Posted: March 2, 2014 |  AUTHOR: KEN FOX | CONTACT ME

 

While many U.S. brick & mortar retailers are struggling to survive and thrive, some retailers are using innovative approaches to win customers and boost sales in new ways. Companies like Sears, K-Mart, Best Buy, GAP and other retailers are fighting to compete against e-retailers, outlet malls, showrooming and dollar stores. Even high end stores like Nordstrom’s is beefing up its on-line presence and paying increased attention to their 140 Nordstrom Rack (outlet) stores. Wal-Mart also recently announced it will open smaller stores as it expands. Internet sales are growing at the expense of brick and mortar stores, said one analyst quoted in the Wall Street Journal.

 

Retailers in the past have always seemed to reinvent themselves. Sol Price created FEDCO, the first membership club store in 1976, which is now part of COSTCO. Warehouse stores such as: Home Depot, Office Depot, PETCO, Barnes & Noble, Niketown and Sport Authority have evolved as super specialty stores. Dollar stores of all kinds, which seemed a latent entity before the economic crisis, have spread and prospered. What and where are the next innovations in retailing? Grocery store food, same day and Amazon Sunday deliveries have been discussed and tested.

 

Technology will play key role in future retailing innovation. However, its not just technologies but how they are used which represent a competitive advantage that may create brand equity After all, new technologies, software applications and other innovations seem to be invented almost weekly.

 

The following are two examples:

vancl

VANCL (China)

 

This Beijing based company started as a specialty men’s retail e-retailer in 2007. The company now also offers women’s fashions, shoes, jeans, shirts, skirts and accessories at “reasonable prices.” They use designers from around the world to sell their own branded products. The Chinese company makes its own clothes and started an English e-commerce site in 2010. It distributes goods “for cash on delivery” across 1,100 Chinese cities. Annual sales in 2011 were 6 billion RMB (approximately 979.4 million U.S. dollars).Their website has evolved and encourages mostly young female customers to model clothes they have bought on the site by people sending in their photos wearing clothes purchased from VANCL. Viewers can browse through photos of fellow customers wearing items from the site. One publication calls it a cross between social media and e-commerce. If one clicks on a photo of a VACL Star, the viewer can insert their picture to see what they look like and ordering information will appear. The VANCL Star pictures offer followers likes, favorites and a portfolio of the viewers’ photos, if desired. These photos can be shared on popular Chinese social media sites such as: Sina Weibom, Tencent QZone or Renren.

 

VANCL Star has also launched as a mobile app, with an iOS version in the works.  Some sample photos from VANCL Star:

VSP

The VANCL Company faces tough e-commerce competition in China. Initially funded by Chinese venture capital money, the company may be losing market share in China but still maintains a loyal following. VANCL has also expanded to Vietnam.

 

Alex and Ani (USA)

 

alex

 

Alex and Ani is a brick and mortar jewelry store chain based in the Cranston, Rhode Island area (USA). The store chain is utilizing what is called location-sensing technology. beacon, originally offered by Apple Computing, is a the location sensing technology built into Apple’s iOS7 operating system (Android devices can download iBeacon apps). iBeacon is a Bluetooth Low Energy radio that broadcasts a signal in a given area, such as an entrance to a clothing or grocery (food) store. Without going into the technical details, one’s phone shows an invitation from the beacon such as an “in-store notification or coupon,” which involves sharing one’s Bluetooth-determined location.

 

Alex and Ani have partnered with a company called Swirl, another beacon based marketing firm (based in Boston). While other major U.S. retailers such as Safeway, Timberland, Kenneth Cole, and American Eagle have tested the location sensing technology, Alex and Ani have launched it in 40 of their U.S. stores.

 

Swirl calls its product technology an “indoor GPS system for retailers.” However, it also works outdoors. U.S. major league baseball will start using the technology to connect with smart-phone carrying fans in 20 ballparks this spring (2014).

 

Eventually, Swirl can tell retailers which aisle a shopper shopped in, what they bought and tie it back to a promotion or coupon sent to a shopper in the corresponding product aisle or when they entered a store. As an example, a store manager or owner might view a shopper lingering in a certain section or aisle of a store. This technology would, ideally, allow that manager to target a deep discount coupon to that shopper in real time to make a purchase more enticing.

 

noti

Pictures of a Swirl “beacon”

 

Swirl claims: “that 75% of shoppers who got push (or incentive) notifications from the beacon system opened an app while they were browsing in the aisles, and about one half bought something with a digital coupon from their app while in the store.” The company adds that the Swirl apps require consumers to approve their participation beforehand. However, privacy issues linger.

 

Comments

 

Retailing is always reinventing itself. Shopping is becoming more electronic due to convenience and finding the lowest price. Brick & mortar retailers face the greatest challenges. Yet innovative approaches in merchandise offerings from retailers like Zara and Uniqlo (covered in prior blog entries) keep attracting shoppers. The new “beacon” technology, used by Alex and Ani’s, helps keep the brick and mortar retailers stay competitive by offering new ways to reach captive consumers. The question remains whether this technology will help attract new consumers to visit a store and translate targeted messages or promotions into a purchase.

 

VANCL’s model is interesting and unique. It also appeals to the young, especially female Asian shoppers, who are smart phone savvy and always looking for new fashions. The question here is how sustainable is their competitive advantage? Hopefully, they generate more VANCL Stars.

 

 

Resources:

How One Chinese e-commerce Site turns its Shoppers into Models, TECHINASIA, September 3, 2012.

VACNL, Crunch Base Profile (date not available)

How Alex and Ani is Pioneering the Future of Retail, Inc Magazine, February 13, 2014

Swirl Rolls Out ‘Indoor GPS’ at Alex and Ani Stores Nationwide, Xconomy by Curt Woodward, February 13, 2014.

Nordstrom Sales Continue to Shrink, Wall Street Journal, February 21, 2014.

Apple’s iBeacon turns location sensing inside out, Network World, February 10, 2014

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©2017, The Global Galaxy blog is produced by The Soundings Group, LLC, Charleston, South Carolina, USA, www.thesoundingsgroup.com. The company is an international business consulting firm, specializing in new market assessments, market entry strategies and marketing guidance. The scope of Global Galaxy is to cover timely international trends, issues and business building ideas. Its purpose is to educate, inform and stimulate thinking for business opportunity analyses.

 

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