STORES.org

Beyond Limits

Sandy Smith — Tue, 01 May 2012 05:30:41 +0000

Plus-size line meets a passion for fashion at The Limited

W hen The Limited wanted to launch a new plus-size line, it went beyond just talking to customers. It looked into their closets.

“In addition to the argument that this audience is underserved, we found a real passion for fashion that’s been unmet,” says Anne Connell, vice president of strategy for brand experience design agency Hornall Anderson, tapped by The Limited to help develop the new line. “They felt that they were denied participation in this feminine way of expressing their personality. What they were buying was mainly by default.”

eloquii by The Limited intends to fix all of that, with clothing aimed at sizes 14 regular to 24W. Part of the year-long process into understanding this significant market — encompassing 50 percent of American women — was throwing out pre-conceived notions.

“We thought knits would be a big category,” says Jodi Arnold, The Limited’s vice president of design. “That hasn’t been the case. What she’s wanting is what she’s not found — a great outerwear piece or a faux leather bomber jacket.”

Finding the fit
W hile many brands have talked about creating a plus-size line to appeal to a market estimated at $19 billion, The Limited knew the desire was there.

“Linda [Heasley, The Limited CEO] spends a lot of time in our stores and she was constantly asked by customers and fashion bloggers when The Limited was going to offer stylish plus-size fashion to women,” says Steve Zawada, who was named general manger of eloquii in February.

That started a season of listening to women – an approach that led to the first plan in the brand strategy Hornall Anderson helped develop.

“When we started with the research, we realized that women want to be noticed for that great piece of fashion that they’re wearing,” Connell says. “They want to be looked at for the right reason. We felt there was an opportunity for a brand that engaged with you in a respectful and fun way. ... it’s conversational, fun, engaging and more fashion-oriented.”

Every element of the new brand was designed with this woman in mind — even the name (pronounced el-o-quee), which combines elegance and soliloquy. Terms for a woman’s shape were changed from the old “apple” and “pear” to diamond, emerald, heart, infinity and teardrop.

While eloquii’s customer may have some things in common with The Limited’s customers, she has some distinct differences as well.

“She’s been used to getting something that’s tagged on to something someone else had, rather than something designed specifically for her,” Arnold says. “She might be a little more expressive than The Limited’s customers. She wants to show her waist — the smallest part of her body.”

The old way of doing things — simply adding a few more inches to items created for smaller figures — would not always create the right look. “When you size up, everything gets bigger,” Arnold says. “We’ve taken the back pockets to a place where her backside looks good. We started looking at pants and thinking, ‘This is not good enough.’ She is used to settling for a pant that she can get on and get buttoned. We want it to look modern, not like her grandmother’s pants.”

The Limited wasn’t the only one having to learn lessons. As it turned out, its customers did too.

Engaging the customers
W ith a mission of providing on-point fashion trends, eloquii had to help its customers learn how to wear those items — some of which flew in the face of traditional dressing tips for larger women. “The gem in the research is this real desire for self-expression, a confidence and willingness to step out in styles that get them noticed,” Connell says. “People are not cowering at home. They’ve been wearing black and muumuus because that’s what been offered.”

Bright colors were key, and accessories — also designed a little larger — were appreciated. “The branding of ‘Rejoice in the double take’ says that this woman has the confidence to wear great fashions,” Connell says. “You don’t need to hide behind fashion — you can celebrate it.”

eloquii has celebrated in a major way, launching 30-50 new items every two or three weeks. While that is on par with releases from The Limited, it is a far cry from many plus-size brands that issue only a handful of looks each season.

The typical eloquii customer is a bit younger than the company had initially thought — landing in the 25-35 age bracket instead of 25-44. To help spread the word, eloquii brought blogger Gabi Fresh aboard as a brand ambassador. “This customer seems to be a little more engaged online around this subject,” Arnold says.

The company is continuing to engage and build community. The website includes a tutorial to help women choose their body types and then determine the best fit.

“We found that the plus-size woman hadn’t been able to play with fashion and so maybe she didn’t know how to put fashion together,” says Connell. “In the past, she has had to buy individual pieces and a whole look has never been thought about. eloquii has done that really well.”

eloquii by The Limited launched in late November as an online-only retailer, and web traffic continues to grow. This year, the company will launch a shop-in-shop in some of the best online markets, Zawada says. “It’s a testing period, but we will be keeping it intact,” he says. “We are hoping to grow the shop-in-shop throughout the year.”

That should lead to an inevitable stand-alone eloquii shop launch sometime in 2013.

“Most fashion brands, especially couture, don’t want to associate with plus,” Connell says. “Denying access in fashion starts there and has meted itself out. But with the average dress size migrating, business is finally catching up with culture. And fashion is catching up as well. There’s a huge market that’s looking for it.”

Operating Outside the Luxury Box

Fiona Soltes — Tue, 01 May 2012 05:29:41 +0000

Customizable, affordable jewelry fuels Pandora’s growth

I n 2010, veteran marketing executive Angel Ilagan was given an opportunity to interview with Pandora Jewelry. One look at his daughter’s wrist sealed the deal: He remembered the Pandora bracelet he had given her, as well as shopping together to find a charm for her mother, and understood why consumers use words like “meaningful” to describe their Pandora jewelry.

“Pandora is not about exclusivity,” says Ilagan, now Pandora’s chief marketing officer and vice president of marketing, North America. “It’s really about sharing. This is a brand that celebrates lives and special moments, and it allows women to connect with others. With our products, it’s not, ‘I have this and you don’t.’ It’s, ‘Let me tell you my story.’”

Right idea, right time
Earlier this year, Unity Marketing founder Pam Danziger labeled Pandora a “paradigm-shifting” brand in the jewelry market; Unity Marketing’s luxury tracking survey ranked Pandora second only to Tiffany among jewelry brands.

Rob Bates, senior editor at jewelry trade publication JCK, says Pandora offered the right idea at just the right time. The company was founded in Denmark 30 years ago and came to North America in 2003; a few years later, as the United States slipped into recession, Pandora was uniquely situated to offer customers affordable, customizable luxury.

“Pandora was a godsend for jewelers,” Bates says. “When the market crashed, jewelers were really suffering. Pandora wasn’t necessarily a product that they would normally stock.” It wasn’t just that individual beads were priced lower than typical jewelry store items; Pandora sales also could require a fair amount of time spent with customers.

“But people were so desperate that they were willing to take a chance,” he says. “And a lot of jewelers believe they’re still in business because of their Pandora business.”

Pandora’s sales doubled between 2009 and 2010, and items are now available in 3,100 retailers across North America, including 250 concept stores. The company also has more than 1.3 million “likes” on Facebook and hosted a Pandora Unforgettable Cruise between Ft. Lauderdale and Cozumel in March.

Making a statement
“One of the reasons people buy jewelry is to make a statement about who they are,” Bates says. “Pandora has been very successful at tapping into that .... Pandora is great at having its jewelry represent something bigger than itself.”

During the course of any year, Ilagan says. “there are holidays, birthdays, anniversaries and other occasions where gift giving is appropriate. What we saw was that the average consumer would save up for three years to purchase one item for one special occasion, but Pandora offers the ability to purchase an item to celebrate each.”

As with any quick-growth success story, the question of Pandora being simply a fad has been asked — especially when CEO Mikkel Vendelin Olesen resigned last summer, citing “sharp revenue deterioration.” North American sales didn’t take quite the hit that the European markets did. “I’m not 100 percent sure why,” Bates says. “But I think there are still some places in North America where Pandora is a novelty, and people are still very excited about it.”

The company took some heat — and lost some customers — when it raised prices by an average of 15 percent in January 2011 to help cover higher costs of silver and gold. Some of those prices have come back down, and the company also increased the number of lower-priced offerings.
“We learned that a key aspect of our brand was affordable luxury,” Ilagan says. “You have to hit both ends of that, the affordable part and the luxury part. You can’t sacrifice one for the other.”

Maintaining relevance
Danziger points out that luxury jewelers ignore Pandora at their peril. Pandora clearly understands its target customers, she wrote in her blog, and luxury consumers consistently report valuing experiences over physical possessions when they make luxury purchases.

In that area, Ilagan sees his company as having no equal. Pandora enjoys a recommendation rate higher than 90 percent, he says, and the whole idea of “sharing” goes beyond telling what each charm represents. It’s also about the desire to share the items with sisters, mothers, wives and friends.

“It’s a way for these women to celebrate each other,” Ilagan says. “It’s a way for them to bond.”

“We’ve been told we were a fad since we entered the North American market,” he says. “But I believe if we stick to our DNA, which is celebrating women and offering affordable, customizable jewelry, we won’t be a fad. We’ll always be relevant.”

It’s important to remember, Bates says, that affordable luxury can draw consumers from all ends of the spectrum.

“If you’re a luxury consumer, that doesn’t mean that everything you buy is luxury,” he says. “We all like to buy affordable things. Even if you’re a billionaire, you still might shop on Amazon and save a few bucks on shipping. ... the idea of affordable luxury is not just for the low end.”

Pandora, Bates says, “is very clever at marketing. Once people are Pandora fans, they’re very good at keeping them in the club. This isn’t just about something you purchase. This is akin to a hobby, something that keeps you coming back.”

Ilagan would agree. “It really is all about meaning,” he says. “I’ve never quite seen anything like it — the passion the consumers have for the brand, the passion the company has for the consumer, and the success that passion breeds.”

Where Art & Science Meet

Susan Reda — Tue, 01 May 2012 05:28:41 +0000

BJ’s Wholesale Club's CEO Laura Sen

Laura Sen
CEO
BJ’s Wholesale Club
Westborough, Mass.

Laura Sen began her retail career in 1978 as an executive trainee with storied Boston retailer Jordan Marsh. From there she moved to discount chain Zayre Corporation, sharpening her skills with positions as buyer and assistant vice president, divisional merchandise manager.

In 1989 Zayre sold its nameplate to Ames Department Stores; BJ’s Wholesale Club was spun off shortly thereafter. Sen joined BJ’s as assistant vice president, manager of logistics, and save for a few years as an independent consultant, has been with the company since then. She became CEO of BJ’s in 2009.

STORES Editor Susan Reda recently had the opportunity to chat with Sen.

How’s business?
We don’t report sales because we’re now private, but we have posted sales gains for more than 60 consecutive months. We operate in the extreme part of the value equation, with low operating costs and some of the lowest prices in retailing.

In tougher economic times, members seek us out for saving money on everyday necessities. In stronger economic times they come to us for their expensive toys, such as big screen televisions, swing sets, diamonds and the like. As a result, I think we have an extremely resilient model.

How would you describe your target demographic?
We have a target demographic that is more affluent than average; our customers are not as economically challenged as those of a mass merchant might be. That gives us a little bit of a cushion in tougher economic times. This channel has been growing disproportionate to retail for decades. It’s now well over a hundred billion dollar channel.

What’s your gut telling you about the near future?
There’s no question that gas prices are causing some sticker shock. We’ve noticed an uptick in traffic drawn to the clubs that have gas stations ... and a weakening of discretionary spending. We expect the high-ticket part of the business to be softer until prices moderate.

Are you planning to add new stores in the months ahead?
At this time we have 195 warehouse clubs and we plan to continue our expansion, adding five to six locations a year.

What do you feel sets you apart from the other players in this space?
We have a differentiated model ... we tend to sell items in smaller package sizes and we have more unique offerings, including more natural and organic foods. Our model is to gain share from other channels of distribution — whether it be food, drug, mass specialty, department store or category killer.

We further differentiate in terms of size. Traditionally our clubs are about 120,000 sq. ft., but a few years back we developed a new prototype that’s 85,000 [sq. ft.]. ... With the 85,000 [sq. ft. footprint] we can open in a smaller, less densely populated market ... [or] in markets where there is dense population but not enough land available.

Perishables drive BJ’s business; words like sustainable, organic and natural are mentioned prominently. Why is this so important?
Following consumer trends is extremely important. Our members, generally speaking, are better educated and more sophisticated. They’re looking for “clean” ingredient statements; they want healthier foods. They want organic foods. And they want to get these types of goods at a value.

Our “fresh” strategy is focused on driving value. In the conventional retail space, the margins are highest in perishable foods. We can show incredible value and quality, and we can show differentiation vs. both grocery and our wholesale club competition.

You’ve been in retailing your entire career. What do you love most about it?
What I really appreciate about retailing is the perfect intersection of art and science. There are a lot of quantitative measures around what we do and how we do it — how we go to market, how we apply our strategy and how we figure out what’s working — but there’s also an element of retail that’s extremely dynamic. One of my mentors once told me, “We get our report card every day.” It’s so true. ... I’m a pretty quantitative kind of person, so that has huge appeal.

On the other side, there’s an art to this. The fact that this is a fast-moving, consumer-based industry makes it really interesting. ... It’s all around what differentiators we can develop as a company and as a brand that will allow us to survive and thrive.

You’re a new member of NRF's Executive Board, and corporate tax reform is high atop NRF’s legislative to-do list. Can you offer your thoughts on this?
Retailers pay the highest taxes of any industry in the U.S. and there’s no question that it has made it more difficult for us to create new jobs. I’m certainly no tax expert, but I think it’s fair to say that paying rates at or close to 35 percent has had a negative impact on economic growth.

If the reform that the NRF is lobbying for passes, it would make it easier for companies to make decisions based on business reasons rather than tax implications. And if retailers were able to pay lower taxes, we’d be able to offer better values and expand more readily. Lower prices could translate to increasing consumer demand and increasing jobs throughout the supply chain.

You’re a hands-on CEO. How often do you travel to stores?
I believe that without the people there is no company; they create the value that is BJ’s. I personally care about all the team members ... I think about what they do every day because I know without them we are not going to achieve our plans and goals.

I typically block out two of every 10 days on my calendar and travel to a market unannounced. I arrive to the first club by around 7:00 a.m. and walk in the back door — beginning my visit with the receiving manager. Eventually I find the manager on duty and we walk the store talking about the business. ... I carry a lot of data around with me so I know the club’s results before I walk in. Discussing their unique trends and their strengths and weaknesses leads to a lot of learning.

Last year two private equity firms, Leonard Green & Partners and CVC Capital Partners, announced they bought the club. Has that changed the way you operate?
We are operating under a new financial model, but our new owners have been thoughtful, supportive and helpful. We continue to focus on conducting our business in such a way that we can continue to grow and thrive. ... We have a very relevant model and a decent growth runway. Our objective is to make sure that we are meeting the expectations of our new owners in terms of the opportunity they saw when they bought the company.

USPS Still Rides Strong

M.V. Greene — Tue, 01 May 2012 05:27:41 +0000

Innovations in B-to-C shipping and delivery draw retailers

N imble is hardly the first word most people would think of when describing the U.S. Postal Service. Mail is delivered, to be sure, but post office closings, rising postage rates and staggering debt are not to be ignored. Postmaster General/CEO Patrick R. Donahoe said as much in a March 2012 appearance before a congressional committee, saying the USPS “business model is broken.”

Yet for all its woes, the postal service knows shipping, and sporting goods retailer Olympia Sports is convinced of its value to outbound shipping operations.

Based in Westbrook, Maine, Olympia has more than 200 stores throughout the Northeast and Mid-Atlantic. The chain’s Get It inventory locator program leverages the USPS to deliver products to customers quickly and easily, says Paul Fitzpatrick, Olympia director of operations and distribution. Since Get It was instituted in 2006, it has meant “a few percentage points” to bottom line revenue, he says.

Fitzpatrick characterizes Olympia’s relationship with the postal service as the “last leg to get orders for product not in stores to the home.” It helps that USPS delivers on Saturdays, he adds.

“If you walk in and you need a size 10 in a pair of shoes and we don’t have them in that store, we can go on the system and look and determine if they are available elsewhere,” Fitzpatrick says. “It may be in our distribution center or it may be in another store.”

He says it took some time to orient customers to the inventory locator program. “They purchase the item and walk out with nothing more than a receipt on the faith that they are going to receive it from us,” he says. Over time, though, the service has won kudos: “I couldn’t believe I walked into your store Thursday night, and I needed to get soccer cleats for my [child] for Saturday afternoon practice,” a customer testimonial reads, “and, lo and behold, the postal service delivered it Saturday morning.”

More responsive
P urchases are logged into the Olympia POS system via a label server platform from DYMO Endicia, a provider of shipping postage technology solutions. The server allows retailers to embed USPS postage labels into applications like POS and websites, and DYMO Endicia’s Label Server Application Programming Interface (API) automatically prints out postage labels based on weight and destination. This functionality eliminates the need for additional software or separate accounts for multiple locations to print shipping labels.

Once the postage is purchased, the server automatically notifies the USPS of the pickup location; packages are sent via first-class or Priority Mail to arrive within two or three days.

As Postmaster General Donahoe told Congress, the USPS is seeking to remake its business model to be more responsive to customers, like Olympia, that provide USPS with consistent business. Last month, Donahoe presented eBay with the USPS’ Partnership for Progress award at the annual National Postal Forum in Orlando for bringing postal service technology innovations, including automated label printing, to its customers.

A changing dynamic
O lympia representatives met with postal officials to set up its labeling system and address the chain’s shipping needs. Previously, Olympia would use a traditional shipper in a non-automated, time consuming and expensive process.

Automation through DYMO Endicia and the postal service is key, Fitzpatrick says, estimating that his distribution operation has saved 45 percent in shipping costs compared with its previous carrier.

Amine Khechfe, DYMO Endicia co-founder and general manager, says shipping strategies have evolved in recent years among retail operators largely because of the burgeoning influence of online processes. Since much of e-commerce shipping is business-to-consumer, the postal service is leveraging its dominant footprint and historic role of mail delivery by aggressively working with retailers like Olympia.

“You’re seeing the whole dynamic changing, and traditional retailers have to have an online presence whether they are selling online or selling inside the store,” Khechfe says. “It is really one big presence they have to look at. The shipping market has followed that and has been booming.”

While there is a false perception that USPS has been dwarfed in innovation by carriers like UPS, FedEx and DHL, Khechfe says those carriers remain largely business-to-business shippers of bulk and palletized goods to retail stores and businesses. “When you come to under five pounds going to a consumer, it is the postal service that goes to every door,” he says. “As such, you are seeing a very interesting dynamic that the postal service has become equal or better” than some traditional carriers.

Choice vs. time
V ivian Li, DYMO Endicia brand manager, says e-commerce through the retail establishment is emerging as a new industry norm because of the understanding among consumers that physical stores can hold only so much inventory (Olympia stores, for example, are generally 4,000 to 4,500 sq. ft.).

Li says consumers today are willing to balance “choice vs. time” in their shopping — having the opportunity to touch and feel merchandise in the store, but amenable to waiting a day or two to have items shipped to get precisely what they want.

“There’s a feeling that you go to a retail store and you will be able to get something right away,” Li says, “But a retail store can only hold so much inventory. That’s where e-commerce comes in. It’s the World Wide Web — everything is out there. The idea that you can access a retail store and get all the inventory that they have on hand at all of their distribution centers is a very compelling story.”

The postal service’s embrace of innovation has provided Olympia with a critical solution by delivering to its customers efficiently.

“The customer probably doesn’t care where it is being shipped from as long as they get it in a timely fashion and get what they are looking for,” Fitzpatrick says. “The postal service has been a very good fit for us to take care of that piece of the business.”

Efforts to Expedite Visas Succeeding

Craig Shearman — Tue, 01 May 2012 05:27:41 +0000

NRF’s efforts to convince the government to make it easier for tourists and business travelers from key foreign countries to come to the United States and shop in U.S. stores are paying off.

Until recently it could take 120 days or more for citizens of China, India or Brazil to get a visa. After months of lobbying by NRF and other members of the Discover America Partnership coalition, President Obama signed an executive order in January requiring that visa processing capacity in China and Brazil be increased 40 percent this year and that 80 percent of visa applicants be interviewed within three weeks.

Now, Sen. Charles Schumer (D-N.Y.) has introduced a bill that would require the State Department to reduce the wait in all three countries to 15 days immediately, and to 10 days within a year. The department would also be required to establish a program for “premium processing” in three business days for those willing to pay extra.

While the average visitor to the United States spends about $4,000, the average Brazilian spends $5,000 and the average Chinese spends $6,000. A recent U.S. Travel Association study found that speeding up visa processing could create 1.3 million domestic jobs and add $860 billion to the U.S. economy by 2020.

What NRF is doing
NRF has taken a leadership position in the coalition, submitted testimony at a Senate hearing, met with members of Congress and the Obama Administration and raised the visibility of the issue in numerous media interviews. NRF president and CEO Matthew Shaw raised the issue with officials at the U.S. Embassy in Beijing during a visit to China last fall, and again earlier this year at a breakfast with prominent business executives in New York.

What you can do
Retailers should contact members of the Senate to explain the importance of foreign shoppers and urge passage of the Schumer bill. Contacts are particularly important in states that are home to major tourist destinations.