- Published: November 25, 2013
It has been 18 years since Amazon.com sold its first book and, as a result, altered the face of retailing. Of course, they did not change things overnight. It took several years before they became a prominent retail player and several more before they reached dominating retailer status. If there is a lesson to be learned from Amazon, and many other online retailers, its that technology can change how business is done and how an industry evolves.
Of course, technology is not the only reason retailers have thrived or withered, but anymore it seems to be at the top of the list for what makes for retail success or failure.
This story from Forbes presents a nice summary of a few technologies retailers, both store-based and online-only, are now using to improve the customer experience, which is a key factor in retail success. Technologies discussed include: streamlined checkout, interactive product displays, and augmented reality mobile apps.
While the discussion of the impact of each technology is nicely presented, the story also offers detailed insights from retailing executives. The executives from store-based retailers Lowes and Ikea, and from online retailer Zappos, offers their take on how technology is being used, and the benefits they are experiencing.
- Published: November 21, 2013
On the heels of our Bitcoin post from a few days ago, here is another post dealing with pricing decisions. As we discuss in the Setting Price: Part 1 and the Setting Price: Part 2 tutorials, marketers often consider many different options when arriving at a final price. One set of options falls under the category of psychological pricing, where marketers take into consideration how customers mentally perceive a product's price. One of these psychological pricing methods is the so-called “odd-even” pricing method, where marketers may intentionally set price at a level where customers may perceive the product as offering a better value compared to a competitor’s product that is set slightly higher but at an even number price. For instance, setting the price at $5.95, compared to a competitor’s product that sells for $6.00. Marketers have been taught for years customers not only see a price difference between these two products, mentally some may believe it to be a sizeable difference.
But marketers may want to take another look at this. According to this story, the effect of odd priced items may be less effective than in the past. This is based on academic research focusing on the evolving “pay-what-you-want” pricing model, where marketers allow customers to determine the price. As the story discusses, the majority of customers who make purchases where they determine the price prefer to set a price that is a round number, such at $20 instead of $19.95. The story offers several examples of purchasing situations where this is the case.
To be realistic, the “pay-what-you-want” pricing model is far from being widely used. So whether the results reported in this story can truly apply to other types of purchase situations remains to be seen. In the mean time, the data presented is intriguing.
- Published: November 19, 2013
Here is an excellent example of how changes in customer behavior can affect a company. As this story discusses, Campbell Soup is facing tough times and this appears to be attributed to consumers’ desire for fresher products. It seems especially to be an issue with consumers in the under-30 year-old market, commonly identified as the millennial generation. Apparently this group is not all that interested in canned products, which is the heart of Campbell’s product offering.
To be fair, Campbell is aware of this shift and has recently introduced new products. Yet, in the minds of many younger consumers, these products are still not seen as meeting the test of freshness.
A noteworthy comment in this story, is that many younger customers entering supermarkets are likely to spend much of their time on the perimeter of a food store, where the freshest products are available. Campbell and many other leading brands cannot compete against this trend with their existing product lines. So it will be interesting to watch if major food marketers like Campbell go on a shopping spree and acquire companies in the fresh food business.
- Published: November 18, 2013
Today, the U.S. Congress began a hearing on the fate of Bitcoin. If you are not familiar with Bitcoin, you are not alone. In fact, the number of people in the U.S. and around the world who even understand it is extremely small. Essentially Bitcoin is a new global currency that, for the most part, only exists as virtual money (though some attempts at a physical Bitcoin have been reported). You can’t see this currency, thus someone can’t hand you one. But you can transact it using online payment systems and mobile device apps. Bitcoins are obtained in several different ways, though most people usually obtain it by purchasing these with another currency (e.g., purchase by paying with bank funds).
Like any currency, the value of a Bitcoin fluctuates so purchasing power can change. So what could be purchased with a single Bitcoin six months ago may be different than what can be purchased today. But, unlike most major world currencies, the change in value of Bitcoins has been quite volatile. In fact, according to a Bitcoin exchange rate chart, six months ago a single Bitcoin was worth a little over $100 while today it is worth nearly $800. That growth rate is likely not sustainable, and many predict that the bubble will burst on this currency. Yet even if it does burst, the currency itself may have long-run appeal.
For marketers, and especially retailers, there may soon come a time when they should consider accepting Bitcoin payments. For instance, this story describes how a Subway store in Pennsylvania is now accepting Bitcoin.
It is certainly not a foregone conclusion that this will be an accepted method for transacting business. In fact, the U.S. government is only now looking closely at this. But marketers should keep their options open. At the very least, it is probably a good time to research this evolving payment option.
- Published: November 15, 2013
It looks like the 2013 holiday shopping season is shaping up to be extremely competitive. As detailed in this New York Times story, retailers are bracing for a holiday season they believe may be quite difficult. There are two main reasons cited most often for the challenges that the 2013 Christmas selling season may bring. First, the U.S. economy continues to lag, with unemployment rates remaining north of seven percent.
Second, there is an extremely short time period between the traditional start of holiday shopping, the Friday after Thanksgiving (a.k.a. Black Friday), and Christmas (six days less compared to 2012). In fact, this span (only 26 days) is the shortest possible since November 28 is the latest Thanksgiving can be. The effect of these two issues is that retailers fear shoppers will not be increasing their level of spending compared to what they spent the last few years. And the last few years were not all that great.
As we noted earlier, several retailers are already in full holiday selling mode and others will be there come Thanksgiving night. In addition to pre-Black Friday promotions and early store openings, this story offers other tactics retailers plan to employ to building in-store and online traffic. It includes Sharper Image creating a special video featuring actress Betty White, which the retailer hopes will spread via social media; Lexus continuing its “buy someone a car for Christmas” theme but focusing on a younger target market; and fundraising efforts by high-end retailers located along Beverly Hills’ Rodeo Drive and Madison Avenue in New York. The story also offers several other examples of promotions being rolled out by other retailers.