Zara, H&M rock American retail

March 26, 2009

DISCUSSION TOPIC

America‘s Favorite Retail Imports 3/26/09

TOPIC SUMMARY:

They’re fast fashion. They’re cheap chic. They’re moving up on America’s favorite places to shop even though they were definitely not made in the U.S.A.

As a piece on Forbes.com points out, consumers here are increasingly drawn to the high style and low prices of chains such as Sweden’s H&M and Spain’s Zara. Others including Uniglo from Japan and Mango from Spain are still relative newcomers that have achieved some success. Another import in the same vein, Topshop from the U.K., is scheduled to open its first store in the U.S. next week in Manhattan.

Zara was the first to make its way to the U.S. market back in 1989. The company uses an in-house design staff, its own factory and tightly controlled distribution network to get new product to the stores in as little as two weeks. This year the chain is looking to add 10 stores in the U.S. It currently has stores in 13 states and Washington, D.C.

H&M, which has 169 U.S. stores, came to the U.S. in 2000 and plans to open 16 new locations in 2009.

“Foreign retailers deliver an [inexpensive] product that is not perceived as a uniform,” Marshal Cohen, chief retail analyst at The NPD Group, told Forbes. “They offer what you want, when you want it, as well as self-expression through fashion.”

Discussion questions:  What is it that makes Zara, H&M and other apparel retailers from outside the U.S. successful here? Do you see domestic chains picking up ideas and competing more effectively in this area? Is there one – Zara, H&M, Mango, Uniglo or Topshop – that you are particularly impressed with?

My post: 

These retail stars were shining well before the current economics made their formula a darling of the media.  Zara and H&M have been in the US for a while now and not only are their openings huge local “events’, but they seem to maintain their followings of teen to 40-something fans effortlessly as they consistently add small quantities of fun, cool fashions for cheap.  Now Uniqlo and Mango are gaining traction with Topshop coming soon.  American fashion fans are eating up this foreign feast as they have tired of the majority of American specialty and department stores’ miles of boring overstocked sameness.  Simple message:  fun, fast, affordable fashion, constantly refreshed.  Forever 21 is one exception to the rule, but most of American retail now buried in debt and teetering has to wake up to what the customer is looking for.

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13637

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Hurry up!

March 25, 2009

DISCUSSION TOPIC

Consumers Tired of Waiting (No Joke) 3/25/09

 TOPIC SUMMARY:

The piece is from The Onion so it is intended as a joke but the message is not far from the truth. As far as many (most) people are concerned, everything takes too long.

Consider this fake research attributed to a poll from CBS and The New York Times (with RetailWire edits), “Americans are split into three separate camps when it comes to the growing national frustration: Those who think everything is taking too long; those who think everything is taking too g-d long; and a third fringe group that believes everything is taking f-ing forever.”

As one fictional character standing in line at Rite Aid said, “Oh, for crying out loud. Open up another register if you have to. What are these people doing? Hanging out?”

Discussion questions:  How big a factor is time in consumers’ decisions where to buy products across a wide range of retailing channels both off and online? What can or is being done to save shoppers time while generating money for merchants?

My post: 

Truly we have become a society of impatient people.  As retailers we need to focus our energies on improving any of our systems that require the customer to wait:  POS systems, automated telephone routing systems, on-line check out, etc.  As people, we need to focus our energies on learning to relax already!

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13634

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The Brilliance of The Container Store

March 20, 2009

DISCUSSION TOPIC

The Container Store: The Employee as an ‘Extension of the Brand’ 3/20/09

TOPIC SUMMARY:

In the retail industry, a 100 percent plus annual employee turnover is not uncommon. And, in these tough economic times, that statistic doesn’t tend to be of greatest concern to operators. More likely, they’re preoccupied with determining if they can get away with one less person on the floor; cutting back on training; or increasing the commission portion of the compensation.

There is one retailer, with 46 stores and 3,500 employees, which seems to have a very different philosophy. The Container Store experiences just 10-to-15 percent annual turnover. How does the retailer achieve a number virtually unheard of in the industry?

Perhaps the most eye-opening place to start is on the interview process for a “transition team.” The transition team at The Container Store is a group of associates hired for a five-day or so tenure to transition a store between themed selling seasons. There would typically be transition teams before and after Christmas, Spring Cleaning, Back-to-School, etc. At The Container Store, the selection process for this short-term associate is more involved than what most retailers would have their full-timers go through. It consists of two interviews: one in a group setting; and one face-to-face lasting an hour and a half. If there is a next step, the candidate is taken for a walk around the store with a group of other candidates and asked “what if” questions largely oriented to customer interaction. (Note: This is for associates who are being hired to change displays, fixtures and move merchandise – not to sell product.)

Karyn Maynard is The Container Store’s director of recruiting. When asked about this process, she said this type of attention to detail is not unusual for The Container Store. “We believe each employee is an extension of our brand. The staff in the office can write all day long about how great we are, but it is our associates on the floor who communicate it by action with the shopper.”

The evaluation process is very deep regardless of the position. “We want to hire great people and we want to retain great people,” said Ms. Maynard. “We have part-timers who have been with us over 15 years.”

The evaluation process also goes both ways. As with any screening process, The Container Store wants to be sure the future employee is the right fit. But, The Container Store also wants to be sure the company is the right fit for the employee. The company considers it symbolic that their very first hire was a customer.

“This process has been an evolution,” recalls Ms. Maynard. “When the founders started the company in 1978 they wanted to have ‘the best retail organization in the country.’ We are certainly more sophisticated now than they were then, but even our first hire started us in the right direction.”

Today, in fact, most employees are former customers. Many are approached on the sales floor when they are shopping. (“Have you ever considered…?”) The other source of talent is online through The Container Store website, where every application is reviewed and replied to.

When asked what mistakes other retailers make, Ms. Maynard quickly answered, “They are not making a commitment to time.”

(By the way, Karyn Maynard did not come up through the Human Resource department. She came up through the stores, like everyone else at The Container Store.)

Discussion questions:  The Container Store seems to be an outlier when it comes to hiring in the retail industry. Do you know of other retailers with unique hiring processes? Why do you think many (if not most) retailers accept an annual turnover rate of 100 percent? What does The Container Store gain from such an extraordinarily low turnover rate?

My post: 

I’ve watched the Container Store for years and have always been impressed that they have never wavered from their “commitment to time” in talent acquisition, education, and ongoing improvement of these processes.  They are simply maniacal about this.  We all know that having extraordinary people outweighs any temporary lack of extraordinary products, services, or strategies.  But few companies focus on the people side with the same level of intensity that The Container Store executes daily.  Why?  It started at the beginning with the founders’ personal focus on hiring and educating the best workforce anywhere.  For any company wishing to emulate The Container Store’s success, it must start at the very top.  The leader must ensure their lieutenants share their maniacal focus and stay on this literally forever.  Any relaxation in this focus will allow slippage.  There is no shortage of information on developing excellent hiring, education, and retention processes.  There is, however, a terrible shortage of leaders willing to make this the company’s #1 priority.

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13624

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Do added employee perks make a difference?

March 18, 2009

DISCUSSION TOPIC

Employers Provide Added Perks to Keep Workers Happy 3/18/09

TOPIC SUMMARY:

While many employers are looking to cut labor-related costs wherever possible, some others are taking a longer range view and actually adding perks despite the current challenges of running a business, reports The Wall Street Journal.

Among the added perks are adoption benefits, backup childcare, child-care centers, concierge services, expanded health care services, and academic scholarships for children of company employees.

“Your knee-jerk reaction is, ‘Why in the world would you add something like this now?'” Carol Sladek, a principal at consulting firm Hewitt Associates, told the Journal.

The answer, according to Ms. Sladek, is that many companies have added perks to help reduce the stress on employees who may be working in leaner organizations. The Harvard Business Review cited a study showing voluntary quit rates at companies increase an average of 31 percent following a layoff.

Jeff Henderson, chief financial officer at Cardinal Health, told the Journal, “Anything companies can do to reduce that stress level for employees is something you have to look at.”

Discussion questions:  What added perks do you think are most helpful at this point in time? Will these benefits increase productivity, reduce turnover and foster any other benefits for employers that offer them? Are there any unique programs in retailing or consumer goods manufacturing companies that you believe are worthy of emulation?

My post: 

Providing perks that help reduce stress is admirable and strategic if part of a holistic effort to create an inspiring work environment.  Unfortunately, many firms over the years have added perks either because they were flavor-of-the-day ideas or to mask a lack of a meaningful, inspiring company purpose.  Before a company looks to add more perks, start by assessing whether the employees feel connected to the company vision and purpose.  Is there a vision & purpose?  How is it articulated, demonstrated, made a part of everyday decisions?  The key here is for employees to feel they are part of something meaningful, a deeper purpose than the specifics of their job function.  If you can make this real, you’ll find that you need fewer perks to reduce stress or inspire engagement and loyalty.

If, however, your company’s employees are emotionally connected to your vision and purpose, it will be a natural extension of your culture to work with your employees to understand what perks are appropriate.  In that case, the addition of one or more meaningful perks will enhance your company’s reputation as an ’employer of choice’ and ensure the best talent is seeking to join your team – in good times and bad.

I am most impressed with companies that focus on extraordinary learning and development.  This is the best ‘perk’ of all.  The Container Store comes to mind as a leader in this regard.  As has been well documented, every first-year, full-time salesperson undertakes some 235 hours of training as opposed to the retail industry’s typical seven or eight. 

Start with a great vision, provide extraordinary learning opportunities, and remain consistent with both.  Then, discussions about perks are appropriate and meaningful.

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13620

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Lose your job, your suit is free!

March 17, 2009

DISCUSSION TOPIC

JoS. A. Bank Free Suit Offer Made for Tough Times 3/17/09

TOPIC SUMMARY:

JoS. A. Bank has the promotion for you if you’re among those trying to put your best look forward at work or if you’re interviewing for a new job. The company’s new “$199 Sale” comes with a unique guarantee. If you buy a suit from the retailer and subsequently lose your job, the chain will refund your purchase price and let you keep the suit on top of it.  Details here.

R. Neal Black, CEO of the men’s clothing retailer, said in a press release, “We understand the uncertainty everyone is facing. We want to help the customer look good at work, and if he loses his job, to be dressed appropriately as he meets with his next employer. It’s like giving all of our customers a bit of unemployment insurance.”

The special promotion applies to any suit or suit jacket/pants combination purchased from March 16 through April 9, 2009. If the customer involuntarily loses his job between April 16 and July 1, JoS. A. Bank will refund the price paid for the suit, up to a maximum of $199. The company will require documentation of a job loss to evaluate any refund requests.

Discussion questions:  What do you think of JoS. A. Bank’s “unemployment insurance” offer? Will it drive additional sales? Will we see others following this example during the downturn?

My post: 

I have known CEO Neil Black for years and I am not surprised to see him once again knowing how to effectively speak to his customer base.  Yes, the promotion is a bit silly, and borrows from other’s ideas (Hyundai, etc.).  But it nails the current market psychology and press sound bites:  the economy sucks, people are losing their jobs left and right, people are scared, etc. etc.  The promotion shows that they get it, they are listening, and they are positioned as a value retailer to be helpful for a product that the consumer needs but may be scared to spend on.  At a time when most retail stocks are in terrible shape, JoS. A. Bank (JOSB) is performing well over their peers and is up 8% YTD.  Mr. Black, keep the promos coming!

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13616

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It is time to celebrate the craft of the front-line worker

March 16, 2009

DISCUSSION TOPIC

Secrets of a French Checkout Operative 3/16/09

TOPIC SUMMARY:

There are some people that many of us take for granted and never even notice. We either ignore them or use them as a target on which we can vent the frustrations of the day. Amongst these, frequently, are checkout staff. Checkout staff who many of us only greet, let alone thank, on the rarest of occasions.

But one of that category has decided to vent her own frustrations. Anna Sam, who worked in a French supermarket for almost a decade, has written a book about her experiences with customers and employers alike. Since its appearance in France last year, Les Tribulations d’une Caissière (The Tribulations of a Checkout Girl) has been reprinted 19 times and sold 100,000 copies, according to a report in The Times. The film rights have also been acquired, a musical comedy based on it is planned and a comic-strip version is to appear this year. English is not one of the ten languages into which it has been translated.

Ms. Sam claims that despite smiling at shoppers, she received “little besides insults and disdain in return. She witnessed behavior ranging from the loathsome to the lustful – queue-jumping, cheating, thieving, moaning and sometimes a quick fondle between the meat and the cheese counter.” Self-important managers watched from behind a one-way mirror.

Described by the paper as “the voice of the voiceless, and the witty observer of a place that seems to bring out the worst in us all,” Ms. Sam often said “bonjour” 250 times a day but received few responses. She needed authorization to go to the toilet from managers who kept her waiting. When greeting families at the cash register, parents warned their children, “If you don’t work hard at school, you’ll end up like that lady.”

A blog to let off steam eventually led to the book. Her advice is now sought by politicians, retailers and even a cash register manufacturer developing a training course for his products’ use. But her main advice to retailers is that both managers and checkout staff would benefit from training in how to deal with people as well as products. “You can’t educate shoppers to behave better but you can train employees to handle them,” she said.

Discussion questions:  How would you rate working conditions for retail cashiers and sales associates? Are retailers doing enough to teach managers and checkout staff how to deal with people?

My post: 

The key reason for apathetic front-line workers and the resultant poor service is the poor level of leadership skills in front-line managers – usually due to poor leadership skills of the senior management.  Please read the full article in the Times to understand the experience the author writes about.  

This passage is a great example:  At a retail trade conference in Luxembourg, Sam suggested to executives that they should greet checkout staff every day. “It was as though they had never thought of it. Oh yes, that’s a good idea, they said. They all made a note – ‘say hello in the morning’ – to remind themselves.”  Pathetic, but unfortunately common. 

The message:  Retailers must invest in understanding and hiring for the talent that make effective front line workers and leaders:  empathy, customer focus, high energy, etc.  Provide significant training on people management:  personality types, conflict management, etc.  Then, ensure that senior management consistently models people-centric behaviors:  saying hello to front-line staff, asking their opinions of product, procedures, store design, customer service initiatives, etc.  Treat front-line staff as professionals engaged in an important craft and see how quickly they begin to behave as such.

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13614

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Outsourcing IT – good or bad for retailers?

March 15, 2009

DISCUSSION TOPIC

Do retailers know how to manage knowledge workers? 3/13/09

TOPIC SUMMARY:

By Bill Bittner, President, BWH Consulting

I’ve followed the headlines recently as various retail organizations announced outsourcing or layoffs of information technology (IT) and industrial engineering (IE) workers and I’ve asked myself whether these layoffs make sense or whether companies are being short-sighted.

These knowledge workers (KWs) have several unique characteristics that retail management must appreciate when they make decisions that affect them. First, they often have unique knowledge of company resources that cannot be replaced by another technician or knowledge worker, for example, something as critical as the way a retailer’s critical replenishment application works.

Second, KWs have enormous leverage in their impact on the organization. Changing a replenishment algorithm or improving a forecasting estimate can have a ripple effect on all the various operating units of the company. Spending an extra hour to design a better check stand or to simplify a sign-in procedure can impact thousands of co-workers.

The challenge is that it is often difficult to measure the quality of results coming from knowledge workers. Who’s to say “there are no better ways to do this”? Of course, that is one of the challenges with managing KWs as “paralysis through analysis” can lead to rejecting the good in search for the perfect. But KWs are also the most flexible members of your organization because they can adapt to new roles and learn the requirements of different positions quickly.

Knowledge Workers often have different motivation than their hourly counterparts. They tend to have a strong sense of ownership in the solutions they design, so while salary is necessary, simple praise or recognition for extra work are often enough of a reward. Educational opportunities and attendance to conferences can be as important as salary increases. Knowledge workers need to understand how their efforts impact the rest of the organization. This sense of contribution is often a reward in itself.

Discussion questions:  Do you think the total impact on “corporate knowledge” caused by outsourcing or replacing in-house knowledge workers is understood? Do you believe retailers fully appreciate the contribution of KWs? Do you think most KWs would accept a reduction in salary to preserve theirs or a co-worker’s job?

My post: 

As a long time retail operations executive, I have seen both sides of this:  outsourced and in-sourced IT groups.  My own experience shows that the key individuals to keep in-house are the IT leadership and then just a few technicians.  The IT leaders are among the keepers of institutional knowledge and the partners to operational management to discover opportunities, define the organizational goals, and apply technology to amplify potential and to solve business problems.  The few techs on-site ensure the senior managers don’t go crazy when they can’t figure out how to access their documents.  For the heavy lifting of project management, system design and maintenance, data integration, etc., outsourcing is the effective way to go.

I do not think most retail managers appreciate their IT folks – but only due to lack of knowledge.  That is why it is key to have strong IT leadership sitting at the leaders’ table to match the IT tools to the real business challenges, and report back on the ROI and efficiencies enabled by the technology employed.

Whether or not a KW would accept a reduction in salary to preserve their or a co-worker’s job is irrelevant.  This is always a bad idea.  If a reduction in force is necessary, it is far better to make the cuts quickly, articulate a strong future vision, and move on.  The remaining team will be better equipped to move forward positively than if they are constantly reminded of the RIF by a reduced salary.

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

What do you think?  Please post your comments and add to the discussion!

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13603

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