake reviews) and the fake review farms,” Gross says. “Every night we see people trying to game our system.”
Effective security also prevents would-be competitors from reverse-engineering Fakespot’s intellectual property.
Fakespot’s system analyzes reviews inputted by consumers and runs them through its artificial intelligence-based algorithms. The algorithms are trained through machine learning, which draws from a database of some 3.7 billion reviews. Natural language processing enhances the procedure, helping to discern common word patterns that often appear in fake reviews.
After the analysis is completed, the system assigns the review a letter grade, “A” through “F.” The higher the grade, the more trustworthy the review. Unreliable reviews are removed from the site, and the star rating of the reliable reviews is reevaluated in light of the findings.
Fakespot also offers other information — a product overview, details from the most positive and least positive vetted reviews, a representation of the most and least authentic reviews, review count history, price history and comparisons with similar products.
“We like to look at Fakespot as a one-stop shop for consumers, and a last line of defense before the customer hits the ‘buy’ button,” Gross says.
As Fakespot continues to evolve technologically, the business model changes along with it. When the company began, the consumer site was supported by advertising and Fakespot charged for the Chrome extension. It recently received $1.3 million in venture funding, however, which enabled the company to remove
STORES.ORG STORES July 2019 47
the advertising and make the Chrome extension free.
“Soon we plan to introduce a B2B product which will help brands better understand what’s going on within their reviews,” Gross says. That will allow future clients to obtain a clean view of customer sentiments once the influence of incentivized reviews is removed.
“People are moving toward more authentic experiences on the internet, and we want to promote that for all honest players.”
LEGAL REMEDIESWhile the people at Fakespot have
done the public a favor, what about the unfortunate merchants negatively impacted by fraudulent online appraisals? What recourse do they have?
“If a business owner or company perceives a problem of fake online reviews, there’s a full gamut of legal remedies that can be used to obtain relief,” says Matt Cavanaugh, partner in the Cleveland office of the McDonald-Hopkins law firm. “The best method to use will depend upon the nature of the problem. How big an issue is it? How large and influential is the offending party?
“Also, is the source of the problem in the U.S. or is it abroad? If it’s a rogue actor in Russia, U.S. law can be of limited usefulness.”
Within American borders, it’s a different story: Cavanaugh says every state has laws prohibiting individuals from engaging in deceptive conduct in commerce. Lawsuits can be filed on grounds of commercial disparagement or false advertising. On the federal level, suits can be brought under the Trademark Act, which covers false advertising.
If the plaintiff is successful, the court can order injunctive relief, which will force the offending party to take down
the fraudulent review. Monetary damages may also be ordered.
In order to prevail, however, it may be necessary to prove causation — the plaintiff must demonstrate a particular review was directly responsible for the merchant’s lost business. Such proof may be difficult to show.
An especially effective strategy may involve some diligent investigative work.
“Try to find the hub,” Cavanaugh says. “Look for companies that use a network of reviewers. The group is approached by the unethical company which makes an offer to pay them to boost their ratings on Amazon or Trip Advisor. They have their minions post phony positive reviews, or negative reviews to bash a competitor. Finding the hub allows the plaintiff’s counsel to use the subpoena power from filing a lawsuit to undercover and expose many of the spokes in that network.”
Detroit-based Paul Vachon writes for various
trade publications, in addition to feature stories
for consumer magazines and books on Michigan
history and travel.
An unscrupulous vendor could produce an inferior item, create a third-party seller account, then post dozens of fake reviews.
Fakespot’s system analyzes reviews inputted by consumers and runs
them through its artificial intelligence-based algorithms.
48 STORES July 2019 STORES.ORG
by LIZ PARKS
How can retailers prevent someone from buying an expensive piece of
apparel or jewelry, wearing it for a special occasion, then returning it for a full refund? Or stop people who purchase big ticket items like televisions just before the Super Bowl, for example, and then return them after the event?
Despite fears of offending shoppers with strict return policies, retailers have begun combatting both types of fraud using low-tech solutions like one-time-use tags that stop people from returning expensive items if removed and high-tech computer algorithms that identify serial returners.
In documenting the problems and the growth of these types of fraudulent returns, the National Retail Federation’s
What to Do About Wardrobing?Retailers stem returns with new rules and oversized tags
2018 Organized Retail Crime survey estimated that return fraud and abuse amounted to $24 billion in 2017.
Wardrobing — the return of used, non-defective merchandise — accounted for 32 percent of all retail return fraud in 2017, a loss of $7.6 billion.
NRF Vice President for Loss Prevention Bob Moraca says apparel, which includes expensive gowns and suits — typical targets of wardrobing — accounted for 13 percent of total returns.
“Only half of what’s returned can be resold,” says Stuart Rosenthal, vice president of sales and marketing for Alpha High-Theft Solutions, a brand of Checkpoint Systems, a division of CCL Industries and a provider of single-use
tags. He says one report estimated that almost two-thirds of retailers have “encountered customers who use an item and then return it for a refund.”
And, he adds, “people who ‘wardrobe’ on average return about 20 items a year per person, not including items stolen and returned.”
A ‘HUGE PROBLEM’In the past few years, retailers and the
manufacturers of single-use security tags as well as companies like Appriss and Brightpearl have stepped up their efforts to confront problems like wardrobing and serial returners.
Appriss Retail provides artificial intelligence software that can pinpoint
FRAUD
STORES.ORG STORES July 2019 49
people who serially return products. Brightpearl provides customer relationship management systems that allow retailers to better track their customers’ returns. Companies can tag a customer in the system and then monitor their purchase histories and returns, and use that to pinpoint those with higher return rates or odd patterns of behavior.
Last year, Brightpearl conducted two return fraud studies, one documenting retail return trends in both the United States and the United Kingdom and the other consumer attitudes toward returns and retail return policies.
Based on feedback from the retail study, which surveyed more than 200 retailers, Brightpearl’s CEO Derek O’Carroll described wardrobing as a “huge problem, costing retailers millions.”
He notes that many stores don’t want to make their return policies stricter, to avoid alienating customers who might object to a more limited or strict return policy: 83 percent of shoppers say “they check returns policies and only shop again with a store that has a returns policy they like.”
But O’Carroll says consumer research shows customers are now returning 66 percent more items than five years ago.
“That’s adding a significant cost and complexity to returns management, especially for many ecommerce brands that are already
operating on slim margins.”More than half of all retailers
surveyed in the United Kingdom and 44 percent in the United States by Brightpearl report their margins being significantly squeezed by the process of handling and packaging returns.
LOW TECH, HIGH OUTCOMESNational retailers including
Bloomingdale’s have adopted single-use security tags, regarding them as low-tech but extremely efficient deterrents. Alpha introduced the first single-use tag about 15 years ago; when wardrobing was recognized as a growing and serious problem about five years ago, sales of the Alpha Shark Tag spiraled up — 300 percent from 2014 to date, Rosenthal says.
Chris Benzing, vice president of sales for Retail Security Group Inc., which distributes security tags, calls single-use security tags “the wave of the future, cost-effective enough that even consignment shops can use them for the value they provide.”
The three-inch tags, typically bright and colorful, are placed on apparel in highly visible places. They “work quite well,” Benzing says. “You really can’t defeat them. It’s a no-win for people who want to abuse returning goods.”
“These tags are successful,” Rosenthal says. “They’re low cost, bright and colorful, and stand out when placed in a conspicuous location. It makes it harder for a person to try to wear an expensive item, then return it. It’s a visual deterrent.”
The tags typically carry an alert saying the item cannot be returned or exchanged without the tag attached. Some tags are customized — Bloomingdale’s has its name on its single-use tags — while others are more generic, which reduces their costs even further, a benefit for smaller retailers.
Over 30 large retail chains and a growing number of specialty stores are using Alpha Shark Tags in the United States alone, Rosenthal says; Checkpoint
has just introduced a similar tag called R-Turn in Europe, where wardrobing fraud is also on the upswing.
RETURN POLICIESLast year, research done by Brightpearl
in association with OnePoll compared the behaviors of 4,000 adults who shop online in the United States and the United Kingdom with the views of 200 U.S.- and U.K.-based retail decision makers.
They found both shoppers and retailers agree the problem of return fraud needs to be tackled, O’Carroll says, but whether retailers are being clear enough with consumers about return policies “is a point of contention.”
Almost half of all respondents in the consumer survey admitted they will, at least sometimes, buy items with the intent of sending some back. The practice was most pronounced in the 18- to 34-year-old age group: O’Carroll says that suggests “serial returners could be here to stay,” unless retailers act to discourage that behavior through return policies.
From the retail perspective, over one-third of retailers in the United Kingdom and 42 percent in the United States said they had seen an uplift in serial returners in the last 12 months, while 44 percent in the United States and 50 percent in the United Kingdom agreed their margins are being strongly impacted by the returns.
O’Carroll notes the cost of cleaning, repackaging and getting items ready for new owners averages $5 billion in the United States and could triple in the coming years. It makes sense for retailers to adopt more stringent return polices “while providing shoppers with very seamless and clear instructions about how the policies work.”
Given the success of retailers who have tested or adopted single-use tags, Moraca notes it would be wise for other retailers to use their “creativity” to come up with something similar and attach it to higher-end products.
“It just makes sense.”
Liz Parks is a Union City, N.J.-based writer
with extensive experience reporting on retail,
pharmacy and technology issues.
END CAP
‘It’s Summertime … Go Outside and Play’
by PHIL RIST
Phil Rist is executive vice president of strategic initiatives at Prosper Insights & Analytics.
It was 1972 when Magnavox released the Odyssey Home Video Game system and Atari released Pong, creating a new leisure-
time activity to take the place of playing outside in the sun.Fast forward to 2019, and 34 percent of adults in the United
States say playing video games is one of their favorite ways to spend their free, leisure time, according to Prosper Insights & Analytics’ ongoing surveys of U.S. adult consumers. Tilting more male at 58 percent, these video game players have an average age of 39. With the advent of multi-player games, players can compete
with rivals from around the world. Video game competitions are drawing TV viewers from gamers and non-gamers alike: 22 percent of all adults regularly or occasionally watch video game (eSports) competitions on TV.
No longer tethered to the home game system, 73 percent of video game players play on their smartphones. Some shopping malls are hosting video game competitions as a traffic driver for young and old alike. Video game enthusiasts no longer need to stay home to play. “It’s summertime … go outside and play.”
SOURCE: MEDIA BEHAVIORS & INFLUENCE™ SURVEY, JAN-19
Who plays video games?
Male
Female
0% 10% 20% 30% 40% 50% 60% 70%
50 STORES July 2019 STORES.ORG
58%
49%
51%
42%
Video Game Players US 18+
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