February 2008 Big Grower

Food for Thought By Visions Group

New Handhelds May Speed Checkout, Improve Customer Experience

Motorola is unveiling two new handheld scanners designed to speed customers through the checkout aisles and make shop-floor assistants more productive. One is a cell phone–size bar-code scanner that connects to the retailer’s wireless system, letting floor personnel access product and price information as well as communicate with other employees via walkie-talkie or direct calls. This device is targeted at cutting losses from shoppers who walk out of stores when they can’t find the right product or the information they need, or when checkout lines are too long.

Most consumers return to the stores where they have had good shopping experiences. It remains to be seen how receptive retailers will be to this new device. Most retailers are increasing spending on technology and information systems, but providing individual devices for each floor associate would be a huge undertaking.

The other device is a personal shopping assistant that allows consumers to check prices and scan their purchases as they put products into their cart on the way to the checkout counter. This could potentially significantly decrease checkout time and improve the customers’ shopping experience. This device is also designed to wirelessly receive targeted promotions for similar or complementary products. Someone scanning a carton of milk could immediately receive a coupon for yogurt. Someone scanning a potted plant could receive a promo for plant food or a watering device. This concept of in-store, one-to-one, finely tuned marketing is beginning to gain acceptance among retailers as the fight intensifies to increase the average sale.

Brand Extensions: Sound Marketing or Promotion Gone Wild?

Brand extension has long been considered one of the basic principles of marketing and product development. You develop a product, make it attractive and convince customers they can’t live without it. What’s more logical than transferring this consumer acceptance and demand to other products, therefore reducing costs and time in creating another winner? Or, you can license the brand name to the highest bidder, who may manufacture products in the same product category or even in a completely different product category. Think Ralph Lauren paint, Prada cell phones, Giorgio Armani LCD widescreen TVs and Ferragamo watches.

If a consumer accepts and trusts one product under the Brand X label, he will certainly accept and trust another product under the Brand X label, right? Until recently, most brand extensions caught on easily. Not so anymore in the age of the enlightened and informed consumer. Some of this is caused by the Internet and the ease with which consumers can research products and comparison shop from the comfort of their homes. Consumer-product skepticism also results when manufacturers and retailers overdo it, putting multiple products under one brand.

Floriculture has not been as quick to adopt widespread brand marketing as other industries. But there are a number of house brands along with national manufacturers and even breeder/producer brands. Some have become all-encompassing, even including many unrelated products under their banner. Everyone needs to be aware of the potential for brand dilution in today’s competitive marketplace.

Assuming a Corner on the Marketplace Leads to Missed Opportunities

Complete knowledge of the marketplace and your company’s products and services have always been the cornerstone of maximizing sales and profits. But the line between superior knowledge and complacency can sometimes be very fine. For more than a century, KIWI shoe care thought they knew all there was to know about shoe polish and what their customers wanted. They were successful, so they offered pretty much the same thing over and over: one ounce of colored wax in a palm-sized container embossed with their logo, a kiwi bird.

Then, about two years ago, new management decided KIWI needed to prove that 100 years of tradition was the correct operating procedure, according to a Wall Street Journal story in December 2007. KIWI interviewed 3,500 people in eight countries about their shoe-care needs. What they learned was shocking and virtually rocked the foundation of the organization. People didn’t care nearly as much about the shine on their shoes as KIWI thought. What they did care about was how fresh and comfortable their shoes were on the inside. An ounce of colored wax certainly didn’t help with that. Of the resulting list of 20 attributes that people desired in their shoes, a nice shine ranked 17th.

Management learned that shoes and the way people wear them had changed since KIWI was founded. Today’s footwear is made less from leather and more from canvas and synthetic materials. Most consumers today are more likely to toss out a pair of worn shoes than work to keep them in good condition. Women, who make up the majority of the shoe market, are most concerned about comfortable, fresh-smelling shoes. It was clear that KIWI needed to become a foot-care brand without losing its edge as the world’s shoe-care expert. KIWI immediately went to work and since then has unveiled a slew of new products.

Along with fragrant shoe inserts and other in-shoe products for women, KIWI also produced new fresheners for sneakers and men’s shoes, single-use polishes and more products to protect shoes.

Since the new products were rolled out in limited markets, sales are up 4.4 percent for the year. Management is confident that the upward trend will continue as the new products debut in all markets.

Coddling Demanding Customers: The In-Store Concierge

Concierges with almost mystical abilities have long been the hallmark of luxury hotels and high-end retailers. Now, in an effort to attract new customers and foster increased loyalty among existing ones, some mainstream retailers are employing the services of individual concierges and concierge desks manned by multiple staffers with different areas of expertise. In this age where almost all stores carry similar brands, setting yourself apart from the competition and providing superior customer service is increasingly important.

The services provided by these wizards of information are not always limited to the store’s products and services but can also include information on the surrounding area, other retailers, and even restaurants and entertainment facilities. While these service employees are not engaged in direct selling, they do drive sales that can make up a significant portion of the total. These concierges have become the ultimate “in-the-aisle marketers,” producing results that exceed those of even in-store sample distributors. Very important or repeat customers eventually build a rapport with the concierge and receive individual recognition and service that leads to increased purchasing. Translating this type of service to the aisles of the big box plant retailer certainly poses significant challenges, but the rewards for someone who develops an appropriate system will also be significant.