A quick update on smartphones & mobile price checking
Normally we strive to post something weekly about an emerging trend or retail topic. Since our post yesterday, we have seen a bunch of posts and tweets on the emerging trend and retail store threat of consumers doing price shopping in aisle with their smartphones. We ran across this infographic with some amazing stats that was just too good to pass up.
6 Stats that should be a wake-up call for all marketers
Eric Anderson of White Horse recently reported on an interesting ethnographic study of consumer behavior in the store aisle. They set out to study how consumers actually use smartphones today. According to Anderson, the White Horse study:
“Set out to identify the areas of greatest opportunity for retailers and CPG to develop a mobile experience strategy that aligns with changing mobile behavior. Our research included a 390-person survey of smartphone users, as well as “shopalongs” with smartphone shoppers in a range of retail environments.
The infographic below summarize 6 amazing findings from the study which is available for download.
Source:
Marketing Profs: 6 Stats on In-Aisle Mobile [Infographic], January 23, 2012
The war over smartphone price checks is heating up
It happened rather innocently the last couple of years as consumers started surfing the web while shopping in retail stores. But, the battle for price conscious consumers reached a fever pitch last holiday season. Amazon poured salt in the wounds of retailers by offering an additional $5 off if consumers used their Price Check app to scan bar codes in a retail store. Will it be an Amazon world, or can big box retailers fight back?
Retail store prices are under siege by web e-tailers
In the “old days,” consumers waited for Sunday ads to check prices before they went shopping. Today, 79% of shoppers research online before going out to stores. But, the new and increasing threat is the consumer today is armed with a smartphone and price app to literally stand in the aisle and check prices against the best deals on the web.
Allison Enright just published a timely piece in the Internet Retailer entitled: “Target takes aim at web-only retailers”. In this article, Enright quotes some amazing stats from a survey regarding the use of smartphones by in store shoppers:
58% of smartphone owners checked out electronic prices in a store AND then purchased elsewhere online
41% checked out shoe prices in store and then bought online
23% checked in store but bought appliances online
22% for sporting gear
19% checked in store, but bought home & garden online
Retail stores are doomed if they price match the web
It is every consumer's right to check prices. It always has been and always will be that way. What has changed dramatically is the growth of smart phones and the ability to check prices while standing right in the store aisle. In the US, the growth of smart phones has been dramatic:
In the US, 44% now have smart phones, up from 18%
In 2010, shoppers pent $3.4 billion using mobile phones
eBay’s RedLaser price app was downloaded 16 million times
We have written previously about this subject -- there is absolutely no way that retail stores can consistently match web prices, even from their own websites. The old school retail strategy of lowest price guarantees is a recipe for bankruptcy. The biggest strategic challenge facing retail stores in 2012 will be consumers asking for prices they found on their smartphone by scanning bar codes in store.
How Target is taking aim at Amazon and price Apps
Target is certainly not the only retailer to be hit by the loss of revenue and profits from smartphone comparison shoppers. Best Buy is reported to have suffered considerable losses to web price based shoppers last year. Even Walmart’s flat growth is attributed in part to more smartphone price comparison shopping, especially for high ticket items.
Target has recently been much more vocal about fighting back against Amazon and web only based retailers. According to Enright’s article, Target is aggressively changing its policies:
Target has sent letters to suppliers stating that it does not want to become a showroom for e-tailers selling the same products.
Target has asked some suppliers to renegotiate agreements so that Target can be competitively priced with online only retailers.
Target is considering membership or subscription based pricing for products sold in store at web based prices.
Target will continue to aggressively expand “house brands” of products exclusively only sold at Target.
Walmart is also taking action, and adds a twist
Amazon’s holiday promotion of offering consumers $5 for scanning bar codes woke up and ticked off a lot of people. Be careful when you tick off the 800 lb. gorilla of retail! Walmart is aggressively building its own online web retailing presence to compete with Amazon. However, like Target, Walmart has policies that say its stores do NOT match prices found online, even those listed on their own-ecommerce sites.
In a very interesting twist, Walmart has actually opened some pilot web stores in California malls! The purpose of these stores is to act as showrooms for items that Walmart sells on the web. Consumers can touch and test some feature products in these stores, but can only make purchases from kiosks in the store directing them back to Walmart.com. A very smart way to challenge Amazon’s selection and web experience if you can deliver!
Why suppliers must care about smartphone price apps
It could be easy for manufacturers to say: “That’s the retailer’s problem … I will still get my sales regardless of where consumers purchase.” While that may be true, what will happen if consumers do not have an experience in store, or access to places to see demos, or have associates explain how to use products?
All of those things related to the consumer experience in store add to the costs of the retail store operator. If the consumer uses their store for the experience and then purchases from their phone elsewhere, that store can’t make sale. If the store matches the online price, it won’t make a profit given its extra overhead costs.
Imagine that you are Microsoft launching Windows 8. It is one of the most important product launches in your company's history. Not only will this new platform impact PCs, but will be pervasive across tablets and phones. If you were Microsoft, where would you rather have consumers experience the “wow factor” of your new Windows 8 – as a landing page on Amazon, or on end-cap demos and every device in Best Buy, Walmart and Target?
Consumers now hold the power of shopping by phone, anywhere any time. To survive and compete, retail stores must go back to the basic Law of the Retail Jungle: Differentiate or Die! 2012 is going to get a whole lot more interesting as even the largest retailers must differentiate on more than just lowest price.
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Is Pinterest a fad, or opportunity for today’s marketers?
One of the hottest items in social media of late has been Pinterest. It seems to be particularly attractive to women, who like the visual bulletin board interface. One of the best descriptors I’ve seen for Pinterest is “fantasy football for women”. While Pinterest has been getting a lot of press, is it another passing social media fad or an entirely new format offering new marketing and branding opportunities?
What in the world is Pinterest?
Pinterest is yet another new type of social media/network. What makes it so unique is the visual aspect of literally “pinning” your likes to a visual board. As you create your “pin boards”, you are creating visual icons of things you like, places you might like to go, or products you are interested in purchasing. In the simplest sense, Pinterest is a way of visually putting "post it" notes all over the web.
Of course, you can already collect links to sites that interest you in a number of ways, including the traditional “favorites” in Internet Explorer. But, rather than a URL or short name, Pinterest enables you to select a photo that becomes an icon to the product, place or website. Not only can a Pinterest pinner curate their own collection of interests, they can track what others on pinning across 32 different topic areas from art to science. Most importantly, they can share their Pinterest pins quickly with friends through Facebook and Twitter, and that is what makes it so powerful and attractive to marketers.
What makes Pinterest unique?
Pinterest is unique in its approach. One differentiator is the highly visual nature of the links vs. traditional URLs. The act of “pinning” a representative photo is very symbolic of creating a bulletin board with post-it notes, with the ability to organize and categorize them. This visual act of “curating” collections seems to have an unprecedented popularity among women.
What makes Pinterest both interesting and valuable is being able to share your “pins” and “boards” with others through other social media forums, such as Facebook. For example, a bride to be can pin a variety of wedding dresses to their board, and then share them with all her friends. She can also see if others “repin” her dress selections to their boards. For inspiration, she can search Pinterest categories to see what others are spotting and selecting as trends. All of this can be done in a completely visual way using photos and images.
Is Pinterest a passing fad or something worth exploring?
Over the holidays, my daughters told me that as a marketer I had to get on Pinterest. My initial reaction was: “Oh great, another social media tool, and I haven’t even really cracked the code on Twitter.” To be honest, I hadn’t really heard of Pinterest and questioned why marketers should care.
I was surprised to learn that Pinterest has become one of the top 10 social media sites and forums. And technically, it is still invite only. But, despite rapid recent growth, Pinterest has less than 5 million users in contrast to Facebook approaching a billion. So, it’s still very new.
What makes Pinterest so compelling is the visual appeal to users, especially women. And the key to curation of “likes” on Pinterest is that it is often about “dreams”, “passions” and lifestyles. Said another way, there are many sites to search for products and descriptions, but Pinterest is about how people see themselves using products and services. In fact, Pinterest etiquette clearly states that it is not a platform for self-promotion and “hawking” products.
Why brands and retailers care about Pinterest?
If Pinterest is not a broadcast medium like Twitter, or a social connection like Facebook, why should marketers bother? For one thing, Pinterest has captured and engaged women. But, the engagement is not about products per se, but about the “idea” behind the product and the lifestyle of the brand.
Through Pinterest, users become not only aspiring purchasers, but powerful advocates who share and even promote those interests to others in their network. Indeed, one of the real fascinations of using Pinterest is to see what others have on their pin boards … and who repins what you have on yours. (How do I know this … I had try it out on my Pinterest account with photography!)
Who is using Pinterest today to reach consumers?
There have been a number of recent articles on Pinterest in the social media. Not surprisingly, the early adopters and power users on Pinterest have been in the fashion categories. Retailers like the Gap have used Pinterest to effectively promote their Holiday Gift Guide.
Pinterest is not only for women’s fashion. You will find furniture stores, restaurants, travel, universities, museums and even tech companies like AMD on Pinterest. The reality is that anything can be “pinned” to your board on Pinterest. I have pinned articles, websites, blogs and YouTube videos to my photography boards.
How brands and retailers can use Pinterest …
The key to using Pinterest is not about pushing products. The success seems to come from promoting a “lifestyle” and showing products or services being used. In essence, Pinterest is a vehicle for brands to promote aspiration and differentiation, rather than features at the lowest price. Amen! This could be very valuable in this market and economy.
One of the articles I would highly recommend is Laren Drell’s piece in Mashable entitled: Pinterest for Brands: 5 Hot Tips. Drell does a good job of explaining what Pinterest is and ways to use it, including:
Promote a lifestyle
Promote brand, company values
Differentiate your experience as a retailer, place
Consumer research – use it like a live focus group
Crowd source for ideas, connections and advocates
Run contests to engage with consumers and advocates
Inspire and mobilize your team and staff
Still wondering if Pinterest is for you – Try it!
While Pinterest may have special appeal for women, it has potential appeal for all consumers if brands and retailers explore how to use it. It is a very unique media and interface, with the power to easily and quickly link through other social media like Twitter and Facebook.
Beyond signing up and starting to pin your favorites, there are nuances on how to optimize it as a marketer. One reference I would highly recommend exploring is an article by Stephanie Buck entitled: Pinterest: 13 Tips and Tricks for Cutting Edge Users.
If still undecided, it is extremely easy to get started and explore. However, when you go to the Pinterestwebsite you will not be enabled as a user right away. You have to wait for your invitation in email, which in itself piques interest and appeal.
The bottom line: Facebook or Twitter will not rule the world. Whether it is Pinterest or a clone, there seems to be high consumer interest in sharing aspirations and passions around aspirations, lifestyles, places, services and events.
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Sometimes the “Art” of retail outweighs the “Science”
With a blog title of “Results Count”, we do a lot of posts on the science and numbers of retail. If you scan the archives in the search bar on our blog site, you will find a lot of previous posts on scorecards and metrics of retailing. This week’s post is about the “art” of retail and how Target made a bold statement without saying anything. Kudos to Target!
Retail is a brutal business run by the numbers
Make no mistake about it, retailing is truly a brutal business. The “Laws of the Retail Jungle” are about detailed execution 365/24/7. At the end of the day, the retailers that survive long term must make their numbers work in their business model, and generate an operating profit.
Target is a very interesting case study of a mass merchant retailer that goes head to head with Walmart. And, like everyone else, Target is also feeling the pain and price pressures from online retailers like Amazon. But, Target has been successful by following a core rule of retailing today: Differentiate or Die!
Target’s differentiation survival strategies
There is no way that Target can compete head to head on price with Amazon or Walmart, and they don’t attempt to. A primary Target strategy is to differentiate by carrying different types and brands of merchandise that consumers can’t purchase anywhere else. For example, Target has a number of “house brands” like Cherokee jeans, which has now morphed into a clothing line that is only sold at Target.
Target is also one of the best practitioners of the “Art” of retailing. They have designed their stores to be very appealing to women, especially moms with kids. Their plan-o-grams are meticulous and consistent making their stores easy to shop. They have designed their stores with wide aisles with bright lighting. As a result, Target has come to “own” the female consumer when she shops bricks and mortar stores.
Target’s numbers not so hot for holiday
All strategy and merchandising aside, Target’s numbers were not so hot for the holiday period. Like most retailers struggling to make sales to middle class America, Target offered a number of deals and discounts to lure shoppers. One promotion was a “50% Off” the day after Christmas focused on scrounging up last minute sales. So while sales were up, profits were marginal due to all of the discounting and promotions.
On the whole, Target did not fare well in fourth quarter. Earnings forecasts are down. But to be fair, other competitive retailers like Kohl’s and JC Penney also dropped forecasts based on holiday sales. It is becoming apparent that long term strategies will need to:
Focus on value beyond lowest price
Develop relationships with consumers
Create a brand and loyalty beyond merchandise & price
In short, future success will require both the science and art of retail.
Going beyond the “mainstream” … leading by example
Few probably know that I started my career as a “teacher” for special needs students. It was not a career choice, but more of an opportunity to put food on the table by applying my BA in psychology. What started out as a “job” became a rare opportunity to learn some lessons in life.
Four decades ago, a very large number of handicapped and challenged children were not in public schools. Part of my job was to get these special kids equipped to be part of the new “mainstream” movement enabling them to attend public school classrooms. The most memorable moment of my early teaching career was when Tommy, a student with Down Syndrome, was removed from my “special” education class because he became “just a student” at his local school.
You may have missed Target’s ad that spoke volumes
All the numbers aside, Target ran an amazing Ad that you probably missed. If you missed it, it was by design. Target very skillfully featured Ryan in one of their ads … with not a single word about it.
There is nothing remarkable about this ad. In fact, the ad is for $5 shirts, not some remarkable product or deal.
What makes the ad significant is that it features Ryan on the left. Ryan lives with Down Syndrome, but in this ad he looks and poses just like all of the other kids. Most of us wouldn’t notice … and that’s the point.
Why is Target’s Ad worthy of recognition?
Target could have engaged a PR firm or used their extensive social media to call attention to their ad and how they included Ryan. But, Target did none of that. The way I found out about the ad was through my daughter who sent me a link to Noah’s Dad blog. Noah’s Dad created a blog to write about his son with Down Syndrome. He very eloquently captures what makes this Target ad special:
This wasn't a "Special Clothing For Special People" catalog. There wasn't a call out somewhere on the page proudly proclaiming that "Target's proud to feature a model with Down syndrome in this week's ad!" And they didn't even ask him to model a shirt with the phrase, "We Aren't All Angels" printed on the front.
Target has made its share of mistakes and taken its lumps. But, in this case, Target got it right in terms of communicating the right message in the right way … without fanfare. It is one example of how retailers need to work at building brand identity and relationships that last beyond the lowest price of the day.
And, that my friend is the new “Art of Retail” … getting consumers to be your advocates and say things that you could never buy or say in advertising or even in your own social media.
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In reading my “Morning News Beat”, I ran across a great post by Mark Sansolo entitled: “Snapshot of the Future”. While his case examples are about the technology of photography, Sansolo does a great job of capturing the essence of change and why companies must continue to evolve, at an even more rapid pace to remain competitive. Kodak is a snapshot of the past … and Lytro could well be the picture of the future.
Case studies in change … and the lack there of
Chances are very high that you took photographs over the holidays and they were “digital”. Most kids today have never seen a roll of film. Yet, when I grew up, Eastman Kodak ruled the world of photography. Today, Kodak is in virtual ruins and has become a poster for a company not being able to change to compete.
I had an opportunity to actually consult with Kodak early in my career. We worked with them on retail strategies and even taught some of our Retail University courses. But, Kodak’s problem was not retail per se. Their heritage was film and paper prints. They saw retail only as a channel to reach consumers to sell their core “product lines”.
The real threat for Kodak was from the coming age of “digital” where it is now possible to view an “image” without paper. Even in the face of digital cameras, Kodak clung to its heritage of pictures are prints … people will still want to print their digital images right? Not so much.
Eastman Kodak – Snapshot of a past giant who is dying
As it turns out, the heritage and DNA of what made Kodak great did not prepare it for the rapid revolutionary change in consumer photography in a digital age. Kodak did not anticipate rapid adoption of cell phone cameras, and the fact that many consumers came to prefer to send or text their photos rather than print them. They also did not know how to cope with social media like Facebook, where all things are shared digitally rather than on paper.
For a number of reasons, Kodak simply did not foresee the future or react quickly enough. Today, Kodak’s share price is below 50 cents, and the Wall Street Journal reports they are on the verge of filing for bankruptcy. But, the ultimate irony noted by the WSJ article is that Kodak “actually invented the digital camera – in 1975”! Kodak is another case study of Polaroid … deja-vu all over again.
The only certainty of Change – It accelerates!
Pardon me if I am a bit nostalgic about Kodak. This was a great company that had great products and great ads. Kodak in fact ran a classic series of ads about “how quickly life changes” (with very powerful emotive imagery of why we need photography to capture those “Kodak moments”). Who knew it would be a crystal ball of Kodak’s future.
I can’t remember who said it, but the thing about change today is that it is not only inevitable … it continues to accelerate. I’m quite sure that Kodak had incredible engineers and planners, who no doubt thought they had seen it all. They figured out the premier path for photography … in a film and print world.
The problem for Kodak was that innovators moved the goal line … in fact they completely changed the game to digital. But nothing is “safe” or stable. The digital world is poised to be turned upside down by new disruptive technology by companies like Lytro.
Snapshot of the Future – “Light field cameras”
In the switch to digital photography, the image was captured on sensor pixels and converted to digits rather than in silver emulsions on film. Digital images still require you to choose a subject to focus on. Once snapped, the image is then fixed in that static photograph. But, what if any viewer could go back and move the focus around in photos that have already been taken?
I’m guessing that like me, most of you haven’t heard of Lytro. Go take a look at Lytro’s website and be prepared to be amazed at what their $400 camera will do. Without getting technical, their camera does not “capture the image”. Rather, it captures “the light field emitted by a subject” in a computer system, which in turn allows you manipulate a photo after you take it. It is easier to experience than explain … click around on areas within a Lytro photo to see what happens.
Click on the picture
What does all of this mean … take nothing for granted!
Lytro’s new photographic technology is not quite ready for prime time, but it is already in the market today. It represents just one possible “tipping point” that could literally upend digital photography. Will Canon, Nikon and Sony be able to think outside of the box, or get stuck in the ruts with their own baggage of heritage like Kodak did?
Of course, revolutionary change is not just about photography or even technology. Walmart has long dominated mass market retailing. But, it will be the discounter Dollar General, who is opening 662 new US stores in 2012, not Walmart. Best Buy was the absolute category killer in consumer electronics, but it is Amazon and Newegg who are showing remarkable double digit gains in year over year growth, while Best Buy struggles.
The New Year is a natural time for planning. As we enter 2012, we would do well to not to live in the past and fight the wrong battles on a playing field that could be turned upside down over night. If you want to see what happens when consumers leap “across the chasm”, just go ask the shareholders of what used to be Kodak.
“The future ain't what it used to be.”Yogi Berra
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Sources:
MorningNewsBeat:Sansolo Speaks: Snapshot Of The Future, January 4, 2012
Using the 4-5-4 calendar is an essential for next year
Today’s retailers strive for consistent year over year planning and reporting. Since the 1940s, they have been using a 4-5-4 week format to create consistent months and quarters. Only one problem … this format only accounts for exactly 52 weeks and 364 days. So, about every 6 years retailers have to add another week to the year. 2012 is one of those retail years with 53 weeks, and New Year’s Day in retail is Dec 29th!
Why do retailers use a 4-5-4 Calendar?
Like most businesses, retailers used a standard monthly calendar to run their businesses for decades. By the 1940s, retailers were growing in size and aggressively advertising sales on weekends. As sales increasingly shifted to Saturdays and Sundays, retailers needed to more carefully plan and track weekends.
The problem with traditional monthly calendars is that the number of weekends in certain months varied from year to year. In order to plan ads and supply chain fulfillment, retailers needed comparable months that were consistent year over year. By adopting a calendar with consistent weeks per month in a 4-5-4 cycle, retailers and analysts can improve information, accuracy and forecasting.
So, why does 2012 have 53 weeks?
Creating a 4-5-4 calendar improves year over year consistency and accuracy, but it only has 364 days (52 weeks X 7 days = 364). Since it takes mother earth 365 and a fraction to complete its revolution around the sun, the 4-5-4 calendar quickly gets out of sync.
In order to maintain the 4-5-4 monthly format and stay in sync with the solar year, it is necessary to add a 53 week to make up the difference. This anomaly occurs approximately every 5 or 6 years. 2000, 2006 and 2012 are all 53 weeks years for retailers on the 4-5-4 calendar.
4-5-4 Retail Calendars are published by NRF
The National Retail Federation (NRF) publishes the guidelines for the retail 4-5-4 calendars with retail week numbers throughout the year. Calendars are already available for 2012 through 2014. The NRF calendar shows that 2012 begins on Dec 29th and ends on Jan 2nd.
NATIONAL RETAIL FEDERATION
2012 RETAIL SALES REPORTING and
4-5-4 MERCHANDISING CALENDAR (2012 Not Restated)
* Fiscal Year 2012 is a 53 week year. 2012 should be restated for comparability to 2013.
** Green shaded boxes indicate a Sales Release Date. Black shaded boxes indicate the following Holidays: Valentine's Day, Presidents Day, Easter, Mother's Day, Memorial Day, Father's Day,
Independence Day, Labor Day, Rosh Hashanah, Yom Kippur, Columbus Day, Halloween, Election Day, Veterans Day, Thanksgiving, Christmas, New Year's Day, and Martin Luther King Day.
*** Rosh Hashanah and Sales Release fall on 9/5/13.
Vendors, you had better know what day it is in retail!
The interesting challenge for vendors is that few of them end their fiscal year at the end of the calendar. But, in reality it doesn’t matter. The key is adopting a planning calendar that is on cycle with how retailers plan. The good news is that many vendors appear to be incorporating a 4-5-4 planning calendar. In fact, one of our most searched blogs in our Results Count archives is titled: “What week is it in retail?”
Retail is detail more than ever today. It requires precise planning, analytics and forecasting. If vendors are not in sync with their retailers’ calendar, they are literally not in the game. The 4-5-4 calendar is literally a prerequisite for doing business profitably with large retailers today.
What calendars do e-tailers use?
No one is quite sure what the future holds for online e-tailing. In the case of web sales, peak volumes do not necessarily fall on weekends, but on Monday’s or during midweek. However, many top e-tailers also have stores, so they typically use a 4-5-4 calendar for planning supply chain and reporting sales.
All retailers strive for consistency in data in order to establish year over year comparatives in reporting. So, many e-tailers also use the 4-5-4 calendar for consistent reporting, even if they focus on Cyber Monday instead of Black Friday.
What does all of this calendar stuff mean for you?
One thing is for sure … consumers determine when the cash register rings! While the 4-5-4 calendar is essential for optimizing retail planning and execution, the most important “calendar “ for you is the one that you use to make purchase decisions. As a consumer, you might find however that retailers do become more aggressive in promotions and discounts as they end their 4-5-4 calendar quarter.
If you want to get a head start on the New Year, then you might want to adopt the retailer 4-5-4 calendar and start celebrating on Dec 29th, which kicks off 2012 in what will be a very interesting year for retail.
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Would you pay less if you purchased the gift list online?
The Twelve Days of Christmas is an old English Christmas carol that enumerates a list of increasingly grand gifts celebrated across a 12 day span for the Holiday. Each year, companies like PNC Wealth Management do a price index on what it would cost if you purchased the actual gifts mentioned in The Twelve Days of Christmas carol. The shift to the internet has been getting a lot of press this holiday season … but would you pay less for the 12 Day gift list online in 2011?
The Twelve Days of Christmas – A Retail song?
The Twelve Days of Christmas is a bit of a strange song for the Christmas holidays. Most Christmas carols are in fact about the birth of Jesus Christ or the meaning of the season for Christians celebrating the holiday. The 12 Day part of this song in fact refers to 12 days typically celebrated after Christmas Day, or starting on December 26th, which corresponds to St. Stephen’s Day (or what is now known as “Boxing Day” in the UK, Canada and elsewhere.
According to Wikipedia, the roots of The Twelve Days of Christmas song appear to be in old folk carols. The song was first published around 1780 in England. Instead of purchasing gifts to give on Christmas, the song is a list of what would have been seen as “lavish” gifts to give in the 12 days following Christmas. The gifts listed in the song could be considered the “Niemen Markus” premier gift catalog for your “true love” in the 1700s:
Day 1 – Partridge in a pear tree … you get two gifts the first day!
Day 2 – Two turtle doves … what no tree?
Day 3 – Three French hens … do they lay eggs?
Day 4 – Four calling birds … what’s up with the bird thing?
Day 5 – Five golden rings … now we’re talking!
Day 6 – Six geese-a-laying ... who eats goose eggs?
Day 7 – Seven swans-a-swimming … what if the pond froze?
Day 8 – Eight maids-a-milking … what if you don’t have cows?
Day 9 – Nine ladies dancing … finally some entertainment!
Day 10 – Ten lords-a-leaping … do you really want to see that?
Day 11- Eleven pipers piping … do they play songs by request?
Day 12 – Twelve drummers drumming … Ah, the drummer boy song!
Yep, The Twelve Days of Christmas is one weird Christmas Carol. But it gives some glimpses into “high street retailing” and what was considered luxury gifts in the 1700s.
What would the 12 Day gift binge cost you today?
Every year, someone puts out a piece on what it would cost to purchase The Twelve Days of Christmas gifts. With the soaring price of gold and increasing costs of food, it’s no surprise that it is getting more expensive to give Twelve Days of Christmas Gifts to your “true love” mentioned in the song. But what is driving the prices up the most … commodities, precious metal, labor costs?
First, there’s a bit of trick in calculating the true cost of The Twelve Days of Christmas. If you look at the lyrics, the gifts are cumulative across the 12 days. So on the first day you give/get a partridge in a pear tree. On the second day, the gifts would include both the two turtle doves AND the partridge and pear tree. So if you add it all up, there are actually 364 items to purchase as listed in the lyrics of the carol!
“True Cost of Christmas” as calculated by PNC
For the past couple of decades PNC Wealth Management has been calculating their “PNC Christmas Price Index” for purchasing each item and the cumulative total in the carol. They publish the index on their web site each year along with percentage increases:
12 Day Total = $101,120 It better be for a true love!
I’m sure that prices were a lot cheaper in the 1700s at the time of the song. And of course PNC had to make a lot of assumptions about the items. Where do you get a gold ring for $650 these days … must be a very thin band!
There are some very interesting price changes for 2011:
The price of birds is up a lot, except for French hens
The most expensive thing on the bird list is swans swimming?
Why do dancing ladies cost so much more than milking maids or leaping lords?
Again, there are a lot of assumptions. It would depend if you purchased the items at specialty retail, or could you get them at your local Walmart or Costco. Why not save the hassle and buy them all online?
12 Days of Gifts would cost $39,860 more online!
Ok, this is of course all hyperbole and intended as a bit of fun as we prepare for the holidays. It was however interesting to note that in the PNC analysis that things would be much more expensive if you tried to purchase all of the 364 items online.
According to the LA Times, the additional $40K to purchase online is primarily due to shipping costs. Apparently it is quite a bit more expensive for Amazon to ship live birds, dancers, and lords than it is to ship Kindles and commodities.
Make time to enjoy the Holidays and Special times with your Family & Friends!
We are fortunate that there are a multitude of holidays which occur at the end of the year enabling us to get a much needed break. I will get to enjoy Christmas this weekend with my family and 3 special grandkids.
Whatever holiday(s) you celebrate, may you enjoy special times with family and friends!
Happy Holidays from the IMS Team
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Sources:
Las Angeles Times:'Twelve Days of Christmas' list priciest ever at $101,119.84, November 28th, 2011
Your shopping cart is about to become a data center
No one thinks much about the lowly shopping cart in the store. It first appeared at a Piggly Wiggly in 1937. For the last 70 plus years the cart has remained baskets on wheels to help customers gather goods for checkout. All that will change when your smart cart gets its “new brain”. The computers being added to new shopping carts will be able to customize offers … and track your every move in store!
Buyology - Truth and Lies about Why We Buy
Many think that retail is a boring place dominated by operations and lots of details. They obviously haven’t met Martin Lindstrom, one of my favorite psychologists. Martin has the uncanny ability to bring the science and art of retail together. He also has an ongoing investigation into the psychology of brands and why we buy.
People often ask me for books that provide insights into retailing and merchandising strategies. In addition to Lindstrom’s recent article in the Harvard Business Review Forum on The Future of Retail, I would highly recommend two of his books:
Lindstrom is an interesting guy that pokes around in unusual places. He recently visited the research lab of one of the largest shopping cart manufacturers. An interesting example of Lindstrom’s fact based insights is: the bigger the cart, the more we buy.
In fact, researchers found that if the cart size is doubled in size, we buy 40% more than we usually do. It’s not as if shoppers need the extra items purchased. Lindstrom postulates the psychology of why bigger carts lead to more purchases:
We're still operating with our primitive brain and, ultimately, we're primed to guard against starvation. Evolutionary speaking, we're hardwired to store food in times of plenty. So, if our shopping cart looks half-empty, we'll fill it.
The “smart cart” coming to track you in the aisle
In his visit to the shopping cart research lab, Lindstrom found that the lowly basket with wheels is about to be revolutionized with technology. The shopping carts of the future may look essentially the same but they will be equipped with a sophisticated computer and GPS. By hooking this “smart cart” to the stores mainframe computer the retailer can now:
Track a specific shopper’s route through the store
Monitor the speed of the shopper at different locations
Understand what displays literally stop shoppers in their tracks
Calculate how long it takes for a shopper to make a selection
Not only calculate the value of the “market basket”, but also understand the order in which a shopper purchased the items
How smart shopping carts will change future retailing
Supermarkets are already collecting a ton of data via consumer loyalty cards. Imagine what is possible if a consumer swiped their loyalty card into the computer built into their shopping cart. In addition to offering customized discounts to specific shopper profiles, retailers could get immediate behavioral feedback on how such offers impact shopping behavior and purchases right in the aisle at that moment.
With all of the behavioral and traffic data coming from the smart cart, retail store designers will have new insights into traffic patterns. Actual consumer routes and patterns in store will show where there is a need for more flexible, changing layouts.
Store aisles and plan-o-grams have historically not changed much. Moreover, most fixtures are difficult and expensive to move especially if they are based on large steel fixtures and cases. Circuit City in fact invented gondolas and fixtures on wheels so that store layout could be changed overnight. This would have been perfect merchandising design to capitalize on smart cart traffic data. Unfortunately Circuit City failed for other reasons (a subject for another blog another time).
Always an interesting question of value versus privacy!
What consumer doesn’t want a good deal? In fact some recent research indicates that as many as 50% of consumers online will give up some privacy to get a deal. The advent of smart shopping carts enables the retailer to offer all sorts of promotions, bundles and deals to shoppers based on how they are shopping, and where they are shopping in store.
Shopping data from the smart carts will enable retailers to better understand profiles of consumers and how they respond to advertisements and visual merchandising. Rather than guessing at end cap displays and demos, retailers can use the smart carts to see what consumers stop and respond to … and more importantly, did stopping also trigger a purchase.
But what happens if retailers start selling your shopping data? Retailers own the carts and will quickly figure out that they can generate a revenue stream selling consumer shopping behavior to manufacturers and suppliers. The data rich smart carts could be a real consumer convenience, or a real invasion of privacy depending upon how the data is used and managed.
Not a question of if … but when smart carts will arrive
While the “basket on wheels” may not look all that different to most of us, the intelligent shopping cart is destined to arrive in retail soon. The cart may have a built in computer, or simply have a port for your tablet or phone to be engaged. Either way, the intelligent shopping cart will have a significant impact on retail stores and how we shop in them.
To receive more information and sound bites from IMS follow IMS Results Count on Twitter and Facebook.
Sources:
SmartPlanet:Shopping cart prototypes track data, analyze purchases, December 9th, 2011
Harvard Business Review: Shopping Carts Will Track Consumers' Every Move, December 9th, 2011
IBM research says higher the heel the bigger the fall
Now, here’s a bit of interesting economic research by IBM which identifies a leading economic indicator you may have missed. IBM Global Business Services has identified an economic predictor based on what fashoenistas are wearing on their feet. In economic downturns, the heights of heels on women’s shoes go up and stay up. So, ladies do your part to spur the economy … ditch the stilettos and go buy some flats. Seriously, is there any science behind any of this?
Predictive analytics - the science of finding relationships
Economists are always in search of “leading economic indicators”. To isolate and quantify which things might predict future trends, researchers use a variety of statistics to find patterns that occur beyond “chance” or random levels.
The most popular kinds of statistics employed are correlation and regression analyses. Given a large amount of data for multiple variables, researchers use correlation to determine if there is any “significant” relationship between two or more variables. Knowing the strength of the relationship and trend of one variable can predict the other, within limits of accuracy identified by the analyses. For those of you who haven’t been in stats class for a while, a perfection correlation of 1.0 means that there is a perfect one for one relationship. A correlation of 0.0 means no relationship.
Are high heels a good predictor of economic trends?
Don’t ask me why, but apparently IBM Global Business Services has been studying the relationship between the height of women’s heels on their shoes and the rise/fall of the US economy. According to a recent article by Jack Neff in Ad Age, there is a negative correlation between the height of heels and the performance of the economy.
Negative correlations do not mean “bad”. It just means as one variable goes up, the other variable goes in the opposite or inverse direction:
The flat shoes of the 1920s gave way to the high heels worn during the 1930’s depression in the US
Platform heels also soared in the US during the 1970s recession (although there was also an oil crisis at that time as well)
US women shoe heel height soared from 3 inches in the first half of 2008 to 6 inches by the end of 2008
Heels spiked to 7 inches at the height of the 2009 recession
Currently, heel height is trending from 5 inches toward 3 or less
So ladies, do your part and dump the stilettos to fuel economic recovery!
So, what do lady’s heels have to do with the economy?
I absolutely have no idea. Nor do the researchers at IBM Global Business Services. What the researchers merely did was to apply statistics to sets of data to test if there was a significant “co-relation” between variables. While they didn’t report the size of the correlation coefficient (which would indicate the strength or degree of relationship), there clearly is a negative or inverse pattern.
Neff’s article in Ad Age also quotes Trevor Davis from IBM regarding other findings corroborated via social media: “IBM’s cross analysis of heel-height buzz and macroeconomic data suggest a strong inverse correlation between [social media] heel-height buzz and economic growth.” Here is yet some more evidence of a predictive relationship between variables.
So, what do women’s heel heights have to do with the US economy? Don’t know. Why do shoe heels spike when the economy tanks?
Correlation is predictive – Not cause and effect
Correlation and regression are useful tools to identify relationships between variables. This can be very useful in planning and forecasting. But, there is an inherent danger of correlation and predictive studies – over interpretation and assumptions of cause and effect. Even in the article on heel height as an economic predictor, Jack Neff includes the following interpretative statement:
Historically in economic downturns heels have tended to go up and stay up … as consumers look to compensate for dismal times with more flamboyant fashions.
That last part is an utter stretch, an over reach, and not supported by correlational predictive analyses. We don’t know why women chose different heel heights unless we systematically survey them. Maybe it’s the designers who simply said to women that high heels are “in” so please adopt the new style so that we can sell more shoes during tough times.
What does all of this mean to retailers and suppliers?
There is absolutely nothing wrong with using predictive analytics to identify relationships between variables. If there is quality sampling and appropriate analyses yielding a high correlation coefficient, then knowing valid predictors can lead to better decisions regarding forecasting, merchandising, and product mix. In a recent NRF post, 72% of respondents surveyed indicated that they would be making a great investment in analytics for 2012.
Over the last 25 years, I’ve had the privilege to work with many retailers and suppliers making sizable investments to change results. The bottom line is that most do not do any type of systematic research to understand the relationships among variables … or to validate that their single store experiment is repeatable and scalable.
Here are my top three suggestions regarding research and design:
Use correlation and regression to identify significant variables worthy of additional testing … BUT don’t assume a “cause and effect” from a correlation.
Do not shy away from systematic observational research. People like Paco Underhill have discovered incredible insights by systematically observing consumer behavior in the context of the store.
TEST is the most powerful 4 letter word in retail today. Once hunches and predictor variables are identified, they need to be put to the test using research design, comp store analyses, and repeated measures to isolate incremental impact and ROI.
The old adage is still rings true à It is very dangerous to make assumptions, especially in terms of cause and effect.If you don’t believe that … Just go ask that woman wearing stilettos to please go buy some flats so that the economy will improve!
To receive more information and sound bites from IMS follow IMS Results Count on Twitter and Facebook.
Sources:
Ad Age:At Last a Good Economic Indicator: Heel Heights Poised for Fall, November 26, 2011
Today kids’ first experience will be on a tablet not a PC
Yes, PCs are still be being sold by the millions. But, if you want to see the future, just watch a toddler using an iPad. The interface is instinctive, intuitive, and addictive. Kids below the age of 2 are flicking and flipping through their parents’ iPads before they can even talk. And increasingly, parents are buying both tablets and apps just for their kids. Is the tablet just a new “digital pacifier”, or will it be the future screen of choice for today’s youth literally cutting their teeth on a tablet?
Apple’s iPad is still the tablet of choice
The hottest selling electronic item this holiday season is a tablet. And the tablet of choice is clearly an iPad, despite the higher price point. Consider the following stats for Apple’s iPad:
Apple has already sold 40 million iPads since they debuted.
Apple will sell another 20 million in just this holiday season!
Apple sold 14.8 iPads per hour in its stores on Black Friday which is up significantly from 8.8 units per hour last year.
Apple’s iPad is not the only tablet for this Holiday
Apple is no longer the only game in town. There are a host of Android tablets on retailer shelves. And, this season there is the new Kindle “Fire” with a color screen and an amazing price point of just $199.
While Apple remains the top selling tablet, an opening price of $499 definitely poses challenges. According to a Parks Associates survey, 51 percent of adults chose the Amazon Kindle Fire over the iPad based on price. Amazon claims that Black Friday shoppers bought four times as many Kindle devices over the prior year.
Price is always a consideration. Lower prices will definitely increase adoption rates and serve to further spur tablet sales of all brands. But, price alone is not the only criteria … just ask kids … young kids!
Kids are a very powerful consumer voice & vote
This blog post is not about arguing the relevant merits of brands or operating systems. The focus on this blog is on one very simple fact of retail: Consumers vote with their wallets even if they don’t have one!
Kids are interacting with technology at much earlier ages. Babies even less than one year old are mesmerized by the intuitive nature of tablets. David Morris has written a great post in Bloombergon how “iPad Crazed Toddlers Spur Holiday Sales”.
There is just something fundamentally appealing to young children playing with an iPad. According to Jamie Pearson, founder of BestKidsApps.com, “Kids just get it – They touch it and it moves. It’s like any other natural language they just pick it up.”
Parents have noticed and are buying tablets for their children:
29% of tablet owners share their tablet with their kids
65% of mothers use the tablets with their children
iPad was the most wanted holiday gift for kids age 6 to 12 and that is for the second year in a row
Kids are literally fighting to get to use the iPad in their home. So, parents are actually purchasing one for their children so that they can access the 300,000+ apps available, which even those teaching toddlers to read and write. There is nothing more precious and important to parents than the development and success of their children.
Dangers of tablets becoming a digital pacifier
Today’s kids are exposed to technology almost from the time of birth. Some estimate that the TV is on in most households for at least 4 to 6 hours a day. The key to whether tablets are harmful or helpful seems to be whether harried parents simply turn on the “tube” in order to pacify young children.
According to Victoria Nash at the Oxford Internet Institute: “We know already that there are dangers with watching too much television and doing too much online gaming.” The key with younger children is parental guidance and interaction while young children use a tablet device with young children. Rather than a digital pacifier, the tablet can become an incredible door to learning when the parent assists in helping their toddler to learn read and write.
Right now, the magic of iPad wins – Just test it yourself
Right now Amazon, Google and Microsoft can all make arguments as to why their particular version of a tablet will be better or more useful. Adult consumers will vote over the next couple of years regarding their tablet of choice and how it serves to support or replace their PC.
But in the case of the youngest consumers iPad wins hand down!
If you have an iPad or access to one, go play with young children this holiday season and watch the magic come alive in very young hands. Here are some very quick things to watch as toddlers learn on an iPad:
Watch how fast they learn to “turn it on and off” by merely lifting and closing the magnetic lid
Watch them master touching icons to open things
It is amazing how fast they learn to flick to scroll in photos
Buy a Christmas book app with interactive icons and video and watch how fast they learn to find and tap them
After playing with your iPad watch young children go to the TV expecting the same experience of being able to click and flick
I can hear the uproar now …”It doesn’t have to be an iPad … those things are true for any tablet”. Maybe for an adult. But, go do a test with a young child. Give them an experience with an iPad, and then a Kindle or Android tablet … and see which device they grab out of your hands to play with.
The point is very young children will experience technology first on a tablet, not a PC with a keyboard. Once they experience touch and flick … they’re not going back to a PC unless forced to do so.
If I were a parent of young children today, I would definitely consider purchase of a tablet as one of the most powerful ways to help them learn and grow. Today, that choice is clearly an iPad voted hands, the best hands, down by toddlers who don’t even know what a credit card is yet.
